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WEDNESDAY DECEMBER 3, 2014 ISSUE 1852/2014
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www.theedgemarkets.com 5 HOME BUSINESS
Yvonne Chialed SPAC to raise RM750m via Bursa listing 5 HOME BUSINESS
MOL Global shares tumble on Vietnam accounting glitch, profit slump 6 HOME BUSINESS
Govt confident of hitting fiscal deficit target 16 C O M M E N T
Good, bad and ugly of lower oil prices
22 W O R L D B U S I N E S S
Investors shun China stock link on ownership concern
Cameron Highlands disaster exposes lax regulation 13 H O M E
WEDN ESDAY DEC EM B ER 3 , 2 0 14 • TH EEDGE F I N AN C I AL DAI LY
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Mier cuts Malaysia’s 2015 GDP growth forecast to 5%-5.5%
Zeti: Falling oil price beneﬁts local businesses and consumers
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Aviva in £5.6b Friends Life takeover Creates market leader with 16 million life insurance customers BY HUW JO NE S & C ARO LY N CO HN
LONDON: British insurer Aviva agreed terms yesterday for a £5.6 billion (RM30.09 billion) all-share takeover of rival Friends Life, responding to pressures caused by pension industry reform. Pension providers are rushing to revise their product ranges after the government in March surprisingly removed obligations for people to buy an annuity, or income for life, at retirement, hurting sales. Aviva said the merger creates a market leader with 16 million life insurance customers. It is expected
to generate £600 million in excess cash flow a year and about £225 million in annual cost savings by the end of 2017. Andy Briggs, current group chief executive of Friends Life, will become CEO of Aviva UK Life, with Mark Wilson continuing as CEO of the enlarged Aviva Group. Briggs said the two businesses worked well together. Friends Life’s corporate pension business is skewed to larger firms, while Aviva focused on smaller ones. “There’s a very good complementary fit,” he said. After the changes announced by
the government in March, insurers have focused on alternative products such as pensions drawdown which allow savers more freedom over the amount of money they withdraw each year, or “bulk annuites” — taking on the risk of company defined benefit pension schemes. Wilson said there would likely be job losses among the combined staff of more than 15,000 and savings from office moves. Analysts said the cost savings from the Aviva/Friends Life combination were higher than expected but would take several years to be achieved. — Reuters
Indonesia to cut off ‘oil mafia’ JAKARTA: Indonesia’s new administration plans a major expansion of oil storage and will construct more refineries as part of sweeping energy reforms that will help in cracking down on any corruption in the state oil trader. Sworn in six weeks ago, President Joko Widodo launched the overhaul of the scandal-tainted oil and gas sector last Friday by sacking the entire board of state oil giant Pertamina and pledging a comprehensive audit of its trading arm, Petral. In 2013, Indonesia’s oil and gas sector made up over 7% of GDP in the US$740 billion (RM2.5 trillion) economy, Southeast Asia’s largest. When completed, the plan to increase storage and refining capacity will allow Indonesia to shift from buying gasoline and diesel on the opaque spot market to stable long-term contracts with foreign producers. That would reduce opportunities for graft at Petral.
IN BRIEF Doctor’s bomb joke costs him US$90,000 MIAMI: A doctor thought it might be funny to crack a joke about a bomb in his luggage. Instead, he partly forced the evacuation of Miami International airport, and earned an almost US$90,000 (RM307,800) fine. Manuel Alvarado, 60, will pay out US$89,172 for his “momentary lapse of reason in making these statements,” which prompted costly evacuations and delays for airlines, and brought out a police bomb squad, said his lawyer Brian Bieber. Just before boarding a flight to Bogota (Colombia) on Oct 22, a security officer asked Alvarado routine questions; the Venezuelan doctor responded that he was carrying C-4 explosives. Though he corrected himself and said he was just joking, it was too late for airport authorities’ taste. — AFP
Smartphone growth cooling, prices dropping WASHINGTON: The global smartphone market will see cooler growth in the next few years, amid “cut-throat” competition that will bring down prices for many consumers, a market tracker said on Monday. A forecast by the research firm IDC indicates smartphone sales of 1.5 billion units in 2015, a rise of 12.2% from the current year’s estimate. That would mean growth falling by more than half from the 26% pace of 2014. The sluggish growth is likely to continue through 2018, IDC said. — Reuters
GIC to buy US landlord IndCor for US$8.1b
Indonesian State Enterprise Minister Rini Soemarno (left), Dwi Soetjipto, the new head of state energy ﬁrm Pertamina, and Energy Minister Sudirman Said (right) pose for the media in Jakarta on Nov 28. Indonesia’s president sacked the entire board of Pertamina last Friday and pledged an audit of its trading arm, Petral. Photo by Reuters
“With limited storage, all you can do is buy on the spot market and then you are at the mercy of the market,” Ari Soemarno, a presidential adviser and former head of Pertamina, said.
Energy Minister Sudirman Said said last week: “Every transaction that is hidden has that potential (for corruption). Direct deals reduce that potential and reduce the role of intermediaries.” — Reuters
SINGAPORE: Sovereign wealth fund GIC Pte Ltd will buy IndCor Properties Inc, one of the biggest industrial landlords in the United States, from parent firm Blackstone for a whopping US$8.1 billion (RM27.7 billion), the companies said yesterday. Blackstone Group LP aid in a statement that the deal is expected to close in the first quarter of next year. It said that as a result of the transaction, Chicago-based IndCor will no longer be pursuing an initial public offering. — AFP
China’s invisible tycoon takes centre stage in Wanda IPO BY JOHN FO LE Y
BEIJING: Wang Jianlin is China’s invisible tycoon. The founder of Dalian Wanda Group Corp Bhd will soon be the controlling shareholder of four listed companies spanning cinemas, real estate and hotels with shares that trade in China, Hong Kong and New York (the United States). Yet he is not on the board of any of them. What may look like good governance raises a different set of questions. Investors in Chinese companies are accustomed to founders with controlling stakes and enormous power. But Wang has no official role in Wanda’s commercial property division, which is planning to list a
minority stake in Hong Kong, or in the upcoming offering of its mainland Chinese cinema business. He is also absent from US cinema chain AMC Entertainment Inc, which Wanda bought in 2012 and refloated a year later, and from its Hong Kong-listed hotel unit. See related story on Page 22 Wanda executives hold various board seats, including the chairman’s role at all four companies. Yet the tycoon’s lack of direct involvement is unusual. At first glance, it’s reassuring, because it looks as if he is distancing himself from the dayto-day running of the businesses.
It may also reflect the fact that Wanda, with 178 real estate projects and around 500 cinemas as of September, has grown too big to be micro-managed by its founder. Yet Wang is hardly stepping back. He won’t be selling shares in Wanda Commercial Properties Co Ltd, according to a person familiar with the situation. And the reality is that founders are influential insiders. Snagging land in China’s property market depends on connections. Wang will continue to trade between his companies too, as tenant, landlord and supplier. If his talks to buy Hollywood movie maker Lions Gate Entertainment Corp come to fruition, Wanda productions will
be showing on AMC and Wanda Cinema Line’s big screens. Having board seats or a clear role wouldn’t remove scope for undue meddling, but would add transparency and accountability. The biggest unknown is Wang himself, ranked China’s second richest man by the Hurun Report. Chinese billionaires operate in a deeply political system, and anything that affects Wang’s personal reputation would swiftly be reflected in the share prices of his portfolio companies. Investors may be glad that he is taking a hands-off approach, but they shouldn’t pretend he doesn’t have a leading role. — Reuters
HOME BUSINESS 3
W E D N E SDAY D EC E MBER 3 , 2014 • T HEED G E FINA NCIA L DAILY
Job cuts in TH Heavy amid dwindling order book Management to retrench redundant staff effective Monday BY L EVI N A L I M
KUALA LUMPUR: TH Heavy Engineering Bhd (TH Heavy) is laying off staff in order to withstand the current strong headwinds in the oil and gas industry. In a memo sighted by The Edge Financial Daily, the fabrication company informed selected employees that “due to the current financial situation the management has no alternative but to implement the retrenchment of redundant staff effective Dec 1”. It is learnt that the selected employees were hired in anticipation of clinching at least one fabrication job from Petroliam Nasional Bhd (Petronas) in either the Baronia oil field or the Bergading central processing platform (CPP). “This retrenchment is good for TH Heavy as it reduces its ‘burn rate’,” a source told The Edge Financial Daily. In an earlier interview with The Edge weekly, TH Heavy managing director and chief executive officer Nor Badli Munawir Mohamad Alias Lafti had admitted that if the company did not bag a reasonably large fabrication job by the first quarter of next year, it could be in “serious trouble”. As the Bergading project in the North Malay basin was awarded to
South Korea’s Hyundai Heavy Industries (HHI) in May, TH Heavy’s fortune hinges on the possible US$1 billion (RM3.42 billion) award of the CPP project for the Baronia oil field off Sarawak. However, reports from international oil and gas publications indicated that HHI is likely to be the front runner for the project, which will edge out TH Heavy and its partner McDermott International Inc. As at Sept 30, 2014, TH Heavy had an outstanding fabrication order book of barely RM180 million and a floating production, storage and offloading (FPSO) leasing award of about US$372 million. TH Heavy’s FPSO leasing award from JX Nippon is expected to contribute positively towards its earnings. However, it is understood that the FPSO will only start generating revenue in the later part of 2016. The falling crude oil prices do not augur well for companies such as TH Heavy, which has failed to secure enough contracts to weather the possible slowdown in the industry. Petronas last Friday announced a cut in capital expenditure by 15% to 20%. In the third quarter ended Sept 30, 2014 (3QFY14), TH Heavy posted a net loss of RM15.09 million against a net profit of RM3.9 million a year ago. Its revenue dropped
Nor Badli: This retrenchment is good for TH Heavy as it reduces its ‘burn rate’. Photo by Suhaimi Yusuf
5.51% to RM78.99 million from RM83.6 million previously. TH Heavy’s administration expenses shot up almost 62% to RM17.75 million in 3Q compared with RM10.98 million a year ago — an indication of higher payroll. “Moving forward, we are cautiously optimistic but anticipate the fabrication business to remain challenging in view of the present competitive environment.
“However, the company is working towards realigning its business strategies to capitalise on more promising areas in the fabrication business and is exploring other business opportunities in the oil and gas value chain,” TH Heavy said in its results announcement. Its operating environment has also become challenging, with the number of licensed fabricators increasing from six to eight after Petronas awarded Sarawak-based KKB Engineering Bhd and Muhibbah Engineering (M) Bhd licences in 2013. CIMB Research recently downgraded TH Heavy to “reduce” with a target price of 43 sen after the release of its 3Q results. “Expenses for lost contracts caused TH Heavy to post a wider net loss of RM20 million in 9MFY14, significantly below our FY14 expectations and consensus estimate. “The fabrication of FPSO modules will start in FY15 and the Sepat CPP contract is still on offer but the fabrication outlook appears grim for certain players, including TH Heavy,” said CIMB analyst Norziana Inon. Its share price has fallen off the cliff, tumbling from 82 sen at end-September to 40.5 sen yesterday — the lowest closing since July 2012.
Bargains emerge in O&G sector BY GHO C H EE Y UA N
KUALA LUMPUR: Despite the sharp fall in crude oil prices, investment analysts believe that companies which have secured contracts should be able to weather the possible slowdown in the industry. Kenanga Research believes that certain oil and gas (O&G) stocks offer good bottom-fishing opportunities as values have started to emerge even after earnings downgrades. Its picks are Dayang Enterprise Holdings Bhd, Barakah Offshore Petroleum Bhd, Perdana Petroleum Bhd and SapuraKencana Petroleum Bhd. Kenanga Research has ruled out the possibility of crude oil hitting US$40 (RM137) to US$50 per barrel as per market talks. “This is because our simulation study reveals that the probability for it dipping below US$60 per barrel is remote with a probability of less than 10%,” it added. AllianceDBS Research analyst Arhnue Tan said earnings of O&G companies had met expectations in the recently concluded results season for the quarter ended Sept 30.
She expects corporate fourth-quarter (4Q) earnings to remain intact as most of the companies have secured contracts which will be realised in 4Q14. “Our earlier forecast on the O&G sector remains unchanged in the short term,” Tan told The Edge Financial Daily yesterday. Nonetheless, she noted that she is still working on the new valuations for the sector for 2015 in view of the plunge in oil prices. Tan is advising investors to pick stocks that have strong fundamentals or heavily sold down O&G stocks such as SapuraKencana Petroleum, Dialog Group Bhd and Bumi Armada Bhd to capitalise on the recent sharp decline in their stock prices. “These counters are fairly strong fundamentally and have large order books which may help them to pull through the difficult operating times. “Furthermore, these counters have a long-term earnings visibility and they are more resilient compared with other counters,” she added. But Tan remained cautious about the sector as she believes a
recovery would not be immediate. “As of now, I maintain a ‘neutral’ rating on the sector as there is no exact time frame for the recovery in crude oil.” O&G stocks regained some lost ground yesterday after the heavy selldown on Monday. Beaten-down shares such as Petroliam Nasional Bhd (Petronas)-related stocks led the rebound, with Petronas Chemical Group Bhd emerging as the top gainer, up 7.21% to close at the day’s high of RM5.50 after falling 8.88% or 50 sen the day before. The FBM KLCI also recovered, rising 0.4% to 1,785.97 points yesterday. According to Reuters, Brent was unchanged at US$72.54 yesterday, while US crude was down 40 cents to US$68.60 a barrel. In its strategy report yesterday, CIMB Research head Terence Wong said it remains positive on the O&G sector, which should be a major winner riding on the Economic Transformation Programme (ETP) spending despite the 15% to 20% cutback in Petronas’ spending next year. “Assuming that our earlier forecast for Petronas’ capital expendi-
ture (capex) in 2015 of RM60 billion (based on its average capex in 2012 and 2013) will be lowered by RM9 billion to RM12 billion to RM48 billion to RM51 billion, this will still be the highest annual capex prior to the implementation of the ETP. “It also appears that the capex reduction will affect the downstream segment more than upstream, which forms the bulk of Petronas’ net profit and where most of the companies under our coverage operate,” said Wong. He noted that the companies under CIMB Research’s coverage are mostly service providers, which “are sticking to their growth plans, even eyeing merger and acquisition opportunities as the sluggish market has thrown up attractive valuations”. “Their order books, over the next two years at least, are intact as they are based on committed capex. “Furthermore, the contractual terms and rates are not tied to oil prices,” he said, adding that it maintains an “overweight” stance on the sector. Its top picks are SapuraKencana among the big caps and Perdana Petroleum among the small caps.
Nexgram’s founder Tey disposes of 1.48% stake BY L IE W J IA T E N G
KUALA LUMPUR: Businessman Tey Por Yee (pic), who is embroiled in a shareholder tussle with Protasco Bhd group managing director Datuk Seri Chong Ket Pen for control of the company, has disposed of a 1.48% stake in Nexgram Holdings Bhd, a company he founded. In a filing with Bursa Malaysia yesterday, Nexgram said Tey sold around 27.826 million shares. He still owns an 11.52% direct stake and an 8.5% indirect stake after the disposal. The 27.826 million Nexgram shares sold by Tey represented 41.88% of the firm’s trading volume yesterday. Shares in Nexgram were actively traded and emerged as the fourth most active on Bursa Malaysia, with more than 66.463 million shares changing hands.
Tey is the chief executive officer and managing director of Nexgram, which is involved in telecommunications software research and development, as well as investment and technology advisory services. Tey has been trimming his stake in Nexgram since Nov 7 this year. He owned as much as 26.12% of Nexgram as at May 8, 2014, subsequently reducing his stake to 20.02% stake as of yesterday. Nexgram shares rose one sen or 14.3% to settle at eight sen yesterday, giving it a market capitalisation of RM150.6 million. Tey continued to acquire 100,000 shares in Protasco yesterday. He now owns about 57.521 million shares or a 17.16% stake in the company.
Boustead considers spinning oﬀ unit SINGAPORE: Boustead Singapore Ltd said it was considering spinning off its real estate solutions business, which could lead to a listing of the unit’s shares. The company said the proposed plan was at a preliminary stage. Boustead Projects, which designs and builds industrial facilities, operates in Singapore, China, Malaysia and Vietnam. — Reuters
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WEDN ESDAY DEC EM B ER 3 , 2 0 14 • TH EEDGE F I N AN C I AL DAI LY
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Petronas Chemicals leads rebound in O&G counters However, the surge may be a short-term recovery followed by continued downtrend BY JEFFREY TAN
KUALA LUMPUR: Oil & gas (O&G) counters led by Petronas Chemicals Group Bhd staged a rebound yesterday on bargain hunting, said analysts. The rebound followed a beating in O&G stocks on Monday as global oil prices fell to a five-year low of below US$68 (RM232.56) per barrel. However, analysts are unsure if the surge reflects a dead cat bounce pattern, which depicts a short-term recovery fol-
SIP programme to get government subsidy PUTRAJAYA: Prime Minister Datuk Seri Najib Razak said subsidies at 2% interest rate will be given under the SME Investment Partner (SIP) programme of the SME Masterplan. Najib, who is also finance minister, said the subsidies are necessary because of the high costs involved and to enhance earlystage financing for SMEs. “Because the subsidies involve sukuk bonds, the costs will be quite high. We decided subsdies would be given out by the government at an interest rate of two percent to identified SME Partners,” he told reporters after chairing the National SME Development Council’s 17th meeting here yesterday. Under Budget 2015, the government has proposed a RM375 million fund for five years in the form of loans, equity or both, especially at the start-up stage, for the SIP programme. Of the total, RM250 million will come from SME Bank and RM125 million from private investors. Najib said the draft for the proposed SME Act is being prepared and is expected to be tabled in Parliament in the third quarter of next year. SME Corp said the draft will cover the roles and responsibilities of the government and the private sector, with the former focusing on regulation and monitoring, and the latter taking a more proactive stance through business associations. — Bernama
lowed by a continuation of the downtrend. AllianceDBS Research analyst Tan Arhnue told TheEdge Markets.com that it is still unclear what the impact of crude price volatility will be on O&G stocks. Another O&G research analyst said the rebound in O&G stocks yesterday was due to investors picking up oversold stocks as valuation improved. “Valuation has dropped a lot, but fundamentally there is no change,” he said. The analyst agreed much un-
certainty remained in the market due to declining crude oil prices and Petroliam Nasional Bhd’s (Petronas) cut in next year’s capital expenditure budget. “I don’t think O&G stocks will reach its former valuation or peak,” he said. Petronas Chemicals shares rose 37 sen or 7.21% to end the day at its highest of RM5.50, emerging as the top gainer with 2.31 million shares changing hands. Pe t ro na s D a ga n ga n Bh d climbed 14 sen or 0.96% to close at RM14.78 on trades of 885,900
shares, while Petronas Gas Bhd gained 10 sen or 0.48% to RM21.10 with 1.13 million shares done. SapuraKencana Petroleum Group Bhd nudged up 5 sen or 1.99% to RM2.56 on volume of some 39.92 million shares. UMW Oil & Gas Corp Bhd shares gained 15 sen or 6.44% to close at RM2.48 yesterday. The sixth top gainer saw trades of some 13.49 million shares. It had earlier scaled a high of RM2.56. Dialog Group Bhd rose 7 sen or 5.56% to settle at RM1.33 on volume of some 69.47 million shares.
Country Heights Damansara residents block high-rise project BY LEV INA LI M
KUALA LUMPUR: Residents of Country Heights Damansara here are attempting to block a development approved by the Kuala Lumpur City Hall (DBKL) to build two blocks of 41-storey condominiums, which they claimed to be an “arbitrary, illegal and irrational” decision. “The initial plan was to build a clubhouse with a three-storey commercial strip that has a plot ratio of 1:1, dubbed SARA Waterfall Commercial Centre,” Teoh Seow Chiew, a member of the Country Heights Damansara Residents’ Association (CHDRA), told a press conference yesterday. “Should the 700 condominium units be built, Country Heights Damansara will be turned into a high density area with an increased plot ratio of 1:6,” said Teoh. He said this will drastically raise the congestion of traffic heading towards the entrance of Country Heights Damansara, which is along the Lebuhraya
Lim (left) and Teoh at the press conference on the building of two blocks of condominiums on a site originally meant for a clubhouse. Photo by Kenny Yap
Damansara-Puchong (LDP). Segambut Member of Parliament Lim Lip Eng, who was present at the press conference to represent CHDRA, said there was no public consultation on the change of the original plan, with DBKL ignoring residents’ letters of objection sent over the last two years. Several weeks ago, residents of Country Heights Damansara discovered that site work for the project had begun despite their objections. It is understood that the developer of SARA Waterfall Commercial Cen-
tre is a privately-held firm known as Maryland Supreme Sdn Bhd. There was also a separate attempt in 2012 to alter another development plan in an adjacent commercial plot in Country Heights Damansara for a 13-storey hostel, which was not approved by DBKL on the grounds that it clashes with the original plan. Lim said he will bring up the matter to the Ministry of Federal Territories and Urban Wellbeing, and to the Malaysian Anti-Corruption Commission if necessary.
EPF trims Bumi Armada stake to 8.51% KUALA LUMPUR: The Employees Provident Fund has trimmed its equity stake in Bumi Armada Bhd to 8.51%, the latter said in a filing with Bursa Malaysia yesterday. The pension fund on Nov 27 disposed of some 1.7 million shares that represented a 0.03% stake in the offshore oilfield service provider and floating, production,
storage and offloading player. Yesterday, Bloomberg reported that the Malaysian oil and gas services provider climbed from a record low after saying that the oil rout and the cut in spending by state-owned energy company Petroliam Nasional Bhd (Petronas) will have “minimal” impact on earnings.
Bumi Armada sank the most on record on Monday after oil slid to a five-year low and an announced spending cut of as much as 20% by Petronas dented investor confidence. Bumi Armada closed up 4 sen or 4% yesterday to RM1.05, giving it a market capitalisation of RM5.98 billion. — by Jeffrey Tan
Fima Corp shares up on attractive dividend yield, valuations KUALA LUMPUR: Investors bought Fima Corp Bhd shares after Insider Asia said the company offered attractive dividend yield and valuations. Fima Corp owns a concession to produce government security and confidential documents, besides bank notes. Fima Corp shares rose 8 sen or 3.15% to close at RM2.62 yesterday. A total of 54,900 shares were traded. In comparison, the FBM KLCI fell 7.56 points or 0.4%. Insider Asia said in a report published in The Edge Financial Daily yesterday that Fima Corp offered an attractive dividend yield of 4.4%, while payout ratio had doubled from 20.3% in financial year ended March 31, 2010 (FY10) to 41.6% in FY14. On valuations, Insider Asia said Fima Corp shares traded at a 12-month trailing price-earnings ratio (PER) of 9.73 times and 1.29 times book value. Bloomberg data showed that the sector average PER is about 26 times. Insider Asia reported Fima Corp offers investors a high-yielding investment with stable income, thanks to its unusual core business. — by Tarani Palani
Sime Darby sells 55% of China palm oil reﬁning unit for RM45m KUALA LUMPUR: Sime Darby Bhd is selling a controlling 55% stake in its China-based palm oil refining unit to a local business entity for 85.25 million yuan (RM45.2 million). In a statement to Bursa Malaysia yesterday, Sime Darby said it is selling the stake in wholly-owned Rizhao Sime Darby Oils & Fats Co Ltd to Shandong Wanbao Agricultural Co Ltd. Sime Darby said it had signed the equity transfer agreement with Shandong Wanbao last Friday. “The proposed transaction offers a good opportunity for Sime Darby to improve its commercial viability in other edible oils in China.” The transaction is due for completion within six months from the date of the agreement. — by Chong Jin Hun
HOME BUSINESS 5
W E D N E SDAY D EC E MBER 3 , 2014 • T HEED G E FINA NCIA L DAILY
Yvonne Chia-led SPAC to raise RM750m
Credit Suisse named Malaysia’s best foreign investment bank BY C H E N S H AUA F UI
THE EDGE FILE PHOTO
95% of proceeds will be used to acquire new qualifying assets BY A H MA D NAQ I B I DRIS
KUALA LUMPUR: Asian Healthcare Group Bhd, led by former Hong Leong Bank Bhd group managing director and chief executive officer Datuk Yvonne Chia (pic) as its executive director and chairman, plans to raise RM750 million from its initial public offering (IPO) on the Main Market of Bursa Malaysia, of which 95% of the proceeds will be used to acquire new qualifying assets. It will be the country’s first healthcare special purpose acquisition vehicle (SPAC) listing on Bursa, which has seen four oil and gas (O&G) SPACs listed to date — namely Hibiscus Petroleum Bhd, CLIQ Energy Bhd, Sona Petroleum Bhd and Reach Energy Bhd. According to its draft prospectus lodged with the Securities Commission yesterday, Asian Healthcare
said it intends to acquire at least one secondary and/or tertiary care hospital with 100 to 500 beds in Malaysia together with any complementary services attached to such hospital(s) for its qualifying acquisition. Asian Healthcare’s IPO involves an offering of 1.5 billion new shares at an issue price of 50 sen per share, and to entice investors; it comes together with one warrant for each share subscribed. Out of its 1.5 billion shares to be issued, 112.55 million shares will be allocated to retail investors, while 1.39 billion shares have been earmarked for institutional investors. Apart from the 1.5 billion new shares and 1.5 billion warrants, there are also 187.5 million redeemable convertible preference shares of 10 sen each that will be converted into 375 million new shares together with 375 million
attached warrants, which will raise gross proceeds of around RM18.75 million. Asian Healthcare said it plans to use 95% or RM712.50 million of its proceeds from the IPO to acquire its qualifying asset, while the balance will be used to cover its listing expenses and for working capital. Apart from Chia, Asian Healthcare has at its helm BP Healthcare Group managing director (MD) Datuk Chevy Beh as its executive director and MD and renowned medical doctor Tan Sri Dr M Jegathesan as its credentialing counsel. Going forward, the group aims to be an integrated healthcare services provider, with services ranging from primary to tertiary, intermediate and long-term care in Malaysia. It may also expand its business in other countries in Southeast Asia such as Indonesia, Thailand and Singapore.
Post-listing, its IPO investors will hold an 80% stake in the enlarged issued share capital of the company, while Chia, Beh and Negrita Holdings Sdn Bhd will have equity interests of 8%, 5% and 7% respectively. The group would have a market value of around RM937.5 million upon listing based on its issue price.
MOL Global shares tumble on glitch SINGAPORE: Shares in MOL Global Inc, the first Malaysian company to list in the United States, fell more than 60% on Monday after the online payments company reported accounting errors at its Vietnam unit and a 61.5% fall in net profit. The company, majority owned by billionaire Tan Sri Vincent Tan and the Sultan of Johor, is now trading 80% below the price it was listed on Oct 10. It is also facing two class action lawsuits from investors who said they had been misled by its listing prospectus. MOL said the Vietnam unit initially overstated revenue and direct costs slightly. The error, though, will add to investors’ worries about the company after the departure of
chief financial officer (CFO) Allan Wong last week and a delay in its results announcement. “It’s a perfect storm that resulted in a delay in our earnings result,” chief executive Ganesh Kumar Bangah said on an analyst conference call. “We hope we get up and are able to basically continue to deliver on the promises we have set forth in our prospectus and to our investors.” Trading in MOL shares was halted on Nov 24 after falling more than 50% when the company said Wong was leaving, a departure the company stressed was for personal reasons. The eventual release of its results on Monday offered little respite to investors, showing that the profit
The company blames the fall in proﬁt on the ‘rapid’ shift in gaming habits of consumers who are now playing more games on their smartphones than online.
attributable to shareholders fell 61.5% to RM3 million in the three months ended Sept 30. The company blamed the fall on the “rapid” shift in gaming habits of consumers who are now playing
more games on their smartphones rather than online. “This decrease was further compounded by technical delays in introducing and monetising new mobile games on the company’s platform,” MOL said. The company, also known as Money Online, is one of the largest e-payment enablers for online goods and gaming in Southeast Asia by payment volume. Deutsche Bank AG, which helped MOL to go public, suspended its research coverage on the company last week, citing the delay in reporting third-quarter results and the departure of the CFO. Its analysts have not said anything further since the results release. — Reuters
KUALA LUMPUR: Credit Suisse has been named Best Foreign Investment Bank and M&A (mergers and acquisitions) House in Malaysia for 2014 by The Asset magazine. In a statement, Credit Suisse said it won the best foreign investment bank accolade for the fourth consecutive year under The Asset’s Triple A Country Awards. Credit Suisse said this marked a continuation of its excellent track record in Malaysia. “This award complements Credit Suisse’s philosophy in cultivating long-term relationships with Malaysian corporates as well as complementing and not competing with the domestic investment banking partners. “We thrive to strengthen the bank’s reputation as the “first call” foreign investment bank of choice in Malaysia,” said Edwin Low, Credit Suisse’s co-head of Southeast Asia investment banking. According to Credit Suisse, during the period under review, it executed a number of landmark transactions involving M&A and equity issuances in Malaysia. In M&A, Credit Suisse had advised Affin Holdings Bhd’s US$410 million (RM1.43 billion) acquisition of the investment banking, asset management and futures business of Hwang-DBS (Malaysia) Bhd. Credit Suisse is also currently advising RHB Capital Bhd on the proposed RHB-CIMB Group Holdings Bhd-Malaysia Building Society Bhd merger. Credit Suisse’s head of Malaysia coverage in investment banking, Jefferi Hashim, said the group emphasised the creation of a capable team to further grow its business here. “We put strong emphasis on investing in a high calibre local team and hope to continue this commitment to the Malaysian franchise given this success and support from our clients and local partners,” said Jefferi.
Zafrul: Malaysia’s economic fundamentals intact depite volatilty in oil market KUALA LUMPUR: Malaysia’s underlying economic fundamentals continue to be strong despite the apparent free fall in global crude oil prices which roiled markets worldwide including the local equity and currency markets. “The economy remains strong but the country does not operate in isolation, making its markets vulnerable to falling oil prices,” CIMB Group Holdings Bhd chief executive Tengku Datuk Zafrul Tengku Abdul Aziz said yesterday. He said Bursa Malaysia’s bearish performance, particularly oil and gas (O&G)-related counters, on Monday was mainly due to Malaysia being a major investment
Zafrul: Bursa Malaysia’s bearish performance, particularly O&G-related counters, on Monday was mainly due to Malaysia being a major investment destination for O&G players. The Edge ﬁle photo
destination for O&G players. As a result, what happened in external economies, especially the O&G sector, would normally influence investor sentiment locally. “Malaysia has been a strong destination for O&G
companies to be listed, especially O&G support services companies. “They (O&G firms) are not immune to what is happening right now and we don’t know where it is heading. It depends on global developments,” he told reporters after the CIMB Asean Stock Challenge-National Level awards presentation ceremony here yesterday. Crude oil prices, now hovering at
US$68 (RM233) per barrel, are at fiveyear lows following the Organization of the Petroleum Exporting Countries (Opec)’s decision last week not to cut production despite excess supply. Analysts feared that the prices now, seemingly on a free fall, could deteriorate further to as low as US$40 per barrel, a level last reached some 30 years ago. Prices had also fallen to a historic low of US$12 per barrel in the 1980’s, again due to over-production and Opec’s refusal to cut production then. However, O&G counters on Burasa Malaysia, which fell heavily on Monday, recovered yesterday on bargain-hunting. Petronas Gas Bhd closed 10 sen higher at RM21.10,
Petronas Chemicals Bhd gained 37 sen to RM5.50, Petronas Dagangan Bhd perked 14 sen to RM14.78, and SapuraKencana Petroleum Bhd added five sen to RM2.56. The competition tested participants’ ability to trade in stocks with a virtual start-up capital of US$80,000 in four major Asean stock markets — Bursa Malaysia, Indonesia Stock Exchange, Singapore Exchange and Stock Exchange of Thailand. StocksElite, the team from HELP University, emerged as the Malaysian champion and advances to compete with the national champions from four other countries for the regional champion title and US$12,000 grand prize at the grand finale in Thailand. — Bernama
6 HOME BUSINESS
WEDN ESDAY DEC EM B ER 3 , 2 0 14 • TH EEDGE F I N AN C I AL DAI LY
Govt confident of hitting fiscal deficit target
Benalec to sell reclaimed Melaka land for RM107m BY A H MA D N AQ IB ID R IS
KUALA LUMPUR : Benalec Holdings Bhd is disposing nine pieces of reclaimed land in Pekan Klebang, Melaka for RM107.2 million, which will enable it to repay outstanding debts, as well as finance ongoing and future reclamation projects. In a filing with Bursa Malaysia yesterday, the group said its wholly-owned unit Sentosacove Development Sdn Bhd (SDSB), has entered into a sale and purchase agreement with Jadex Land Sdn Bhd (JLSB) and its subsidiary Quality Paradise Sdn Bhd (QPSB) to dispose of the lands. Six of those tracts measure about 39.27 acres (15.89ha) and will be sold to QPSB for RM71.8 million. “Benalec is expected to realise an estimated gain of RM18.82 million (after taxation) against the estimated net book value of approximately RM46.75 million,” said Benalec. Another three pieces of land measuring 19.36 acres will be sold to JLSB for RM35.4 million. The group expects an estimated gain of RM9.28 million from the disposal, against the land’s net book value of RM23.05 million. “The land disposal is in line with Benalec group’s business model to dispose of the reclaimed land, which involve settlement in kind for cash in a timely manner either through disposals or joint ventures,” said Benalec. It said it will be able to repay its outstanding debts, as well as finance ongoing and future reclamation projects via the proceeds from the disposal. The group expects to complete the disposal by the end of the fourth quarter of 2015.
Need to look at revenue contribution from taxes and oil and gas PETALING JAYA: The government remains confident of achieving its fiscal deficit target of 3.5% of gross domestic product (GDP) for this year, following the removal of fuel subsidies for RON95 petrol and diesel, said Second Finance Minister Datuk Seri Ahmad Husni Mohamad Hanadzlah. “We have to look at the overall financial position in terms of revenue contribution from taxes and oil and gas (O&G) that we received,” he told reporters after opening the National Economic Outlook Conference yesterday. In 2013, Malaysia’s fiscal deficit stood at 3.9% of GDP. Ahmad Husni noted the infla-
tion rate will increase next year from 3.3% this year, despite the softening in oil prices. For the first eight months of 2014, Malaysia’s inflation accelerated to above 3%, but inflation eased slightly in September and October to 2.6% and 2.8% respectively. “Based on our forecast, if we take into account the implementation of the goods and services tax (GST) next year, inflation would inch up further,” he said. On Monday, the government implemented the managed float system to fix the prices for RON95 petrol and diesel. In his keynote address earlier, the minister said the government
knew that the subsidy did not benefit those who needed it the most, as only about 24% of the entire fuel subsidy went to Malaysian households, with the remainder benefiting mainly the business sector. “These subsidies were unfair to the poor,” he said, adding that on average, assuming all things remained equal, each household, regardless of income, received a subsidy of RM625 per year for electricity and RM885 for fuel. In reality, however, it was the high-income households that enjoyed both of these subsidies, receiving 80% of both subsidies,” he added. On another note, Malaysian Institute of Economic Research
(MIER) executive director Professor Emeritus Dr Zakariah Abdul Rashid said Malaysia’s GDP growth will remain robust at 5.9% this year, driven by private sector consumption and investment. However, he estimated GDP growth of 5% to 5.5% next year, supported by external demand. Zakariah warned that the recent weakening of the ringgit along with other regional currencies would continue as the US dollar strengthens. He also said as Malaysia relies quite significantly on the O&G industry, the impact on the country will be both positive and negative.— Bernama
Fairfax buys MCIS’ general insurance unit BY C H EN SHAUA F UI
KUALA LUMPUR: Fairfax Financial Holdings Ltd is acquiring the general insurance business of MCIS Insurance Bhd to expand its presence in the region. The deal is expected to be completed in the first quarter of 2015. In a statement yesterday, Fairfax’s wholly-owned unit The Pacific Insurance Bhd said it has entered into a business transfer agreement with MCIS, formerly MCIS Zurich Insurance Bhd, and Koperasi MCIS Bhd, to effect the transaction. “The transaction is subject to customary closing conditions, in-
cluding court approval, and is expected to close in the first quarter of 2015,” said Pacific Insurance. The statement was jointly issued by Pacific Insurance and MCIS. It said Pacific Insurance has been granted approval by Bank Negara Malaysia to acquire the general insurance business of MCIS. The value of the deal, however, was not disclosed. MCIS is an established life and general insurer in Malaysia with over RM180 million in gross written premiums in 2013 for its general insurance business. On completion of the deal, the general insurance division of MCIS
will trade under the name “Pacific Insurance”, becoming part of the Fairfax Asia group under the leadership of Ramaswamy Athappan, the statement said. “We are thrilled to have the general insurance business of MCIS join the Fairfax group and we look forward to working with Koperasi MCIS as our new partner in Malaysia,” said Prem Watsa, chairman and chief executive officer (CEO) of Fairfax. “MCIS has a very strong presence in the Malaysian insurance sector and this is a great opportunity for us to expand our operations in the region”, added Prem.
“We commenced a restructuring exercise to strengthen our participation in the Malaysian insurance industry in both the life and general insurance business through strategic partnerships to enhance opportunities and optimise synergies,” said Datuk Balaram Petha Naidu, chairman of Koperasi MCIS. Koperasi MCIS has been involved in the insurance business for more than five decades. Meanwhile, MCIS CEO Kevin Jones said the business transfer augurs well for MCIS as it paves the way for the life insurance business to establish itself on a stronger footing to compete with market players.
RM2.5b Skycity project in Kota Kinabalu to be launched in 2Q15 BY C H A I Y EE HOONG
KOTA KINABALU: Homesign Network Sdn Bhd will launch a mixeduse development called Skycity in Karamunsing here in the second quarter of next year. A joint venture between Homesign Network and the Ministry of Local Government and Housing Sabah (KKTP) Sdn Bhd, the 6-acre (2.42ha) Skycity development commands some RM2.5 billion in gross development value (GDV) and sits on the site of a former abandoned housing project. It features a five-star hotel, grade A offices, a shopping mall and two towers of residential suites. “Skycity will be a good location for professionals and businesses due to its location in the city centre. It is well connected to other rapidly developing regions,” said the minister with special tasks Datuk Teo Chee Kang at the Skycity sign-
ing ceremony between Homesign Network and New World Hotel & Resorts on Monday. “Other developments and transport expansion in the area [are] expected to grow and this would be the most bustling area in [the] near future,” he added. The ceremony marked the collaboration for the development and management of the New World Kota Kinabalu Hotel that is a part of the Skycity development. Teo said Sabah is currently in a rapid economic development phase of the Economic Transformation Programme led by the Sabah Economic Development and Investment Authority. He noted that the Malaysian property market is expected to increase in terms of value and stabilise in terms of transactions in 2015. He added that the real estate sector is seeing high demand due to the implementation of the Sabah
Skycity development commands some RM2.5 billion in gross development value and sits on the site of a former abandoned housing projectl.
Development Corridor and that prices for residential, commercial and industrial units are projected to increase by 5% to 10% next year. Homesign Network managing director Lee Chee Kiang said the
number of tourist arrivals may drop due to the shortage of hotel rooms in the state. He noted that most hotels recorded about 92% average occupancy rate and close to 100% during peak seasons. He estimated
that more than 2,000 rooms would be needed in the city to prevent shortage. The hotel in Skycity will carry the New World Hotels & Resorts brand under its parent company, the Rosewood Hotel Group. The group’s portfolio encompasses 49 hotels in 17 countries and is expanding with nearly 30 new hotels currently under development. “Based on these numbers we are confident that our renowned brand name in North Asia will be a great addition to the Kota Kinabalu hospitality market,” said Rosewood Hotel Group chief executive officer Sonia Cheng. The 16-storey hotel features 350 rooms and will offer facilities such as a sky pool, spa, gymnasium, lobby bar, sky bar, two restaurants, two basement car parks, as well as 41,792 sq ft of meeting facilities. It is slated to open in 2018 and will be atop 1012 storeys of office space.
WE D N E SDAY D EC E MB ER 3 , 2014 • T HEED G E FINA NCIA L DAILY
Perduren (M) Bhd PERDUREN (M) Bhd, formerly known as Orlando Holdings and later Formis (Malaysia) is now a property investment company following the discontinuation of its former IT and garment businesses in 2006. The company was taken over by tycoon Tan Sri David Law Tien Sen, who undertook a general offer for the remaining shares he did not own late last year at RM1.10 per share. Its shares are currently trading at RM2.06, having risen 10.8% yesterday, but on very thin volume of 106,300 shares. As the tycoon currently has a 71.4% stake in the company, its shares are fairly illiquid. Perduren’s key property assets are in Johor Bahru, comprise Plaza Sentosa, a commercial complex, Grand Sentosa Hotel and Holiday Plaza, a retail and commercial mall. In the Klang Valley, Perduren also owns Shamelin Business Centre in Taman Shamelin Perkasa, Cheras.
The company’s property investment portfolio provides stable income. It has also started moving into property development with the launch of Shamelin Star in Taman Shamelin Perkasa in 2013. The project, comprising of serviced apartments and retail lots, has a GDV of RM330 million and is expected to be completed by 2016. Over the past five years, the company’s revenue has been steadily rising, except for the marginal dip in FY March 2011, to RM66.3 million in FY2014. For FY2014, net profit rose 190% to RM6.9 million. Net gearing is relatively high at 63.2% as at FY2014, and the company has not paid any dividend since 2004. For 2Q2015, Perduren’s revenue jumped 190.0% to RM22.6 million while its net profit turned into black from the previous corresponding period. The stock appears fully valued, trading at a trailing 12-month P/E of 32.6 times and a price-to-book ratio of 1.2 times.
*Valuation factor — Composite measure of historical return & valuation **Fundamental factor — Composite measure of balance sheet strength & proﬁtability Note: A score of 3.0 is the best to have and 0.0 is the worst to have
ST O C KS W I T H M O M E N T U M 7
8 I N V E ST I N G I D E A S
WEDN ESDAY DEC EM B ER 3 , 2 0 14 • TH EEDGE F I N AN C I AL DAI LY
I N S I D E R A S I A’S S TO C K O F T H E D AY
Matrix Concepts Holdings Bhd SINCE listing on May 28, 2013, Matrix Concepts has seen its market capitalisation almost doubled to RM1.3 billion, partly due to its policy of rewarding shareholders well. It paid dividends of 30.4 sen per share in 2013, or a yield of 13.8% against its IPO price of RM2.20. In July 2014, a 1-for-2 bonus issue was declared. Matrix is famed for its flagship 5,233-acre Bandar Sri Senayan (BSS) township in Seremban. As end-Sept 2014, it has a remaining landbank of 1,289.5 acres at BSS, including Sendayan TechValley (STV), with potential GDV of RM5.1 billion. STV, an established industrial park within BSS, has attracted RM3 billion worth of investments from multinational companies. Its other projects in Seremban have estimated GDV of RM1.2 billion on 343.6 acres of land. Down south, Matrix is developing the 637.6-acre Taman Seri Impian in Kluang. It has 294.5 acres left to be developed with GDV of
RM957 million. Last year, Matrix acquired 1.1 acres of land near Putra World Trade Centre in Kuala Lumpur and aims to launch apartments with GDV of RM400 million in 3Q2015. All in, Matrix’ remaining land bank has potential GDV of RM6.5 billion to last until 2022. As at end-Sept 2013, unbilled sales totalled RM410.5 million, equivalent to a year’s revenue. Thus, longer term earnings sustainability may be an issue although industrial property sales are more ad-hoc. Matrix’ net cash fell from RM 191.9 million at end-3Q2013 to RM0.1 million in 3Q2014, due to property development cost of RM556.3 million and the dividend payout. The stock is trading at a trailing 12-month P/E ratio of 7.8 times and 2.0 times book. It has set a minimum 40% dividend payout policy. However, the ability to continue paying high dividends will depend on future profits and cashflows, since its cash position has fallen sharply.
T O N G ’S MOMENTUM P O RT F O L I O THE local bourse went through a roller-coaster ride yesterday before closing higher. The rebound in oil and gas stocks, as well as banks and plantations, mirrored a recovery in global oil prices, which hit five-year lows. Brent crude touched $67.53 per barrel, its lowest level since October 2009, before recovering to $72.54 per barrel. Volatility in oil prices, down 40% since June, may persist. OPEC’s decision to maintain production, despite a global glut, signalled its intent to squeeze out US shale producers. The price war could turn bloody with the IEA estimating that many of the latter remain profitable at prices above $42 per barrel. Low oil price is good news for most Asia economies but not Malaysia, a net oil exporter and major palm oil producer. Already, the ringgit has fallen by 4.6% this year. With over 40% foreign holdings in government bonds, a further slide may intensify capital outflow. The FBM KLCI index gained 0.43% to close at 1,785.97. Market breadth was slightly positive with gainers outweighing losers by 1.1 to one. Total returns on my portfolio rose 0.48% to RM102,308.9. The portfolio started on 8 July 2014 with a capital of RM100,000. Since then, it has outperformed the FBM KLCI by 7.9%, registering an annualised return of 5.7%. Total profits currently stand at RM2,309.
This is a personal portfolio for information purposes only and does not constitute a recommendation or solicitation or expression of views to influence readers to buy/sell any stocks. Portfolio started on 8 July 2014 with RM100,000.
B R O K E R S’ C A L L / T E C H N I C A L S 9
W E D N E SDAY D EC E MBER 3 , 2014 • T HEED G E FINA NCIA L DAILY
Market to trade sideways BY B ENN Y L EE
lunging crude oil prices and the weak ringgit weighed down Bursa Malaysia in the past week. I mentioned in the previous week that the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBMKLCI) was still in a bearish trend despite having a rebound and resistance at 1,850 points. The index failed to break the resistance level and its bearish trend. Global markets were still bullish as lower crude oil prices are favourable to economic growth. However, our market, which has oil and gas companies in the index, was hit. Plantation companies were also affected by declining crude oil prices as it affects demand for biodiesel. The KLCI fell 2.9% in a week to 1,785.97 points after rebounding from a low of 1,763.55 points yesterday. Trading volume has slightly increased in the past week with foreign institutions continuing to cash out on the weak ringgit. Average daily trading volume in the past week increased to 2.1 billion shares from 2 billion shares two weeks ago. The average daily trading value in
the past week was RM0.1 billion higher than the previous week at RM2.1 billion. Foreign institutions were the sole net seller last week. Net selling from foreign institutions amounted to RM108.9 million while local institutions and local retail net buying were RM96.9 million and RM12 million respectively. In the KLCI, decliners outnumbered gainers 5 to 1. Gainers were led by Genting Bhd (+4.0% from last week), IOI Corporation Bhd (+3.2%) and YTL Corporation Bhd (+1.9%) while decliners in the index were led by SapuraKencana Petroleum Bhd (-21.5%), Petronas Dagangan Bhd (-12.8%) and Felda Global Venture Holdings Bhd (-12.3%). Markets in Asia were mixed in the past week but the bulls continued to dominate China. China’s Shanghai Stock Exchange Composite jumped 7.6% in a week to its highest level in more than three years at 2,763.32 points. Japan’s Nikkei 225 increased 1.5% in a week to 17,663.22 points, the highest level in seven years. However, Hong Kong’s Hang Seng Index declined 0.7% in a week to 23,654.3 points. Singapore’s Straits Times Index also fell 0.7% in a week to 3,322.32 points The US market took a breather from its bullish trend in the past week while European markets were
Daily FBM KLCI chart as at December 2, 2014.
mixed. On Monday, the US Dow Jones Industrial Average declined 0.2% to 17,776.80 points after pulling back from a record close two weeks ago. London’s FTSE100 Index declined 1.1% to 6,656.37 and Germany’s DAX rose 1.8% to 9,963.51 points. The US Dollar index declined marginally from last week to 87.98 points. The Malaysian ringgit weakened from 3.36 a week ago to 3.43 against the US dollar. Gold was bearish throughout the past week but a strong rebound on Monday pushed the price to close higher than the previous week. Comex gold increased 1.2% in a week to US$1,211.90 (RM4,144.70) an ounce after rebounding from a low of US$1,149.50. Nymex WTI crude oil declined 8.2% in a week to US$69.31 per barrel. Crude palm oil futures on Bursa Malaysia fell 3.6% in a week to RM2,139 per tonne on falling price and weak demand in November. The KLCI fell below the short-
November results season was a disappointment Malaysia’s 3Q14 results In view of the earnings cuts, our end-2015 KLCI target has been lowered from 2,050 points to 1,970 points, based on an unchanged 10% premium over the three-year moving average price earnings ratio (PER) or a PER target of 16.5 times. We still prefer the Economic Transformation Programme (ETP) sector winners i.e. oil and gas, construction and property. We also continue to like smaller-cap stocks. The November results season was a disappointment as the percentage of stocks in our universe that missed expectations increased from August’s 30% to 36%. The percentage of companies that beat expectations, however, increased from 11% to 13%. As a result, the revision ratio stayed at its lowest point since the second quarter of 2011 (2Q11), at 0.36 times. In terms of companies that met expectations, the proportion declined from 59% to 51%. All in, 15 sectors disappointed, two
more than the previous results season, while only two (three previously) beat expectations. Only the construction and transport sectors did better than expected while the rest either missed forecasts or at best were in line. Our biggest fear has materialised as 2014 core net earnings per share (EPS) growth has been continuously cut from double digits earlier in the year to only 0.7%. This represents the third year of close to zero earnings growth. Banks, plantation companies and telcos are the key culprits dragging down earnings. 2015 growth should improve to 8.1% due to the low base but there are downside risks due to low commodity prices and the impact from the implementation of the goods and services tax (GST) starting from April 1. Of the 117 companies that we track, 36% missed expectations during the recently-concluded reporting season, a deterioration from the 30% that missed during
the August results season. Our revision ratio (number of forecasts upgraded vs number of forecasts downgraded) stayed at 0.36 times as the percent increase in number of companies that beat expectations and disappointed was the same 20%. This ratio is closing in with the lows of 0.32 times in second quarter financial year ending 2008 (2QFY08) and 0.31 times in 2QFY11. 3QFY14 EPS changes dipped deeper into negative territory on both a quarter-on-quarter and year-on-year basis. This second straight quarter of contraction is worrying. In the last three months, we cut calender year ending 2014 (CY14) EPS by 5.2% and CY15 EPS by a steeper 7.9%. The number of companies with their earnings upgraded increased from 11 to 12, while the number of companies with their earnings downgraded increased from 24 to 37. — CIMB Research, Dec 2
term 30-day moving average and Ichimoku Cloud indicators after breaking above these two indicators a week ago. The market turned bearish after the index failed to break above the immediate resistance level at 1,850 points. This was also where the long-term 200-day moving average was. So basically, the index remains in a bearish trend. Momentum indicators turned bearish again. The RSI fell below its mid-level and the MACD indicator crossed below its moving average. Furthermore, the Bollinger Bands are expanding with the KLCI trading at the bottom band. In addition, the Ichimoku Cloud indicator is currently narrow and this indicates that the index can easily whip-saw. Moving forward, the Cloud is in a whipsaw and this indicator is weak in providing support or resistance. The market is currently being supported at the 1,760 points level. Like I had mentioned in my pre-
vious article, this support level is crucial as it is the confirmation of a longer term bearish trend reversal pattern. A breakout below this level could send the KLCI to 1,650 points based on the pattern price target. However, the index is expected to be supported above this level as the rebound yesterday showed some bargain hunting. Henceforth, I am expecting the KLCI to be trending sideways as the Cloud indicator is in a whipsaw mode and range between 1,770 and 1,810 points. Benny Lee is chief market strategist for Jupiter Securities Sdn Bhd. Jupiter Securities is a participating broker in Bursa Malaysia. He can be contacted at [email protected]
com. The views expressed in the article are the opinions of the writer and should not be construed as investment advice. Please exercise your own judgement or seek professional advice for your investment decisions.
Berjaya Auto to ride on Inokom’s earnings uptrend Berjaya Auto Bhd (Dec 2, RM3.31) Maintain outperform with target price (TP) of RM 3.82. Berjaya Auto Bhd (BJAuto) announced that it had entered into separate share sale agreements with Berjaya Group and Perusal (M) to acquire 20 million ordinary shares, representing a 20% equity interest in Inokom Corp Sdn Bhd (Inokom) for a total cash consideration of RM30 million (or RM1.50 per share). The considerations for the acquisition will be funded entirely from BJAuto’s internally generated funds. Inokom is principally involved in the manufacturing and assembly of light commercial and passenger vehicles, and contract assembly of passenger vehicles. It is also the contract assembler for Mazda completely knocked down (CKD) models namely Mazda 3 and CX-5 in Malaysia. It recorded a core net profit (NP) of RM9.2 million in the financial year ended June 2013 (FY13). Although the RM1.50 per share valuation for Inokom appears to be stretched based on our back-of-the envelope calculation, we laud the management’s move and are positive on the deal as this allows the group to ride on Inokom’s earnings uptrend, which is benefiting from BJAuto’s aggressive launches of its CKD models in Malaysia, with higher earnings contribution to BJAuto’s associate level (currently only contributed by Mazda Malaysia Sdn Bhd), and wide exposure of eight foreign brands that Inokom is assembling. Assuming a conservative two-year compound annual growth rate of 5% from Inokom’s FY13 core NP of RM9.2m, which arrives at Inokom FY15 core NP of RM10.2 million, this could contribute at least RM2 million to the associate earnings of BJAuto in FY15. The balance-sheet impact is minimal as BJAuto is still sitting on a huge net cash pile of RM229.1 million. — Kenanga Research, Dec 2
10 B R O K E R S’ C A L L
WEDN ESDAY DEC EM B ER 3 , 2 0 14 • TH EEDGE F I N AN C I AL DAI LY
Household loans will be slow Banking sector Maintain “neutral”. Banking system loan growth stable at 9% yearon-year (y-o-y) in October 2014, growing at the same rate as the preceding month. Business loan growth continued to gain traction for the second consecutive month, rising to 8.3% y-o-y, up 50 basis points (bps) from the previous month. Meanwhile, household loan growth further moderated, slipping RM20 billion from the previous month to 10.5% y-o-y in October 2014. Growth in working capital loans continued to rise, growing at 9 % y-o-y while growth in construction loans slipped to 14.4% y-o-y, down 220 bps from the previous month. Expansion of loans was mainly attributable to increase in loans to the manufacturing, construction, real estate, financing, insurance and business services, and wholesale, retail, and restaurants and hotels sectors. Momentum for household loans continued to be slow. There is still a good traction on mortgage loans. Growth in loans for residential property purchases remained
Growth in loans for residential property purchases remained stable at 13.7% in October 2014 y-o-y. The Edge ﬁle photo
stable at 13.7% in October 2014 y-o-y while growth in loans for purchase of non-residential property moderated slightly to 15.1% y-o-y. Meanwhile, growth in loans for purchase of securities slipped to 15.1% y-o-y, a decline of 40 bps from September 2014. Growth in loans for purchase of
passenger cars improved to 3.7% y-o-y after four consecutive months of decline. Personal loans and credit card lending continued to grow modestly at 3.7% y-o-y and 2.7% y-o-y respectively. Industry loan application growth further decelerated to -4.3% y-o-y vs 6.7% y-o-y in the preceding month.
Hartalega should be more aggressive on its pricing Hartalega Holdings Bhd (Dec 2, RM6.75) Upgrade to “buy” with a target price (TP) of RM 8.45. The first two new-generation complex (NGC) production lines will come online this month. Backed by incoming capacity (about nine billion pieces per annum) and the best operating structure in the sector — break even utilisation of only 42% — we expect Hartalega to be more aggressive on its pricing, once it has commissioned sufficient capacity at the NGC plants. It would help Hartalega to: i) grab market share from competitors; ii) maximise utilisation and profits and iii) derail competitors’ expansion plans by depressing future internal rate of return (IRRs). An aggressive pricing strategy will reduce earnings before interest and tax per 1,000 pieces of gloves (Ebit/k); we have reflected this in our forecasts but this will be more than offset by the resulting higher sales volumes. Despite revising financial year 2015 and 2016 (FY15 and FY16) sales volumes up by 8% and 13%, our revised earnings are only 2% and 3% higher because we conservatively slashed Ebit/k gloves. There could be upside to our earnings forecasts. Our RM8.45 TP is based on 22 times FY16 earnings per share (EPS) (50% premium to peers average), which we believe is justified by our expectations for 16% earnings compound annual growth rate in FY15 to FY17 forecasts (F). We expect valuation to rerate once Hartalega proves it can execute its expansion plan successfully. The key rerating
catalysts for the stock will be the timely roll-out of the NGC production lines, successful deployment of the new capacity in an earnings-accretive manner, and further milestones in plant 3 and plant 4. Hartalega maintains an edge over peers in terms of production efficiency and automation. The six NGC plants are expected to have an annual capacity of 27.2 billion gloves. This is expected to triple Hartalega’s installed annual capacity to 42.5 billion gloves. We estimate Hartalega has a
break-even utilisation level of 42%, while its competitors’ are 44% to 57%. This gives Hartalega strong leverage to weather a price war. We upgrade Hartalega to “buy” with a RM8.45 TP, based on 22 times FY15F EPS. Our target valuation is at 50% premium to the industry average. Hartalega is facing rising competition as the other glovemakers are crowding into the nitrile gloves segment.The lucrative margins currently enjoyed by Hartalega may not be sustainable. — AllianceDBS Research. Dec 2
Compared with September 2014, the decline in growth in applications in October 2014 was broadbased. By business sectors, finance, insurance and business activities construction and manufacturing experienced slower growths in loan applications compared with the preceding month.
Growth in household’s loan applications slipped to -14.1% y-o-y from -0.5% y-o-y in the preceding month. Loan demand weakened across all types of household loans. We believe this has been attributed by the rise in inflation with the adjustment in fuel prices as well as due to some banks taking a conservative stance on lending only to selected segments, hence avoiding lending to individuals falling under the vulnerable income group or borrowers that do not fall under the preferred risk grades for lending. Maintain our “neutral” stance on the sector. Our stock picks are Hong Leong Bank Bhd (target price [TP]: RM16.30), Malayan Banking Bhd (TP: RM11.20) and RHB Capital Bhd (RM10.70). We have a trading “buy” call on CIMB Group Holdings Bhd (TP: RM7.27) due its share price weakness which has declined below its fundamental value. On the other stocks, we are neutral on Public Bank Bhd (TP: RM19.50), AHB Holdings Bhd (TP: 3.30), AMMB Holdings Bhd (TP: RM7.30), and Alliance Financial Group Bhd (TP: RM5) — MIDF Research
Gamuda’s new land expected to generate RM3b in GDV Gamuda Bhd (Dec 2, RM5.05) Maintain “neutral” with a target price (TP) of RM 4.90. Gamuda enlarged its exposure in Tanjong 12, Kuala Langat in Selangor after announcing that its wholly-owned subsidiary, Setara Hati Sdn Bhd had entered into a sale and purchase agreement with Bukit Melati Sdn Bhd for the acquisition of 104.1ha of leasehold land located within the area for RM392.2 million. If the deal materialises, Gamuda will have 1,787 acres (723ha) of land in Tanjong 12, which should take more than 20 years to develop. The new land is expected to generate RM3 billion in gross development value (GDV) in our estimates, which will increase the group’s potential GDV to RM22 billion in the area. Similar to the earlier land, the new land deal is also a leasehold agricultural land, and is located 2km away from its flagship development, Kota Kemuning, in Shah Alam, Selangor. Hence, the accessibility is good, with the land connected to highways such as the Shah Alam Expressway and Lebuhraya Kemuning-Shah Alam via the main spine road (Persiaran Anggerik Mokara) in Kota Kemuning which extends right through to Thangamalay estate. We understand that upon completion of the connection road from Kota Kemuning to Bandar Saujana Putra, accessibility to the land will be further improved with connections to Expressway Lingkaran Tengah and the South
Klang Valley Expressway. Together with the previous two land deals, this land will be the group’s third major land deal and we believe it will be financed by internally generated funds and/ or bank borrowings, which should not be a problem given the current low net gearing of 0.3 times. If the deal goes through, Gamuda is expected to spend RM1.8 billion to expand its land bank in the recent two years, which is within its guidance of spending RM1 billion per annum for landbanking. The land price of RM392.2 million or RM35 per sq ft (psf ) appears to be on the high side if compared with RM11.80 psf (or compared with Eco World Development Group Bhd’s land in Beranang, Ulu Langat [Kuala Lumpur-Putrajay] which was purchased at RM10.50 psf ) it paid earlier for the 1,530 acres in the same locality. However, if Gamuda can generate similar GDV/acre that is RM3 billion, the land cost of 13% looks palatable compared with other development projects whereby land cost can go as high as 20% nowadays. With this land deal, we expect Gamuda’s remaining GDV to increase to RM48 billion, with RM35 billion from Malaysia. We maintain “neutral” and a TP of RM4.90, pegged on parity with our sum-of-parts valuation. In view of the anticipated infrastructure spending, job flows for Gamuda remain good but we opine the risk-reward is not attractive as yet. — Public Investment Bank, Dec 2
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WEDN ESDAY DEC EM B ER 3 , 2 0 14 • TH EEDGE F I N AN C I AL DAI LY
M’sia palm oil industry using child labour, says US Also for forced labour in the country’s electronics and garment sectors KUALA LUMPUR: Malaysia’s palm oil industry has been cited by the United States Department of Labour for using child labour and for forced labour in the country’s electronics and garment sectors. Malaysia appears in the latest list of goods produced by child labour or forced labour released by its Bureau of International Labour Affairs (ILAB), which was released on Monday as part of biannual reporting to the US Congress. In a press statement on the department of labour’s website, it said palm oil was a new addition to the list of goods made with child labour, and cited Malaysia for it. Malaysia’s electronics sector was also a new addition to the list under the category of forced labour, in addition to the garment sector. The list, in its sixth edition, is required by US law under the Trafficking Victims Protection Reauthorisation Act 2005 to monitor and provide information on human trafficking for forced labour. This news follows Malaysia’s downgrade to Tier 3 in the US’ annual Trafficking of Persons Report
Penang says renaming Gurney Drive a rumour GEORGE TOWN: The Penang government dismissed yesterday a rumour that it wanted to rename Gurney Drive as Chin Peng Drive on Jan 1 next year after the late leader of the outlawed Communist Party of Malaya (CPM). State Local Government, Traffic Management and Flood Mitigation committee chairman Chow Kon Yeow described the rumour as absurd.“There is no truth at all to the matter,” he said when contacted by Bernama. He was asked to comment on a statement by Penang Umno Youth chief Rafizal Abdul Rahim seeking clarification from the state government over the rumour. Rafizal told a press conference that Umno Youth had heard about the matter from the office of Penang Chief Minister Lim Guan Eng, but declined to name the source of the information. “We will protest in the strongest terms if there is any move to rename Gurney Drive as Chin Peng Drive,” he said. — Bernama
in June this year for insufficient action to combat human trafficking, whereby victims are said to include foreign migrants seeking work in Malaysia. In a report about the list on the department’s website, the ILAB said it focused on information about children under the age of 18. It also defined “child labour” as work done by a person below 15 that is similar to slavery, for illicit purposes, which harms “the health, safety and morals of children”. It defined “forced labour” as work that is done under coercion, force and fraud, which includes the use of threats or actual physical harm, schemes and abuse of the law or legal progress. The list was made using data from “publicly available primary and secondary sources”, and these included data from the International Labour Organisation, site visits by ILAB and American government staff, as well as information compiled by academic institutions and non-governmental organisations. Other goods made with child labour that were added this time
around were garments from Bangladesh, cotton and sugar cane from India, vanilla from Madagascar, fish from Kenya and Yemen, and alcoholic beverages, meat, textiles and timber from Cambodia. “There’s a story behind each item on these lists — a child facing back-breaking labour without education or other opportunities for a better life or an adult trapped in a dismal job through deceit or threats,” the press statement quoted US Secretary of Labour Thomas E Perez. There are an estimated 168 million child and 21 million forced labourers globally making everyday consumer goods, it added, quoting the Deputy Undersecretary of Labour for International Affairs, Carol Pier. “Child labour and forced labour are fundamental human rights violations, and they are also bad business practices that stifle economic development,” she said. The ILAB’s mission includes improvement of working conditions, raising living standards, protecting workers’ rights, and addressing workplace exploitation of children
and vulnerable groups. The listing of Malaysia’s electronics sector under the forced labour category also follows a report by international labour rights group Verite, which in September said that nearly one in three of 350,000 workers in the sector suffered from conditions of modern-day slavery, such as debt bondage. Penang Chief Minister Lim Guan Eng urged the federal government to respond to the report or risk Malaysia being put on a watch list and be subject to possible economic restrictions. Penang is a hub for the electronics and electrical industry, contributing to about half of the sector which was worth RM236.8 billion in 2013, or 32.9% of Malaysia’s total exports that year. But, an opposition MP from Penang, Sim Tze Tzin, said the industry practised self-regulation through the electronics industry code of conduct, but this had not been “properly communicated” by the Ministry of International Trade and Industry to the US Labour Department. — The Malaysian Insider
Lawyer: Putrajaya silent on return of ‘Allah’ CDs letters BY V ANBALAG AN
KUALA LUMPUR: The government has not replied to demand letters sent by Jill Ireland to return eight Christian CDs that contained the word “Allah” after a court order in July, said lawyer Annou Xavier. “We have sent three demand letters to the Attorney-General’s Chambers to comply with the court order, but there was no reply at all,” he said. Xavier said the Home Ministry could not retain the CDs just because it had filed a stay application. He said his client was entitled to enjoy the success of her judicial review until that decision was set aside. “My client wants to know the status of the CDs after the court ordered its return and quashed the Ministry’s decision to seize them,” he told The Malaysian Insider after attending a case management session to fix the date to hear the government’s application to stay the July 21 High Court order. Judge Datuk Asmabi Mohamad will hear the application on Jan 22. In August, Home Minister Datuk Seri Dr Ahmad Zahid Hamidi affirmed an affidavit that he would not return the CDs on grounds of public interest.
Xavier (left) said he wrote letters on Aug 13 and 21, and Oct 21 to the government’s lawyers, seeking the return of the CDs. Photo by The Malaysian Insider
Judge Datuk Zaleha Yusof ordered the return of the CDs to the Melanau clerk, but did not set a time frame for it to be complied. She also ordered Putrajaya to pay the applicant RM5,000 in costs. Xavier said he wrote letters on Aug 13 and 21, and Oct 21 to the government’s lawyers, seeking the return of the CDs. Ireland is also objecting to Putrajaya filing the stay application to withhold the CDs. Ministry officials confiscated the CDs from Ireland at the then LowCost Carrier Terminal (LCCT) in Sepang, Selangor in 2008 and this prompted Ireland to challenge the
seizure in court. Ireland’s legal team argued that this case was not about Christianity against Islam, but about her constitutional right as a bumiputera Christian. Putrajaya is appealing against Zaleha’s ruling. Ireland also filed an appeal against the High Court decision which failed to address her constitutional right to use the word “Allah”, as the court had only ordered that the CDs confiscated from her be returned. Putrajaya’s and Ireland’s appeals are fixed for hearing in the Court of Appeal on Feb 10. — The Malaysian Insider
Two civil servants among three held in Islamic State raids KUALA LUMPUR: Two civil servants among three people detained in raids in Kedah and Kuala Lumpur are believed to be involved in the Islamic State (IS) militant group in Syria, including channelling funds to Malaysians participating in the group. Inspector-General of Police Tan Sri Khalid Abu Bakar said all three Malaysians were apprehended by the Special Branch’s counterterrorism division in raids last Thursday and Friday. “The government employees, aged 23 and 28, were working in a department in Kuala Lumpur and are believed to be involved in channelling funds to several Malaysians who wanted to join the IS group in Syria. “Another suspect, aged 36, joined the militant group in Syria on Dec 28 and returned to Malaysia on April 2,” he said in a statement here yesterday. Khalid said all the suspects were nabbed for offences under the Penal Code (Act 574) and would be investigated under the Security Offences Act (Special Measures) 2012 (Act 747). In another case, the Syariah High Court here issued a warrant of arrest against Mohd Fazil Mohd Yunus, who is charged with spreading deviant teachings known as Millah [email protected]
Abraham. Judge Muhamad Abdul Karim Wahab made the order after the Federal Territory senior syariah prosecutor Zainor Rashid Hassin informed the court that Mohd Fazil, 37, a businessman, was not in the court and that the accused went missing after his release on bail last Nov 4. He said officials from the Federal Territory Islamic Religious Department (Jawi) went to Mohd Fazil’s house in Klang, Selangor, but the accused and his family were not there. “Jawi also went to look for the accused at his in-law’s house, and was told by his father-inlaw that he was also looking for Mohd Fazil and his wife. Mohd Fazil’s wife, who is a religious teacher, was also said to have not been to her workplace for some time,” he added. The proceeding yesterday was fixed to record the plea by Mohd Fazil and another accused, Wan Ramlah Megat Razalli, 47. Wan Ramlah pleaded guilty to the charge of spreading a doctrine or religious belief other than that of Islam at Level 2, No 10-2, Jalan 2A/27A, Section 1, Wangsa Maju here, between 10pm and 10.30pm on Nov 3 this year. The charge, under Section 5 of the Syariah Criminal Offences (Federal Territory) Act 1997, provided a maximum fine of RM3,000 or imprisonment for up to two years, or both, if found guilty. — Bernama
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W E D N E SDAY D EC E MBER 3 , 2014 • T HEED G E FINA NCIA L DAILY
Set out clear roadmap for creative value chain — DPM Strong collaboration between tertiary institutions and the industry must be forged BY JAMALUDDIN MUHAMMAD
BEIJING: Tan Sri Muhyiddin Yassin wants all Malaysian public and private higher education institutions to set out a clear roadmap and commit rigorous efforts towards building and managing a creative value chain. In this regard, the deputy prime minister, who is also the education minister, said strong collaboration between higher education institutions and the industry must be forged to address various challenges in creating a conducive environment. “The knowledge-exchange will help students see the practical application of what they learn from the textbook in university. Without this, college education remains incomplete,” he said when opening the Seeds for the Future Programme by Huawei at the Huawei R&D (research and development) Centre here yesterday. He said the aspiration to achieve high-income
Muhyiddin (right) shaking hands with Prof Long Peng, president of Beijing Foreign Studies University, after being conferred an honorary doctorate at the university yesterday. Photo by Bernama.
status as a developed country was very much dependent on an innovation-based economy founded on high-level knowledge and creativity. Greater efforts in enabling R&D activities towards outcome-based innovation and commercialisation had been steadily encouraged by the Malaysian government, he said.
Muhyiddin said the government had also emphasised the development of educational infrastructure, student character, curriculum and development. Huawei, he said, had truly taken the lead in industry-academia interaction in Malaysia especially in the telecommunications sector
and the programme was another milestone achieved. “I hope more corporations follow in Huawei’s footsteps in enabling technology transfer and partnering with Malaysia for a better, brighter future of our young leaders,” he said. Huawei is one of the leading global information and communications technology solutions providers founded in 1987, serving more than one-third of the world’s population in more than 170 countries. It has over 70,000 products and solutions R&D employees, comprising more than 45% of its total workforce worldwide. Huawei sponsored 16 Malaysian university students for a two-week hands-on work experience training at its R&D centre under the initiative starting yesterday. The Fortune 500 Global company with a revenue close to US$40 billion (RM136.8 billion) last year trains 20,000 engineers annually at its global training centre in Cyberjaya. — Bernama
First device to detect driver fatigue on sale KUALA LUMPUR: The first Driver Alertness Detection System (DADS) is now available for purchase at DADS.SRGINT.com. It is the first solution that provides advance warnings of fatigue for all drivers — commercial fleet, mass transit operators, commuters and young drivers. Operating as a cloud-based service developed by InterCore’s wholly-owned subsidiary SRG International Inc, DADS is a real-time monitoring and warning system that can assist in preventing accidents caused by driver fatigue, lack of alertness, or distractions, said a statement issued yesterday in Delray Beach, Florida, US. “We are excited to be bringing DADS to the market with consumer and commercial versions, offering both sectors a simple, highly effective way to detect fatigue and distractions while driving. “The DADS service alerts drivers and dispatchers to help avert tragedies and disasters on our roadways,” explained James F Groelinger, InterCore chief executive officer in the statement. The DADS service uses sophisticated technology to assess three stages of alertness in drivers. — Bernama
Cameron Highlands disaster exposes lax regulation BY KK SEMENY I H
KUALA LUMPUR: The destruction of Cameron Highlands, although disheartening, is wrongly blamed on Natural Resources and Environment Minister Datuk Seri G Palanivel. He had inherited the manifestation of years of total neglect by everyone ranging from the residents who work the land to the regulatory authorities, including the state and federal governments. The serious degradation of the once pristine environment is due to unregulated development. Though farming is back breaking, farmers are ever willing to explore the jungle, opening land (legally or illegally), against all adversities, to produce the food we enjoy. For most, it is an opportunity to make money. For others, it is the only livelihood they have known for generations. For a few, it’s the greed, resulting in unscrupulous land clearing, often leased to foreign workers, mainly (illegal) Bangladeshis. Over 15,000 of them are estimated to be in the area. Some bring along their families, entering as tourists, and making a living as contract farmers. How is this possible? Is this their fault? Obviously not, especially since we are not new at importing foreign workers . Cameron Highlands produces over 60% of our vegetable and flower supply, with the balance imported. Increasing population, growing affluence with increased purchasing power have resulted in exponential growth in demand, with more land being cleared for cultivation (legally or illegally). Though this is good for the people’s economic well-be-
Flood damage seen at a section of Cameron Highlands a week after landslides occurred in the area in November. Photo by Bernama
ing, it is not so for the environment. The authorities and the government (both state and federal) did nothing to strike a balance, e.g. develop organised farming clusters, in tandem with the increase in demand, over the last 50 years. Thus, in the absence of any regulated approach by the government, the “market” had developed its own methodologies, exploited by a few corrupt individuals who worked with local enforcement authorities to expand their activities as they pleased. So, we could either ignore the problem and hope it goes away, or shut the place down, to avoid further destruction and loss of lives. But, we need to right the wrong now. It requires a coordinated, firm and committed approach, with longterm implementable and practical strategies, to restore Cameron Highlands to its former glory and ensure it remains a sustainable eco-system. This would create a situation where
the livelihoods of the 36,000 resident, and 15,000 foreign workers are sustainable, and the environment provides comfort to the thousands who find solace in its mild climate. Three is no point pointing fingers at the foreign workers for our failure to regulate the situation. They are opportunists, and are here to make a living. Over 80% of these foreign workers stay overnight in farms, where most, if not all their waste, including human waste, goes into our river system. The reasons, firstly, are that there is no allocated accommodation elsewhere, and secondly, the travel time to the farms is extremely challenging, taking up to 2½ hours to travel 20km. There are no proper access roads to farms, with almost all road networks constructed and maintained by farmers. There is little or no effort from the authorities to provide these basic infrastructures. Roads washed away during heavy rain are rebuilt by the farmers themselves to
ensure perishable produce reaches collection points on time. The inadequate collection points are also built and organised by the farmers. Why aren’t the authorities assisting these communitie, who are indeed tax-paying rakyat? There are no dedicated disposal areas for farm waste for the entire Cameron Highlands. Most, if not all farms, dump their waste into the fringes of farms, along roads and river banks, with most of it ending up in rivers during heavy rain. Designated areas for farm waste disposal should be assigned, where waste is composted and recycled as organic or biofertilisers, ensuring sustainability. Although municipality solid waste should be incinerated, sadly, the incinerator in Cameron Highlands has not been in operation since it was commissioned. Why? Because, over 52% of our waste is organic, and will only burn if fuel (diesel) is added.
farms, and reallocate these to registered farmers. *Get the Agro Bank to finance technology acquisition, adoption and incorporation. Consider extending leases to beyond 10 years if farms comply with good practices. *Get all farm owners to provide housing for workers. *Charge a levy, calculated on a per acre basis, with the frequency of payment to be mutually agreed. *State/federal authorities should provide adequate access roads to all farms to enable the use of 3-ton trucks instead of the ageing Land Rovers. *Any farmers who fail to comply with the rules should have their licences revoked and their farm leases terminated. This includes employing illegal workers, illegal land clearing, improper waste disposal, improper drainage infrastructure and failure to provide workers’ quarters, etc. *Provide technical support to farmers to reduce crop damage, excessive use of chemicals, erosion control, etc. Currently, the best consultants are the chemical salesmen (for crop production) and bulldozer drivers (for land clearing). *There must be commitment from the government and farmers. Then, a concrete long-term action plan, adhered to by all, is needed. Since it took over 30 years to cause the destruction we experience today, it may take another 30 years to remedy the situation.
Righting the wrongs: *Stop opening new land/farms temporarily. Register all existing farms, including their location, size, owner(s), number of workers, etc. (create and maintain a database). * Systematically reforest all cleared area that is not farmed or unsuitable for farming, including steep slopes, river banks and catchment areas. *Group farms into manageable clusters, with good access roads and collection points for easy monitoring. Anyone farming beyond their allocated area must be The opinions expressed in the article stopped and their licence revoked. are the writer’s own and may not re* Evacuate or confiscate all illegal flect the views of the publisher.
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WEDN ESDAY DEC EM B ER 3 , 2 0 14 • TH EEDGE F I N AN C I AL DAI LY
Klang port risks trial PKA given till Monday to record a settlement in RM720m lawsuit BY V A N B A L AGA N
SHAH ALAM: The Shah Alam High Court has given the Port Klang Authority (PKA) until Monday to settle a RM720 million suit filed against turnkey contractor Kuala Dimensi Sdn Bhd (KDSB), failing which it will proceed with the trial. Judicial Commissioner Datuk Azimah Omar issued that ultimatum yesterday as the matter had been dragging on for some time. “This is the third time the matter is before me. I had fixed the case for trial but parties inform me now that it is for settlement,” she said in response to lawyers asking for a short adjournment. She fixed Monday for them to either record a settlement or be prepared to go to trial. Earlier, lawyer D Nimalan, who appeared for PKA asked a short adjournment as the counsel handling the matter is overseas. “It is not that we do not want to settle the matter but could not get the parties together to negotiate,”
he told Azimah. Lawyer Chetan Jethwani, who represented KDSB, later told reporters that PKA had submitted a proposal to settle the suit and other cases pending in the Kuala Lumpur High Court. “We obtained the proposal last week but I will have to get back to my client this week for instructions,” he said. On Nov 24, PKA counsel Lim Chee Wee, from legal firm Skrine & Co, said the court will have to be informed if there is withdrawal of the suit. In a statement to the The Edge Financial Daily, Lim said the evidence produced and findings of facts made by a High Court judge in the criminal trial against former transport minister Tun Dr Ling Liong Sik had a material impact on this suit. Ling was acquitted of three charges of cheating Putrajaya regarding the Port Klang Free Zone land deal. The Edge Financial Daily had reported that PKA had decided to withdraw its RM720 million suit against turnkey contractor KDSB over the PKFZ fiasco.
It is learnt that the PKA board unanimously agreed to discontinue the suit in a special meeting in Putrajaya on Nov 21. It was also decided at the meeting that it would initiate negotiations with KDSB for it to withdraw its suit against PKA. PKA filed the suit against KDSB on Sept 25, 2009, seeking rectification of the agreement signed on Nov 12, 2002, for the land worth RM1.88 billion. It sought a declaration that it should not be charged interest of RM720 million on the balance purchase price of the land under the agreement and sought a refund of the interest paid to KDSB. PKA contended that mistakes and fraud were involved in the agreement and that the value of each square foot of the land should be RM21 and not RM25. It also said the purchase price was inclusive of interest as stated in the agreement and that it would be paid over 15 years. PKA’s decision to withdraw
comes just two months after Tan Sri Kong Cho Ha was appointed its chairman. PKA is under the purview of the transport ministry and Kong is a former transport minister. Sources said the PKA board’s decision came after lawyers Skrine & Co had issued a letter saying the case was weak. PKA is said to have written to the Attorney-General and the ministry for their advice. The Edge Financial Daily also reported that the advice to withdraw was because of implications from Ling’s criminal trial. It is learnt that some of the witnesses in this suit were the same and the acquittal had seriously impacted the decision. The board is also said to have weighed the cost of continuing the lawsuit and losing the case. It is said that some RM3 million had already been spent on the PKA cases and up to RM1.5 million may be incurred on this case alone. — The Malaysian Insider
Sabah education chief denies crucifix ban KUALA LUMPUR: The Sabah education department has come out in defence of a public high school over allegations that it prohibited Christian students from wearing the crucifix, saying there is no such ban. A local daily reported yesterday that Sabah Education Department director Datuk Jame Alip had said the department had never banned anyone from wearing religious symbols in schools. “Students can wear crucifixes or other religious symbols, provided
they are not too big or meant for ‘accessorising’,” he was quoted as saying. He said that the school had never banned anyone from wearing religious symbols. But the English daily reported that parents were required to inform the school and fill up some forms to allow a student to wear religious symbols, including the crucifix, to school. The school principal said this was to curb an increasing number of students wearing necklaces
and other accessories in school for reasons other than religious use. On Monday, the Sabah newspaper Daily Express reported that students of Sekolah Menengah Ken Wah in Keningau were prohibited from wearing the crucifix unless they obtained permission from the school’s disciplinary board. It said the regulation came under the personal hygiene category. Among others, one of the rules is that sudents are not allowed to wear jewellery and religious symbols.
A concerned parent told the media that he came to know about the regulation after attending a briefing for parents of newly enrolled students on Nov 7. “Her explanation about makeup, jewellery and hair was normal for any school but I was taken aback when the teacher said that students are also not permitted to wear the crucifix without getting prior approval from the disciplinary board,” the parent said. — The Malaysian Insider
Brothers charged with 11 counts of making false claims worth RM8m KUALA LUMPUR: An owner of an engineering company and his younger brother were charged in the Sessions Court yesterday with 11 counts of making false claims for the purchase of electronic goods, worth almost RM8 million, between 2008 and 2011. Siblings Lim Ann Kok, 60, and Lim Ann Liang, 47, pleaded not guilty to all charges. They are jointly charged with submitting false invoices which they knew contained false statements on the purchase of Electronic Dimmabe Ballast 26-42W, valued at between RM192,400 and RM1.46 million. The invoices were submitted to obtain a bankers acceptance facility from Malayan Banking Bhd. The Lim brothers are alleged to have committed the offences at the Pudu Maybank Trade Finance Centre between Dec 31, 2008 and Oct 6, 2011. Deputy public prosecutor Wan Ahmad Nidzam Wan Omar offered bail at RM200,000 for each of the accused and to have them surrender their passports to the court. However, lawyer Ashok Kandiah, representing the Lim brothers, said Ann Kok had to travel to New Zealand where his daughter is undergoing medical treatment, while Ann Liang has business dealings in Singapore. Judge Rosbiahanin Arifin allowed the brothers bail of RM150,000 in one surety each. She also ordered them to surrender their passports, but they can request the return of the documents when they need them. The court set Jan 9 for mention. — Bernama
Exploring opportunities in machinery industries KUALA LUMPUR: Representatives of 33 machinery and hardware companies from Taipei participated in a business matching session with hundreds of Malaysia-based small and medium enterprises (SME) in Kuala Lumpur on Monday. Led by the New Taipei City Economic Development Department, the delegation was welcomed by Minister in the Prime Minister’s Department Datuk Dr Wee Ka Siong, representative from the Taipei Economic and Cultural Office in Malaysia His Excellency Lo Yu Chung and the Commissioner of New Taipei City Economic Development Department Yeh Hui Ching. Speaking at the opening ceremony, Wee called for greater cooperation between SMEs in Taiwan and Malaysia and expressed admiration for Taiwan’s production capability and advanced technology. He is confident the collaboration can greatly benefit Malaysian SMEs. Lo said he believes the event has far-reaching significance as the
two nations have a track record of working well with Malaysia’s vibrant SMEs to create opportunities and for mutual benefit. According to Yeh, Taipei’s SMEs are an integral part of Taiwanese industrial development. He said all products such as machine tools, industrial machinery, general machinery, power machinery and mechanical components in this delegation have been carefully selected and that he is confident of finding suitable support in the Malaysian market. The Taiwanese delegates showcased products including stamping beds, food and beverage machinery, 3D printing machines, metal working machines, electronic control systems, cutting technology, machine components, tooling, process technology, medical equipment, automation equipment and turnkey solutions. Many of the products and services are strongly competitive and rival those from Europe, the United States and Japan.
Chairman of New Industries Taipei City Industrial Association Reynold Chun Ming Wu (front, left), president of the Federation of Malaysian Foundry and Engineering Industries Associations Tan Poh Seng (front, right) and Wee (centre) at the business matching session. Photo courtesy of Taipei Economic and Cultural Oﬃce in Malaysia.
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WEDN ESDAY DEC EM B ER 3 , 2 0 14 • TH EEDGE F I N AN C I AL DAI LY
The good, the bad and the ugly If Europe goes into recession, the impact of lower oil prices on the global economy will be negated BY MOHAMED A EL-ERIAN
he net overall impact of this year’s 28% plunge in oil prices is positive for the global economy. But it isn’t universal, and it comes with negative dimensions that need to be well understood, lest they end up reversing the benefits. The good comes from the boost that lower oil prices provide to consumers and manufacturers in oil-importing economies. It is the equivalent of a significant tax cut at an opportune time, especially for Western consumers. And while part of this benefit may go to governments because of the way oil taxes are imposed in certain countries, particularly in Europe, the overall global effect will be to boost consumption and lower manufacturing costs in countries that have been struggling to overcome prolonged malaise in
growth and jobs. There is also a positive distributional effect within these economies, although it is marginal rather than decisive. Because energy spending constitutes a bigger part of the budget for lower-income families, lower oil prices help counter some forces that have worsened the inequality of income, wealth and opportunities. Yet it would be foolish to ignore the risks of lower oil prices. For one thing, they lead to immediate cuts in energy companies’ investment budgets, both in the traditional sector and among promising alternative technologies. As a result, longer-term energy potential will be undermined, both overall and in its more environmentally friendly components. In addition, the lower oil prices, which would normally be seen as producing “good” disinflation in oil-importing countries, could accentuate the general deflationary tendency in Europe — one that could be quite detrimental to the continent’s immediate and longer-
term economic well-being. While I believe the favourable income effects help offset this threat, it would be wrong to ignore it given that Europe is already in uncharted economic terrain. A third risk relates to certain segments of the financial markets. Look for the plunge in oil prices to be disruptive for the commodities markets as a whole, and for securities issued by energy companies and oil-exporting countries. Given the weight of investments
in these securities in certain emerging-markets and high-yield indexes, the result could mean generalised pressure to sell in these asset classes. Besides these three bad outcomes, there is also the ugly: The possible reaction of certain oil-producing countries that are particularly hard hit by the price declines. Nowhere could this prove more consequential than in Russia. Roiled by sanctions, a collapsing currency and large capital flight, Russia now faces the effects of a sharp fall in oil revenue. Companies pushed to the brink may be looking for government support at a time when the authorities’ ability to respond is curtailed by the decrease in their own revenues. The effect will be to strengthen the winds of recession, inflation and financial instability in Russia. How this affects the global economy depends in great part on Russian President Vladimir Putin (pic). Up to now, Putin has been able to resort to regional geopolitical adventures, most notably in Ukraine,
to counter and divert popular dissatisfaction in Russia over the domestic economy. And he has done so notwithstanding the resulting imposition of Western sanctions on his country. Will the additional domestic downturn lead Putin to change course on Ukraine as a way of lifting Western sanctions and alleviating overall pressures on the economy? Or will the internal pressure push him to extend his regional adventures? Should Putin take the second course, the West may impose more economic sanctions, including on the energy and financial sectors, and Russia would probably follow with counter-sanctions on energy supplies to Europe. This could push Europe into recession — which would negate much of the good impact that lower oil prices have had on the global economy. — Bloomberg View Mohamed El-Erian is the chief economic adviser at Allianz SE.
China rate cut is cold comfort for struggling developers PROPERTY developers, among China’s most heavily leveraged companies, will get a negligible lift from the country’s first benchmark interest rate cut in two years as sales slip and banks pull back on lending to the sector. After a long bull run, China’s property market, which makes up about 15% of its economy and is the main driver of demand in some 40 industries from cement to steel, has grappled with soft prices and mounting inventories for at least six months. That prompted China’s central bank to cut its benchmark lending rates by 40 basis points (bps) to 5.6% on Nov 21, reversing in part its drive to cool a sector that many feared had become so bloated by speculative froth that it was crowding out other forms of investment. But the lowering of the lending benchmark will bring only marginal relief to the sector’s biggest headaches — too much unsold stock and tight liquidity. “The fundamental problem of China’s housing market is oversupply,” said Ding Zuyu, co-president of real estate services firm E-House (China) Holdings Ltd, and a few home buyers encouraged by the rate cut wouldn’t change that. New home prices in China dropped for a seventh consecutive month in November from the previous month, a survey by the China Real Estate Index System (CREIS) showed. The force of the cut will also be enfeebled because bank lending to the property sector is in decline, having dropped 23.3% in the third
People standing in front of residential buildings in Shanghai, China on Dec 2. Property developers, among China’s most heavily leveraged companies, will get a negligible lift from the country’s ﬁrst benchmark interest rate cut in two years as sales slip and banks pull back on lending to the sector. Photo by Reuters
quarter from the previous three months, Reuters calculations from central bank data showed. “The impact on property will be limited because for developers, funding access is more critical than borrowing cost,” said Su Aik Lim, Fitch Ratings analyst. “Even if interest cost falls, access to borrowing is poor, so weak de-
velopers still cannot avoid a liquidity crisis when their sales slow.” Standard & Poor’s said this week liquidity was a key risk for some developers, while forecasting a 5% fall in average selling prices in 2015. Moody’s expects residential property sales to shrink between 0% and 5%, too.
All of which will make banks yet more wary about lending to the weaker players, which leaves them ever more reliant on their ability to keep generating cash. “The biggest most reliable source of funding is property sales; it is more important to boost sales than obtaining more construction loans,” said David Ng, property an-
alyst with Macquarie Securities. Larger players, such as Vanke, Country Garden, China Overseas and Shimao Property, have already been increasing their asset turnover in a bid to improve cash flows, taking market share from the smaller fry. Fitch estimates that the share of the top five developers, based on accumulated sales, has risen to 11% in September from 8% in end2013, which also gives them bigger elbows in the scrum for financing. “Banks are lending to companies that can sell faster, so they get their money back quickly and renew their loans more comfortably,” said Ng. That virtuous circle for the most successful becomes increasingly vicious for the strugglers as sales growth remains in the doldrums. “From the demand side, the rate cut will not stimulate demand sufficiently for cities that face oversupply,” said Lim. He added that lower interest costs would be of only slim benefit to even the most indebted builders. “From the borrowers’ perspective, interest expense accounts for only 5% of home selling price; the impact from a 40bps cut will only cut interest expenses by about 6% to 7%, or around 0.3% of selling price.” It’s a point not lost on apartment hunters like Li, a 37-year-old finance professional who would like a second home in Beijing. “Compared with the huge amount for a housing down payment, what’s the use of the moderate rate cut?” she said. — Reuters
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W E D N E SDAY D EC E MBER 3 , 2014 • T HEED G E FINA NCIA L DAILY
Thailand’s troubled democracy Country has had so many coups and violent political strife has been chronic Thai soldiers directing traﬃc near the Democracy Monument in Bangkok on June 1. Thailand’s army seized power in a military coup on May 22 after months of street demonstrations against the elected government. Photo by Reuters
BY TON Y JORDA N
hailand is a prosperous nation with strong banks, modern factories, flourishing tourism, a growing middle class and other typical markers of a successful democracy. Which is exactly what it lacks. Thailand has had so many coups in its modern history that scholars sometimes refer to the last 82 years as its “coup season”. In between, violent political strife has been chronic. The latest round features deadly street clashes, politically tainted corruption trials and the army taking control after an election derailed by protests. In contrast to political activists almost everywhere, the ones in Thailand are demanding less democracy. Thailand’s army seized power in a military coup on May 22 after months of street demonstrations against the elected government. All protests and political gatherings of more than five people are banned. The military junta says an election will be held in 2016, provided the nation’s decade-long political divide can be healed and a new constitution drafted. The last election, in February 2014, was blocked by anti-government groups and former prime minister Yingluck Shinawatra was
removed from office by the Constitutional Court. She was popular among rural voters who supported her brother, former prime minister Thaksin Shinawatra, who was ousted in the last coup in 2006 but directed policy from abroad through his sister and her Pheu Thai party. Protests began in October 2013 against an amnesty bill that would have absolved Thaksin, a billionaire tycoon-turned-politician, after his conviction for corruption. They killed at least 25 people and evolved into a wider push to upend Thaksin’s electoral dominance, which is based, the protesters claim, on vote buying and favours for the poor.
Subsidies for rice farmers helped Thaksin and his allies win the last five elections with support from the vast northeast of the country. His opponents include civil servants, middle-aged royalists and the Democrat Party, which led a court-installed government during the last deadly uprising in 2010. Thailand has had a dozen coups since the country’s seven-century reign of kings ended with a bloodless 1932 putsch that turned the Kingdom of Siam into a constitutional monarchy. The economy was kick-started by US economic aid that rewarded Thailand’s postwar campaign against communism,
then propelled by Japanese and European manufacturers tapping Thai workers to make cars and disc drives for world markets. Thailand has had more than 20 prime ministers since 1946 when King Bhumibol Adulyadej assumed the throne. The economy has proved resilient, bouncing back from the Asian currency crisis in 1997, the devastating tsunami in 2004 and crippling floods in 2011. About two-thirds of Thailand’s 67 million people live in rural areas and more than 90% are Buddhists. Bangkok’s urban middle class and royalist elite have resisted ced-
ing control after Thaksin drew rural voters to the polls, swelling turnout to more than 75% in the last two elections. They reject the idea that they’re thwarting democracy, saying the damaged political system can only produce a credible government after it’s swept clean of Thaksin’s influence. His supporters, enraged by the way their repeated victories have been overturned, have joined the cycle of stalemates and sporadic violence. A gradual accommodation might involve more power sharing with regional governments, though that could take a generation or more. The worst outcome could be a break-up of the country or even a civil war. While the 86-year-old king, whose portrait hangs in most homes and shops, has intervened in the past to calm his subjects, he’s seen as too ill to do so now. — Bloomberg View
PDPA — one year on, what we have achieved so far BY ED WI N L EE YON G CIEH
THE Personal Data Protection Act 2010 (PDPA) is the very first legislation in Malaysia that seeks to comprehensively protect personal data. As we do not have a general Privacy Act in place and our Federal Constitution does not expressly recognises the right to privacy (although our Court of Appeal in one particular case held that the right to life and liberty (Article 5) is arguably broad enough to include the right to privacy), the PDPA is certainly a very much needed piece of legislation that Malaysians have long been waiting for. So when the PDPA was passed in June 2010, it was seen as a positive move by our government towards recognising the importance of protecting personal data of individuals in Malaysia. It also signals a milestone for Malaysia in bridging the gap between Malaysian laws and international trends in protecting personal data. To prevent the misuse and disclosure of personal data to unauthorised third parties, governments around the world have enacted legal regimes on personal data protection. In Asean, Malaysia and Singapore are the only two countries which have enacted a comprehensive data protection legislation. Three years down the road, the PDPA finally came into force on Nov
15, 2013. One would have thought that given the time that it took for the PDPA to come into force after it was passed by Parliament in June 2010, most data users (i.e. companies/organisations/individuals who either alone or jointly in common with other persons process any personal data or have control over, or authorise the processing of, any personal data) would have put aside sufficient time and resources to make sure that they take the necessary steps to establish, review and strengthen internal policies, procedures, processes and systems that govern the management and handling of personal data in order to comply with the law. Unfortunately, that was not the case. When the government announced that the PDPA will come into force on Nov 15, 2013, many companies and organisations were rushing into getting themselves PDPA-compliant, as they were only given a three-month sunrise period to ensure compliance with the law. Hence, we saw a spike in companies and organisations busy churning out privacy policies and notices. Data users who were required to register themselves with the Personal Data Protection Department (PDP Department) were also uncertain with the registration process. Perhaps due to inadequate publicity or low awareness, some
data users were not even aware of the registration requirement, which had resulted in them being late in submitting their registration forms. Meanwhile, some companies and organisations (especially small and medium enterprises) chose to take a “wait-and-see” approach, conveniently ignored the fact that the PDPA applies to every company, organisation and individual in the country, and not just the big boys. It has been one year since the coming into force of the PDPA. Let’s examine what we have achieved so far, what could have been done, and what else we all can do. While the deadline for data user registration is already over, the PDP Department has acknowledged that the three-month sunrise period was relatively short (Singapore’s PDPA, which has also recently come into force, provided an 18-month sunrise period). As such, the PDP Department adopted an unofficial stand by stating that they will still accept late applications for registration, provided it was accompanied with a letter stating the reason(s) for the delay. As at November 2014, the PDP Department registered more than 7,000 data users from various industries. Abu Hassan Ismail was appointed the first Personal Data Protection Commissioner. The current commissioner is Mazmalek
individual’s personal data, he must obtain consent from the individual, and the consent must be in a recordable form and capable of being maintained properly by the data user. If a body corporate is found guilty of an offence under the PDPA, officers of the body corporate will automatically be held severally and jointly liable together with the body corporate, unless they can prove that the offence was committed without their knowledge, consent or connivance; and that they have taken all reasonable precautions and exercised due diligence to prevent the commission of the offence. Non-compliance with the PDPA may result in penalties of up to RM500,000 and/or three years’ imprisonment. What is certain is that the PDPA is here to stay, and it is no longer “business as usual”. The intent of the PDPA is not to inhibit business or to stifle the legitimate use of personal data. Rather, it is meant to grow businesses by giving consumers confidence that their personal data will be protected and processed in good hands. Edwin Lee Yong Cieh is a senior associate at Christopher & Lee Ong, the Malaysian associate firm of Rajah & Tann Asia network. This article is for information purposes and does not constitute legal advice.
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WEDN ESDAY DEC EM B ER 3 , 2 0 14 • TH EEDGE F I N AN C I AL DAI LY
Oil drillers to idle more rigs Gearing up for a slowdown as crude tumbles BY RUJUN SHEN
SINGAPORE: Offshore drillers globally are increasingly considering warm stacking their rigs to take them temporarily off the market, as they gear up for a slowdown in the hunt for oil with crude prices sliding to five-year lows. Rigs in warm stack maintain basic operations and most of the crew, and can be put to use once the owner gets a contract. Drillers put rigs in warm stacks to lower operational costs, and to keep them sufficiently ready for quick deployment, meaning they are hoping a downturn won’t be a prolonged one. Rigs can also be cold stacked, or shut down, which typically happens when an owner does not expect to find work for an extended period of time. Oil prices have fallen about 40% in the past six months, with international benchmark Brent dropping below US$68 (RM232.56) to a five-year trough and nearing the marginal production cost of the most expensive offshore projects. “Six months ago, no one talked about stacking rigs,” said Thomas Tan, chief executive officer (CEO) of Kim Heng Offshore & Marine Holdings Ltd, a Singapore-based oilfield service firm. “In the last few weeks, the talk of stacking started.” Tan said his firm has received
JAKARTA: Shares in Indonesia’s biggest coal miner PT Bumi Resources Tbk rose the most yesterday in over four months after three of its units filed for protection from US creditors after failing to make debt interest payments. The filing comes a week after Bumi Investment Pte Ltd, Bumi Capital Pte Ltd and Enercoal Resources Pte Ltd also obtained a six-month
SPH ‘building ecosystem around media’ SINGAPORE: Singapore Press Holdings (SPH) is “building an ecosystem around the media” through its investments and partnerships in related businesses such as online classifieds and education, chairman Lee Boon Yang was quoted by The Straits Times as saying. SPH’s transformation into a full-fledged print and digital media company, supplemented by its other investments in media-related firms and its property business, are part of efforts to boost earnings in the long term and “bring SPH back on to the growth path”, Lee added. He was responding to shareholders asking about the company’s strategy in the face of a rapidly evolving media, and its plans to ensure that revenue and shareholder dividends “remain sustainable”.
Thailand to set up telecoms holding company A worker checking a used drill head at an oil drilling and production island oﬀ the coast of Germany. Oﬀshore drillers globally are increasingly considering warm stacking their rigs to take them temporarily oﬀ the market. Photo by Reuters
enquiries to stack dozens of rigs over the past few weeks. Kim Heng currently services four rigs in warm stack around Singapore. The company serves about 60 rigs a year in different stages of operations, including providing repair, maintenance and logistics services. Seadrill Ltd, the world’s largest driller by market value until recently, expects to see a pickup in stack-
ing and scrapping next year, its CEO said. And Transocean Ltd, which owns the world’s largest offshore drilling rig fleet, said it may retire additional rigs because of a sluggish market. Transocean and Seadrill are among Kim Heng’s customers. Drillers, who provide rigs on hire to oil producers, are in a pinch because day rates to hire rigs have
fallen this year while supply grows. The day rate for a top specification drillship, which can work in water up to 3,658m deep, was recently quoted at as low as US$400,000, down from US$600,000 last year. Even rates for jack-up rigs, generally working in water depth below 122m, have started to weaken in recent months after holding up relatively well earlier in the year. — Reuters
Bumi units file for US creditor protection BY EVEL I N E DA NUBRATA
moratorium in a Singapore court against legal action from creditors. Both moves give Bumi Resources, which was hard hit by a sharp drop in coal prices, more time to restructure its debts. Bumi shares gained as much as 12.2% yesterday, their biggest jump since July, outperforming a 0.5% rise in the Jakarta stock exchange index. According to the US filing, Bumi Resources and its three units have missed several interest payments
Blackstone to sell IndCor for US$8.1b SINGAPORE: Blackstone Group LP said it will sell its US industrial platform IndCor Properties to affiliates of Singapore sovereign wealth fund GIC Pte Ltd for US$8.1 billion (RM27.70 billion). As a result of the deal, IndCor will no longer pursue an initial public offering filed in September, Blackstone said in a statement. Reuters reported in November that GIC was leading a consortium to buy IndCor from Blackstone in a deal valued at about US$8 billion including debt. Chicago-based IndCor was formed in 2010 as a portfolio company of Blackstone, and has a footprint of warehouses and distribution centres across the United States, according to its website. GIC has stepped up its real-estate purchases in recent months, buying office buildings in Tokyo and investing in Australian student accommodation as a way to diversify its portfolio and secure better yields. GIC is estimated by the Sovereign Wealth Fund Institute to manage around US$320 billion in assets. Real estate accounted for 7% of its portfolio in the financial year to April 1, according to its annual report. The deal is expected to close in the first quarter of 2015. — Reuters
since September on debts worth a total US$1.37 billion (RM4.68 billion). Bumi Resources has to reach an agreement with its creditors or undergo a restructuring process under Indonesian law to achieve “a meaningful recovery” for its units and affiliates, chief financial officer Andrew Beckham said in the US court documents. Bumi Resources has an interest in 67 entities incorporated in var-
ious jurisdictions. These entities have either started a restructuring process or are preparing a restructuring plan, as well as negotiating with various creditors on their debt repayments. Bumi Resources is part of the sprawling family-owned Bakrie Group conglomerate, which has aggressively expanded into energy, plantations, property and other businesses, mainly through debt-funded acquisitions. — Reuters
Singapore to adopt Euro 6 standards for petrol vehicles SINGAPORE: Singapore will adopt the environmentally cleaner Euro 6 fuel emission standards from late 2017 for vehicles powered by petrol, a government agency said. The country, which is currently on Euro 4 for petrol-powered vehicles, will adopt the new standards from Sept 1, 2017, the National Environment Agency said. Euro 6 is the latest engine emission standard set by the European Union (EU), which imposes strict rules on tailpipe gas emissions of new vehicles sold in EU member states.
Euro 6 fuel has a minimum sulphur content of 5 parts per million (ppm) while Euro 4 has a minimum sulphur content of 50ppm. It was not immediately clear if Singapore refineries are able to produce petrol meeting Euro 6 standards. The city state’s refineries might have to upgrade existing units to produce the lower sulphur oil product which could be costly, a South Korean refining source said. The new regulation will also reduce nitrogen oxides and fine particulate emissions, the environment agency said. — Reuters
BANGKOK: The government plans to create a National Backbone Holding Co to operate the country’s telecommunications infrastructure to promote a digital economy. Creating the holding company will be aimed at reducing redundancies in telecom network investment, which could result in lower service fees, said Pansak Siriruchatapong, one of eight members of the panel working on the digital economy policy. “The establishment of [the company] needs to be settled after a national digital economy committee... is set up by January,” he said. — Bangkok Post
Jaya hit by S$15.63m claim notice SINGAPORE: Mainboard-listed Jaya Holdings said yesterday that the company had on Sunday received a claim notice from the purchaser of its subsidiaries in connection with an alleged breach of warranties under the sale and purchase agreement (SPA). The Straits Times reported Jaya as saying the purchaser is claiming S$15,625,000, (RM40,949,600) being the cap amount agreed for all claims arising from the SPA. Jaya announced in February that it will be selling its entire business to Mermaid Marine Australia for S$625 million.
Spackman seeks TV post-production house SINGAPORE: Catalist-listed Spackman Entertainment Group, a South Korean entertainment production group, was reported by The Straits Times as saying yesterday that it has entered into a non-binding MoU with an independent third party, Hyun Duk Shin, for the proposed acquisition of 51% or more of the issued and outstanding share capital of Fireworks Co Ltd. Fireworks is a post-production house that creates high-end visual effects for TV commercials, music videos, films and digital media.
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WEDN ESDAY DEC EM B ER 3 , 2 0 14 • TH EEDGE F I N AN C I AL DAI LY
Deflationary forces at play As the rising dollar and falling commodity prices drive inflation rates down around the world, Schroders fund managers suggest investing carefully in a diverging environment S TORI ES BY JOA N NG
he US economy is showing signs of life, but emerging-market economies have yet to benefit from a rise in exports. Meanwhile, Japan, Europe and China are still experiencing significant weakness. “For a very long time we’ve had economic convergence. We’re now moving to an environment of divergence,” says Bob Jolly, head of global macro at London-based asset manager Schroders. “The most likely scenario is that you start getting some very big swings in relative market pricing.” Yet, one common theme that investors can probably count on dominating the first part of 2015 is deflation or disinflation. Oil prices have fallen below US$80 ($104) a barrel, pushing the cost of energy down to lows not seen since before the global financial crisis. Oil is not the only commodity that has become cheaper: The Thomson Reuters/Jefferies CRB commodity-price index is down some 4% on a yearto-date basis. Also, several different factors are pushing consumer prices down the different major economies. At Schroders’ 2014 International Media Conference on Nov 13 and 14, fund managers and economists sounded warnings about the potential effects of lower prices on investment portfolios. Positive on the US Keith Wade, chief economist at the firm, believes the fall in commodity prices will mostly be positive for the US economy and the US consumer. “A lot of people take a very bearish tack on this. But it actually works like a tax cut,” he says. “People have to spend their money on energy and food. If the price of those things comes down, it gives them more real income. And when you look at what has caused the fall in commodity prices, it’s not all owing to the fall in demand. Quite a lot of it is due to better supply. In agriculture, we had a very good year for harvest this year around the world. That’s why food prices have been coming down.” Wade says there have also been some genuine supply side benefits in the energy sector. The shale gas boom in the US is one. “But more recently, we’ve seen a surprise increase in production from Libya. And we’ve also seen Saudi Arabia saying that it’s not willing to cut production.” Given the expectations for continuing economic strength in the US, Schroders believes US equities are set to outperform. Matt Ward, fund manager for US equities, is bullish on the technology space. “I think 2015 is a more interesting year for tech than 2014.” Through much of this year, he says, technology stalwarts such as Intel and Microsoft did well because of geo-
At Schroders’ 2014 International Media Conference on Nov 13 and 14, fund managers and economists sounded warnings about the potential eﬀects of lower prices on investment portfolios
Gautrey thinks 2015’s big headline will be the emergence of a billion mobile Internet users in India and China.
political risks, concerns about the US Federal Reserve’s intentions to reduce the size of its asset purchase programme, and slowing growth in China. “Also, as Windows XP’s sun was setting, you had this artificial lift in corporate renewal of PCs and PC licences.” Now, however, Ward thinks investors should look at tech stocks that will benefit from secular growth. In particular, he believes the next big story driving stocks will be the cloud. “These are cycles that come in every 20 years. The mainframe story gave way to client server architecture. Cut to 20 years later, this whole thing is predicated on cloud. The way I see cloud is basically a chance for someone to outsource or rent his Internet infrastructure. That’s cheaper for enterprises, more nimble, more scalable; it goes to mobile more quickly, it’s quicker to update, it has lower total cost of ownership. Gartner predicts 20% growth rates on cloud, while overall tech is grow-
Wade: People have to spend their money on energy and food. If the price of those things comes down, it gives them more real income.
ing at about 4.5%. That’s where I see the opportunity,” Ward says. “We try to invest in companies such as salesforce.com or Workday, where you’re getting an enormous secular growth profile.” Ward is co-fund manager for the Schroder ISF US Large Cap fund, which currently has an overweight position on storage and data management solutions provider NetApp. His fund also has an underweight position on Microsoft. “Old tech is probably up 10% in 2014 and new tech is probably down 10%,” Ward says. Admittedly, the so-called new tech companies have hefty forward price-to-sales ratios of some 20 times. “But therein lies the opportunity. You have to think about the 20%-plus secular growth profiles of these companies, you have to move out a few years, give them a normalised operating margin, and just count back. All these companies are actually very attractive relative to their growth. We’ve had an enormous pullback. Since March, the
At the beginning of 2014, 99% of the world thought bond rates were going to rise, says Chorlton. ‘They got it spectacularly wrong.’
top five highest-growing stocks are down 50% on a price-to-sales basis.” European corporate earnings growth In Europe, the threat of deflation is much greater. Wade, the economist, notes that in economies such as Spain and Greece, there is genuine deflationary pressure. However, he also expects to see some stabilisation in deflationary forces. “I think a lot of the fall in inflation has really been due to commodity prices coming down. A couple of years ago, inflation in the eurozone was about 3%. But most of that was because of food and energy. Now, food and energy [prices] have fallen. We’ve seen inflation come down to 1% or just slightly below,” he says. (See chart.) However, the base effect should contribute to some stabilisation going forward. Also, the euro has been weakening against the US dollar. Wade expects this trend to continue as the US economy strengthens and
the European Central Bank (ECB) considers forms of asset purchases, much like the US Fed did following the financial crisis. “We expect deflationary forces will ease.” Rory Bateman, head of UK and European equities at Schroders, says the ECB’s quantitative easing will be very positive for European equities. “[When the US Fed did] QE, it was very positive for the Standard & Poor’s 500. It stimulated animal spirits, not only at the corporate level but also at the consumer level. Within Europe, the wealth effect will be much less. But I believe QE will be a positive for equities, particularly if you think about where we are,” Bateman says. “Europe is trading at 13 times 2015 earnings. And it’s at a very depressed level. There’s never been a greater differential in terms of corporate profitability between US and European companies. We’re talking about depressed valuations on depressed earnings. As a contrarian investor, that to me sounds incredibly attractive.” Bateman sees earnings for European companies rising on the back of an improving economy, corporate restructuring and depreciation in the euro. “We haven’t seen much earnings growth over the last three years. It’s all been rerating. That’s because we have faced significant currency headwinds. If that currency weakness continues and you get 10% depreciation in the euro, that will deliver corporate earnings growth of 3% to 5%,” he says. “We’re also seeing plenty of opportunities at the corporate level where companies are restructuring.” Some examples of this, he adds, are French telco Orange, packaged food company Danone and chemicals firm Arkema. He is also very positive on the European banks. “We are anticipating double-digit earnings growth at the banks next year as provisions ease off and margins expand. These guys have been provisioning very expensively in the run-up to the AQR tests,” Bateman says, referring to the ECB’s asset quality review. “The stress tests have been resolved so there should be much less provisioning going forward. The ECB is funding their balance sheets at a much lower rate. And they’re also selling more savings, asset management-type products.” Selective in Asia and emerging markets For the emerging markets, global deflationary forces will have a mixed impact. “There’s a very definite difference now between the first 10 years of this century and today,” says Craig Botham, emerging markets economist at Schroders. “In the first 10 years, you had a common tide lifting all boats: essentially China and globalisation. Now, we’re seeing a more divergent path.”
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W E D N E SDAY D EC E MBER 3 , 2014 • T HEED G E FINA NCIA L DAILY
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Diversity crucial in a world of disinflation As an example, Botham points to Japan’s exporting of deflation to the region. The Japanese government, under the leadership of Prime Minister Shinzo Abe, is hoping to inflate its way out of a public debt burden that is more than twice the size of its GDP. “But the expansion of Japanese monetary policy, which ultimately exports Japanese deflation to the rest of the region, is of particular concern for economies that compete a lot with Japan either by region or industry, or both. South Korea, China and the Philippines are particularly exposed,” he says. Botham believes the Philippines is in a good position. “Although the Philippines exports a lot to Japan and has a lot of competition with Japan, it’s part of the Japanese supply chain. The devaluation of the yen has boosted exports to Japan.” South Korea, on the other hand, has suffered. And Botham thinks corporates in Taiwan and China, which are trying to move up the value chain, are also at risk. “Earlier this year it seemed as though Japanese exporters were happier just to increase profits without fighting for more market share by cutting prices. I think the more certainty they have that this cheaper yen is a more permanent phenomenon, the more likely they are to start fighting for market share because they know they can sustain these lower prices.” James Gautrey, a global equities fund manager, says he is playing this story by favouring Japanese exporters. “We think there’s a very strong story in terms of the exporters. There are some worldclass firms in Japan which, over the last 10 years or so, have struggled against their Korean counterparts. That currency tailwind is now firmly in their favour and still underpriced in markets.” For the rest of the Asian market, Gautrey thinks next year’s big headline will be the emergence of a billion mobile Internet users in India and China. “It’s significant because of just the sheer numbers involved in this. Telecoms is a very capital-intensive industry. It benefits from scale. And when we start talking about numbers as high as a billion, these are numbers that even the best-run telcos in the developed world, the Verizons of the world, can only dream of.”
To capture this growth, Gautrey says it is important to pick the right companies. “In Europe, we had the same data story. But that was not really translating into any benefits for the operator. What we need to see is that the conditions are right for the operators to benefit. We think India is exactly that market,” he says. “Idea Cellular is a particular stock we’ve been invested in for about three years now. It’s a pure play on Indian mobile. But I’m very encouraged when I meet the management teams of Vodafone Group, Bharti Airtel and Idea, which are the three big incumbents out there. They all get it. They all understand what they’re doing.” What makes India different is that the operators are charging extra for data as opposed to giving it away, Gautrey says. “In India, we think we’re at the absolute tipping point now. Smartphone penetration is around 13% or so, but the appetite for data is massive. And one of the big differences is that mobile devices are the only way [via which] people access the Internet. It’s not a substitute for the PC. Companies that can capture that value are very well placed.” In China, Gautrey sees the same dynamics in demand for mobile Internet. However, he is far more interested in the country’s dotcoms. “China has firewalled off competition. It has prevented Amazon. com, Google and Facebook [from] coming into the market [to] let its own domestic champions grow. So Alibaba Group Holding, Baidu and Tencent Holdings, we think, are the three most interesting platforms there. And they still have a long growth run rate ahead of them.” Interest rate risk Deflationary forces could also pose a risk to interest rate assumptions next year. At the moment, consensus expectation is for the US Fed to begin raising the Federal Funds Rate in the middle of next year. Wade thinks this would be the right move, given the current strength of the US economy. “Things are a little bit distorted because energy prices have come off so much. But that will actually support growth later on. Then, as wages begin to accelerate, people will say: ‘Hang on; the Fed is behind the curve’.” However, he acknowledges that what actually happens may be quite
different. “There is what we call a feedback loop. If the US dollar appreciates significantly on Fed tightening, then the Fed might look at it and think: ‘Well, hang on a minute; we don’t need to tighten because a stronger dollar is deflationary for the US economy’,” Wade says. “There have been periods, such as the late 1990s, when we had the Asian crisis, when the dollar rose very strongly. And the Fed, which was preparing to tighten policy, backed away because everybody talked about deflation.” Andy Chorlton, head of US multi-sector fixed income, thinks that by buying long-dated US Treasuries, investors will be able to escape some of the worrying about the Fed’s interest rate action. “We find it quite hard to make money out of the direction of rates. At the beginning of this year, 99% of the world thought bond rates were going to rise. And they got it spectacularly wrong,” Chorlton says. Instead, he is betting on the rise of liability-driven investment among US pension and insurance funds. LDI strategies focus on the predictability of cash payouts in the future. While popular in Europe, this strategy is now catching on in the US. “In the 2000s in the UK, the yield curve was inverted for a long period of time. Why? Lots of pension funds were buying fixed income, buying duration. That’s now part of the conversation in the US,” he adds. Chorlton points to a KPMG statistic saying that some £650 billion (RM4.51 billion) of UK pension money is in an LDI framework of some sort. “The entire size of the long-dated corporate bond market in the US is US$1 trillion. And someone owns that trillion dollars already.” A UK-sized pension market move to LDI would therefore drive long-term yields down significantly. “Whatever the Fed does, and I’m not overly bothered to be honest with you, it is not going to impact the different classes of the yield curve in the same way. Everyone seems to forget that,” he says. “The yield curve will become much more segmented and we do think there’s some value in the long end of the US curve. You are going to see a change in the shape of the yield curve. It may not invert, but we think it will certainly flatten.” — The Edge Singapore
SINCE 2011, inflation has in fact been slowly trending lower across the major economies of the world. And Remi Ajewole, fund manager of multi-asset portfolios at Schroders, thinks that situation is unlikely to change anytime soon. In Japan, recent quantitative easing (QE) by the central bank has led to a pickup in consumer prices. But as real wage growth is still negative, she does not think this trend is sustainable. Meanwhile, in China, excess capacity has led to significant declines in producer prices for the country’s manufacturers. In Europe, Ajewole points to a chronic lack of demand. “The European Central Bank (ECB) has tried to address this by bringing interest rates extremely low. But that low rate hasn’t necessarily been transferred to consumers or corporates. The transmission mechanism is broken,” she says. The reason for this is partly the murky balance sheets of Europe’s banks. “Unfortunately, lending to corporates and households is in negative territory. This is deflationary because if the bank isn’t lending, it is affecting aggregate demand.” This disinflationary phenomenon is, in turn, creating a divergence in the macroeconomic environment, Ajewole says. The US, for instance, is reporting better economic growth. “A lot of this is [because of ] the way the US economy is structured. Growth in the US is very much tied to consumption growth.” China, Europe and Japan, however, are reporting differing levels of weakness. And this divergence is leading to a divergence in monetary policy. The US Federal Reserve, for instance, has ended its asset purchase programme. The Bank of Japan has stepped up its level of QE. And the ECB is contemplating it. What does that mean for investors? “It means that there will be winners and losers. So, as an investor, you need to identify what the winners are and get out of the losers,” Ajewole says. And in such a situation, multi-asset strategies are particularly useful. “We’re unconstrained and can invest in a wide range of asset classes, from equities to bonds to currencies. We can be flexible.
Ajewole: A divergence in monetary policy means there will be winners and losers. As an investor, you need to identify what the winners are and get out of the losers.
We can identify those winners and we can short the losers. We can actually generate positive returns in an environment that’s generally quite challenging for most other investors.” At the moment, Ajewole is bullish on the US dollar. “The trade-weighted dollar since the early 2000s has been on a declining trend,” she says. That decline coincided with a long period of inflation. “Now we’re facing a deflationary trend, which means the dollar is going up.” Inversely, commodity prices are likely to fall. “There is a tight relationship between commodity prices and the dollar. When the dollar is appreciating, commodity prices tend to fall,” she says. Historical trends aside, commodity prices will also suffer from the lack of demand in Europe, deleveraging and over-capacity in China. Finally, Ajewole likes North American equities. “It’s good to have growth. But preferably, you would want an economy that has a combination of strong growth and slightly lower inflation. The reason is that it means you have a central bank that can be quite dovish. That tends to be good for risk assets, such as equities,” she says. Right now, the US and Canada are both enjoying rising growth and falling inflation. “And don’t forget, the US is a heavily consumer-laden economy. Falling oil prices are good for the consumer. It means more money in your pocket.” — The Edge Singapore
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WEDN ESDAY DEC EM B ER 3 , 2 0 14 • TH EEDGE F I N AN C I AL DAI LY
Investors shun China-HK stock link There are concerns about ownership rights and complicated trading procedures KA NA NI SH I ZAWA & ED UA RD GI SMATULLIN
HONG KONG: Institutional investors are shying away from the Shanghai-Hong Kong stock link due to uncertainty about ownership rights and complicated trading procedures, according to an industry body. Most long-term asset managers aren’t going to buy mainland shares through the programme in the near term because investors
Mitsubishi UFJ units downgraded MONA MI Y U I & SHI NGO KAWAM OTO
TOKYO: Mitsubishi UFJ Financial Group Inc units were among five Japanese lenders downgraded by Moody’s Investors Service yesterday after it cut the nation’s credit rating. Bank of Tokyo-Mitsubishi UFJ Ltd and Mitsubishi UFJ Trust and Banking Corp, part of Japan’s biggest banking group, were lowered one level to A1 with a stable outlook, Moody’s said in a statement. Sumitomo Mitsui Banking Corp, Shizuoka Bank Ltd and Chugoku Bank Ltd also had their long-term debt ratings cut. Moody’s on Monday lowered Japan’s rating to A1, the fifth-highest grade, citing uncertainty over whether Prime Minister Shinzo Abe’s administration will achieve its deficit-reduction goals and succeed in boosting growth. — Bloomberg
and regulators aren’t comfortable with their ability to enforce ownership of the equities, Mark Austen, chief executive officer of the Asia Securities Industry and Financial Markets Association, said yesterday in Hong Kong. Requirements to deliver shares to a broker before selling them are also sapping interest, he said. While investors maxed out the 13 billion yuan (RM7.2 billion) daily quota for Shanghai shares on Nov 17, buying through the
link has fallen short of the limit each day since then. Foreigners briefly turned net sellers of socalled A-shares on Monday for the first time. About 95% of large funds aren’t ready to invest because of operational and compliance reasons, Andy Maynard, the Hong Kong-based global head of trading and execution at CLSA Ltd, said last week. There is no stated mechanism in the stock connect, existing Chinese law or Shanghai Stock Ex-
change rules “for confirming the identity of beneficial owners of the A-shares,” Asifma said in a report issued yesterday with Thomson Reuters. “There remains uncertainty as to how owners of the A-shares assert or pursue their claims as shareholders in China.” The exchange link is part of China’s effort to open up its capital account, increase global use of the yuan and turn Shanghai into an international financial centre. — Bloomberg
China’s 4th richest man seeks growth with Dalian Wanda’s IPO BY M ATTHE W M I LLE R & CLARE JI M
BEIJING/HONG KONG: Wang Jianlin plans to raise as much as US$6 billion (RM20.5 billion) from selling shares in Dalian Wanda Commercial Properties Co Ltd to help fund the expansion of an empire built at speed using cheap government land. China’s fourth-richest man with a net worth of US$13.2 billion, according to Forbes, has opened 100 Wanda Plaza mixed-use developments from 21 just four years ago. Wang is aided, he has said, by land bought at half the price others would have paid, from authorities betting on his ability to boost local economies. Dalian Wanda Commercial Properties is now China’s largest in the sector with 178 projects in 112 cities across 29 provinces, many anchored by malls and hotels alongside office and residential towers. On Monday, it won approval in
Wang: China’s outbound investment is an inevitable trend.
Hong Kong to conduct the biggest initial public offering (IPO) in Asia Ex-Japan in four years. “Dalian Wanda has a lot of projects and they all need money,” said a person familiar with the listing
plan. “After the IPO, it can also issue bonds which will help lower funding costs.” Wang has tried to list Dalian Wanda Commercial Properties before. Regulatory reasons scuppered a Hong Kong IPO in 2005, and its application in Shanghai lapsed earlier this year with the bourse saying submitted documents were out of date. Wang, a former member of the People’s Liberation Army, now plans to take the developer into the world’s 10 largest cities over the next decade, beginning last year with Los Angeles, Chicago, London, Madrid and Gold Coast. “China’s outbound investment is an inevitable trend,” Wang told the Apec CEO Summit in November. — Reuters
E.ON’s ‘bad power’ spin-off promises little upside BY OL A F STORB ECK
LONDON: E.ON is coming clean on dirty energy. In a historic move, Germany’s largest utility is exiting conventional generation and bundling unwanted risky assets into a new company to be spun off. The remaining E.ON will concentrate on distribution and green electricity. While both management teams will benefit from focus, this “bad power” spin-off will struggle to offer a tempting investment case. Chief executive Johannes Teyssen is facing up to the reality of German energy policy. Berlin’s decision to phase out nuclear power and grow renewable energy, paired with falling
demand for electricity, has blasted utilities’ business models. The supply of subsidised electricity from wind turbines and solar panels fed into the grid on a preferred basis has more than tripled since 2003. That has crowded out gas, coal and nuclear and dragged down wholesale electricity prices. Operating profit from E.ON’s conventional power generation fell by two-thirds between 2010 and 2013. Many of the group’s conventional plants no longer earn their cost of capital. It’s akin to a financial crisis for the power sector. But E.ON’s balance sheet is now more trustworthy than that of a bank loaded with subprime se-
curities in 2008: the group took a €4.5 billion write-down on Nov 30. Demergers usually spell dissynergies as costs are duplicated. Here, the value of dedicated managements is almost certainly worth more given the strategic challenges in power. Both companies operate in entirely different segments of the market. The snag is that there is only so much E.ON can do to make the spinoff attractive to new shareholders. The unit, with an estimated onethird of group earnings before interest, taxes, depreciation and amortisation (Ebitda), could be worth around €10 billion. It will take E.ON assets in Brazil and Russia, although these will add currency risk as much
as emerging-market sparkle. As a business in run-off, the new company will need a generous dividend to lure income investors. Hence E.ON is keeping debt with the parent. Capex will be low, so cash generation should be healthy in the short term. It is unclear just how long the cash will continue. Germany wants to drive the share of renewable energy from 25% to 45% in 2025. Potential new subsidies for conventional power plants for providing back-up capacity could alleviate the pain, although the government has yet to be persuaded. E.ON’s share price reaction — up 4% at €14.84 — looks overdone. — Reuters
IN BRIEF Nomura Holdings expects higher annual revenue after rating hike TOKYO: Nomura Holdings Inc forecast it would earn a few hundred million dollars in additional revenue after Moody’s Investors Service lifted its credit rating on Japan’s biggest investment banking and brokerage group. Nomura will get an additional US$250 million (RM855 million) in revenue annually over the next 18 months, it said in a presentation at an investors conference in Tokyo yesterday. Higher ratings help to lower funding costs. The upgrade to Baa1 from Baa3 also makes it easier for Nomura to expand sales in the global fixed-income market. — Reuters
Northern Star bullish on gold ﬁnd near Australian mine MELBOURNE: Gold miner Northern Star Resources Ltd said yesterday it had made a “significant” gold discovery below an old open-pit mine next to its Kanowna Belle gold mine in Western Australia. Drilling at White Feather hit “spectacular” grades of more than 5,300g per tonne from about 200m underground, Northern Star said. At a time when other gold miners have been forced to slash exploration spending to conserve cash amid a sharp drop in gold prices, Northern Star is spending A$50 million (RM146 million) drilling in areas previously mined above ground. — Reuters
China Minsheng up by 10% limit on insurance ﬁrm’s investment SHANGHAI: China Minsheng Bank shares rose by their 10% daily limit in Shanghai during afternoon trade yesterday, after the bank announced Anbang Insurance Group had bought 5% of its shares. The company’s Hong Kong-listed shares rose more than 5%. The bank said on Monday that China’s Anbang Insurance Group currently holds 5% of its shares, which it said was due to Anbang’s favourable assessment of China Minsheng’s business prospects. In the next 12 months, Anbang will be allowed to expand its position in Minsheng through private placement. — Reuters
Takata to comply with US order to expand regional recall TOKYO: Takata Corp is preparing to comply with a US order to expand a region-specific recall nationwide, the Nikkei said yesterday, a move that’s likely to add millions more to the tally of cars called back to replace potentially deadly air bags. The US National Highway Traffic Safety Administration (NHTSA) last week gave Takata until yesterday to declare that its air bag inflators are defective and issue a national recall. If it does not, the NHTSA could begin steps to fine the Japanese company up to US$7,000 (RM23,940) per vehicle, as well as force a recall. — Reuters
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WE D N E SDAY D EC E MB ER 3 , 2014 • T HEED G E FINA NCIA L DAILY
Australia’s RBA keeps rates at record lows It expects growth a little below trend for several quarters BY WAY N E COL E
SYDNEY: Australia’s central bank kept interest rates at record lows for a 16th straight month yesterday, saying subpar economic growth could extend this unusually lengthy period of stability for some time yet. There was little relief for the hard-pressed local dollar as the Reserve Bank of Australia (RBA) repeated the currency was overvalued given the ongoing slide in prices for many of the country’s commodity exports. “Overall, the Bank still expects
Hacker group targets company ﬁnancial info WASHINGTON: A hacker group has tapped into email accounts of executives in more than 100 companies that could give them lucrative access to market-moving information, a United States security firm said on Monday. San Francisco-based FireEye Inc said the mysterious group, dubbed Fin4, showed deep familiarity with the way businesses work and appeared to target the accounts of officials with knowledge of mergers and acquisitions and other valuable corporate secrets. FireEye said Fin4 has gone after access to email accounts of companies’ top executives, legal counsel, outside consultants, and researchers. Some two-thirds of the companies Fin4 has targeted since mid-2013 are in the pharmaceutical and healthcare industries, where there has been a surge of large deals in the past year, FireEye said. FireEye said that of the companies it knows were targeted by the group, all but three were listed on the New York Stock Exchange or the Nasdaq Stock Market. But it would not divulge their names, citing client confidentiality. “Fin4 knows their targets,” the FireEye report said. “We can only surmise how they may be using and potentially benefiting from the valuable information they are able to obtain. “However one fact remains clear: access to insider information that could make or break stock prices for dozens of publicly traded companies could surely put Fin4 at a considerable trading advantage.”— AFP
growth to be a little below trend for the next several quarters,” said RBA Governor Glenn Stevens following the bank’s monthly policy meeting. “On present indications, the most prudent course is likely to be a period of stability in interest rates.” The cash rate has been at 2.5% since August last year as the A$1.6 trillion (RM4.6 trillion) economy struggles with the winding back of mining investment and declining terms of trade. So sharp has been the fall in export prices, notably for iron ore, that investors are wagering rates might have to be cut again.
Interbank futures imply around a 60% probability of an easing by August next year, even though RBA officials have shown no sign of contemplating such a move. Perhaps sensing the shifting winds, Deutsche Bank AG has changed its call and now predicts the RBA will lower rates by 50 basis points in two instalments over 2015.The bank’s chief economist, Adam Boyton, cited a moderation in the housing market, a shrinking terms of trade and his expectation of rising unemployment as reasons for the change.
The drop in commodity prices has certainly eaten into sources of national income, from export earnings to company profits, wages and tax receipts. Yet a decade-long boom in mining investment is also greatly boosting the volume of resources Australia can ship abroad. As a result net exports added a healthy 0.8 percentage points to gross domestic product (GDP) in the third quarter, reinforcing expectations for a solid rise in growth overall.The GDP report is due today. — Reuters
Indonesia reviews subsidised fuel policy JAKARTA: As global oil prices tumble, Indonesia’s new government said yesterday it is reviewing its subsidised fuel policy to ensure consumers are not being charged above the market rate. In his first major economic policy decision, President Joko Widodo last month announced a more than 30% hike in fuel prices, expected to save up to US$11.5 billion (RM39 billion) next year, to help fund his reform agenda and tackle the current account deficit. But since then, global crude prices have fallen nearly 10% as supply growth led by the United States shale oil boom exceeded demand. “We keep reviewing fuel prices and will coordinate with the finance ministry to recalculate and find an effective subsidised price,” Energy Minister Sudirman Said told reporters. — Reuters
‘Vale mulling listing of base metals business’
‘Ebola batters Liberia, Guinea, Sierra Leone economies’ WASHINGTON: The Ebola outbreak in West Africa is taking a heavy toll on the economies of Liberia, Sierra Leone and Guinea, all of which face negative or slower growth next year because of the virus, the World Bank said yesterday. The bank said growth estimates for the three countries hardest hit by Ebola had tumbled since its previous analysis in October, and that projections showed the outbreak was costing them more than US$2 billion (RM6.8 billion) in lost income over the 2014 to 2015 period.
VANCOUVER/TORONTO: Brazil’s Vale SA is considering listing part of its global base metals business, two sources with knowledge of the matter said on Monday, as the miner looks to fund capital projects amid a collapse in iron ore prices. The sources said the world’s top iron ore producer is likely to retain a majority interest in the new entity if it proceeds with the plan. The second source said there had been significant discussion inside Vale about listing the base metals assets, which have fared better than its iron ore business due to steadier prices. — Reuters
India govt rejects Mallya as airline chief BOMBAY: The Indian government has rejected the reappointment of liquor baron Vijay Mallya as head of his grounded and debt-laden Kingfisher Airlines Ltd. Kingfisher, once India’s second-largest airline by passenger share, is under growing pressure to repay debts of nearly US$1.5 billion (RM5 billion) owed to a consortium of largely state-run banks. The company said the ministry of corporate affairs had rejected Mallya’s application for reappointment, a move required under government regulations, without detailing why. — AFP
Projections show the outbreak was costing the countries more than US$2 billion in lost income over the 2014 to 2015 period For this year, gross domestic product growth estimates in Liberia were projected to fall to 2.2%, compared with forecasts of 2.5% in October and 5.9% pre-crisis. In Sierra Leone, 2014 growth was now forecast at 4%, down from previous estimates of 8% in October and 11.3% pre-crisis, the World Bank said. It lowered its 2014 growth forecast for Guinea to 0.5%, compared with 2.4% in October and 4.5% pre-crisis. It said all three countries had been growing rapidly in recent years and through the first half of 2014. The bank added that, for 2015, it was projecting negative growth of minus 2% in Sierra Leone, down from a 7.7% growth forecast in October and 8.9% before the crisis. It
Chipmakers to merge in US$4b deal
also forecast negative 2015 growth for Guinea of minus 0.2% versus October’s estimate of 2% growth and a pre-outbreak forecast of 4.3%. “In Liberia, where there are signs of progress in containing the epidemic and some increasing economic activity, the updated 2015 growth estimate is 3%, an increase from 1% in October, but still less than half the pre-crisis estimate
of 6.8%,” the bank said. The report comes as the World Bank group president Jim Yong Kim begins a two-day visit to West Africa to discuss ways of addressing the outbreak. The World Health Organization said on Monday that some 5,987 people had died of Ebola in Liberia, Sierra Leone and Guinea. — Reuters
SAN FRANCISCO: Chipmakers Cypress Semiconductor Corp and Spansion Inc announced plans to merge on Monday in a US$4 billion (RM13.7 billion) deal bringing together two key makers of components for “Internet of Things” devices. “This merger represents the combination of two smart, profitable, passionately entrepreneurial companies that are No 1 in their respective memory markets and have successfully diversified into embedded processing,” said T J Rodgers, Cypress founding president. — AFP
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W E D N E SDAY D EC E MBER 3 , 2014 • T HEED G E FINA NCIA L DAILY
Japan kicks off campaign in ‘Abenomics referendum’ PM promises to make the country ‘shine again at the centre of the world’ BY TORU YAMANAKA
SENDAI: Official campaigning kicked off in Japan yesterday before a Dec 14 election which Prime Minister Shinzo Abe has described as a referendum on his faltering “Abenomics” growth blitz. “I promise to make Japan a country that can shine again at the centre of the world,” Abe told hundreds of voters at his initial stump speech in the northern port of Soma. The town lies around 40km from the Fukushima Daiichi nuclear plant, which was sent into meltdown by the 2011 tsunami. Its fragile economy and ageing populace are a stark reminder of the challenges Abe’s government faces as it struggles to reinvigorate Japan’s lethargic economy. “There will be no revival of Japan without Fukushima’s reconstruction, which I vow to speed up” Abe said. More than 1,180 candidates nationwide are vying for 475 legislative seats in the powerful lower house of parliament, with Abe’s Liberal Democratic Party (LDP) seen likely to cruise to a comfortable majority. The 60-year-old premier still has
Abe (second from right) giving high ﬁves with well-wishers during his stumping tour for the Dec 14 general election in Sendai, Miyagi prefecture yesterday. Photo by AFP
two years left in his mandate, but he called the vote in the wake of his decision last month to delay a planned sales tax rise to 10%. A levy rise in April, from 5% to 8%, slammed the brakes on growth and pushed the country into recession in the July to September quarter. Ratings agency Moody’s on Monday downgraded Japan’s credit rat-
Hong Kong protest founders to surrender HONG KONG: The three original founders of Hong Kong’s pro-democracy Occupy Central movement tearfully announced yesterday they will surrender by turning themselves in to police today and urged protesters still on the streets to retreat. “As we prepare to surrender, we urge the students to retreat, put down deep roots in the community and transform the movement,” said Occupy Central leader Benny Tai, who added that the decision to surrender is a commitment to the rule of law and based on “the principle of peace and love”. The announcement came after hundreds of pro-democracy protesters clashed with police on Sunday
leaving dozens injured, in one of the worst nights of violence since rallies began over two months ago. “Surrendering is not an act of cowardice, it is the courage to act on a promise. To surrender is not to fail, it is a silent denunciation of a heartless government,” Tai said. He praised the bravery of frontline occupiers, saying it was time for protesters to leave “this dangerous place”. Tai, Chan Kin-man and Chu Yiuming founded the Occupy Central civil disobedience group in early 2013 to push for political reforms, but have increasingly taken a backseat as more radical student groups came to the fore. — AFP
ing by one notch to A1, citing “rising uncertainty” over the country’s debt situation and Abe’s faltering efforts to kick-start growth. Critics have derided the vote, which will cost taxpayers about US$500 million (RM1.71 billion), as “an election without a cause,” but Abe has insisted the poll is necessary as a referendum on his controversial big-spending,
easy-money policies. For voters, the state of the economy, streamlining the size of Japan’s parliament, and better child care programmes to lure more women into the workforce are the top three issues, according to a survey published by the Asahi newspaper on Monday. Some 34% of surveyed voters said they would vote for the LDP, followed by 13% for the main opposition Democratic Party of Japan. The survey showed that Abe’s cabinet maintained an approval rating of 40%, nearly flat from 39% seen in the same survey taken a week ago. The opposition has criticised the conservative leader for his decision to expand the role of the Japanese military, as well as efforts to restart nuclear power after the Fukushima crisis. — AFP
Canadian, Indonesian on trial over Jakarta school sex abuse BY P RE S I M ANDARI
JAKARTA: A Canadian and an Indonesian went on trial yesterday accused of sexually assaulting children at a prestigious Jakarta school. Neil Bantleman and Ferdinand Tjiong deny committing abuse at the Jakarta International School, which has long been favoured by expatriates and wealthy Indonesians in the capital but is now facing the worst crisis in its 60-year history. They are the most prominent figures caught up in a wide-ranging issue that has also seen cleaning staff accused of raping a young boy, and the revelation that a suspected serial paedophile sought by the FBI used to teach at the school. School administrator Bantleman and teaching assistant Tjiong, who face up to 15 years in jail if found guilty, have received strong support from parents, many of whom believe they are innocent. After the initial allegation emerged in April that cleaners had raped a nursery school boy, more parents made abuse claims. The first trials began in August, with five cleaners facing charges of child sex abuse. However, several of the cleaners who originally confessed have since recanted, claiming they were beaten by police. Their trials are continuing. — AFP
China will not go to war for North Korea, says retired general BAIJING: China will not step in to save neighbouring North Korea if the Pyongyang regime collapses or starts a war, a retired People’s Liberation Army general said, possibly signalling waning patience in Beijing with its wayward, nuclear-armed ally. “China is not a saviour,” Wang Hongguang, formerly deputy com-
mander of the Nanjing military region, wrote in the Global Times newspaper, which is close to the Chinese Communist Party. “Should North Korea really collapse, not even China can save it,” he said. The outspoken Wang has made critical comments about North
Korea before, and it was not clear whether his words indicated a policy shift regarding Pyongyang. China has long been the isolated North’s key ally and aid provider. “China has no need to light a fire and get burnt,” Wang said. “Whoever provokes a conflagration bears responsibility. It is not necessary for
China’s younger generation to fight a war for another country,” he said. Wang criticised North Korea for its nuclear development, using it as an example of how its interests can differ from China’s and saying it had “already brought about the serious threat of nuclear contamination in China’s border area”. — AFP
IN BRIEF AC/DC drummer pleads not guilty over drugs, kill threat WELLINGTON: AC/DC drummer Phil Rudd has pleaded not guilty to charges of drug possession and threatening to kill, his lawyer told a New Zealand court yesterday. Rudd was excused from appearing when his case came up briefly in the District Court in the North Island coastal city of Tauranga, where he was arrested on Nov 6 when police raided his waterfront mansion. But the 60-yearold’s lawyer Paul Mabey said that since the veteran rocker last appeared before the court in November, he had filed a notice entering a not guilty plea to all charges. — AFP
Pakistan air strikes and ground fire kill 24 militants PESHAWAR: The Pakistan military said yesterday it had killed at least 24 militants in air strikes and ground fighting in northwestern tribal areas bordering Afghanistan, as part of ongoing offensives in the region. Air strikes took place in the restive North Waziristan tribal district, where the army launched a major operation in June targeting Taliban and Haqqani network militants. Ground troops, meanwhile, traded fire with militants in Khyber agency, where Taliban fighters are based. — AFP
Suspected Shebab rebels massacre 36 in north east Kenya NAIROBI: Gunmen have massacred 36 people in northeast Kenya in the latest attack by suspected militants from Somalia’s al-Qaeda-affiliated Shebab rebels in the troubled region, officials said yesterday. A group of gunmen attacked a quarry near the town of Mandera yesterday morning. After spraying tents where the quarry workers slept with gunfire, the militants then weeded out non-Muslims and shot them in the head. Some of the victims were also beheaded, police sources and reports said. — AFP
British reporter convicted of contempt by Bangladesh court DHAKA: A Bangladesh court yesterday found an award-winning British journalist guilty of contempt for questioning the official death toll of three million in the country’s 1971 independence war. Judges from a special war crimes court ruled David Bergman’s blog in November 2011 had “hurt the feelings of the nation”. It ordered him to pay a 5,000-taka (RM222) fine or go to prison for seven days, according to prosecutor Tureen Afroz. — AFP
WEDN ESDAY DEC EM B ER 3 , 2 0 14 • TH EEDGE F I N AN C I AL DAI LY
Three surrender in Thai corruption probe At a time of heightened sensitivity surrounding the palace months after military coup BY A MY SAWI TTA LEF EV R E
BANGKOK: Two Thai army officers and a civilian have answered a police summons, police said, in a widening corruption investigation that has also led to the arrest of high-ranking policemen and relatives of Princess Srirasmi, the wife of the Crown Prince. The investigation comes at a time of heightened sensitivity surrounding the palace months after the military launched a coup. The revered but ailing King Bhumibol Adulyadej, 86, was admitted to hospital in October and underwent an
operation to remove his gallbladder. Last week, some senior police officers and civilians were arrested in the crackdown into alleged police graft including charges ranging from bribery to defaming the monarchy. Among them were three people with the Akrapongpreecha surname, the royal name bestowed on Srirasmi’s family when she married Crown Prince Vajiralongkorn in 2001, police said. Witthaya Theskhunthot, a civilian, and army officers Sergeant Nathakorn Yasri and Sergeant Thiraphong Chochampi, were the lat-
est suspects to surrender to authorities. “Altogether three people turned themselves in,” Major-General Chanthep Saesawet, deputy commissioner of the Metropolitan Police Bureau, told Reuters. “The two army officers are being detained by the army and one civilian surrendered to police on Monday night at a television broadcasting station.” The men turned themselves in three days after Crown Prince Vajiralongkorn asked the government to strip his wife Srirasmi’s family of the royal name.
Police say Lieutenant General Pongpat Chayapan, a former head of the Central Investigation Bureau, was the ringleader. Pongpat and several others were charged under harsh lese-majeste laws for allegedly citing the monarchy for personal benefit. The suspects have not been allowed to comment publicly on the charges, which include money-laundering and oil smuggling. Police last week displayed slides showing antique Buddhist statues, gold bars, stacks of cash and cars seized at safehouses allegedly linked to some of the suspects. — Reuters
MEXICO CITY: A peaceful rally over the presumed massacre of 43 Mexican students ended with violence in the capital on Monday, and the president’s popularity sank to new lows on his second anniversary. Thousands marched along Mexico City’s main boulevard, chanting for President Enrique Pena Nieto to resign and waving blackened flags of the country in anger over the case of the missing students. As night fell, a small group of masked protesters armed with bats threw firebombs at banks and broke the windows of several shops along Reforma Boulevard, which is popular with tourists. Hundreds of riot police protecting the Senate used fire extinguishers to repel the protesters. — AFP
British complaints on ban on MPs’ Hong Kong visit ‘useless’
Man who went on spending spree with father’s credit cards jailed 27 months
KICK SCOOTER DELUXE... Kick scooters are already a common sight in most major cities, either ridden by children on the way to school or commuters completing the ﬁnal leg of the daily journey into the oﬃce. But what makes MINI’s CitySurfer stand out is that it has an electric motor integrated into its rear wheel hub that gives the scooter a top speed of 25kph. Its lithium ion battery — which is an integral part of the frame — is good for 25km before it needs recharging. The CitySurfer can recapture energy via braking while running on the motor and use it to top up the battery. When the battery is dead, the scooter still operates like a normal kick scooter and the cell can be recharged via the 12V power socket found inside most cars. Photo by AFP
Ceasefire in Lugansk ‘agreed in princple’ KIEV: Ukraine and pro-Russian rebels have “agreed in principle” on a ceasefire in the eastern war-torn region of Lugansk, one of the ex-Soviet state’s two separatists provinces, the Organisation for Security and Cooperation in Europe (OSCE) said. “All agreed in principle to a total ceasefire along the entire line of contact between Ukrainian Armed Forces and those under control of the (Lugansk People’s Republic), to be effective from 5 December,” the
Peaceful protest over 43 missing Mexicans ends in violence
BEIJING: China rebuffed as “useless” yesterday complaints from British Prime Minister David Cameron about a ban on a group of British lawmakers from visiting Hong Kong, saying the former colonial power would reap what it sowed. Cameron believes China’s decision to prevent the trip is mistaken and has only served to heighten concerns around the territory, his spokesman said on Monday. On Sunday, the chairman of parliament’s foreign affairs committee said Chinese embassy officials had told him he and other British lawmakers would be refused entry to Hong Kong to monitor progress towards democracy there. — Reuters
Lebanese army detains wife and son of IS leader BEIRUT: The Lebanese army detained a wife and son of Islamic State (IS) leader Abu Bakr al-Baghdadi as they crossed from Syria in recent days, security officials said yesterday. The officials declined to give the name or nationality of the woman whom they described as one of his wives. The Lebanese newspaper As-Safir reported the army had detained her in coordination with “foreign intelligence apparatus”. It said she had been travelling with a fake passport accompanied by one of her sons. IS has seized wide areas of Iraq and Syria, Lebanon’s neighbour to the east, declaring a “caliphate” over the territory it controls. Investigators were questioning her at the headquarters of the Lebanese defence ministry, As-Safir reported. The Lebanese security forces have waged a crackdown on IS sympathisers in Lebanon and the intelligence services have been extra vigilant on the border crossings. — Reuters
OSCE said in a statement released on late Monday. “They also agreed that the withdrawal of heavy weapons would start on 6 December,” the statement added. The two sides signed a Russian-brokered truce on Sept 5 in the Belarussian capital Minsk that helped stem some of the bloodiest fighting but it has been frequently broken and followed by hundreds of deaths on both sides.
The heaviest battles now rage around the devastated airport of the main rebel-held city of Donetsk, centre of the self-proclaimed Donetsk People’s Republic that also proclaimed independence from Kiev. Fighting has intensified at the airport in recent days, but a separatist source told AFP that a new round of negotiations about a broader Donetsk ceasefire was due to begin yesterday afternoon.
The Ukrainian military announced on Monday that a temporary truce had been agreed for the territory surrounding the Donetsk airport, although an AFP reporter heard heavy shelling in the area yesterday morning. The rebel source said the negotiations would involve senior Ukrainian military figures and General Alexander Lentsov — the deputy head of the Russian ground forces. — AFP
SINGAPORE: A jobless man helped himself to credit cards and cheque books that belonged to his family members, The Straits Times reported, and used them to fund a shopping and gambling spree. In less than three months, Nicholas Tian Weijie paid for a raft of items including iPhones, movie tickets and restaurant meals, causing losses amounting to S$36,850.36 (RM96,498). Only S$700 has been recovered. Yesterday, he was sentenced to 27 months in prison after admitting to 99 offences between last December and February this year.
Foreign worker jailed for assaulting police oﬃcer during Little India riot SINGAPORE: A construction worker was sentenced to a year in prison yesterday for assaulting a police officer during the Little India riot last year, The Straits Times reported. Ganesan Periyaiah, 25, is the 22nd individual to be dealt with over last year’s incident. The Indian national threw a glass beer bottle at the female police officer.
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WE D N E SDAY D EC E MB ER 3 , 2014 • T HEED G E FINA NCIA L DAILY
WELLBEING . THE ARTS . WINE+DINE . STYLE+DESIGN . LEISURE
First you take a drink, then the drink takes a drink, then the drink takes you. — F Scott Fitzgerald
IT’S BACK! Urbanscapes 2014 ascends to Genting BY CA RMEL DOMI N I C
rbanscapers, consider yourselves warned. Malaysia’s creative arts festival celebrates 12 years of Urbanscapes with a month of activities which included satellite shows featuring Scottish post-rock band Mogwai (Nov 30) and American comedy rock duo Tenacious D (Dec 1) before the full-fledged festival on Saturday at the Horse Ranch, Resorts World Genting. At the country’s longest-running creative arts festival, guests have the opportunity to explore creative arts, culinary and cultural offerings while enjoying a thrilling line-up of local, regional and international bands. Come Saturday, festival goers can look forward to the rousing sounds of the Los Angeles-based indie rock band, Local Natives. Playing alongside it will be the legendary American college rock outfit, The Lemonheads whose cover of Simon & Garfunkel’s “Mrs Robinson” provided them with the much-needed breakthrough in their salad days. Grammy Award-winner Kimbra, the New Zealand-born single-named art-pop songwriter and Jagwar Ma, the Sydney-based psychedelic/dance band will be performing at Urbanscapes. Fans of our own local artistes can look forward to OJ Law and his versatile range of catchy melodies intertwined with infectious guitar beats and unforgettable vocals. Singer-songwriter Ali Aiman will serenade festival goers and the talented singer Najwa will give fans the opportunity to experience sounds from her new EP that features darker undertones with sombre, minimalistic echoes. The other acts that complete the festi-
Horse Ranch, the venue of Urbanscapes 2014, in Resorts World Genting
val line-up are June Marieezy, Faiq and the Manja Mob, Azmyl Yunor & Orkes Padu, The Cotton Field Scarecrowes,Cashew Chemists, Paperplane Pursuit, Jumero and Dirgahayu. Known for its off-beat festival sites, Urbanscapes is the first to introduce a highland festival experience to the expanding Malaysian festival circuit. Since its inception, it has supported Malaysian grassroots movements, fuelled home-grown entrepreneurs and provided a platform that has launched the careers of many artistes. Festival goers can expect local brand offerings from clothes to sports attire to high-quality, distinctive canvas art. Among the brands that will make an appearance
at the festival are Ash Be Nimble, Mosaic Bijoux, Psychedelic Store, Nyo, Trendy Bellaz, I’ll Studio, Third Culture, URBN8, CanvasPick, Prototype gallery, Huggaz, Homu store, Robe Du Jour, Wild Baby, Sun Off A Beach just to some. Urbanscapes is transforming the assumption that stables are just for horses. Wandering through the festival grounds will take the crowd to “The Democratic People’s Republic of North Bangsar”, a mock parody country with a back story that is hilarious — and perhaps, plausible. Produced by Terry & The Cuz and Kuah Jenhan, “North Bangsar” offers an experience much like walking into a film set. Visitors to the festival will get to
meet its mayor — Jenhan — and explore the town, get a “prescription” from a Chinese medicine hall and participate in the “local” activity of choice. Or you could explore the sounds, shapes and power of water with The Biji-Biji Initiative’s interactive water tower. This tower will also light up in the night — turning it also into an art installation. For more information, check out urbanscapes. com.my and to buy your Urbanscapes tickets, visit www.ticketpro.com.my. Tickets can also be bought at physical outlets throughout the country. For the full list, look them up at www. ticketpro.com.my/jnp/ticket-outlets/index.html.
WEDN ESDAY DEC EM B ER 3 , 2 0 14 • TH EEDGE F I N AN C I AL DAI LY
WELLBEING . THE ARTS . WINE+DINE . STYLE+DESIGN . LEISURE
Personal ASSISTANT COMPI L ED BY LLEW -ANN P HANG
WORK. LIFE. BALANCE
NATIONAL legend Tan Sri P Ramlee, back in 1962, directed a ﬁlm entitled Ibu Mertuaku which told the tale of a tragic love aﬀair between a small-time musician Kassim Selamat and Sabariah Mansoor whose very wealthy mother separates the two. Hariry Jalil writes and directs a stage play called Surat Sabariah which depicts the tale of Kassim and Sabariah as they live in the basement of a house and argue over his passion for music. Jegela brings the couple’s son Tajuddin on a journey through his parents’ story. The play stars Azman Hassan, Aloeng Silalahi, Razak Osman and Sherie Merlis as Sabariah. To be staged from tomorrow until Sunday at the Damansara Performing Arts Centre’s (DPAC) Black Box in Petaling Jaya from 8.30pm, tickets are priced at RM35 for adults and RM25 for students. Tickets can be obtained at www.dpac.com.my. Call the box oﬃce at (03) 4065 0001/0002 for details.
NEED a new bag for your year-end holiday? IVD Ideal Vision Distribution is holding its OﬀSeason Clearance Warehouse Sale on luggage, bags and accessories. From today until Sunday, enjoy clearance sale discounts of up to 70% on brands including Samsonite, Caseman, American Tourister and Case Logic, among others. Open from 10am to 10pm, the sale is at The School in Jaya One, Jalan Universiti, Petaling Jaya.
Genting to host fun and familiar musicians in Elmo Makes Music BY C ARM E L DO M I NI C
IF you’ve not heard about it yet, myBurgerLab is in the spirit of giving in the season of Advent, leading up to Christmas. For 25 days leading up to Christmas, you can claim a burger everyday with the myBurgerLab Advent Calendar 2014 that is priced at RM100. Choose from the bomb, chicken and egg dilemma, fat Elvis, A++, gojira, curry crunch, spicy Hawaiian, sarong burger, Swisstake, kick in the face, hangover, yellow submarine, geisha, beautiful mess, jammin with Elvis and say cheese2. The calendar comes in the form of a card with 25 dates on it and each day at 4pm, myBurgerLab will announce the burger of the day at which point you can claim your burger. Get your card at the outlets in OUG, Kuala Lumpur, or Sea Park, Petaling Jaya, and it can be used at either Labs or the new one in Bandar Sunway.
ome 45 years ago, Joan Ganz Cooney and Lloyd Morrisett discussed the platform which they would provide pre-schoolers with the advantage and opportunity of learning a thing or two as the kids sat fastened in front of the television set. It was after this discussion and deliberation that Sesame Street was mooted to disseminate an educational presentation of alphabets, numbers and other important lessons through Jim Henson’s colourful muppets with funny names and characteristics to match. One would not know the struggles or challenges the crew had encountered to keep itself relevant over the past four decades but Sesame Street should pride itself on the 159 Emmy Awards and eight Grammy Awards it has amassed as of this year, and the estimated 77 million Amer-
ican kids who had watched the series by the year 2008. Of the many muppets — Kermit the Frog, Oscar the Grouch, Cookie Monster, Bert and Ernie, Miss Piggie, Mr Snuffleupagus — it was a furry red thing with an orange nose which emerged in 1985 with the name, Elmo, that turned out to be a sensation. A funny character who refers to himself almost always in the third person, Elmo proved to be popular enough by 1998 that he was given his own full segment on Sesame Street called Elmo’s World. Elmo came to Malaysia, more specifically to the highlands of Genting, late last month to appear in his own musical Elmo Makes Music, thanks to Christopher J Harper, the talent behind this musical. In an exclusive interview with The Edge Financial Daily, Harper reveals his foresight and enthusiasm — two traits that are essential to produce a live pro-
duction of this magnitude and to have it shared across borders. The 38-year-old, who hails from Mississippi in the United States, said: “Elmo Makes Music is a teaching show, just like Sesame Street and one of the main points of the live show is that the characters use their imagination, ingenuity and their creativeness to make their own musical instruments because the story line is such where situations arise that require them to be spontaneous with whatever resources that are available to them.” This is in line with the original objective of the television show — to educate and encourage children to think out of the box while also teaching them to work through the restrictions that could potentially limit their abilities. The family-oriented musical that is 90 minutes long has 15 dedicated cast members who perform 25 songs designed to have a little something for
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WE D N E SDAY D EC E MBER 3 , 2014 • T HEED G E FINA NCIA L DAILY
WELLBEING . THE ARTS . WINE+DINE . STYLE+DESIGN . LEISURE
01. Harper posing with the characters from Sesame Street. Photos by Patrick Goh 02. Harper speaking enthusiastically about the show.
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parents and their children. “The beauty of this production is that it is written to have adult humour because the writers know that parents are going to be watching too and so, while it is written to primarily entertain and educate the kids, at the same time, the adults will also be entertained. It crosses both levels,” Harper said. He proceeds to give an example of a scene whereby Bert (the banana-looking muppet), who does a disco number, will come on stage dressed in a white suit, similar to the one John Travolta wore in the 1977 hit dance movie Saturday Night Fever. Bert usually dons a striped T-shirt and olive green pants. Hence, when he emerges on stage in the white ensemble, to the children, it’s
hysterical, but for the parents, the scene will take them back to images of John Travolta grooving to the Bee Gees’ songs. “So, both the kids and the parents are entertained by this scene but for different reasons yet, at the same time, they get to share the funny moment,” Harper explains. Harper is grateful for the various roles he has held backstage over his 20-year career in live stage productions. “The opportunity to experience the whole gambit of everything — from being in charge of making the costumes and making sure that they last for the whole tour to doing the make-up for the cast to designing the backdrop for the production — in my opinion, plays a pivotal role because you take
everything that you have learnt into account, especially when you venture into directing or choreographing,” he mused. Having done over 25 live productions, one would think that Harper might find it hard to have a favourite but he says this particular live musical is his favourite. “It has the best combination of songs from the older and latest version of Sesame Street. Also, the way that the show progresses is very fluid from one scene to the next. The other thing that fascinates me about this production is one particular UV (black light) number that has dancing feet. There have been many UV numbers in past productions, but somehow, this one just fascinates me. Usually, when people ask me how a UV scene
PICK OF THE DAY “I CREATED this fragrance like a trigger to reveal all of man’s potential,” says Theirry Wasser who created Guerlain’s latest scent, the L’Homme Ideal. Packaged in a mysterious form, the scent comes in a square, facetted and luxurious bottle, complete with a masculine heavy cap that is matte and borrows its guilloche detailing from the watchmaking world. Wasser labels the fragrance as smart, handsome and strong and says the key to the perfume is the ‘amaretto’ accord that makes a strong enough impression and an almond ﬁnish to encapsulate an irresistible man. Guerlain is available at the Parkson KLCC, Parkson Pavilion, Sogo, Isetan Gardens Mid Valley and Isetan KLCC and the L’Homme Ideal EDT is priced at RM244 for the 50ml bottle or RM340 for the 100ml package.
is engineered, I will simply say it’s magic!” he said with obvious exuberance. As the conversation progressed, Harper recollects how he would not be living this illustrious career if not for his older sister. Having been dragged along by his parents for one of his sister’s school productions, the then five-year-old Harper was fascinated just watching his sister singing as a chorus member and decided there and then that he wanted to do just that for the rest of his life. Also as the younger sibling, Harper said he was forced to be his sister’s dancing partner for all her home dance show productions that were staged in their hall for their parents. This, he noted, sparked his interest to go into choreographing. For Harper, being on stage is not about the attention, but the smiles and laughter he will be able to inevitably give the audience through his performances either on stage as one of the muppets or in this case, the director of the musical. “I do like performing on stage but what I honestly like is seeing the reaction on people’s faces. Like for instance, when I played the Cookie Monster. As I was walking out, I saw kids wearing the Cookie Monster T-shirt or some putting their hands out for a highfive or asking for a hug and looking so excited… that is the best feeling in the world. It honestly is. I live for the small moments of seeing their faces light up when the muppets come out. That’s what makes my day,” Harper said. Elmo Makes Music will show at the Genting International Showroom until Jan 3. Tickets are priced from RM88 to RM158 for adults. Log on to http://www.rwgenting.com/en/ entertainment/2014/sesame_street/index. htm for a preview of the show, showtimes and promotions.
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WEDN ESDAY DEC EM B ER 3 , 2 0 14 • TH EEDGE F I N AN C I AL DAI LY
Chelsea seeks another Bridge of sighs for Spurs After a draw at Sunderland, Mourinho’s men eager to get back to winning ways BY TON Y JI MEN EZ
LONDON: Chelsea will look to stretch one of the longest unbeaten sequences in the top flight when the runaway leaders entertain arch-rivals Tottenham Hotspur today. There has been little love lost between the fans of both sides since Spurs beat Chelsea 2-1 at Wembley in the first all-London FA Cup final in 1967. The Stamford Bridge club, how-
N Korea hopes football school will unearth next Messi BY PATRI C K JO HNSTON
MANILA: Argentine captain Lionel Messi is the most popular player among students at the Pyongyang International Football School, a fledgling facility North Korean officials hope will unearth a talent like the Barcelona great. North Korean leader Kim Jong Un was the driving force behind the school, which opened in June last year, according to the country’s Asian Football Confederation official Han Un Gyong. The facility caters for 200 boys and girls aged nine and above who are chasing dreams of soccer stardom. Han, who sits on the AFC’s executive committee, said students are selected from around the country after scouting and playing in trial matches.Han told a small group of reporters on the sidelines of the AFC’s award ceremony in Manila: “I go to the school and I ask them who is very good, best player? They all say ‘Messi’. “They read books about Messi. Through the Internet, they can watch all the matches at the Pyongyang International School.” She said work began on the new school in 2012, shortly after basketball-loving Kim came to power following the death of his father, Kim Jong Il, in late 2011. Interest in football soared in North Korea after their appearance at the 2010 World Cup. Han said she would love fourtime World Player of the Year Messi to come and see the facility. What would it mean to North Korea if Messi came? “Oh please,” she gasped. “Our children love him.” — Reuters
ever, can boast a proud 24-year unbeaten home streak against the team from White Hart Lane, stretching back to 1990 when Gary Lineker scored one of the goals as the visitors triumphed 2-1 in the old First Division. Chelsea have yet to taste defeat in 20 matches in all competitions this season and, after dropping two points in a 0-0 draw at lowly Sunderland last Saturday, Jose Mourinho’s men will be keen to instantly get back to winning ways.
“I wouldn’t say we are happy with a point but one is better than no points,” Belgium goalkeeper Thibaut Courtois told the club website on Monday. “If you score early then you know the opposition have to come at you and there will be more space but we couldn’t do that and it was a difficult match.” Chelsea are six points ahead of second placed Manchester City after 13 Premier League games and Courtois is hungry to keep
churning out victories. “We don’t have to focus on clean sheets, the most important thing is to win games,” he said. “Obviously it’s nice to keep a clean sheet but I’d rather win a match 2-1. It’s good that we haven’t lost a match but we want to win rather than draw.” Spurs are in seventh place, 13 points adrift of Chelsea, and will go to Stamford Bridge buoyed by their 2-1 comeback victory at home to Everton last Sunday. — Reuters
Neuer joins Ronaldo, Messi on Ballon D’Or shortlist ZURICH: Manuel Neuer became the first goalkeeper since 2002 to make the final shortlist for the FIFA world player of the year award on Monday when he was included alongside Cristiano Ronaldo and Lionel Messi in the final three. Argentina and Barcelona forward Messi, winner on four occasions, made the shortlist for the eighth time in a row and Portugal’s Ronaldo, winner in 2008 and last year, for the fourth time running. Germany coach Joachim Loew, Real Madrid’s Carlo Ancelotti and Atletico Madrid’s Diego Simeone were selected for the Coach of the Year award. The final ceremony will take place in Zurich on Jan 12. Germany and Bayern Munich goalkeeper Neuer helped his country win this year’s World Cup and often doubled up as a sweeper, rushing out of his penalty area to intercept opponents’ attacks. He is the first goalkeeper to make the final three since compatriot Oliver Kahn was included in the shortlist in 2002. — Reuters
Viva Zapata! Sub rescues 10-man Napoli with late goal MILAN: Substitute Duvan Zapata headed a stoppage-time equaliser to give 10-man Napoli an unlikely 1-1 draw after hosts Sampdoria had controlled most of their Serie A encounter on Monday. Sampdoria, leading 1-0 thanks to Eder’s second-half strike, appeared set for maximum points after Napoli defender Kalidou Koulibaly was given a second yellow card for a trip on the Brazilian forward in the 85th minute. Napoli then stunned the Luigi Ferraris crowd when Colombian Zapata escaped the attention of four defenders and stooped to head in Faouzi Ghoulam’s cross in the second minute of added time. Napoli’s point took them up to joint third alongside Genoa on 23 points, one ahead of Sampdoria. Juventus are top with 34 points followed by AS Roma on 31. — Reuters
Iraqi Abbas devastated by knee injury SYDNEY: Sydney FC’s Iraqi midfielder Ali Abbas was devastated after suffering a knee injury which will sideline him until 2016 and has ruled him out of January’s Asian Cup, his club coach Graham Arnold said yesterday. Abbas tore his anterior cruciate ligament, medial ligament and damaged the capsule at the back of his left knee after being tackled by Western Sydney Wanderers midfielder Iacopo La Rocca in last Saturday’s derby. The 28-year-old, who was recently recalled to the Iraq squad for the first time since he sought asylum in Australia in 2007, will be sidelined for 14 to 15 months. — Reuters
Liverpool’s Balotelli apologises for post
Players must lead a healthy lifestyle, says Tengku Abdullah KUANTAN: Footballers, especially national players, must be disciplined and lead a healthy lifestyle to ensure success in competitions, including the 2014 AFF Suzuki Cup said Football Association of Malaysia (FAM) President Tengku Abdullah Sultan Ahmad Shah. Tengku Abdullah said for Malaysia to succeed in the competition and reach the final of the AFF Suzuki Cup, coach Dollah Salleh’s boys must be disciplined and practise a healthy lifestyle. “I was informed that national
striker Safee Sali was spotted smoking. I must remind the players that smoking is unhealthy. They must practice a healthy diet, sleep early and have a positive mind because these are the winning factors. “If players can be focused and be confident, they can be successful,” he told reporters yesterday. Safee was heavily criticised after a picture of the striker, smoking a cigarette during the AFF Suzuki Cup competition in Singapore, went viral on social media. The FAM secretary-general Da-
tuk Hamidin Mohd Amin said Safee had already apologised and had promised not to repeat the offence. Tengku Abdullah said making it to the semi-finals was just the first step towards achieving the FAM’s intended target of reaching the final. “Based on the track record since 2008, we have found it difficult to beat Vietnam but I hope this year will give us a positive result. The players must be confident,” he said. Malaysia face Vietnam in the first leg semi-finals at the Shah Alam Stadium this Sunday. — Bernama
LONDON: Liverpool striker Mario Balotelli apologised yesterday for his social media post which appeared to contain potentially racist and anti-Semitic references. Balotelli, who made the post on his Instagram page on Monday, will be investigated by the Football Association, according to British media reports. The 24-year-old Italian later deleted the post. “I apologise if I’ve offended anyone,” Balotelli said on Twitter. “The post was meant to be anti-racist with humour. I now understand that out of context it may have the opposite effect.” — Reuters
T-Team Signs Two Uzbekistan National Players KUALA TERENGGANU: T-Team has signed two Uzbekistan national players to spearhead their challenge in the Premier League next season. Chief operating officer Mohd Syahrizan Mohd Zain said T-Team is still looking to sign another foreign player of quality to fill the third slot. The two Uzbekistan players who signed for T-Team are striker Farhod Tadjiyev and midfielder Sadriddin Abdullaev. Both the former Lokomotiv Tashkent players are 28 years old. — Bernama
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W E D N E SDAY D EC E MBER 3 , 2014 • T HEED G E FINA NCIA L DAILY
Chong Wei to sue Razif, daily over doping claim ‘Just because I have a doping case now, you can’t simply say anything’ REUTERS
KUALA LUMPUR: Embattled national badminton hero Datuk Lee Chong Wei, who has been provisionally suspended for an alleged anti-doping violation, has sent a legal notice to Razif Sidek over claims that he had been using the banned substance dexamethasone for a long time. A local daily reported yesterday that Chong Wei had sent a letter of demand to Razif and a Malay daily through law firm Song and Partners last week. “The allegations are not true. Just because I have a doping case now, you can’t simply say anything.
Australian Open tweaks heat policy for 2015 tournament MELBOURNE: Australian Open organisers have tweaked their Extreme Heat Policy for next year’s tournament after being accused of forcing players to perform in “inhumane” conditions during a heatwave in January. Despite water bottles melting, ballboys collapsing and players vomiting and passing out when temperatures exceeded 40°C for four days at this year’s tournament, play was stopped for only four hours on the outer courts. There was a groundswell of criticism from players, mainly over the lack of transparency about when the policy would be implemented as it was entirely at the discretion of the tournament referee and not triggered by temperatures reaching a certain level. Tournament director Craig Tiley said yesterday the addition of a roof over a third show court, the Margaret Court Arena, would mitigate the effects of hot weather and he hoped the changes to the policy would make matters clearer to players. “The heat policy will be applied at the referee’s discretion,” Tiley told reporters. “The decision on implementing the heat policy will take into account the forecast once the ambient temperature exceeds 40° C and the Wet Bulb Global Temperature (WBGT) reading exceeds 32.5. When conditions exceed these levels the referee is taking into account the forecast and state of play.” Rather than use the raw Celsius readings to assess the heat, organisers prefer to use the WBGT composite, which also gauges humidity and wind to identify the perceived conditions. — Reuters
Does he have any proof to justify his claims?” he was quoted as saying in the report. Chong Wei’s urine sample was found to have traces of dexamethasone during a random test at the World Badminton Championships in Copenhagen in August. Dexamethasone is a type of steroid medication usually used for rehabilitation from injuries. A second test carried out on his B-sample at the Oslo University Hospital in Norway on Nov 5 confirmed the presence of the substance. The Badminton World Federation (BWF) then announced on
Nov 11 that Chong Wei was provisionally suspended. Razif, who is also a former national player, was quoted by Malay daily Kosmo! as saying that Lee, 32, had been using dexamethasone for a long time. He had also alleged that officials within the Badminton Association of Malaysia were aware of the matter. Youth and Sports Minister Khairy Jamaluddin responded by calling the claim unsubstantiated and urged people not to speculate until the BWF hearing. — The Malaysian Insider
Malaysia kicks off women’s World Team Championship in style WOMEN’S WORLD TEAM SQUASH CHAMPIONSHIP
KUALA LUMPUR: Malaysia got off to a perfect start at the 2014 Women’s World Team Squash Championship after securing two straight wins in the preliminary Pool C matches held at the Mark Sachvie Squash Centre in Canada. The national squash side led by world No 1, Datuk Nicol David secured a comfortable 3-0 win against host country, Canada, before doing the same against Mexico in the second match, played late on Monday, according to the tournament website. In the first match against Canada, Low Wee Wern produced a brilliant display to put Malaysia ahead by defeating Danielle Letourneau 11-6, 11-2, 11-5. Nicol however, faced stiff resistance from Samantha Cornett before emerging with a 11-6, 11-8, 9-11, 11-3 victory before Delia Arnold wrapped up the comfortable win by edging Nikki Todd 11-6, 12-10, 11-5. In the second game against Mexico, Wee Wern also gave Malaysia a good start by defeating Nayelly Hernandez 11-5, 11-6, 11-3 before
Kazakhstan’s Almaty seeks place in Olympic history ALMATY: Inspired by the success of neighbours Russia in staging the Olympics in the southern resort city of Sochi, Kazakhstan has set its sights on hosting the 2022 Winter Games in its former capital of Almaty.”We will prove that Kazakhstan is a powerful country which is capable of staging the world’s biggest sports events.” Kazakhstan, which is mostly known to the Western public through the British-American mockumentary Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan, currently looks like the favourite in the race for the right to host the Games. — AFP
Pocock has no regrets over protest arrest SYDNEY: Wallabies flanker David Pocock has made no apologies for his arrest following an environmental protest at the weekend, despite his employers issuing him with a written warning. The Zimbabwe-born 26-year-old was among seven protestors who chained themselves to equipment at a blockade at Whitehaven Coal Ltd’s Maules Creek mine in the Leard State Forest last Sunday. All were granted conditional bail after arrest, while Pocock was also given a written warning for breaching their code of conduct by the Australian Rugby Union, which was endorsed by his Super Rugby side, the ACT Brumbies. — Reuters
Gloucester signs All Blacks prospect Marshall
Malaysia and Canada line up before their Pool C meeting, which Malaysia won.
Nicol contributed the second point after disposing Diana Garcia 11-5, 11-3, 11-4. Delia then wrapped-up the second consecutive win for Malaysia after breezing past Karla Urrutia 11-4, 11-3, 11-5. Malaysia, seeded third in the tournament, would play Guatemala, later yesterday before con-
cluding their pool matches against sixth seed, the United States, today. Based on the tournament format, the top two teams from each of the four groups qualify for the quarter-finals tomorrow. For the record, Malaysia’s best achievement was a third placing in the past four editions — 2006, 2008, 2010 and 2012. — Bernama
Former IOC VP Pound backs squash inclusion NIAGRA-ON-THE LAKE (Canada): Former International Olympic Committee vice- president Dick Pound is confident the IOC will drop regulations limiting the number of sports on the Games programme and says squash should be brought into the Olympic fold. Pound, also the former president of the World Anti-Doping Agency, said the sport had women to thank for raising standards and bringing squash into the Olympic debate. Speaking at the opening ceremony
of the Women’s World Team Championship in Canada, Pound said squash deserves its place on the programme and promised to work to get it there. “As a member of the International Olympic Committee, [I cannot help thinking]that squash should be in the Olympic Games,” he said in his opening address. “If that happens, it will be a direct result of the high level of the women’s game ... which will make the difference. So you have both opportunity and responsibility.”
Later this month, an IOC session in Monaco will vote on a list of recommendations as part of President Thomas Bach’s Agenda 2020, which could usher in the most significant changes to the Olympics in decades. Squash and a joint softball/baseball bid lost to wrestling for a spot at the 2020 Games in Tokyo but the IOC is looking at changing the seven-year rule for a sport’s inclusion to tap into potential new viewers and sponsors. — Reuters
LONDON: Former New Zealand Under-20 international Tom Marshall has agreed to join Gloucester for the 2015/16 season, the English Premiership rugby club announced yesterday. Auckland-born Marshall, 24, can play at centre, on the wing or at full back and is currently playing for Super Rugby side the Chiefs. He previously played for Crusaders. “Tom’s played a significant number of Super Rugby games and has impressed whilst with both the Crusaders and the Chiefs,” said Gloucester director of rugby David Humphreys in a statement released by the club. — AFP
Season over for Clermont’s Kolelishvili PARIS: Clermont’s Georgian international flanker Victor Kolelishvili is likely to be ruled out for the rest of the rugby season with a serious knee injury, the Top 14 club said yesterday. The 25-year-old completely ruptured the cruciate ligament in his right knee and suffered meniscus damage during last Saturday’s loss which saw Clermont toppled from the Top 14 summit by Toulon. The club said in a statement they expect the 31-times capped player to be ruled out for “about seven to eight months”. — AFP
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WEDN ESDAY DEC EM B ER 3 , 2 0 14 • TH EEDGE F I N AN C I AL DAI LY
Tiger makes comeback from back injury He has not won a major title since the 2008 US Open BY JI M SL AT ER
ORLANDO: Tiger Woods returns to competition after a four-month injury layoff this week at Isleworth, the same gated community where his historic golf career began to unravel five years ago. Woods, who has played only seven events in 2014 due to a nagging back injury, will make his comeback starting tomorrow at the Hero World Challenge, an 18-player invitational event that benefits his charity foundation. Seven of the world’s 11 top players will compete, including eighthranked Australian Jason Day in his return from a back injury and 11th-rated Jordan Spieth, coming off a victory in last week’s Australian Open, but not world No 1 Rory McIlroy.
“We’re thrilled about the depth and talent of our field,” Woods said. Woods, ranked 24th, moved the event this year from California to the same neighborhood where he drove into a fire hydrant in late November of 2009. That began a series of revelations unveiling a sex scandal that led to Woods’ divorce from wife Elin in 2010 and damaged his once-perfect image with major sponsors. Woods, a 14-time major champion chasing the record 18 majors won by Jack Nicklaus, has not captured a major title since the 2008 US Open. Back, knee and leg injuries have hindered his pursuit of Nicklaus in recent years and Woods turns 39 later this month. No player has ever won more than three majors beyond his 39th birthday, some-
Tiger has played only seven events this year due to a nagging back injury.
thing Woods must achieve if he is to catch Nicklaus. The Challenge will be the first tournament for Woods since he named Chris Como as his new swing consultant last month following a split with swing coach Sean Foley in August. “I’m excited to be back competing,” Woods tweeted two weeks ago when he announced he was working with Como. Woods underwent a microdiscectomy on March 31 to ease pressure on a pinched nerve, a surgery
that caused him to miss the Masters and US Open. This year, Woods missed two cuts plus a secondary cut at Torrey Pines and withdrew from two other events. He has finished 72 holes only twice this year — sharing 25th at Doral in March in his final event before surgery but wincing in pain at shots and when bending to pick his ball out of the hole and taking 69th at the British Open in July. — AFP
Slump made me stronger, says world No 1 Park REUTERS
SEOUL: World No 1 Park In-bee (pic) believes a prolonged slump after her breakout year in 2008 has made her a stronger golfer. The South Korean, who married her swing coach earlier this year, said that 2014 had been the most consistent season of her career, even though she won just one major. Park was on a tear in 2013, winning three majors in a row and claiming six titles on the leading LPGA Tour. “Of course, I had a great year last year, so this season’s three wins may
seem a little less compared to that, but I am very happy with myself this year. The biggest accomplishment for me was that I consistently made it to the top 10 more than previous years and showed a more consistent performance,” she said. Park was a top 10 finisher in 17 of the 22 LPGA tournaments she entered in 2014, six more than the previous year, a consistency that has brought her near the US$10 million (RM34.2 million) mark in earnings. Park burst on the scene in 2008 when at 19 she
World Cup warm-ups announced SYDNEY: A series of cricket World Cup warm-ups were announced yesterday with South Africa facing Sri Lanka and New Zealand, England taking on the West Indies and Pakistan, and Australia against reigning champions India. A total of 14 games will be played at Adelaide, Melbourne, Sydney and Christchurch from Feb 8-13 ahead of the tournament proper, jointly hosted by Australia and New Zealand, starting on Feb 14. The matches are not official one-dayers and will operate under slightly different rules, with up to 15 players able to be used but no more than 11 players at any one time. “The public will be welcome to attend warm-up matches which will be ticketed but free of charge,” said the International Cricket Council. — AFP
WA R M U P S C H E D U L E : Feb 8: India v Australia at Adelaide Feb 9: South Africa v Sri Lanka at Christchurch; New Zealand v Zimbabwe at Christchurch; England v West Indies at Sydney, Pakistan v Bangladesh at Sydney Feb 10: Ireland v Scotland at Sydney; India v Afghanistan at Adelaide
Feb 11: New Zealand v South Africa at Christchurch; Sri Lanka v Zimbabwe at Christchurch; Australia v UAE at Melbourne; England v Pakistan at Sydney Feb 12: West Indies v Scotland at Sydney, Ireland v Bangladesh at Sydney Feb 13: Afghanistan v UAE at Sydney
became the youngest player to win the US Women’s Open, but she failed to build on that success. Her next win on the US tour took four more years to arrive though she found some success on the Japanese tour. “I think everyone goes through that,” she said of her slump. “But I also think that I’ve been able to sustain this good run because I survived the difficult times. I rose, then fell to the very bottom, but got back on top again and I think that has made me stronger.” — Reuters
Webber has ‘no recollection’ of high-speed crash SAO PAULO: Former Formula One driver Mark Webber has “no recollection” of the high-speed crash that left him “bruised and concussed” at the World Endurance series race in Brazil. The 38-year-old Australian’s Porsche 911 made contact with Matteo Cressoni’s Ferrari on the final corner of the six-hour race in Sao Paulo and slammed into a track barrier. A statement on the Australian’s official website (www.markwebber. com) said he suffered “bruising and concussion.” Webber added: “I’ve got no recollection of the accident or how it happened — the team is looking into the details to find out more. “I’m quite sore this morning and am pretty bruised and have got a stinking headache. “Thanks to the medical team at
the track and here at the hospital who did a great job and are looking after me very well. “On a positive note it’s great that the boys in car No 14 managed to bring home the victory which is a fantastic way to finish off the season. I’m already looking forward to getting out there again next year.” Webber was taken to hospital in Sao Paulo where he will undergo further checks before returning to the United Kingdom later this week. The 2009 Formula One world champion and current McLaren Mercedes driver, Jenson Button, tweeted: “Glad to see @AussieGrit is OK after his shunt at Interlagos @ FIAWEC, that was a big one matey.” After a 12-year career in Formula 1, former Red Bull driver Webber joined the Porsche team in the Endurance series where he finished ninth overall. — Reuters
IN BRIEF Pantani probe oﬃcers threaten to sue RIMINI (Italy): Police involved in investigating the death of top Italian cyclist Marco Pantani have threatened to start defamation proceedings following new press reports questioning their professionalism, their lawyers said on Monday. Pantani died of acute cocaine poisoning in a Rimini hotel room on Feb 14, 2004. However a fresh investigation into the death of the 34-year-old cyclist was reopened by prosecutors last month after fresh evidence emerged which, it is claimed, supports the theory of foul play. Media reports have since speculated that key evidence found in Pantani’s hotel room may have been contaminated because several investigators did not wear gloves, and that a bottle found close to Pantani’s body was not analysed. — AFP
Malaysia can retain AUG overall title in Palembang PUTRAJAYA: The Malaysian contingent that will be competing in the Asean University Games (AUG) in Palembang, Indonesia can defend the overall title says the chef-de-mission (CDM) of the Malaysian contingent, Prof Datuk Abdullah Mohamad Said. He said the main medal hopes would hinge on swimming, athletics and karate. He said Malaysia, which won 60 gold, 47 silver and 72 bronze medals at the previous AUG hosted by Laos in 2012, should be able to repeat this feat. Malaysia with 332 athletes will be competing in 20 sports led by karate exponent Lim Chee Wei, as the flag bearer. Lim won the Kata gold medal at the Incheon Asian Games. — Bernama
Don’t ban bouncers, says India’s Sehwag MUMBAI: Banning bouncers following the death of Australia’s Phillip Hughes would be unfair on bowlers because batsmen always have the option of ducking under short-pitched deliveries, former India opener Virender Sehwag said yesterday. “It was very sad that Hughes died in such a way. But it’s part of cricket and injuries are part of any sport,” Sehwag told reporters. Batsmen have been hit on the helmet by quite a few bouncers. “But it’s a weapon for the bowlers so they should not be robbed of it,” he said. — Reuters
Clarke to bear Hughes’ coﬃn at funeral SYDNEY: Australia skipper Michael Clarke will be one of the pallbearers and will lead tributes at the funeral of his close friend Phillip Hughes today, Cricket Australia announced. The funeral in Hughes’ hometown of Macksville will be attended by the Australian Test squad as well as past and present luminaries of the game including Mark Taylor, Sir Richard Hadlee, Brian Lara, Virat Kohli, Ravi Shastri, Shane Warne, Mike Hussey, Ricky Ponting, Brett Lee, Adam Gilchrist and Glenn McGrath. — AFP