Malaysia Economic News

[Behappyalways]

1MDB should be prosecuted, says Malaysia Central Bank
http://www.bbc.com/news/business-34483989

[CityFarmer]

Good to go into Bursa now? It should has many depressed quality stocks over there...

KL to shore up stock market but let ringgit float

LIMA — Malaysia will use its state funds to put a floor under the country’s battered stock market, though currency intervention and interest rate hikes are ruled out as tools to keep sharp falls in the ringgit in check, its Deputy Finance Minister said.

The world’s second-largest exporter of liquefied natural gas has been hit by the collapse in global crude prices that added to the pains of an economy grappling with mounting household debt.

Foreign investors have trimmed exposure to Malaysia, causing its stock and bond prices to tank. Its currency, down 16 per cent this year, remains vulnerable to further falls against the dollar as the United States Federal Reserve eyes raising interest rates.

Asked whether state investment funds are ready to prop up slumping domestic stock prices with purchases, Johari Abdul Ghani said: “Yes, our state fund is quite big right now, in the sense we always have ample space” to absorb any sell-off by foreign investors.

“Every year these (domestic) pension funds are getting new funds almost close to 40-50 billion ringgit ($9.7-12.0 billion), so I think there is enough for them to continue buying while waiting for external factors to improve,” he told Reuters on Saturday during his visit to Lima for the World Bank and International Monetary Fund meetings.

Malaysian markets may face a temporary setback from an expected U.S. rate hike but if the Fed wanted to raise rates, it would have to do so quickly as markets “don’t like uncertainty” on when it will happen, Johari said.

He stressed that the government does not see an immediate need to take steps to defend the ringgit and will leave markets to determine its levels.

“Pegging (the ringgit to the dollar) is out of the question,” as well as direct intervention to prop up the currency or imposing capital controls, Johari said.

“We do a lot of trade with a lot of countries ... We allow markets to find their ways,” he said.

An interest rate hike by Malaysia’s central bank is also ruled out as an option to rein in declines in the ringgit as it would hurt households with high debt and cool consumption, Johari said.

Malaysia has sufficient foreign reserves to weather further declines in its currency and can repatriate profits or liquidate assets its state funds hold overseas if needed, he added.

“Our financial system is very solid compared to 1997-1998,” when Asia suffered from a financial crisis. “I think we’re ready to face the headwind.”

Johari also said the government will liquidate assets of heavily indebted state fund 1Malaysia Development Berhad (1MDB), including its energy and property investment, by early next year that will raise enough funds to avoid a bailout. Reuters
http://www.todayonline.com/business/kl-s...epage=true

[greengiraffe]

1MDB power asset deal lifts China’s influence in Malaysia

• P.R. VENKAT, RICK CAREW
  
  
• THE WALL STREET JOURNAL
  
  
• NOVEMBER 26, 2015 12:00AM
  

[img=650x0]http://cdn.newsapi.com.au/image/v1/307f1a2806bc2002ab01a9754ae4cec3?width=650[/img]

China General Nuclear Power Corporation has agreed to buy the power assets of Malaysia’s 1MDB fund.

[*]

China’s $US2.3 billion ($3.16bn) deal to buy power assets from a debt-ridden Malaysian government investment fund could give Beijing greater sway in the Southeast Asia nation and pave the way for Chinese companies to win a string of coveted infrastructure deals.

State-owned China General Nuclear Power Corporation agreed to pay 9.83 billion Malaysian ringgit ($3.2bn) in cash and take on an unspecified amount of debt for a group of power plants from 1 Malaysia Development, or 1MDB.
The deal came as part of a series of agreements struck between Chinese Premier Li Keqiang and Malaysian Prime Minister Najib Razak’s government, including Beijing buying Malaysian government bonds and boosting investment in Malaysia, according to China’s official Xinhua News Agency. Malaysian economy has been rocked by a scandal involving 1MDB and by low oil prices.
For China, the deal appears to offer the world’s second-biggest economy broader influence across the region, in line with the government’s “One Belt, One Road” policy.
In addition to the pledge to buy government bonds, Mr Li expressed an eagerness for China to cut infrastructure deals in Malaysia, including building a high-speed railway linking Malaysia and Singapore, a China-Malaysia port deal and other rail projects in the country, the official Xinhua News Agency reported.
The political nature of the deal was reinforced by China General Nuclear’s decision to buy the assets. The company’s Hong Kong-listed unit, CGN Meiya Power Holdings, withdrew from the bidding process after making an initial approach in the deal.
The unlisted, state-owned China General Nuclear has greater financial firepower and flexibility to ensure a deal would close quickly. It won’t need to seek shareholder approval or make the same disclosures as the Hong Kong-listed company.
Malaysia’s tender rules had limited foreign ownership of local power assets to a minority stake, but an exception to those rules was made for the Chinese buyer, according to sources.
The deal with China came days after a visit to Malaysia by US President Barack Obama, who pushed for closer ties between the US and Malaysia to offset growing Chinese influence in Southeast Asia.
The Chinese state-owned firm outbid a rival offer from a Malaysian state-run power company. Tenaga Nasional, which is 30 per cent-owned by Malaysia’s sovereign-wealth fund Khazanah Nasional, wasn’t willing to offer as steep a price as China General Nuclear given the controversies surrounding 1MDB.
1MDB’s travails have put Mr Najib in the spotlight and hurt investor confidence in the commodities exporting nation.
“1MDB is at the centre of a political scandal that, with falling oil prices, has weighed on Malaysian financial asset prices,” ING economist Tim Condon said.
He added that he expected the sale to boost the country’s credit-default swaps, a contract that gauges a government’s ability to repay its debt.
After 1MDB bought power plants in 2012 from two Malaysian companies, it wrote down the value of the purchase from one of them, and the seller recorded a big gain on its financial statements. 1MDB said the premium it paid reflected the experience of the staff that ran the power plant.
The pending deal has been highly anticipated because it would help determine if 1MDB did overpay for the assets. The fund paid about 12 billion ringgit for the plants and valued them at about $US4bn in a planned initial public offering earlier this year.
After the deal, funds tied to one of the companies were donated to a charity linked to Mr Najib, which later donated money to schools in a battleground state during a tightly fought national election, The Wall Street Journal reported in June.
The 1MDB fund denied the purchases were driven by political considerations and said they made long-term commercial sense. Mr Najib has denied wrongdoing.
Mr Najib formed 1MDB in 2009 to spur growth in the country, but the fund has since accumulated more than $US11bn in debt and is the focus of a series of global investigations.

[Behappyalways]

PM no-show to answer RM2.6 billion donation will fuel fresh quit calls, says C4
http://www.themalaysianinsider.com/malay...ions-calls

[weijian]

Sit tight and wait for fireworks in UMNO assembly next week, although it will be a tall order for the status quo to move.

[Behappyalways]

After the hard work, comes the heartbreak for MACC
http://www.themalaysianinsider.com/malay...k-for-macc

[Behappyalways]

DAP lawmakers poke fun at RM2.6 billion donation in CNY video
http://www.themalaysianinsider.com/malay...-cny-video

[weijian]

1MDB says it is now free of all bank and short-term debt
http://business.asiaone.com/news/1mdb-sa...-term-debt

KL-Abu Dhabi stand-off may hit markets
http://news.asiaone.com/news/malaysia/kl...it-markets

[BlueKelah]

Bank rate rigging spreads as ANZ, Macquarie hauled into court over Malaysian ringgit cartel

ANZ and Macquarie Bank have been hauled into the Federal Court over alleged attempts to manipulate the benchmark rate of the Malaysian ringgit.
Key points:

• ANZ admits to 10 instances of alleged cartel conduct, fined $9m
  
• Macquarie faces a $6m fine
  
• Macquarie trader regularly contacted ANZ traders about submissions for Malaysian ringgit fixing rate
  

The action taken by the Australian Competition and Consumer Commission (ACCC) alleges traders at both banks engaged in cartel conduct in attempting to influence the daily rates used for currency trading.
The allegations date back to a series of trading days in 2011.
ANZ has admitted to 10 instances of attempted cartel conduct and has submitted to the court to pay a penalty of $9 million and contribute to the ACCC's costs, while Macquarie is facing a $6 million penalty and costs.
Both banks have accepted a series of facts the ACCC has put before the court.
These include that a Macquarie trader regularly contacted traders from ANZ and other Singapore-based banks in private online chatrooms about daily submissions in relation to the benchmark rate for the Malaysian ringgit.
"On various dates in 2011, traders employed by ANZ and the Macquarie trader attempted to make arrangements with other banks that particular submitting banks would make high or low submissions to the Association of Banks in Singapore (ABS) in relation to the ABS Malaysian ringgit fixing rate," the ACCC said.
While Macquarie was not one of the banks authorised to make rate submissions to the ABS panel, the trader often initiated discussions with panel traders, including those from ANZ.
The ACCC pursued the banks via the cartel provisions under the Competition and Consumer Act.
"I personally believe that the action we've taken today will send a message to the boardrooms and senior managers of banks that I think will help shape behaviour," ACCC chairman Rod Sims told ABC News.
"They did have this action brought to their attention, they acted in relation to the individuals and acted in relation to future compliance policies.
"I think we need to be clear that this occurred in 2011, that's a long time ago, and I think the banks would argue with some justification that they're trying to address the issues that have been brought to their attention."

ACCC estimates turnover on forward contracts worth $10b
The ACCC estimated the 2011 turnover in Australia for trades in the Malaysian ringgit forward contracts the traders were seeking to manipulate was approximately $9 to 10 billion.

[specuvestor]

Next year SGDMYR 3.50 is not impossible...

When the top is crooked... the principle of governance is important.

(Bloomberg) --
Less than a decade ago, the International Monetary Fund used to talk about Asian countries piling up too much in their currency-reserve stockpiles.

The global financial crisis turned that conclusion on its head, and now that U.S. interest rates are poised to keep climbing, the race is on to identify which countries have the strongest buffers against capital flowing out toward developed markets.

A measure developed by the IMF itself shows that Thailand and the Philippines may be best placed to withstand further downward pressure on the emerging currencies in Asia, based on calculations taken before the Donald Trump-induced U.S. reflation play roiled the foreign-exchange market.

The IMF last month forecast Thailand’s reserves at $163.3 billion at year-end, compared with the $64.9 billion needed according to the so-called Assessing Reserve Adequacy gauge, which incorporates criteria from short-term debt to money supply, imports and investment flows. The Philippines was heading for a $84 billion hoard, against a $31 billion need.

-Snip-

The measure shows Malaysia -- not coincidentally the worst performing of the major emerging Asian currencies against the dollar this month -- faring poorly by comparison, with a $100 billion reserves projection against short-term external debt of $128.2 billion, based on IMF estimates. Looking beyond Asia, Turkey, South Africa and Mexico are among those deemed more vulnerable by the assessments.

“Both Thailand and the Philippines increased their reserves in the last couple of years and have adequate buffers to intervene to smooth currency volatility," said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group Ltd. in Singapore. Malaysia’s reserves are well down from a May 2013 high, and the slimmer adequacy ratio “limits the ability for BNM to intervene,” he said, using the initials for the country’s central bank.

-snip-