Daily News - 27 July 2020

Industrial Insight > Daily News - 27 July 2020
27 July 2020
Compiled by AllianceDBS Research

MALAYSIAN NEWS

MAA revises upwards 2020 car sales to 470,000 units

Malaysian Automotive Association (MAA) has revised upwards it’s total industry volume (TIV) forecast to 470,000 units from 400,000 units initially, on the back of the government’s sales tax exemption and introduction of new models at competitive prices that may sustain buying interest. Despite the revised forecast, MAA president Datuk Aishah Ahmad cautioned that consumer sentiment is still expected to remain weak due to the uncertain economic environment. TIV in the first half of 2020 plunged 41.1% to 174,675 units from 296,317 units in the previous corresponding period, as a result of economic disruptions resulting from the country’s movement control order to curb the spread of the Covid-19 pandemic. In April, the MAA revised downwards its 2020 TIV forecast to 400,000 units from 607,000 units it had projected in January. This year’s sales forecast marks the first time in 13 years since the TIV failed to surpass the 500,000-unit mark. According to historical data, the last time vehicle sales failed to breach the 500,000-unit mark was in 2007, when TIV stood at around 480,000 units. (Starbiz)

Difficult for Malaysia Airlines, AirAsia merger to work - Khazanah

Khazanah Nasional Bhd has stressed that a merger between Malaysia Airlines Bhd and low-cost airline AirAsia would be difficult to carry out. Khazanah managing director (MD) Datuk Shahril Ridza Ridzuan said the different business model and work culture of the two entities would make a merger between the two an unlikely option. “Malaysia requires both low-cost operators as well as a higher-value operator like Malaysia Airlines to co-exist because you need to address multiple segments of the market. “So, I think for the long-term strategy of Malaysia, [it is] important to provide enough choice, not only for Malaysians to fly, but for international travellers to come to the country [as well],” he said on TV3’s Money Matters programme. (Bernama)

85% of disrupted construction projects under MCO now underway

To date, 85% of construction projects nationwide involving government contracts that have stalled due to the implementation of the Movement Control Order (MCO), have resumed, said Senior Minister (Infrastructure) Datuk Seri Fadillah Yusof. He said the remaining 15% could not be continued because the contractors involved faced problems such as lack of building materials or manpower apart from some who had cash flow problems. "We have also provided an extension of time automatically for three months for all construction projects involving government contracts taking into account the factors they could not work during the implementation of the MCO since March 18. "If they need more time, they need to make an application and we will evaluate the reason and basis of the application before giving more extension period, compared to the three months that have been set," he said. (Bernama)

Straits Inter Logistics buys oil tanker for RM10.4m

Straits Inter Logistics said it is buying a used oil tanker for RM10.4m to add into its existing nine-vessel fleet that is involved in marine gas oil trading and oil bunkering services. The purchase consideration represents a discount of about 30% over the market value as ascribed by an independent registered valuer, the group said in a filing with Bursa Malaysia. The group said the vessel will be chartered to TMD for its business activities, which mainly cater to the demand for the trading of marine fuel oil as well as the provision of oil bunkering services of marine fuel oil. (The Edge Markets)

GLOBAL NEWS

Economic recoveries in US, Europe take diverging paths

The US economy lagged in July and Europe’s bounced back, according to fresh surveys of purchasing managers, evidence that the two economic powerhouses are recovering at different speeds from the coronavirus pandemic. In the US, output in the service sector shrank for the sixth consecutive month as companies faced a wave of coronavirus cases that prompted new restrictions in several states. Manufacturing output expanded for the first time since February as new orders ticked up. Overall, economic activity in the US was unchanged. The divergence between the US and Europe suggested that European countries could be benefiting from the strict lockdowns they pursued in the spring, as well as current policies regarding mask wearing, social distancing and bans on large gatherings. Most European countries are seeing just several hundred cases of new infections a day, compared with several thousand at the peak of the crisis. In contrast, the surge in infections in the US this has recorded more than a quarter of world-wide cases is holding the recovery back. (Wall Street Journal)

Eurozone businesses bounce back in July as lockdowns loosen

Eurozone business activity grew in July for the first time since the coronavirus pandemic hit, as more parts of the economy that were locked down to curtail its spread reopened and people emerged from their homes to work and spend money. Across the world almost 15.5m people have been infected by the coronavirus but as the rate of infections has eased across much of Europe, governments have loosened some restrictions. That unleashing of pent-up demand pushed IHS Markit’s flash Composite Purchasing Managers’ Index (PMI), seen as a good indicator of the bloc’s economic health, to 54.8 in July from June’s final reading of 48.5, its highest since mid-2018 and well ahead of the 51.1 forecast in a Reuters poll. The headline index had been below the 50 mark which separates growth from contraction since March so a return to positive territory will be welcomed by policymakers and governments who have pumped trillions of euros into the economy. (Reuters)

China imports more oil from Saudi than any other country in June

China’s crude oil imports from Saudi Arabia rose 15% y-o-y in June, as refiners ordered record volumes of the fuel in March and April when oil prices tumbled, cementing the kingdom’s position as the top oil supplier to China. Imports from Saudi Arabia rose to 8.88m tonnes in June, or 2.16m bpd, in June, according to data from the General Administration of Customs on July 26. That was in line with May’s volumes, but well above 1.89m bpd during the same period last year. The record imports follow a price war between Saudi Arabia and Russia, the world’s top oil exporters, during March and April when the coronavirus pandemic dampened demand and caused a global fuel glut. Saudi, however, delivered bigger oil cuts from June and raised crude prices as a plunge in oil prices weighed on the kingdom’s budget. China, the world’s biggest crude oil importer, took in a record 53.18m tonnes last month, according to customs data. (Reuters)

Singapore private home prices eke out surprise 0.3% rise in Q2: URA data

Defying Covid-19 circuit breaker measures and a recession, private home prices in Singapore edged up 0.3% in the second quarter from the previous three months, according to final data from the Urban Redevelopment Authority (URA) on July 24. But analysts warned that a market recovery is far from certain as business closures, salary cuts and job losses will eventually take their toll in the months ahead. The 0.3% gain in the second quarter of 2020 bucked the 1.1% drop in the URA's flash estimate released on July 1. It comes after private home prices dropped 1% in the first quarter of 2020, their first quarterly decline in a year. Prices have raised 1.2% y-o-y from the second quarter of 2019. For the first half of 2020, overall prices of private home dipped 0.7%, a very mild decline considering the unprecedented pandemic and economic disruption," he noted. (The Straits Times)