Capital markets news summary for Mon 13 Feb 2023

Capital markets news summary for Mon 13 Feb 2023

Iris selling 80% of NIISe developer for RM70m

The company is retaining the balance 20% in Iris Information Technology Systems (IITS) which is the developer of the RM1.13b National Integrated Immigration System (NIISe). The purchaser is Tass Tech Technologies Sdn Bhd (TTT), whose holding company Tass Tech (Malaysia) Sdn Bhd is 70% owned by Shukor Ahmed and 30% by Raja Muhammad Badiuzzaman Raja Chulan. TTT’s directors are Raja Muhammad Badiuzzaman and Malisa Mohd Zaki. The sale – which is not subject to shareholders’ approval – will conclude in Aug upon full settlement of the purchase price. The NIISe project is under the Malaysian Anti-Corruption Commission’s investigation for alleged abuse of power in its award related to former Prime Minister Muhyiddin Yassin and his son-in-law – Datuk Muhamad Adlan Berhan. Iris closed at 14 sen.

Islamic banking to outperform conventional banks

According to Fitch Ratings, although higher rates and slower growth in 2023 will reduce demand for Islamic financing, the supportive regulatory environment, Islamic finance ecosystem and shift towards Shariah-compliant services help maintain the momentum. The 8.7% economic growth for 2022 raised the Islamic financing growth to 13%, a 5-year high. There was sustained pick up in working capital facilities and financing for households. Malaysia has the world’s third largest Islamic banking market with the share of Islamic financing at 41% of the total banking system loans in 2022 up from 38% in 2021. Sukuk makes up 64% of local outstanding issuances in 2022. Any asset quality deterioration in 2023 will be manageable with Islamic banks having healthy Common Equity Tier 1 capital ratio of 14.2%.

Globaltec to supply coalbed methane to South Sumatera

A subsidiary of Australia Stock Exchange-listed NuEnergy – which Globaltec owns 65% of – signed a heads of agreement with PT Laras Ngarso Gede, a downstream natural gas and its derivative products provider. The gas sale and purchase agreement is expected to be signed in 2Q2023 for a 5-year term. The supply of gas will commence on 1 Oct for a volume of 1.49b standard cubic feet (scf). The initial phase of 1m scf per day targets the underserved market in South Sumatera. The target level is 25m scf per day of gas production under the Tanjung Enim POD-1 approved by the government. NuEnergy has a total of 4 coalbed methane production sharing contracts in Indonesia. Globaltec’s share price closed at 61 sen.

Minister confirms targeted subsidies not approved by Cabinet yet

Salahuddin Ayub – the Minister of Domestic Trade and Cost of Living – said that the government is still maintaining petrol and diesel subsidies and has no plans to abolish them in the near future. Lately, many economists have advised the government to switch from blanket subsidies to subsidy programmes that target the needy. For example, Apurva Sanghi – the World Bank’s lead economist for Malaysia – has been vocal about pursuing gradual subsidy reforms as part of efforts towards fiscal consolidation.

MDEC identifies 5 future e-commerce trends

Malaysia Digital Economy Corporation (MDEC) champions the digital transformation of the country. In advancing digital trade, the company recognises several trends. First is ubiquitous market spaces. For example, internet-of-things will allow consumers to make purchases from their everyday devices such as home appliances. Second is hyper-personalised commerce. Granular and real-time data will drive how brands interact with consumers. Third is ultra-precise delivery network. Fulfilment will be able to deliver purchases directly to consumers wherever they are. Fourth is metaverse commerce. McKinsey projects that e-commerce within the metaverse – a virtual 3D world where participants interact with each other and with businesses – will be worth USD2.6t by 2030. Fifth is eco-commerce. Heightened awareness amongst consumers raises environmental social governance (ESG) expectations.