Capital markets news summary for Mon 3 Apr 2023

Capital markets news summary for Mon 3 Apr 2023

RHB and Boost Holdings to subscribe for 100m Boost shares

RHB Bank Berhad and Boost Holdings Berhad jointly incorporated Boost Berhad on 1 Mar 2023 to carry out a digital banking business. Boost Holdings is a subsidiary of Axiata. Both parties agreed to subscribe for the shares – Boost Holdings 60% and RHB Bank 40% – within 30 days of incorporation. They entered into the subscription agreement with Boost Berhad to raise the RM100m minimum capital requirement. RHB Bank’s portion is funded via internally generated funds. Upon completion of the subscription, Boost Berhad will seek the approval of Bank Negara Malaysia (BNM) to be designated as the legal entity for the proposed digital bank. On 29 Apr 2022, BNM announced 5 winning consortiums of the digital banking licences namely Boost-RHB, Grab-Singtel-Kuok Brothers, YTL-Sea, Aeon-MoneyLion and KAF. RHB closed at RM5.58 while Axiata closed at RM3.01.

BioAlpha gets approval for Malaysia agriculture hub in China

The project’s master development plan received local authority approval from the Longhu Town People’s government. The integrated health supplement company announced in Jul 2022 that it will be developing the 21-acre hub in Hainan province to benefit from tax incentives and local government exemptions. The company has also established a headquarters for China in the area. The hub – which has easy access via various expressways to Hainan’s capital city of Haikou and the central city of Ding’an Country – will take 3-5 years to complete. The first phase will focus on formulation, manufacturing and commercialising food products using Malaysia’s indigenous and tropical herbs. The planned research and development facility and factory complex within the hub will support the formulation and manufacturing activities. Over the last several years, BioAlpha has set up an office in the Yangpu economic development zone in Hainan, a warehouse and processing centre in the Guizhou province, and procurement teams in Guizhou, Hainan and Foshan in Guangdong province. The company is experiencing an encouraging uptrend in orders since the lifting of Covid restrictions. The counter closed at 12 sen.

DRB-Hicom and Geely sign HOA for Tanjung Malim automotive hub

Both parties had signed a memorandum of understanding in Apr 2022 on the 1,000-acre automotive high-tech valley (AHTV). The original 6-month deadline was extended in Oct 2022 and again in Jan 2023. The signing of the heads of agreement (HOA) was held in conjunction with the Prime Minister’s official visit to China. The AHTV will cover the automotive and mobility solutions value chain, including a manufacturing cluster and supporting services, with the aim of being a hub for a new energy vehicle industry. The hub will house an automotive university and a high technology global research and development centre to provide carmakers with a tropical setting to test their vehicles. The AHTV is anticipated to attract RM32b investments, including from Proton, which plans to relocate the remaining 2 models currently being assembled in Shah Alam. In 2017, Geely bought 49.9% of Proton. DRB-Hicom closed at RM1.38.

The UK agrees to join CPTPP

The country had agreed to join the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as it looks to build global trade links especially with fast-growing economies after exiting the European Union on 31 Jan 2020. Britain formally applied for accession on 1 Feb 2021. The deal – which will cut tariffs on cars, spirits and dairy products – would boost the UK’s economy by GBP1.8b (RM9.8b) each year and rise as more countries join. The CPTPP was signed on 8 Mar 2018 by Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam to eliminate 98% of tariffs in a USD13.5t market or 13.4% of world GDP and population over 500m. Malaysia ratified the agreement on 30 Sep 2022 and entry into force was on 29 Nov. Upon implementation, the UK will eliminate import duties for a wide range of Malaysian products including palm oil, cocoa, rubber, electrical and electronics, and chemicals. Signing of the legal accession agreement is scheduled for 3Q2023.

US inflation cools in Feb

The core personal consumption expenditures (PCE) – which excludes food and energy – climbed 4.6% year-on-year in Feb after rising 4.7% in Jan. The US Federal Reserve tracks the core PCE against its 2% inflation target. The elevated inflation rate was the reason for the recent 0.25% rate hike to 4.75%-5%, although the Federal Reserve indicated a pause amid the on-going banking crisis. As banks tighten lending standards, the risk of a recession is increasing. Consumer spending – which accounts for more than 2/3 of US economic activity – grew 0.2% in Feb. Economists had predicted consumer spending rising by 0.3%. It was down from +2% in Jan when the biggest cost of living adjustment since 1981 for Social Security beneficiaries was made.