Capital markets news summary for Fri 10 Feb 2023

Capital markets news summary for Fri 10 Feb 2023

Government to set up airport development fund

The Airport Development Fund (ADF) will be funded via 50% of the passenger service charge (PSC) component of the user fee that Malaysia Airports Holdings Berhad (MAHB) pays to the government. The PSC is paid by departing passengers. The percentage of PSC and other components of the user fee to be contributed to the ADF will be reviewed every 3 years. The government in finalising the operating agreements with MAHB and signing is expected by Mar. MAHB will have greater flexibility in developing airports either through government budgetary allocations or with MAHB’s own funds via an identified investment recovery model. The company will be allowed to form joint ventures subject to the government’s approval once the weighted average cost of capital is determined. Under the new operating agreements, the government and MAHB will be able to implement a more competitive commercial development plan to enhance the value of government-owned land through revenue sharing. MAHB closed at RM6.96 down 13 sen.

Bursa enhances Islamic securities selling and buying used in short selling

The Islamic Securities Selling and Buying – Negotiated Transaction (ISSBNT) framework was introduced in Dec 2017. It is the world’s first shariah-compliant alternative to securities borrowing and lending which is used for short selling activities. The previous ISSBNT framework only allowed for cash transactions settled via commodity murabahah or replacement with similar shariah-compliant securities as remedial options. The enhancement includes an additional remedial option which allows users to recall or acquire back the securities if the status of the eligible securities changes to non-shariah compliant. Bursa expects the additional option to improve trading liquidity and the velocity of shariah-compliant securities. The counter closed at RM6.71 down 8 sen. Separately, investors shorted 28.8m MyEG shares in the past 2 days following news that the Immigration Department will cut ties with e-government service providers.

Kejuruteraan Asastera buys 10% of Sabah power plant

The RM230m power plant located at Sipitang Oil and Gas Industrial Park will be developed by Regas Terminal (Lahad Datu) Sdn Bhd (RGTLD), a subsidiary of Petronas Gas. The plant will be completed in 1Q2026. Kejuruteraan Asastera (KAB) also signed a shareholders’ agreement with Petronas Gas to assume the role of technical partner in the joint venture. RGTLD will enter into a power purchase agreement for the supply of power to Petronas’ upcoming nearshore floating liquified natural gas facility in Sipitang, Sabah over a 20-year concession. The facility will have a capacity of 2m tonnes per annum. In January, KAB received a letter of award from RGTLD for the engineering, procurement, construction and commissioning of the power plant. KAB closed at 37 sen.

First Abu Dhabi Bank attempts another takeover of Standard Chartered

FAB said in Jan that it was no longer bidding for Standard Chartered (SC), but the British bank’s market value of USD24b – compared with First Abu Dhabi Bank’s (FAB) USD43b, exposure to the world’s fastest growing economies, plus the fall in the British pound are forcing FAB to reconsider. SC now trades at an attractive 0.56 times book value. FAB has concluded the due diligence and is waiting for the UK takeover rules’ cooling period to expire. The acquisition will be for USD30b-USD35b cash and funded by Mubadala and the ruling Al Nahyan family. High crude prices enabled Abu Dhabi to build a warchest they are keen to use in transforming the financial sector, in contrast with other rich Gulf nations which have only bought minority stakes in international banks.

Indonesia drafts law for media to receive payments from digital platforms

60% of the advertisement market in Indonesia goes to mainly foreign digital platforms such as Facebook and Google. The platforms benefit from carrying content generated by media companies while most media receive small profits. This prompts the government to draft a regulation which will allow media outlets to receive payments from digital platforms or aggregators that carry their content. With the Press Council setting price structures and payment schemes and acting as mediator in disputes, balance between content creation and generating profits will be struck. The law which has been proposed 2 years ago is inspired by similar legislation in Australia and Germany. Since the News Media Bargaining Code took effect in Mar 2021, tech companies have signed more than 30 deals to compensate media outlets for click and advertising income generating content.