Capital markets news summary for Mon 6 Feb

Capital markets news summary for Mon 6 Feb

Skills mismatch for Malaysian graduates worrying

This has caused graduates to be employed in semi-skilled and low-skilled jobs, a situation of skill-related underemployment. There is also attitudinal issues with graduates not willing to learn the basics once employed. According to a Malaysian Employers Federation (MEF) salary survey in 2021, the 3 top skills lacking in graduates are analytical 71%, management 68% and data analysis 44%. Fresh graduates also lack soft skills, in particular, problem-solving 66%, communication 53% and leadership 44%. A student-led movement suggested that adequate resources be set aside to attract reputable academicians to lecture and conduct research. The MEF proposes closer partnerships between employers and higher education institutions to facilitate internships, apprenticeships and other forms of work-based learning, which will provide students with practical experience and enhance their employability.

Petros to invest RM2b in Miri power plant

State-owned Petroleum Sarawak (Petros) will develop a 400MW combined cycle gas turbine power plant. Miri has been identified as the next gas hub after Bintulu, Samalaju and Kuching to provide state-wide access to affordable and reliable gas supply under the Sarawak Gas Roadmap. The roadmap will help realise the 2030 vision of becoming a high income state, through the prioritisation of 1,200 million metric standard cubic foot per day of Sarawak’s natural gas to spur the domestic economy. One year ago, it was reported that Sarawak produces 70% of Malaysia’s liquefied natural gas but consumes only 5%. The has estimated USD25b in investment opportunities in downstream industries.

India profits from selling refined Russian oil to US and Europe

In addition to the USD60 price cap on Russian sea-borne crude oil, the EU, the G7 and Australia are imposing USD100 per barrel for more expensive fuel like diesel and USD45 on lower-quality products such as fuel oil. However, Western countries are allowing India to buy cheap Russian oil, refine it and then export the refined products to the West at market prices. This serves the twin objectives of limiting Russia’s oil revenues and keeping the oil markets well supplied. India sent 89,000 barrels a day of gasoline and diesel to New York in Jan, the most in 4 years. Daily low-sulphur diesel flows to Europe were at 172,000 barrels in Jan, the most since Oct 2021. Western countries will continue to tap Asia to fill the supply gap. Brent closed at USD79.82.

US unemployment at 53-year low

Despite tech companies and banks laying off workers, other employers in the country added 517,000 jobs in Jan 2022 bringing the unemployment rate to 3.4%. Notwithstanding, inflation has gone down from 9.1% in Jun 2022 to 6.5% in Dec. The Federal Reserve’s model of increasing unemployment to control wage growth, and in turn, reduce inflation has turned out to be wrong. But the Federal Reserve could still interpret the jobs growth as potentially feeding inflation in future, and therefore signal the need to increase rates. Investors see a 52% likelihood that rates will be raised by 0.25% in Mar and again 0.25% in May.

China to continue building renewable energy projects in 2023

Fitch Ratings says that China stands to exploit strong demand, lower raw material costs and a low base effect for wind power. The country’s large state-owned power generation companies are committed to the energy transition strategy and are the largest investors in renewable energy. In 2022, a total of 446 wind power projects with a capacity of 87GW completed equipment bidding, compared with 60GW in 2021. The installed capacity of wind and solar power in China increased 22% year-on-year.