Capital markets news summary for Tue 7 Feb 2023
Capital markets news summary for Tue 7 Feb 2023
Subang Airport Regeneration Plan approved by Cabinet
The plan – which was prepared by Malaysia Airports Holdings Berhad – will focus on the development of the aerospace ecosystem, general aviation and business aviation, and city and secondary airport. Scheduled passenger flights and belly cargo flights using narrow-body jets up to A320 and B737 will be reintroduced. The ecosystem that will be developed at the Subang Airport involve seven components, namely: an aerospace industry centre; maintenance, repair and overhaul centre; research and development centre; general aviation operations; business aviation operations; urban air mobility; and regional commercial flight operations. Subang Airport will be transformed into a regional aviation hub with a maximum capacity of eight million annual passengers.
Taiwan pivots towards Japan
The country has developed a new policy of preferring Japan over China. Domestic startups are encouraged to enter into the Japanese market or partner with Japanese companies. Government agencies are also not allowed to steer startups towards China. Japanese accelerators have been invited to Taiwan and the country’s startups will be channelled towards them. Japan is chosen because it is an ageing country and needs fresh blood to work with them. This follows efforts by Western countries to diversify supply chains away from China. Tensions between US and China have also contributed to the US cutting China off from the global supply chain of key technology products. 3 Japanese banks have offered startup funding and access to clients, especially in Southeast Asia. Still, 4,200 Taiwanese companies operate in China taking advantage of cheap labour and a common language and culture.
China’s high-end manufacturing ecosystem keeps on attracting investments
Despite disruptions caused by Covid lockdowns in 2022, Freudenberg Group completed the construction of a USD77m plant that manufactures high-quality automotive seals. Foreign investors flock to China because of the government’s commitment to accelerate the building of a modern industrial system. Resources are allocated to resolve weak links. The government is also putting in more effort to boost foreign direct investments (FDI) in manufacturing, in particular, high-end equipment and key components. The country’s complete and stable supply chain, a large population of skilled researchers, engineers and workers, and huge domestic market are the main considerations. In 2022, the actual use FDI rose by 6.3% to RMB1.23t. The manufacturing sector’s share was RMB323.7b up 46.1%. High-tech industries increased by 28.3% while electronic and communication equipment grew by 56.8%.
Dell to fire 6,650 workers
After a Covid induced personal computer boom, the company’s personal computer shipments shrank 37% in 4Q2022 year-on-year. It generates 55% of revenues from personal computers. Dell says that previous cost-cutting measures such as a hiring freeze and limits on travel are insufficient. The tech sector alone announced 97,171 job cuts in 2022, up 649% from the previous year. The 5% reduction in Dell’s headcount will mean a total decrease of 39,000 since Jan 2020.
China to contribute half of oil demand growth
The International Energy Agency (IEA) says that jet fuel demand is surging in the country. As travel restrictions are lifted, Chinese nationals begin to make domestic and overseas trips. A rebound in China’s economy leading to strong demand for oil may force OPEC+ to review their 2m barrels per day production cut announced in Oct 2022. This is however tempered against rising interest rates causing a global economic slowdown which constrains fuel demand. Oil prices fell after the US posted strong jobs growth, but has since recovered slightly. Brent is trading at USD81.
