Investment & Market Trends

KUALA LUMPUR: The Ministry of Investment, Trade and Industry (MITI) is calling for local companies to establish investment partnerships with companies from Saudi Arabia, especially those in the services sector. Its minister Tengku Datuk Seri Zafrul Abdul Aziz said that Saudi Arabia is inviting Malaysian companies to bolster bilateral trade and investment relationships with the country, which is in line with the Saudi Vision 2030 plan. “We have expertise in diverse sectors, including electrical and electronics, tourism, logistics and facility management. “This opens up opportunities for Malaysian companies to expand their business into the country,” he said after a dinner reception in honour of the Saudi Arabian delegation’s visit to Malaysia. In this regard, Tengku Zafrul said the Malaysia-Saudi Business Council has been established to boost business-to-business activities between the 2 countries. Meanwhile, Saudi Arabia’s Minister of Commerce Dr Majid Abdullah Alkassabi said that it is important to build connections and discover the multitude of opportunities available. “We are preparing a comprehensive plan…a cooperation plan based on Saudi Crown Prince Mohammed Salman’s direction to prepare a joint plan and to enhance the bilateral trade cooperation,” Majib said. In October of last year when MITI facilitated Prime Minister Datuk Seri Anwar Ibrahim’s w-day visit to the United Arab Emirates (UAE), a total of RM40.6 billion worth of investment commitments were made for Malaysia in sectors such as renewable energy, aerospace and logistics. The investments included a commitment by Abu Dhabi Future Energy Company PJSC (Masdar) to invest up to RM37.8 billion to develop renewable energy projects with a 10GW capacity in Malaysia. To that end, the minister said MITI’s strategic collaboration with Masdar and UAE International Investment Council (UAEIIC) will pave the way for Malaysia’s pursuit of new technology that prioritises low-carbon, green manufacturing and circular economy solutions. Meanwhile, the Malaysian Investment Development Authority (MIDA) and the UAEIIC also agreed to strengthen their existing collaboration to enhance Malaysia-UAE sustainable economic cooperation to increase sustainable investment flows between both countries.

KUALA LUMPUR: Prime Minister Datuk Seri Anwar Ibrahim recently held an online conference with Alphabet & Google President and Chief Investment Officer Ruth Porat, where the Prime Minister mentioned that the meeting was a follow-up to their meeting in the US last year. During the conference, Porat informed on the progress of the framework areas that Alphabet & Google can expand in Malaysia based on his previous explanation regarding the mission and focus of the Malaysian government. “Alphabet & Google very much welcomed the leadership, commitment and support of technology and AI related to the education, health and agriculture sectors. “I emphasised that these efforts must eventually bring comprehensive economic and social benefits without leaving out any group or community, especially in terms of technology literacy,” she said. With that, Anwar expressed his hopes the efforts will bear fruit particularly in launching the national technology transition planning and creating job opportunities. In the previous meeting in San Francisco, Anwar met with tech giants such as Google, Enovix Corporation, Microsoft and TikTok (through its parent company, ByteDance) which ended up in pledges of greater investments in Malaysia. At the time, Google revealed plans to invest in Malaysia’s digital competitiveness, including infrastructure and AI innovation programmes. The initiative is expected to see both parties getting together to help businesses advance their digital competitiveness through skilled programmes, investment in digital infrastructure, responsible AI innovation and cloud-first policies. Additionally, Enovix Cooperation had planned to set up a high tech silicon battery producing plant in Penang, which was expected to begin operations in April of this year.

KUALA LUMPUR: The recent surge in global cocoa prices that was caused a supply shortage is impacting local chocolate companies throughout the supply chain. Smaller companies are being cautious in their contracting and planning. The situation has been dragged down by heavy rainfall and crop diseases in the top cocoa producers Ghana and Ivory Coast. Experts believe that price fluctuation and market manipulation would cause worries about the future of the chocolate industry and other challenges could also arise such as decreased affordability, cost pressure on manufacturers, impact and smallholder farmers, disruption in the supply chain as well as the quality and sustainability concerns. It was reported that the global cocoa supply will decrease by almost 11% over the 2023-2024 period, based on findings of the International Cocoa Organisation. On 19 April 2024, cocoa had jumped four times to US$12,218 per tonne from US$3,515.2 per tonne on 2 January 2024. According to Plantations and Commodities Minister Datuk Seri Johari Abdul Ghani, Malaysia’s cocoa sector has not yet achieved a satisfactory level of self-sustainability as the production of cocoa beans in the country has declined significantly, which pushed many local industries to import cocoa beans from abroad. Meanwhile, Benns Ethicoa Chocolate Factory Founder Wilfred Ng Chee Wai believes that if coca prices continue to rise, chocolate makers will encounter challenges such as increased production costs, pressure to raise product prices, reduced consumer demand due to higher prices and supply chain stress caused by fluctuating prices. “As a result, factories would require increased cash flow to secure these essential resources. “Consequently, chocolate prices will need to rise, which will eventually slow demand and the current price levels have placed immense strain on the entire supply chain,” he said. Ng stressed that cost-cutting should be prioritised for chocolate companies, which may result in downsizing or diversifying to mitigate the impact. — BERNAMA

KUALA LUMPUR: The share price of Malaysia’s only listed closed-end fund, icapital.biz Bhd (ICAP) has flat out outperformed the MSCI Malaysia Index, the S&P500 and Nasdaq index over a 1-year period in US dollar terms from 1 April 2023 to 29 March 2024. Over that 1-year period, ICAP’s share price returned 47.75%, while MSCI Malaysia returned (-0.98%) and the S&P500 and Nasdaq returned 27.86% and 34.02% respectively. Meanwhile, on a 3-year period, ICAP still outperformed the other three indexes, returning 49.34%. The MSCI Malaysia index, S&P500 and Nasdaq returned (-17.58%), 32.26% and 23.65% over the said period. As of 29 March 2024, ICAP’s total net asset value (NAV) stood at RM536 million or RM3.82 per share, based on its 140 million shares outstanding. ICAP’s designated person Tan Teng Boo said: “Who says Malaysia is not a good investing destination? It’s even better than investing in Nasdaq. It’s about choosing the right Malaysian asset. If you invest in ICAP shares, there is no need to worry about the ringgit.” Tan, who was also recently named Adjunct Professor of University of Technology Sydney (UTS) in Australia, turned bullish on the Malaysian market during Investor Day on 5 November 2023, as he feels it is in a sweet spot of sorts. He says that the Kuala Lumpur Composite Index (KLCI) is poised for a prolonged bull market over the next 3- to 5-year period, fueled by macro tailwinds, forecasting the index to hit 2,500 to 3,000 points during that period. Should that happen, Tan has two scenarios for ICAP’s share price should the KLCI hit 3,000 points. Firstly, Tan foresees the NAV of ICAP doubling to RM7.86. If so, then this will be a rise of RM4.81 or a 158% rise from RM3.05. In the second scenario, Tan says that historically, the NAV of ICAP has outperformed the KLCI by 6% per annum. “Thus, if the KLCI doubles in 5 years, the NAV of ICAP will be RM10.19 by then. “Assuming its share price trades at a 10% premium to NAV, its share price will trade at RM11.21, which is a rise of RM8.16 or 267% from RM3.05,” he said. Tan adds that the performance scenarios mentioned do not include the contributions from ICAP’s innovative dividend policy. ICAP’s innovative dividend policy was announced on 29 September 2023, with the goal of proactively narrowing the discount between ICAP’s share price and its NAV per share. It is formulated as follows: a base rate of 1% of ICAP’s NAV per share, plus 8% of the difference between ICAP’s share price and NAV. This additional 8% is referred to as the top-up rate. In summary, this innovative dividend policy consists of the aggregate of the 1% base rate and the 8% top-up rate.