MONDAY MARCH 23, 2020 ISSUE 3092/2020 FINANCIAL DAILY2020/03/23 · T ets.com Robert Kuok Hock Nien...

FBM KLCI 1303.28 83.56 KLCI FUTURES 1305.50 94.00 STI 2410.74 99.74 RM/USD 4.4279 CPO RM2284.00 68.00 OIL US$26.98 1.49 GOLD US$1484.60 5.30

Hong Kong’s economy in‘deep water’, says fi nance chief

PA G E 2

FINANCIALDAILY

w w w . t h e e d g e m a r k e t s . c o m

M A K E B E T T E RDECISIONS

PP 9974/08/2013 (032820)PENINSULAR MALAYSIA RM2.00

MONDAY MARCH 23, 2020 ISSUE 3092/2020

A long list of companies are

trading substantially below their NTA.

Lai Ying Yi has the story on

Pages 6 & 7.

More than 700 companies valued at

BELOW US$100MON BURSA

5 H O M E B U S I N E S S

2


1 5 W O R L D

1 2 1 3 F O C U S

Market is oversold, but volatility persists

Two more Covid-19 deaths, 123 new positive cases in Malaysia

No defence against MCO for REITs

Singapore to ban short-term visitors in unprecedented virus crisis

‘Tipping point’ at New York area hospitals as Covid-19 cases mount

Malaysia’s richest tycoons lose RM31b in virus-led rout8 H O M E B U S I N E S S

virus crisis

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Robert Kuok Hock Nien Tan Sri Quek Leng Chan Ananda Krishnan

A llong list of comppanies are

trading subbstantiallytrading subbstantially below their NTA.

LLLaaaaaiiiiii YYYYYYYYiiiiiiiinnnnnnnngggggg YYYYYYYiiiii hhhhhhhhaaaaaasss ttthhhhhhhhe story ony

Pages 6 & 7.



1 5 W O R L D

1 21 2 1 3 F O C U S


Covid-19 deaths, 123 new positive cases in Malaysia


Singapore to banshort-term visitors in unprecedented

i i i

‘Tipping point’ at New York areahospitals as Covid-19 cases mount

virus crisis

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FBM KLCI 1303.28 83.56 KLCI FUTURES 1305.50 94.00 STI 2410.74 99.74 RM/USD 4.4279 CPO RM2284.00 68.00 OIL US$26.98 1.49 GOLD US$1484.60 5.30


PA G E 2

FINANCIALFINANCIALDAILYDAILY

w w w . t h e e d g e m a r k e t s . c o m

M A K E B E T T E RDECISIONS

PP 9974/08/2013 (032820)PENINSULAR MALAYSIA RM2.00

MONDAY MARCH 23, 2020 ISSUE 3092/2020

A long list of companies are

trading substantially below their NTA.

Lai Ying Yi has the story on

Pages 6 & 7.

More than 700 companies valued at

BELOW US$100MON BURSA


2


1 5 W O R L D

1 2 1 3 F O C U S


Two more Covid-19 deaths, 123 new positive cases in Malaysia


Singapore to ban short-term visitors in unprecedented virus crisis

‘Tipping point’ at New York area hospitals as Covid-19 cases mount

Malaysia’s richest tycoons lose RM31b in virus-led rout8 H O M E B U S I N E S S

virus crisis

STAY HOME PLEASE,

WE WILL DELIVER

THE NEWS TO YOU AT

theedgemarkets.com

Robert Kuok Hock Nien Tan Sri Quek Leng Chan Ananda Krishnan

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2 MONDAY MARCH 23, 2020 • THEEDGE FINANCIAL DAILY

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Tony and Kamarudin cleared of bribe claims

BY S YA F I Q A H S A L I M

BY G R EG O R S T UA R T H U N T E R

BY S H A J I M AT H E W

Two more Covid-19 deaths, 123 new positive cases in M’siaTotal infections rise to 1,306, with 25 more patients discharged

The Edge Communications Sdn Bhd (266980-X) Level 3, Menara KLK, No 1 Jalan PJU 7/6, Mutiara Damansara, 47810 Petaling Jaya, Selangor, Malaysia

Publisher and Group CEO Ho Kay Tat

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KUALA LUMPUR: Two new Cov-id-19 deaths were reported to the Crisis Preparedness and Response Centre yesterday, raising Malaysia’s toll to 10.

Health director-general Datuk Dr Noor Hisham Abdullah said in a statement that 123 new confi rmed cases were reported as at noon yes-terday, bringing the total to 1,306.

Meanwhile, 25 more patients have made full recovery and were discharged yesterday, pushing the

recovery tally to 139.Noor Hisham said one of the lat-

est deaths involved a 48-year-old government doctor with a travel history to Turkey. He was treated at the intensive care unit of the Tuanku Fauziah Hospital in Kangar.

Th e other was a 74-year-old local man linked to the tabligh gathering at the Sri Petaling Mosque in Kua-la Lumpur. He was diagnosed with Covid-19 on March 14 and put on respiratory aid at the Penang Hos-pital after his condition worsened.

Of the new cases reported, 74 in-

volved participants of the tabligh as-sembly, while the remaining 49 cases are related to other clusters which are still under investigation. With this, the number of cases related to the tabligh assembly rose to 820.

Noor Hisham said 460 health ministry personnel had undergone tests of which 270 tested negative and 190 more are awaiting their results.

On Saturday, Inspector-General of Police Tan Sri Abdul Hamid Bador said six police personnel had test-ed positive for Covid-19 while their

335 family members are waiting for their test results.

He said the cases highlighted the risks that police personnel are fac-ing when carrying out their duties during the outbreak.

Selangor remains the state with the highest reported cases of Cov-id-19 cases at 309, followed by Kua-la Lumpur (183), Sabah (158) and Johor (145), he said.

To date, 46 of the confi rmed cas-es are under intensive care treat-ment, with 22 of them on ventilator support.

HONG KONG: Hong Kong’s unem-ployment rate is likely to continue rising after hitting a nine-year high in February as the city reels from the eff ects of the Covid-19 outbreak, according to Financial Secretary Paul Chan.

Economic data is deteriorating and likely to get worse, he wrote in a blog yesterday, citing falling em-ployment statistics and retail sales fi gures. Th e city’s jobless rate rose to 3.7% for the December-to-Febru-ary period, the government said last Tuesday, marking the fi fth straight month of higher unemployment and the most since 2011, with the equivalent fi gure for the consump-


tion and tourism sectors climbing to the highest in a decade.

“Hong Kong’s economy is in deep water,” Chan said. “Th ese fi gures still do not fully refl ect the latest develop-ments in the epidemic, and I believe that the unemployment rate will continue to rise in the short term.”

Hong Kong’s economic data has weakened steadily since protests started in June, before the Covid-19 outbreak began in January. After in-itially slowing the rate of infections, the city has recently seen an increase in cases from people returning from overseas.

Chan urged the banking sector to help customers deal with their capi-tal turnover needs and provide com-panies with the option to restructure

debt. Landlords should reduce rents for their tenants, he wrote.

Hong Kong will release its month-ly consumer price index today, fol-lowed by an equivalent gauge of producer prices tomorrow and trade data on Th ursday. Retail sales, due to be announced on March 31, fell 21.4% in value in February from a year earlier.

As part of its relief measures, the government last month said that all permanent residents of the city aged 18 or older would be granted a HK$10,000 (RM5,710) cash handout as part of a HK$120 billion budget. Th e Hong Kong Monetary Author-ity has also reduced interest rates, following the US Federal Reserve. — Bloomberg

DUBAI: Emirates, which runs the world’s biggest airline by inter-national traffi c, will suspend all its passenger operations from Wednesday as the spread of Cov-id-19 hammers global travel de-mand.

“By Wednesday, March 25, al-though we will still operate cargo fl ights which remain busy, Emir-ates will have temporarily sus-pended all its passenger opera-tions,” chairman Sheikh Ahmed bin Saeed Al Maktoum said in a statement. “We continue to watch the situation closely, and as soon as things allow, we will reinstate our services.”

Emirates to halt all passenger operations from Wednesday

Dubai-based Emirates said the outlook for travel demand remains weak across markets in the short to medium term and that it will take the following measures:• A temporary reduction of basic

salary for the majority of Emir-ates Group employees for three months, ranging from 25% to 50%.

• Employees will continue to be paid their other allowances during this time. Junior-level employees will be exempt from basic salary reduction.

• Emirates president Tim Clark and Dnata president Gary Chapman will take a 100% ba-sic salary cut for three months. — Bloomberg

A pedestrian walking past a shuttered retail space covered with property advertisements in Hong Kong’s Hollywood Road last Monday. Hong Kong’s economy has been in recession for the past two quarters, leaving it fewer resources to battle the pandemic. Photo by Bloomberg

BLOOMBERG

3MONDAY MARCH 23, 2020 • THEED G E FINANCIAL DAILY

https://uemsunrise.com/property/region/greater-kuala-https://uemsunrise.com/property/region/greater-kuala-

4 H O M E B U S I N E S S MONDAY MARCH 23, 2020 • THEEDGE FINANCIAL DAILY

Malaysia’s daily Covid-19 positive cases

Source: Ministry of health

2020March 22Jan 25

0

50

100

150

200

TOTAL: 1,306

123

US$/barrel

20

40

60

80

Dec 31, 2019 March 20, 2020

Brent crude futures

30.51

Ringgit weakens to 5-year low

Dec 31, 2019 March 20, 2020

4.3947

Source: Bloomberg

4.0

4.1

4.2

4.3

4.4

4.5

The US dollar strengthened over the past weekCurrency vs US dollar

Change w-o-w (%)

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-1.67

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-3.64

-4.32

-4.76

-7.41

Philippine peso

Hong Kong dollar

Taiwanese dollar

Chinese yuan

Indian rupee

Singapore dollar

Thai baht

South Korean won

Japanese yen

Malaysian ringgit

Euro

British pound

Australian dollar

Indonesian rupiah

March 4,2019

March 20,2020

18,000

22,000

26,000

30,000

Dow Jones Industrial Average

19,173.98

Declines in markets around the world over the past week

Closing

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0.78

8,92

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1,30

3.28

2,74

5.62

16,5

52.8

3

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7

2,41

0.74

2,30

4.92

1,56

6.15

19,1

73.9

8

4,19

4.95

4,77

8.76

Still down despite the rebounds

Investors seek shelter in the US dollar

The worst crash since October 1987

The drop in oil continues

Covid-19 outbreak

confirmed cases

1,306Malaysia

(UPDATED 6.00PM, MARCH 22, 2020)

139 cured

10 deaths

Malaysia is now the top 20 countries

H O M E B U S I N E S S 5MONDAY MARCH 23, 2020 • THEED G E FINANCIAL DAILY


BY A D A M A Z I Z Not all REITs are worth bottom-fishing for

REIT MARKET CAP SHARE PRICE YTD GAIN/ DIVIDEND TRAILING (RM MIL) (RM) LOSS (%) YIELD (%) PER (X) TYPE

IGB REIT 5,718 1.61 -14.81% 5.69 18.08 RetailPavilion REIT 4,778 1.57 -9.77% 5.41 18.17 RetailSunway REIT 4,771 1.62 -10.99% 6.06 12.27 Retail, commercialAxis REIT 2,582 1.79 1.13% 5.17 12.28 Industrial, logisticsKLCC Stapled Group 1,805 7.60 -3.8% 5 17.36 Commercial, retailCapitaLand Malaysia Mall Trust 1,624 0.79 -21% 7.91 22.27 RetailYTL Hospitality REIT 1,415 0.83 -38.97% 9.51 12.17 HospitalityAl-‘Aqar Healthcare REIT 986 1.34 1.52% 5.78 12.95 HealthcareMRCB-Quill REIT 600 0.56 -44% 12.14 20.6 Commercial, retailUOA REIT 482 1.14 -7.32% 7.99 24.3 Commercial KIP REIT 354 0.70 -18.60% 8.8 7.58 RetailAl-Salam REIT 348 0.60 -25.93% 10.78 9.63 Retail, commercialAmanahRaya REIT 309 0.54 -27.03% 11.48 26.72 Commercial, educationHektar REIT 295 0.64 -35.35% 12.14 25.84 Retail, commercialAmFIRST REIT 243 0.355 -28.28% 11.24 11.7 Commercial, retailAtrium REIT 180 0.88 -15.38% 3.9 39.04 LogisticsTower REIT 165 0.59 -28.05% 8.78 13.38 CommercialAmanah Harta Tanah PNB 140 0.64 -16.34% 8.98 11.01 Commercial

KUALA LUMPUR: Equity investors usually fl ock to defensive stocks like real estate investment trusts (REITs) to weather any storms in the markets.

But things are very diff erent this time around, with the Covid-19 out-break, and the lockdowns that ensued around the world, including Malay-sia’s movement control order (MCO), as governments battle the spread of the pandemic. As investors dump stocks in a rush to liquidate, REITs could not escape the panic selling.

Th e immediate concern is the impact of the MCO on rental pay-ments among tenants, as well as the possibility of the partial lockdown being extended beyond March.

“At the end of the day, property owners will likely provide rental rebates as part of corporate social responsibility. So, there will be neg-ative impact,” an analyst covering the sector said.

“But it is still in early stages. Stake-holders are not so worried about the two weeks [of the MCO from March 18 to 31] compared with the possibil-ity of an extension,” said the analyst.


Retail REITs have the biggest earn-ings risk as the partial lockdown has resulted in malls seeing a 70% drop in visitors, according to reports.

“We gathered that most REITs had not firmed out any strategy moving forward in relation to rent-al during the MCO period; we do

not rule out the possibility of “rent-free” rebates for tenants during the MCO period,” said HLIB Research in a note last Th ursday.

Moreover, landlords may have to incur any cleaning and sanitisa-tion costs should a case be detected within their premises, the research house said.

Also at high risk are hospitality REITs, considering cancelled visits that would occur amid the MCO. Th e government has instructed those who have made bookings to dis-cuss directly with hotels or book-ing agents for refunds. Th ere is no indication so far of any government assistance in that respect.

At this point in time, business-es hiring white-collar workers are largely still in operation, with the outbreak forcing organisations to implement work-from-home pro-grammes, swiftly making it the norm now rather than a privilege. It will be interesting to see whether this phenomenon will impact the offi ce rental space after the MCO.

On the manufacturing side, while those producing non-essential prod-ucts are instructed to halt operations, warehousing activities have some respite as e-commerce activities and supporting operations like logistics

BY J U S T I N L I M

1,200

1,300

1,400

1,500

1,600

1,700

Dec 31, 2019 March 20, 2020

FBM KLCI

1,303.28

7,000

9,000

11,000

13,000

15,000

Dec 31, 2019 March 20, 2020

FBM Small Cap Index

8,409.79

KUALA LUMPUR: With shares on Bursa Malaysia slumping further last week amid continued fears and uncertainty over the Covid-19 pandemic, analysts concurred that the market is grossly oversold.

“We are definitely oversold, judging from the rate of falling seen in the stock market last week,” said EquitiesTracker Holdings Bhd head of research Lim Tze Cheng.

“According to our studies, 324 counters have fallen more than 70% in the last few weeks. Th ey account for one-third of the to-tal number of listed companies on Bursa Malaysia,” he told Th e Edge Financial Daily.

Lim said the two-week move-ment control order announced last Wednesday, following a sharp spike in the number of Covid-19 cases in the country, has also brought fear into the market.

Th e FBM KLCI nosedived to an 11-year low of 1,219.72 last Th urs-day after falling for fi ve straight trading days.

Th e market recovered last Fri-day, with the benchmark index rising 6.85% to 1,303.28. Still, it was down 3.08% for the week, giving a negative return of 17.97% on a year-to-date basis.

Going forward, most experts think that the rebound would not continue as long as the pandemic continues.

“Th ere is a possibility that the rally we saw today (last Friday) can be sustained in the next cou-

ple of days. However, the situa-tion is still uncertain with the Cov-id-19 pandemic still fl aring up,” said MIDF Amanah Investment Bank analyst Imran Yassin Md Yusof.

“Th erefore, we foresee the mar-ket to be very volatile. And we could see selling pressure should the sit-uation suddenly reverse. Based on these past two weeks, we believe that the good news and bad news could interchange between one day after the next,” Imran Yassin said.

Likewise, Lim said the sustainabil-ity of the rebound will very much de-pend on the pandemic development.

“To get a more sustainable re-bound, fi rstly, we need to see Cov-id-19 cases cease to increase around the world. Secondly, a cure for the virus must be found,” he said.

While neither of these appears to be on the horizon, Lim is of the view that the virus is containable.

He said it is possible that the pandemic would be over in the next two or three months, given that China reported no new local-ly-transmitted Covid-19 cases from last Th ursday to Saturday — the fi rst time since the outbreak started in December last year — and only one domestic case yesterday.

Lim also said economic activ-ities in the country will return to pre-outbreak levels once the pan-demic is contained.

“Currently, businesses have halt-ed [activities] in order to stop the virus from further spreading, while in a real crisis situation, businesses would be shutting down because they do not have demand to sus-

tain them to continue operations.“Th e economic condition is still

healthy, as the banking system is fundamentally strong. Once the pandemic is over, businesses will go back to normal,” he added.

From a technical viewpoint, Public Investment Bank Bhd tech-nical analyst Lee Siao Ping said the KLCI formed a hammer candlestick in the weekly chart — a bottom re-versal candlestick pattern which indicated that buying interest has appeared after the index hit an in-tra-week low of 1,219.72.

Hence, he expects the KLCI to move higher this week barring neg-ative external factors.

Th e index’s resistance level, he said, can be identified at 1,310; 1,360 and 1,400. Conversely, the support levels to look at are 1,250; 1,200 and 1,000.

Areca Capital Sdn Bhd chief ex-ecutive offi cer Danny Wong Teck Meng advised investors to adopt

a wait-and-see approach for the next two weeks to observe the de-velopment of Covid-19 in Malaysia.

“Now we are seeing over a hun-dred new cases reported on a daily basis. As the movement restriction order has just been implement-ed by the government, we do not know how eff ective the measure is in containing the pandemic.

“Th ere will be more clarity in the market when the new cases of the virus infection decline,” Wong said.

Having said that, he stressed that the benchmark index is underval-ued as it is trading at negative two standard deviations below its 10-year mean in terms of price-earnings ratio (PER) and price-to-book ratio.

Meanwhile, Imran Yassin said MIDF has cut its 2020 year-end KLCI target to 1,480, from 1,600 previous-ly, to refl ect both earnings risk and depressed valuation of the index.

Affi n Hwang Capital Research has also cut the KLCI’s year-end

‘One-third or 324 Bursa counters have fallen more than 70% in the last few weeks’

target, to 1,200 from 1,540 earlier, after it revised down corporate earnings growth to 4.7% contrac-tion from an earlier 1.3% growth projection.

Amid the lower projections due to the Covid-19 pandemic, there are still bright spots in the market.

Imran Yassin said utility com-panies such as Tenaga Nasion-al Bhd and telecommunication fi rms may see higher usage from homes. Other winners include food manufacturers and online shopping platforms.

He believes that there is some value going into the market now given the depressed valuations.

“However, investors will need to be cautious and pick on good quality stocks with solid funda-mentals. Defensive stocks will be good candidates such as util-ities and healthcare providers. Also, investors can look for stocks that have good dividend yields as [these] may cushion some of the downside risk,” he added.

Meanwhile, Lim said long-term investors may look at sem-iconductors counters as valua-tions are “more reasonable” now after falling sharply.

“Most of them (semiconductor counters) are trading at below 15 times PER and some even at as low as single digits, compared with 30-40 times during their peak.

Last week, the Bursa Malaysia Technology Index plummeted to as low as 23.81 before closing at 26.33 on Friday, marking a three-year low.

CONTINUES ON PAGE 7


More than 700 companies valued at below US$100 million on BursaA long list of companies are trading substantially below their NTA

BY L A I Y I N G Y I

Companies whose market capitalisation falls within US$1b (RM4.39b)

NAME MARKET CAP SHARE PRICE NTA PER SHARE RETURN YTD RETURN Y-O-YLPI Capital Bhd 4,310,503,936 10.820 4.92 -26.25 -32.80YTL Power International Bhd 4,106,285,568 0.535 0.51 -30.52 -36.69Serba Dinamik Holdings Bhd 3,988,331,520 1.300 0.78 -40.43 -29.46Astro Malaysia Holdings Bhd 3,806,589,952 0.730 -0.23 -42.52 -52.90Bursa Malaysia Bhd 3,799,964,672 4.700 0.84 -21.40 -31.88Inari Amertron Bhd 3,725,177,856 1.150 0.36 -31.74 -28.57Sime Darby Property Bhd 3,604,444,928 0.530 1.35 -42.08 -51.82Malaysia Building Society 3,558,102,784 0.530 1.19 -36.14 -44.21Scientex Bhd 3,533,755,904 6.850 3.90 -27.51 -19.98Malakoff Corp Bhd 3,323,133,696 0.680 0.57 -21.84 -26.09KPJ Healthcare Bhd 3,316,685,312 0.775 0.39 -17.57 -25.48ViTrox Corp Bhd 3,231,326,208 6.860 0.97 -13.38 -4.99Gas Malaysia Bhd 3,209,999,872 2.500 0.77 -7.49 -13.19FGV Holdings Bhd 3,082,688,000 0.845 0.88 -44.41 -28.99Oriental Holdings Bhd 2,977,736,704 4.800 10.71 -26.72 -25.03Berjaya Sports Toto Bhd 2,942,742,016 2.200 0.08 -13.22 -5.98MyEG Services Bhd 2,889,217,536 0.835 0.20 -24.09 -39.93UOA Development Bhd 2,831,073,280 1.440 2.58 -29.06 -34.25British American Tobacco (M) Bhd 2,772,496,384 9.710 -0.09 -33.93 -72.63Affin Bank Bhd 2,720,847,616 1.370 4.24 -27.89 -38.84Magnum Bhd 2,675,155,968 1.880 -0.18 -25.67 -21.67Syarikat Takaful Malaysia Keluarga 2,645,735,424 3.200 1.40 -43.86 -31.03Lotte Chemical Titan Holding 2,613,931,008 1.150 5.25 -52.28 -72.75Alliance Bank Malaysia Bhd 2,600,817,920 1.680 3.42 -36.12 -59.62Axis REIT 2,581,773,056 1.790 1.45 1.75 -0.56SP Setia Bhd 2,506,338,560 0.620 3.02 -60.88 -72.07Dutch Lady Milk Industries Bhd 2,432,000,000 38.000 2.23 -22.61 -40.72DRB-Hicom Bhd 2,300,552,192 1.190 2.93 -50.00 -37.37IGB Bhd 2,286,213,632 2.600 4.56 -27.98 3.17AirAsia Group Bhd 2,272,542,464 0.680 1.14 -60.00 -64.38Hong Leong Industries Bhd 2,242,688,000 7.020 5.57 -32.63 -28.81

KUALA LUMPUR: Th e double wham-my of the Covid-19 outbreak and the oil price crash has dampened inves-tor sentiments around the globe, es-pecially on net export oil-producing economies like Malaysia.

Th e FBM KLCI has plunged near-ly 18% year to date (YTD). Valuation wise, KLCI’s current price-to-earn-ings ratio (PER) stood at 14.56 times, representing a 15.1% discount to its 10-year average of 17.15 times.

Simply put, it is the market in which investors, with cash in pock-ets, could cherry-pick the good bargains.

Since investor sentiment is tran-sient in nature — they come and go like dark clouds, as such we look into how many Malaysian-listed companies lie in the affordable range, to a business-centric and well thought out billionaire inves-tor that has US$1 billion (RM4.43 billion) cash on hand.

According to Bloomberg data, there are about 868 companies which market capitalisation (cap) is at or below US$1 billion.

Big caps at discount on valuationTh ere are 31 big-cap companies, which market cap is in between the US$500 million to US$1 billion categories.

Th e stock exchange, Bursa Ma-laysia Bhd, is among the 31 listed entities.

Bursa Malaysia closed at RM4.70 last Friday after it rebounded 28 sen or 6.33%, giving it a market cap of RM3.79 billion, less than US$1 bil-lion. Th e stock exchange is trading at PER at 20.45 times compared with its 10-year average of 23 times

LPI Capital Bhd, which sits on top of the list, came in at a total market cap of RM4.31 billion. Th e home-grown insurer last closed at RM10.82 as of last Friday — in-dicating its current PER valuation stood at 13.37 times, representing a 23% discount to its fi ve-year av-erage PER of 17.38.

With US$1 billion in hand, the billionaire investor can even af-ford to buy out utility companies, namely YTL Power International Bhd (RM4.1 billion), Malakoff Corp Bhd (RM3.32 billion) and Gas Ma-laysia Bhd (RM3.21 billion).

The three utility giants’ stock price fell in the range of 7% to 30% YTD, to close at 53.5 sen, 68 sen and RM2.50 last Friday.

Shares in Astro Malaysia Hold-ings Bhd saw its price dropped by more than half year-on-year (y-o-y) to 73 sen, valuing it with a total market capitalisation of RM3.81 billion. Th e stock is currently trad-ing at a PER valuation of 5.98 times, according to Bloomberg. Th e media stock’s PER valuation is indeed at a 73% discount to its fi ve-year av-erage PER of 22.3 times.

It is worth noting that many of these companies are trading substantially lower than their net asset values. The list of compa-nies includes Malaysia Building Society Bhd, FGV Holdings Bhd, Oriental Holdings Bhd, Affin Bank Bhd, Lotte Chemical Titan Hold-ing Bhd, Alliance Bank Malaysia Bhd, DRB-Hicom Bhd and AirAsia Group Bhd.

A random check on all the stocks’ valuation, in comparison to end-October 2008 period (the heights of the global fi nancial cri-sis), four out fi ve of the stocks have suff ered lower PER valuation during the 2008 selldown period.

Mid-large cap choicesTh ere are 124 companies that are valued between US$100 million and US$500 million.

A billionaire investor, who has US$1 billion in hand, could aff ord a buyout of some oil and gas giants, Bumi Armada Bhd, Velesto Energy Bhd and Sapura Energy Bhd, which have been succumbed to irration-al selldown after the meltdown on the crude oil prices.

Remarkably, shares in Supermax Corp Bhd was the only one yielded positive among the top-31 compa-nies within the category. Supermax which gained 7% YTD, closed at RM1.49 last Friday — valuing the rubber glove maker at RM1.96 bil-lion. Valuation of Supermax which was widely viewed as one of the beneficiaries for the pandemic containment eff orts stood at 18.85 times PER, 33% higher than its 10-year average of 14.18 times.

Companies that sit above the RM2 billion mark within this cat-egory include Aeon Credit Service (M) Bhd, Shangri-La Hotels (Ma-laysia) Bhd, Allianz Malaysia Bhd and UMW Holdings Bhd — which saw their share price slid between 13% to 68% y-o-y.

In particular, Aeon Credit is trad-ing at a single PER of 7.86 times based on last Friday’s closing of RM8.58. Th e valuation is at a 17% discount to its fi ve-year average of 9.47 times.

While Shangri-La Hotels’ stock price was holding up strong at RM4.85 despite the concern on the Covid-19 outbreak that will af-fect occupancy rate. Th e fi ve-star hotel group is trading at PER of 33.7 times, which is a 12% premium to

its fi ve-year average of 29.92 times.Meanwhile, Allianz Malay-

sia, which used to trade above six times average PER in the past fi ve years, is currently trading at a 32% discount at 4.31 times PER at RM12.02. Interestingly, Allianz’s net tangible assets (NTA) current-ly worth about RM11.89 per share — indicating that the investor gets to own 98% of the tangible assets for every ringgit invested into the insurance company.

Some of the notable consum-er-related companies within US$100 million-US$500 million market cap range, includes Guan Chong Bhd (RM1.78 billion), Leong Hup International Bhd at RM1.68 billion, 7-Eleven Malaysia Holdings Bhd (RM1.49 billion), Aeon Co (M) Bhd (RM1.40 billion) and Padini Holdings Bhd (RM1.35 billion), which saw their share price tum-bled 9% to 47% YTD. Th is group of companies, except for Leong Hup

With the KLCI having fallen nearly 18% year to date, investors with cash in pockets could cherry-pick the good bargains. The Edge fi le photo

H O M E B U S I N E S S 7MONDAY MARCH 23, 2020 • THEED G E FINANCIAL DAILY

Companies which market capitalisation falls within US$100m (RM439m)

NAME MARKET CAP SHARE PRICE NTA PER SHARE RETURN YTD RETURN Y-O-Y

Amverton Bhd 438,076,544 1.200 1.92 0.00 0.00Hextar Global Bhd 437,191,808 0.540 0.22 -14.48 -41.30Mynews Holdings Bhd 429,757,024 0.630 #N/A N/A -43.75 -52.99Mulpha International Bhd 424,891,104 1.330 8.97 -29.63 -45.93Berjaya Food Bhd 424,463,616 1.200 -0.25 -12.38 -25.93Green Packet Bhd 422,353,824 0.455 0.27 -34.06 44.44Favelle Favco Bhd 412,039,968 1.840 #N/A N/A -32.60 -33.33MNRB Holdings Bhd 407,205,088 0.520 2.97 -53.57 -49.02MPHB Capital Bhd 403,975,008 0.565 1.88 -46.19 -46.70Sunsuria Bhd 403,162,784 0.450 1.11 -25.62 -30.77CB Industrial Product Holding 401,295,456 0.805 1.40 -26.82 -25.46Spritzer Bhd 398,940,576 1.900 1.98 -15.56 -13.24Muhibbah Engineering (M) Bhd 398,842,336 0.825 2.46 -66.46 -72.03Sarawak Plantation Bhd 390,645,088 1.400 1.95 -33.33 -9.68Ayer Holdings Bhd 389,236,000 5.200 6.62 17.12 20.65Malayan Flour Mills Bhd 387,845,760 0.385 1.09 -37.61 -49.67Hume Industries Bhd 387,596,160 0.780 0.82 -25.71 9.86Southern Acids (M) Bhd 387,523,584 2.830 4.49 -25.13 -25.53NTPM Holdings Bhd 387,448,800 0.345 0.40 -32.35 -31.00Comfort Glove Bhd 376,002,208 0.645 0.53 -18.35 -19.88KKB Engineering Bhd 371,220,480 1.440 1.30 -3.36 17.07Can-One Bhd 370,855,296 1.930 9.01 -32.75 -35.45Pintaras Jaya Bhd 364,902,560 2.200 #N/A N/A -26.67 1.85OCK Group Bhd 364,257,728 0.380 0.37 -35.04 -34.48Wellcall Holdings Bhd 360,685,728 0.725 0.24 -34.30 -42.91Hai-O Enterprise Bhd 359,988,480 1.240 1.03 -38.00 -54.41Manulife Holdings Bhd 356,171,200 1.760 3.48 -29.03 -28.74KIP REIT 353,710,016 0.700 #N/A N/A -17.00 -19.54Luxchem Corp Bhd 349,365,344 0.390 0.30 -18.75 -26.42Al-Salam REIT 348,000,000 0.600 1.08 -24.65 -29.41Gabungan AQRS Bhd 347,867,104 0.705 0.98 -40.25 -43.60

Companies which market capitalisation falls within US$500m (RM2.19b)

NAME MARKET CAP SHARE PRICE CURRENT P/E 5Y AVG P/E OCT 30, 2008 P/E NTA PER SHARE RETURN YTD RETURN Y-O-Y

AEON Credit Service (M) Bhd 2,176,077,312 8.580 7.86 9.47 4.36 6.04 -39.32 -49.88Shangri-La Hotels (Malaysia) Bhd 2,134,000,000 4.850 33.70 29.92 6.39 2.40 -3.39 -13.39Allianz Malaysia Bhd 2,126,203,904 12.020 4.31 6.34 23.54 11.89 -22.94 -15.17UMW Holdings Bhd 2,091,246,080 1.790 4.03 #N/A N/A 6.72 3.04 -59.79 -68.80Supermax Corp Bhd 1,967,112,576 1.490 18.85 #N/A N/A 3.25 0.86 7.19 5.80Lingkaran Trans Kota Holdings 1,859,695,616 3.500 6.96 13.21 3.74 2.07 -20.72 -19.17Malaysian Pacific Industries 1,809,957,376 9.100 13.44 12.48 7.15 #N/A N/A -20.45 -8.08Guan Chong Bhd 1,785,572,992 1.770 6.71 13.24 #N/A N/A 1.70 -42.53 -4.07Sunway Construction Group Bhd 1,779,315,584 1.380 13.77 17.50 #N/A N/A 0.48 -26.37 -24.18UEM Edgenta Bhd 1,704,829,312 2.050 9.38 15.25 0.66 1.00 -31.89 -27.30Leong Hup International Bhd 1,679,000,064 0.460 10.77 #N/A N/A #N/A N/A 0.42 -47.73 #N/A N/ACapitaLand Malaysia Mall Trust 1,623,755,776 0.790 22.25 19.28 #N/A N/A 1.27 -18.54 -29.46Frontken Corp Bhd 1,519,554,432 1.450 21.94 24.52 #N/A N/A 0.33 -35.97 50.26Bintulu Port Holdings Bhd 1,504,199,936 3.270 11.63 18.70 9.54 -0.76 -26.52 -32.02Mega First Corp Bhd 1,500,116,224 3.460 9.12 9.76 2.89 -1.25 -32.29 -8.71Malaysian Resources Corp Bhd 1,500,095,744 0.340 82.93 16.64 #N/A N/A 1.03 -53.42 -58.547-Eleven Malaysia Holdings Bhd 1,495,246,848 1.300 27.53 32.49 #N/A N/A 0.06 -9.09 -8.65MMC Corp Bhd 1,492,078,720 0.490 5.83 33.13 8.55 2.28 -50.25 -52.43Panasonic Manufacturing M’sia 1,490,701,440 24.540 13.64 16.16 6.63 12.96 -33.68 -34.84YTL Hospitality REIT 1,414,642,816 0.830 12.15 #N/A N/A 1.21 #N/A N/A -38.08 -35.16OSK Holdings Bhd 1,408,152,960 0.680 3.43 5.43 #N/A N/A 2.44 -34.62 -28.04AEON Co (M) Bhd 1,404,000,000 1.000 12.85 25.97 9.26 1.20 -29.58 -34.64YNH Property Bhd 1,374,066,432 2.600 32.58 45.30 3.29 2.17 -4.41 113.11UEM Sunrise Bhd 1,361,230,848 0.300 6.09 25.05 #N/A N/A 1.47 -57.45 -65.32Padini Holdings Bhd 1,355,293,568 2.060 8.24 14.78 2.90 1.18 -35.85 -42.86VS Industry Bhd 1,343,808,128 0.725 7.57 21.99 2.01 0.90 -45.21 -29.61Far East Holdings Bhd 1,306,443,648 2.200 13.70 14.15 3.05 1.87 -21.15 -20.29Keck Seng (Malaysia) Bhd 1,300,679,040 3.620 14.71 32.29 5.43 6.29 -22.98 -23.63Taliworks Corp Bhd 1,300,202,368 0.645 17.02 24.42 9.42 -0.08 -25.04 -29.51Malayan Cement Bhd 1,291,537,152 1.520 #N/A N/A 4.95 1.15 -48.47 -30.91Pentamaster Corp Bhd 1,267,924,480 2.670 15.27 16.62 #N/A N/A 0.83 -41.19 13.78

which was newly listed last year, were trading below their fi ve-year average PERs.

Among the semiconductor com-panies that are within US$100 mil-lion and US$500 million range, Malaysian Pacifi c Industries Bhd (RM1.81 billion) was the only one traded at a premium to its historical values, which stood at 13.44 times PER, representing a 7% premium relative to its fi ve-year average of 12.48 times.

Meanwhile, Frontken Corp Bhd, VS Industry Bhd and Pentamaster Corp Bhd are all traded at a dis-count to their historical values. Th eir share prices had plummeted 20% to 45% YTD.

Cheaper companies but cheaper qualityWith US$1 billion in hand, bil-lionaire investors will be spoilt for choice at bargain prices for stocks with a market cap of US$100 mil-lion or less.

Th ere are 713 companies valued at below US$100 million, based on last Friday’s closings, according to Bloomberg.

Out of the top 31 market cap companies within this category, there are five loss-making com-panies.

Interestingly, companies in which NTA is signifi cantly higher than their respective share pric-es include MNRB Holdings Bhd, MPHB Capital Bhd, Sunsuria Bhd, Muhibbah Engineering (M) Bhd, Malayan Flour Mills Bhd, Can-One Bhd. Share prices in these companies have tumbled 25% to 66% YTD.

MNRB’s NTA at RM2.97 per share is about close to five times higher than Friday’s closing price of 52 sen. While Can-One’s NTA

stood at RM9.01 per share, close to four times higher than its share price of RM1.93, and MPHB’s NTA of RM1.88 per share is more than two times higher than its last trad-ing price of 56.5 sen.

In terms of price valuation, all of the companies were traded below

their fi ve-year average PER, except for Amverton Bhd and Ayer Hold-ings Bhd which are both involved in property development.

Amverton, which has a valuation of RM438 million, saw its share price closed at RM1.20 — implies current PER of 85 times, three times higher

than its fi ve-year average of 28 times.Ayer Holdings current PER stood

at 29 times, representing 22% high-er than its fi ve-year average of 23 times, as of last closing price of RM5.20, valuing the company at RM389 million total market cap-italisation.

Value emerges, but overshadowed by weak earnings

and last-mile delivery are still operating.

Assuming the outbreak gets under control after the MCO, sec-tor highlights like KLCC Stapled Group, warehousing and indus-trial-heavy Axis REIT, and health-care-based Al-‘Aqar Healthcare REIT appear to be fully valued, trading with a dividend yield of around 5% presently.

“We like KLCC as compared to, say, Pavilion or IGB REIT, mainly because their main ten-ant is Petronas. KLCC also has other high-end tenants with deep pockets.

“The higher-end tenants wouldn’t mind paying their rents for now, especially as the tenants are mostly at KLCC for branding purposes to show that they have a presence in a high-end mall,” said a fund manager who is looking after some RM1.5 billion worth of assets under management.

Meanwhile, KIP REIT, which has a portfolio of community malls, has retreated to an at-tractive dividend yield of 8.8%. A quick check showed that KIP Mart supermarkets nationwide are still in operation during the MCO period.

Aside from that, Amanah Har-ta Tanah PNB, with a portfolio leaning towards offi ces that have been showing steady earnings in the recent past, is now fetching a healthy dividend yield of 9%.

While many REITs, includ-ing the bulk of offi ce REITs, are showing dividend ratios in the range of 8% to 12%, many had payouts exceeding their net earnings for the last cumula-tive four quarters, with some showing lower earnings year-on-year as well.

Moving forward, market watchers expect Bank Negara Malaysia to slash interest rates by another 50 basis points in May to support the economy — after it cut it twice earlier this year to the current 2.5%.

While downward revisions of the key rate are generally good news for REITs, another cut may bring little respite given the un-resolved Covid-19 situation that remains a downside risk.

As long as the threat exists, concerns remain that tenants will invoke the force majeure clause in their tenancy agree-ments, although that possibility remains far down the line.

FROM PAGE 5

The higher-end tenants wouldn’t mind paying their

rents for now, especially as the

tenants are mostly at KLCC for branding

purposes.


Richest tycoons lose RM31b in routTh is is based on their known shareholdings in Bursa-listed companies

BY W O N G E E L I N

How much wealth was scrapped off from the Top 10 richest tycoons?Robert Kuok Hock Nien (2020 Forbes Malaysia Rich List No 1) COMPANY STAKE (%) * YTD CHANGE IN LAST VALUE OF SHARES VALUE LOST SINCE SHARE PRICE (%) PRICE (RM) HELD (RM BIL) JAN 2, 2020 (RM BIL)PPB Group 50.81 -14 16.14 11.67 -1.95Shangri-La Hotels (Malaysia) 75.81 -3 4.85 1.62 -0.06Total value lost (RM bil) -2.01

Tan Sri Quek Leng Chan (2020 Forbes Malaysia Rich List No 2) COMPANY STAKE (%) * YTD CHANGE IN LAST VALUE OF SHARES VALUE LOST SINCE SHARE PRICE (%) PRICE (RM) HELD (RM BIL) JAN 2, 2020 (RM BIL)Hong Leong Bank 62.10 -27 12.50 16.83 -6.21Hong Leong Financial Group 78.51 -27 12.40 11.15 -4.05Hong Leong Industries 75.97 -33 7.02 1.70 -0.83Malaysian Pacific Industries 54.73 -20 9.10 0.99 -0.25Southern Steel 69.97 -51 0.39 0.16 -0.18GuocoLand (Malaysia) 67.82 -42 0.405 0.19 -0.14Tasek Corp 88.16 -19 4.40 0.47 -0.11Hume Industries 70.48 -26 0.78 0.27 -0.09Total value lost (RM bil) -11.87

Ananda Krishnan (2020 Forbes Malaysia Rich List No 3) COMPANY STAKE (%) * YTD CHANGE IN LAST VALUE OF SHARES VALUE LOST SINCE SHARE PRICE (%) PRICE (RM) HELD (RM BIL) JAN 2, 2020 (RM BIL)Astro 41.29 -43 0.73 1.57 -1.16Bumi Armada 34.86 -75 0.135 0.28 -0.81Maxis 62.34 -2 5.20 25.35 -0.59Total value lost (RM bil) -2.56

Tan Sri Teh Hong Piow(2020 Forbes Malaysia Rich List No 5) COMPANY STAKE (%) * YTD CHANGE IN LAST VALUE OF SHARES VALUE LOST SINCE SHARE PRICE (%) PRICE (RM) HELD (RM BIL) JAN 2, 2020 (RM BIL)Public Bank 23.41 -26 14.04 12.76 -4.50LPI Capital 44.19 -26 10.82 1.90 -0.68Total value lost (RM bil) -5.18

Datuk Lee Yeow Chor (2020 Forbes Malaysia Rich List No 6) COMPANY STAKE (%) * YTD CHANGE IN LAST VALUE OF SHARES VALUE LOST SINCE SHARE PRICE (%) PRICE (RM) HELD (RM BIL) JAN 2, 2020 (RM BIL)IOI Corp 48.29 -19 3.68 11.15 -2.68IOI Properties Group 63.62 -28 0.89 3.12 -1.22Total value lost (RM bil) -3.91

Tan Sri Lim Kok Thay (2020 Forbes Malaysia Rich List No 7) COMPANY STAKE (%) * YTD CHANGE IN LAST VALUE OF SHARES VALUE LOST SINCE SHARE PRICE (%) PRICE (RM) HELD (RM BIL) JAN 2, 2020 (RM BIL)Genting 44.62 -43 3.36 5.77 -4.03Genting Malaysia 49.90 -38 1.97 5.55 -3.40Genting Plantations 54.49 -11 9.46 4.62 -0.55Total value lost (RM bil) -7.98

Tan Sri Paul Koon Poh Keong (2020 Forbes Malaysia Rich List No 8) COMPANY STAKE (%) * YTD CHANGE IN LAST VALUE OF SHARES VALUE LOST SINCE SHARE PRICE (%) PRICE (RM) HELD (RM BIL) JAN 2, 2020 (RM BIL)Press Metal Aluminium Holdings 39.67 -30 3.25 5.20 -2.21PMB Technology 24.02 -16 2.66 0.13 -0.02Total value lost (RM bil) -2.24

Kuan Kam Hon (2020 Forbes Malaysia Rich List No 9) COMPANY STAKE (%) * YTD CHANGE IN LAST VALUE OF SHARES VALUE LOST SINCE SHARE PRICE (%) PRICE (RM) HELD (RM BIL) JAN 2, 2020 (RM BIL)Hartalega Holdings 49.66 21 6.62 11.12 1.94Total value gained (RM bil) 1.94

Tan Sri Lau Cho Kun (2020 Forbes Malaysia Rich List No 10) COMPANY STAKE (%) * YTD CHANGE IN LAST VALUE OF SHARES VALUE LOST SINCE SHARE PRICE (%) PRICE (RM) HELD (RM BIL) JAN 2, 2020 (RM BIL)Hap Seng Consolidated 73.91 -25 7.50 13.80 -4.56Total value lost (RM bil) -4.56

Source: Bloomberg, Bursa Malaysia *Based on latest filings with Bursa MalaysiaData compiled as of last Friday

KUALA LUMPUR: Malaysia’s rich-est tycoons have lost an estimated RM30.93 billion since the start of this year, based on their known shareholdings in Bursa Malay-sia-listed fi rms, as pandemic-driven panic selling across global markets sparked an equity rout that has yet to see an end.

Of the 10 richest men in Malay-sia, Hong Leong Group’s Tan Sri Quek Leng Chan — who stands at No 2 on the latest 2020 Forbes Ma-laysia Richest List that was released earlier this month — lost the most in the past 12 weeks.

Based on shares he holds in seven companies, in particular Hong Leong Bank Bhd (HLB) and Hong Leong Financial Group Bhd (HLFG), Quek saw RM11.87 bil-lion worth of paper losses. Quek has a 62.1% stake in HLB, whose share price has sunk 27% year to date (YTD). As a result, he lost RM6.21 billion. Quek also holds 78.51% of HLFG, which has also fallen 27% YTD, resulting in his investment value declining by RM4.05 billion.

After Quek was gaming tycoon Tan Sri Lim Kok Th ay, who saw his wealth shrink by almost RM8 bil-lion, as the three Genting Group stocks on Bursa — Genting Bhd, Genting Malaysia Bhd and Gent-ing Plantations Bhd — have been battered.

Th e biggest chunk of Lim’s loss-es — some RM4.03 billion — came from his 44.62% stake in Genting, which has dropped 43% YTD. Th is is followed by RM3.4 billion from Genting Malaysia, in which he con-trols 49.9%. Th en, from his 54.49%-held Genting Plantations, Lim lost a further RM547.51 million.

If not for a slight rebound seen on Bursa last Friday, Lim would have lost RM9.39 billion (based on the stocks’ closing price last Friday) from the shares he holds in these three companies.

Th e tycoon who saw the third biggest loss YTD was Public Bank Bhd founder Tan Sri Teh Hong Piow, as the bank’s stock fell 26% YTD and caused him some RM4.5 billion loss in investment value.

Teh holds 23.41% of Public Bank, which has always been seen as the most solid banking stock in the domestic market. He also holds 44.19% of insurer LPI Capital Bhd, which saw a similar drop in share price that cost him another RM678.63 million.

Th is means Teh lost a collective RM5.18 billion YTD from his in-vestments in these two companies.

Next came Sabah tycoon Tan Sri Lau Cho Kun, who holds 73.91% of Hap Seng Consolidated Bhd. He lost about RM4.56 billion on paper as the company’s shares declined 25% YTD.

After Lau, IOI Group’s Datuk Lee Yeow Chor recorded the next big-

gest loss, with an estimated RM3.91 billion gone from his investments.

Th e group managing director and chief executive offi cer (CEO) of IOI Corp Bhd lost an estimat-ed RM2.68 billion from the palm oil company, in which he holds 48.29%. He also lost another RM1.22 billion from his 63.62%-owned IOI Properties Group Bhd.

Next was Malaysia’s third rich-est man Ananda Krishnan, who lost an estimated RM2.56 billion. This came from telecommunica-tions company Maxis Bhd where he holds 62.34%; media firm Astro Malaysia Holdings Bhd in which he controls 41.29%; and oilfield services-provider Bumi Armada Bhd where he has 34.86%.

The bulk of his losses, some RM1.16 billion, came from Astro, as its share price has sunk 43% YTD. While shares in Maxis have only dipped 2% YTD, Bumi Armada’s shares plunged by as much as 75% to close at 14 sen last Friday.

Th e tycoon with the eighth big-gest loss YTD was Tan Sri Paul Koon Poh Keong, the CEO and co-found-er of now Southeast Asia’s largest aluminium smelter Press Metal Aluminium Holdings Bhd.

Koon lost a collective RM2.24 billion, comprising RM2.21 bil-lion from his 39.67% stake in Press Metal, and another RM24 million from the 24.02% he holds in PMB Technology Bhd.

Last on the YTD loss-making tycoons list is Robert Kuok Hock Nien, the richest man in Malay-sia. He only lost some RM2.01 billion via his shareholdings in PPB Group Bhd (50.81%) and Shangri-La Hotels (Malaysia) Bhd (75.81%). He lost RM1.95 billion from PBB and RM56.7 million from Shangri-La.

Th e only winner from Malaysia’s 10 richest list in the past 12 weeks is Hartalega Holdings Bhd’s found-er and executive chairman Kuan Kam Hon, who earned RM1.94 billion on paper as the world’s largest nitrile glovemaker’s shares surged thanks to higher demand for rubber gloves amid the spread of the pandemic.

YTD, Hartalega’s shares have climbed 21% to close at RM6.62 last Friday, with a market capital-isation of RM22.39 billion.

Led by Kuok, Quek and Ananda, the 2020 Forbes Malaysia Richest List ranks Cambodia-based Na-gaCorp’s Tan Sri Dr Chen Lip Keong as the fourth richest, followed by Teh, Lee, Lim, Koon, Kuan and Lau.

Kuok, the richest man in Malaysia, only lost some RM2.01 billion via his shareholdings in PPB Group Bhd and

Shangri-La.

H O M E 9MONDAY MARCH 23, 2020 • THEED G E FINANCIAL DAILY

Malaysians stranded in Indonesia told to check fl ight schedulesJAKARTA: Malaysians who trav-elled to Indonesia before the enforcement of the movement control order (MCO), are told to directly contact Malaysia Air-lines or AirAsia for informa-tion on flight schedules. The Malaysian Embassy here said in a statement yesterday that following the implementation of the MCO by the Malaysian government, both airlines had reduced their fl ight frequencies between Malaysia and Indo-nesia. “Malaysians using MAS (Malaysia Airlines) and aff ect-ed by the frequencies cut can fi ll out a form or contact MAB (Malaysia Airlines Bhd) region-al acting director of Indonesia Abdul Razak Ab Hamid,” the statement said. As for AirAsia customers, those aff ected can contact the airline offi cial, Kris-tina Ariyanti to check on fl ight schedules. Th ose who required consular assistance can contact the embassy via email [email protected] and [email protected] or via phone number +62 813 8081 3036. — Bernama

Covid-19 health screenings can be done at Armed Forces HospitalKUALA LUMPUR: Members of the public with symptoms of Covid-19 can undergo health screenings at the Malaysian Armed Forces Hospital, the ministry of defence said yester-day. In a statement addressing frequently asked questions on the movement control order, the ministry said, however, that confi rmation tests could only be done in hospitals designated by the ministry of health. Th e statement also said all welfare assistance to Malaysian Armed Forces veterans would continue as usual. — Bernama

King takes to social media to advise public to stay home KUALA LUMPUR: Two days after his royal address on tel-evision and radio advising the public to comply with the move-ment control order (MCO), Yang di-Pertuan Agong Al-Sultan Ab-dullah Ri’ayatuddin Al-Mustafa Billah Shah used social media to send out a similar message yesterday. His Majesty held a yellow placard with the words #StayHome and #DudukRumah to convey his message via the offi cial Istana Negara Instagram page. — Bernama

212 M’sians stranded in Uzbekistan arrive homeKUALA LUMPUR: A group of 212 Malaysians who were stranded in Tashkent, Uz-bekistan arrived safely at the Kuala Lumpur International Airport at 9pm on Saturday. Deputy Foreign Minister Da-tuk Kamarudin Jaff ar said the group departed Uzbekistan on Saturday on an Uzbekistan Airways fl ight which was fully sponsored by the Uzbek gov-ernment. — Bernama

I N BR I E F90% staying homeAlmost 50,000 law enforcers make restriction order work

BY S I T I N O O R A F E R A A B U & N U R S YA Z A F U H AT

KUALA LUMPUR: Almost 50,000 law enforcers comprising the army, police, Rela, and local authorities’ personnel have been deployed to ensure public compliance with the movement control order (MCO) to curb the spread of Covid-19.

Senior Minister Datuk Seri Ismail Sabri Yaakob said apart from state security councils, district disaster management centres would also be activated to help enforce the order.

He said although the police had so far found the compliance rate to be 90%, he still viewed seriously the remaining 10% as their numbers were large given the country’s population of over 31 million people.

Th e government has also agreed to place police and military personnel at markets and supermarkets to monitor compliance with the call to practise social distancing, Ismail Sabri, who is also defence minister, told a media conference here yesterday.

He said this was because most markets and supermarkets had re-mained congested even after the MCO entered its fi fth day yesterday.

On the deployment of armed forces personnel, Ismail Sabri said it was done in accordance with the Prevention and Control of Infectious Diseases Act 1988 and was not aimed at taking extreme action or declaring a state of emergency.

“Too many rumours and false news were circulated when the gov-ernment announced that the armed forces will help the police. As if ar-moured vehicles would be used at roadblocks. It sounds funny, but this is what was circulated to scare the people.

“The armed forces personnel will only help the police in advising the public to adhere to the govern-ment’s directives. What is being done is something related to the preven-tion and control of infectious dis-

ease under the ministry of health, not something related to emergency law or the national security council.

“Yes, there is a punishment of two-year imprisonment but, as of today (yesterday), the implementa-tion of the movement control order is still at the advocacy level. It may change to a sterner action if the level of compliance is still low,” he said.

Ismail Sabri again stressed that armed forces personnel were just helping the police and not taking over their job, let alone making arrests.

Ismail Sabri explained that the armed forces would only help the police in carrying out roadblocks, patrol in urban areas, including mar-kets and hospitals, while also working closely with the Malaysia Civil De-fence Force (APM) and Rela.

“Th eir deployment includes con-trol at entry points and border ar-eas, as well as high-risk locations. Apart from the military, we have also secured the assistance from 1,462 members of Rela and about 3,000 members of APM. A commit-tee chaired by the police will con-vene a meeting from time to time to increase the deployment of Rela members,” he said.

Th e minister said local authorities, such as the Kuala Lumpur City Hall in the capital, or any municipal or dis-trict council would also help monitor MCO compliance at public places, especially at morning markets and supermarkets nationwide.

On the participants of the tabligh gathering at the Sri Petaling Mosque recently, Ismail Sabri said the police had successfully located almost 9,000 of them so far and they, as well as their family members, are request-ed to get tested for Covid-19 at any nearby clinic or hospital.

The same advice also goes to non-Malaysian participants of the gathering, he added. — Bernama

KUALA LUMPUR: Malaysian con-sumers’ panic buying has resulted in the temporary suspension of on-line grocery delivery services amid fears of the Covid-19 pandemic and the 14-day movement control or-der (MCO).

Panic buying began last Sunday, a day before Prime Minister Tan Sri Muhyiddin Yassin announced the MCO from March 18 to March 31. Local supermarkets have experi-enced a spike in orders, causing them to suspend their online de-livery services until further notice.

Jaya Grocer supermarket chain said replenishing stocks on the shelves is its top priority, adding it is doubling its eff orts towards this end. “We are currently facing a huge increase in orders for our online de-livery service, and we understand that some of you may have had a less than satisfactory online shopping experience,” it said in a statement.

Online grocery store MyGroser, which delivers throughout the Klang Valley, is also facing unusually high traffi c to its website. MyGroser chief executive offi cer and co-founder Stephen P Francis said this period has seen a sudden, unexpected de-mand in its volume, with the team

having to delay or deliver orders with only half of the items in them.

“Th e increase has been substan-tial, but we have managed to in-crease our delivery fl eet and capacity over the past two days and are now able to help even more consumers who need groceries delivered.

“Currently, we are in the midst of deploying an enhanced online solution that will be able to han-dle greater volumes of incoming requests and orders from our con-sumers as well as increasing the number of vehicles to better meet the expected delivery times for our customers.

“We are also working with our suppliers to increase the availability of fresh items to meet [demand],” he told Bernama on Saturday, adding that the company has switched most of its advertising to online channels during this period.

HappyFresh Malaysia is also facing a massive infl ux in orders as more people start to work from home after the government an-nounced the 14-day MCO.

Managing director Hu Hun Hui said with the spread of Covid-19, the company has seen a signifi cant increase in people shopping for on-line groceries.

“Orders have increased by ap-proximately 10% to 15%, and we

believe the [percentage] could have been higher if not because of panic buying, which results in suppliers being unable to stock up in time.

“We are trying our best to give more delivery slots, hiring more riders and shoppers, and we are currently working together with a third-party logistics provider to assist with our deliveries, while our retailer partners have also been up-dating us on stock availability,” he said.

Lazada Malaysia said it is also ex-periencing a spike in orders over the weekend. “We are currently seeing increasing demand following the announcement of the MCO [last Tuesday],” a company spokesper-son said.

Lazada shoppers have been ob-served to be buying more grocery items with the company also seeing an increase in demand for telecon-ferencing and computer accessories as Malaysians hunt for products to help them create a more conducive and productive home working en-vironment.

Mydin Mohamed Holdings Bhd managing director Datuk Wira Dr Ameer Ali Mydin said shoppers are spending more on rice, sugar, cook-ing oil, cookies, canned food such as sardines as well as frozen food. — Bernama

Panic buying brings online grocery deliveries to a halt

PUTRAJAYA: It is up to the Ma-laysian National Security Coun-cil to decide on the proposal to give out free masks to the pub-lic, especially in areas at risk of contracting Covid-19, said Do-mestic Trade and Consumer Af-fairs Minister Datuk Alexander Nanta Linggi.

“It was discussed but I cannot give out any information about it. Wait for the decision, the gov-ernment is concerned about the people,” he told reporters after viewing the supply of essential goods during the movement con-trol order (MCO) period at a su-permarket here yesterday.

Alexander was replying to questions from reporters on whether the government was planning to distribute free masks to the public as it was done in several areas in Th ailand by the health units there.

He said the government was working to make sure that there was enough supply of masks in the country by importing from other countries and banning export.

Asked if the government will limit the sale of masks to one per person, Alexander said for now, there was no such plan, but he advised the public to buy only the amount needed. — Bernama

‘Up to security council to decide on free masks’

1 0 B R O K E R S’ C A L L MONDAY MARCH 23, 2020 • THEEDGE FINANCIAL DAILY

WCT’s new RM1.2b job seen to improve investor sentiments

Banking sector Maintain underweight: Bank Negara Malaysia (BNM) an-nounced that the statutory re-serve requirement (SRR) would be lowered from 3% to 2% ef-fective from last Friday. Ac-cording to the central bank, the decision to reduce the SRR is undertaken to maintain suffi-cient liquidity in the domestic financial system.

While cautiousness has heightened, we understand that most banks continue to be supportive of growing loans especially in areas of mortgag-es, personal financing, small and medium enterprises and corporates. That said, we note that overall average approval rates in the system in January 2020 had risen to 48.1% versus 43.4% in 2016 — supported by average business and consumer approval rates of 49.6% (2016: 44%) and 46.9% (2016: 42.9%).

We believe the recent steep volatilities in the financial mar-kets and outflow of funds in the market had likely sapped a large chunk of liquidity in the system. In addition to providing banks with liquidity to help spur lend-ing, we believe the reduction in SRR could also be a pre-emptive measure to cushion the impact of a potential liquidity tighten-ing scenario due to rising asset quality risks.

We foresee downside risks in terms of higher consumer and business delinquencies, as prolonged uncertainty fuelled by Covid-19 weighs on the econ-omy. This would result in a risk of defaults on debt payments as well as the banks loaning op-erations, thus affecting overall liquidity in the system. Further-more, we believe this 100-ba-

BNM’s SRR move seen to cushion impact of potential liquidity tightening

WCT Holdings Bhd (March 20, 31.5 sen)Maintain buy with an unchanged target price of 64 sen: Last Th urs-day, based on a Bursa announce-ment dated March 19, 2020, the group has accepted a letter of award (LoA) from Jendela Mayang Sdn Bhd. Under the LoA, WCT Holdings Bhd is to undertake su-perstructure works of the Pavil-ion Damansara Heights (Parcel 2) mixed development which com-prises part of the proposed inte-grated commercial and residential development.

Th is is the fi rst contract clinched by WCT this year. We note that as of the end of February 2020, the group’s order book stood at RM5 billion. Th e new contract award will add another RM1.2 billion which expands the group’s order book to RM6.2 billion. We think that this is a good start to the year for WCT because the group secured only RM119 million worth of new contracts in the previous year (and RM2.67 billion in the year before).

Th e scope of works under the contract shall encompass the ex-ecution and completion of: i) one block of a 32-storey offi ce and ho-tel on a podium block comprising retail space; ii) mezzanine fl oors and works on the lower ground fl oor and basement car park; iii)

Automotive sector Maintain neutral: We strongly be-lieve that Proton Holdings Bhd and Perusahaan Otomobil Kedua Sdn Bhd (Perodua) will continue to un-derpin the auto sector in 2020 as their products are more attractive in pricing and provide better value for money, while we retain our bear-ish stance on foreign and premium car brands.

We maintain our “buy” recom-mendation on MBM Resources Bhd as the company has strong funda-mentals and is sitting on a net cash of RM227.8 million. With that, we think that the group will be able to weather these diffi cult times and deal with uncertainties better than its peers in our stock universe. Fur-thermore, stable dividends from the group should mitigate the downside risk to its share price.

We also like Sime Darby Bhd as the group’s diversifi ed distribution and services businesses across the Asia-Pacifi c region in both the auto-motive and industrial sectors (that is to say BMW and Caterpillar) serve as a strong backbone to the group’s earnings. It can also act as a direct

WCT Holdings Bhd FYE JULY (RM MIL) 2016 2017 2018 2019 2020F 2021F

Revenue 1,933.6 1,905.8 2,333.4 1,794.1 1,169.7 1,796.6Pre-tax profit 122.0 230.6 154.8 126.6 81.9 170.7Patami 65.1 154.6 111.8 -27.6 56.1 78.0EPS (sen) 4.6 10.9 8.1 -2.0 4.0 5.5EPS growth (%) -69.9 137.5 -25.8 -124.2 -303.2 38.9PER (x) 19.6 8.2 11.1 -21.4 10.5 7.6Dividend (sen) 19.1 1.8 n.a 1.1 1.2 1.5Dividend yield (%) 1.1 1.1 n.a 2.6 2.9 3.5Sources: Company, MIDF Research

two blocks of residential towers; iv) hard and soft landscape works and external works (including road and drainage, water reticulation and sewerage); and v) a Mass Rapid Transit link bridge.

Th e estimated completion pe-riod of the Pavilion Damansara Heights project is 42 months. As for the scheduled commencement date, the project is slated to start in May 2020. In addition, we make no changes to our earnings estimates as the value of new job secured is within our contract replenishment assumptions.

We opine this new project win will help to improve investor sen-timents towards WCT after it re-ceived an unfavourable fi nal award ruling in an arbitration case on March 15, 2020. Th e downside risk

to our call is a delay in the com-mencement of the job clinched due to the ongoing Covid-19 pandemic.

To recap, on Sept 14, 2018, WCT secured a contract worth RM1.77 billion from Impian Ekspresi Sdn Bhd for the construction and completion of Pavilion Daman-sara Heights (Parcel 1) commer-cial development project which comprises: i) nine blocks of offi ce towers and three blocks of serviced apartments on a podium block comprising four retail space fl oors with one lower ground fl oor; ii) one mezzanine fl oor; and iii) eight basement car park fl oors.

A year after, on Aug 27, 2019, the group accepted a letter of intent from Jendela Mayang for Pavilion Damansara Heights (Parcel 2). — MIDF Research, March 20

Auto sector expected to be underpinned by local companies

proxy for an improvement in the FBM KLCI should the selldown in the domestic equity market tapers off . In the wake of the movement control order, we foresee consumers prioritising spending. Consumers will put off purchasing big-ticket

items such as cars and instead focus on utilising discretionary spending to purchase day-to-day essentials in the near to medium term or at least until the Covid-19 pandemic tapers off .

We are concerned about Tan

Chong Motor Holdings Bhd’s out-look for the near to medium term as the group is known to have a per-sisting inventory problem, standing at more than RM1.5 billion. We be-lieve that this is due to the group’s inability to sell its vehicles due to

uncompetitive pricing and unat-tractive product line-ups compared with those of its competitors.

The recent weakening of the ringgit is also a concern. Should the ringgit continue to weaken, it will ultimately be negative for the sector and automotive players un-der our coverage.

Key companies that would suf-fer from a weaker ringgit are Tan Chong, UMW Holdings Bhd and Pecca Group Bhd as a substantial amount of their cost of goods sold is denominated in US dollars at 60%, 40% and 40% respectively. Ceteris paribus, this would lead to height-ened costs, consequently squeezing their net earnings.

Despite potential further over-night policy rate cuts, we think that the minimal interest cost-savings are unlikely to spur sudden consumer interest and lift consumer confi-dence to purchase big-ticket items such as vehicles, or be a catalyst for growth for the auto sector.

With that, we cut our earnings projections and valuations for all auto companies under our coverage. — AmInvestment Bank, March 20

Proton and Perodua will continue to underpin the auto sector in 2020 as their products are more attractive in pricing and provide better value for money, while we retain our bearish stance on foreign and premium car brands.

sis-point reduction in the SRR is also in part an effort to ensure that Malaysia would remain on FTSE Russell’s watch list pend-ing the next interim review in March 2020.

Due to the subdued outlook, we also raise the sector’s mar-ket risk premium assumption in our Gordon Growth Model to 7.5% from 6.5%.

A “buy” call is maintained on CIMB Group Holdings Bhd, while a “hold” call is reiterated for RHB Bank Bhd, and “sell” for Malayan Banking Bhd, Af-fin Bank Bhd and Hong Leong Bank Bhd. We upgrade Public Bank Bhd to “hold” from “sell” as the total upside to its target price (TP) has widened to more than 7%, and Alliance Bank Ma-laysia Bhd to “buy” from “sell” as the total upside has widened to more than 12%.

Meanwhile, AMMB Hold-ings Bhd is downgraded to “sell” from “hold” as the total upside to its TP has contracted to less than 7%. Here, we also reduce Bursa Malaysia Bhd’s TP to RM4.40 from RM5.20 on the back of an increase in the mar-ket risk premium. “Sell” Bursa. — TA Securities, March 20

The recent steep volatilities in the fi nancial markets

and outfl ow of funds in the market had

likely sapped a large chunk of liquidity in

the system.

C O M M E N T 1 1MONDAY MARCH 23, 2020 • THEED G E FINANCIAL DAILY

Th e decline and fall of the Gulf’s oil empire is loomingPrice wars may have little bearing on the inevitable crash in wealth

BY D AV I D F I C K L I N G

For much of the world, oil wealth is a curse. En-dowed with ample re-serves of hydrocarbons, the likes of Nigeria, An-gola, Kazakhstan, Mexico

and Venezuela frittered the benefits away.

Only in the Persian Gulf has oil been a nation-building blessing. Th e discoveries of petroleum in the mid-20th century turned an anar-chic, desperately poor region into one of the most affl uent places on the planet. Qatar, Kuwait and the United Arab Emirates (UAE) are all richer than Switzerland. Even Saudi Arabia, Bahrain, and Oman are on a par with Japan or the UK.

Th e transformation has been so complete that it is easy to believe the wealth derives from some eternal law of nature. Th at is not true, though. Th e current price war in oil markets will only hasten the moment when the unsustainable nature of Gulf econo-mies faces a brutal reckoning.

Right now, all six monarchies are joining with Russia in opening

the taps to fl ood the crude market and fl ush out higher-cost produc-ers. While the planned 2.5 million barrels per day increase from Saudi Arabia is by far the biggest wave in this tsunami, its neighbours are not holding back. Th e UAE will daily add about 200,000 barrels or more, according to consultancy Rystad Energy, while Kuwait will lift out-put by 110,000 barrels. Russia will raise daily production by 200,000 barrels.

Th at splurge of supply is not due to geopolitics. Instead, it is a mathe-matical result of the decline in the oil price. With fewer dollars coming in for each barrel of crude, Gulf mon-archies need to pump much more to maintain something resembling current revenues.

In principle, there is ample fi re-power to fi ght this war. It costs about as much to pump a barrel of oil from a Gulf oilfi eld as it does to buy a bot-tle of fancy mineral water. Even in an extreme scenario where crude pric-es fall as low as US$10 (RM44.30) a barrel and almost the entire global oil industry loses money, Gulf producers would remain in the black. Th e prob-

lem, as we wrote last week, comes for their economies, which need a far higher price to balance their budgets and support dollar-linked currencies.

Th e region’s central banks and sovereign wealth funds (SWFs) have assembled vast sums to see them through such a crisis, as well as the longer-term risk of declining demand. Faced with lower prices, however, these buff ers could disin-tegrate quickly.

Take the net fi nancial assets held by Saudi Arabia’s government — central bank reserves, plus sover-eign wealth fund assets, minus gov-ernment debt. These declined to just 0.1% of gross domestic product from 50% over the four years through 2018 as crude plunged from levels of around US$100 a barrel at the end of 2014. Th e kingdom is now likely to be a net debtor for the foreseea-ble future, even if prices rise back above US$80.

Over the same four years, net fi -nancial assets held by the six Gulf monarchies fell by around half a tril-lion dollars, to around US$2 trillion, according to a study last month by the International Monetary Fund (IMF).

Even if peak oil demand does not hit until 2040, that remaining sum could be depleted by 2034, according to the IMF. Oil at US$20 a barrel would run it down even faster, emptying the coff ers as soon as 2027.

With oil prices in the range of US$50 to US$55 a barrel, Saudi Ara-bia’s international reserves would fall to about fi ve months of import cover-age as soon as 2024, according to an IMF report last year. Th at should be a deeply alarming prospect, bringing the kingdom within months of an unthinkable balance of payments crisis and the abandonment of the dollar peg, which has underpinned the global oil trade for a generation. Yet the prices we are now seeing make this look almost like an opti-mistic scenario.

Th ere is still time to avert this fu-ture, but it will involve major changes to our ideas about the Gulf and its the role in the global economy.

Governments in the region enact-ed vicious budget cuts in the wake of the 2014 price decline, removing subsidies and adding sales taxes in a way that is fraying the edges of their sumptuous welfare states. If they fall

to an even-lower ledge, there will be pressure to add further taxes and shrink bloated civil services. Neither will be popular with citizens who have never been allowed a democrat-ic vote. Lavish defence and security spending, which accounts for nearly a third of Saudi Arabia’s budget, may have to shrink.

Th e era when the Gulf nations and their SWFs were magic cash ma-chines prepared to pay top dollar for assets on every continent may be coming to an end. Th ey may even have to turn into net sellers. That will aff ect institutions from the US Treasury market, where Saudi Ara-bia holds about US$183 billion of securities; to SoftBank Group Corp, which may fi nd Riyadh a less gener-ous partner for funding Masayoshi Son’s expansive visions.

Th e monarchies have surfed a re-markable tide of wealth over the past half-century or so, but every wave eventually crashes. Future genera-tions will never again see the wealth that current subjects enjoy. Perhaps the Gulf was not spared from oil’s curse, after all. Th at moment was only deferred. — Bloomberg

THE fallout from the Covid-19 pan-demic will be nothing like that of the 2008 financial crisis, nor will a V-shaped recovery be achieved through conventional stimulus — not even through truly massive conven-tional stimulus. We are at war with Covid-19, and in wartime, civilian production grinds to a halt and the only work that is needed is for the war eff ort itself.

Moreover, a recession is sadly necessary to stop the spread of this virus. In the US, over 50% of jobs are at risk from layoff s, furloughs, re-duced pay and lost hours. Virtually every sector of the economy stands to lose a large chunk of its business, household incomes will be devas-tated, and spending by consumers and fi rms will rapidly decline. Th e manufacturing collapse has already begun; the service economy, which employs 80% of all workers, will be next.

One pandemic thus will lead to another — of unemployment. Th e avalanche of layoff s will bring a wave of defaults, bankruptcies, and de-pressed profi ts. Th e domino eff ect will continue across many domains, from collapsing state and municipal tax revenues and business failures to impoverished communities, declin-

ing health outcomes, homelessness, and “deaths of despair”.

How should governments re-spond? Th e same way the US gov-ernment did under president Frank-lin D Roosevelt (FDR) in the World War II era.

Th e fi rst priority is to mobilise. Th at means building temporary fi eld hospitals, drive-through clinics, and emergency health centres. It means cranking up production of essential equipment and medication, staffi ng health facilities adequately, and es-tablishing support services for the hungry, homeless, and the most vul-nerable. And it means deploying an army to disinfect airports, schools, and critical public places.

Second, we need to make it easier for people to stay home, such as by implementing short-term debt defer-ments (including on small business and mortgage loans) and suspending utility bills, as some European coun-tries are already doing. Governments also should be providing income support in the form of extended un-employment insurance, food stamps, and housing benefi ts. In the US, all work requirements for public ben-efi ts should be abolished, and the federal government should extend immediate fi nancial assistance to state governments constrained by balanced-budget laws.

Th e Covid-19 response package recently adopted by the US does not go nearly far enough. As it stands,

the legislation still would leave 80% of private-sector workers without medical and paid-leave coverage. Th e provision for free testing off ers no solace to those who are already critically ill, or who will have lost their health insurance as a result of unemployment. Th e US should use this occasion to make universal paid leave and Medicare for all perma-nent policies.

Another top priority is to provide emergency cash support to house-holds. Talk of a universal US$1,000 (RM4,430) disbursement has got-ten Americans excited — US$2,000 would be better. But cash assistance alone will not be enough. On the con-trary, without the aforementioned provisions and bold measures to plug the hole in the cratering labour market, much of the cash payout will be wasted.

When employment and income prospects are uncertain, sending cash to families is like pouring wa-ter into a leaky bucket. What the US and other countries really need are policies to create good jobs once the crisis has passed.

Th at is why, after taking all of the steps necessary for today, govern-ments should mobilise again. Only big government, big public invest-ments, and big public-employment programmes will ensure a quick bounceback, rather than another protracted jobless recovery. In the last crisis, much of the stimulus fuelled

runaway inequality; this time needs to be diff erent.

Th e situation demands not “nudg-es” or “incentives” but direct action on the model of the New Deal, the US Interstate Highway System, and the Apollo Programme. Governments should use this crisis as an oppor-tunity to launch a bold investment programme for clean, green infra-structure, as envisioned in the Green New Deal. After all, another viral ep-idemic is inevitable, and the climate crisis demands FDR-like ambition and resolve.

Once the pandemic is behind us, we need to start hiring. Policy-makers should already be preparing public-service and guaranteed-job programmes for anyone who shows up at the unemployment offi ce. And that job guarantee should be paired with training and education, to help workers qualify for better-paid pri-vate sector employment when the economy recovers.

Until last month, commentators in the US were still talking about labour-market slack from the 2008 fi nancial crisis, and despite histor-ically low official unemployment numbers. How long will it take to return to current employment lev-els after a pandemic that knocks a signifi cant portion of the economy offl ine?

Without direct, guaranteed em-ployment, we are looking at decades of elevated unemployment. Alterna-

tively, a person with a living-wage job can pay a mortgage, buy a plane ticket, and go to restaurants. An am-ple supply of good jobs for all who want them is the surest way to bring every sector of the economy back to full health.

But how will the government pay for it all? Th e same way it pays for everything else. It should not take a pandemic or a world war to remind citizens that the US government is self-fi nancing. US public fi nancial institutions — the Treasury and the US Federal Reserve — ensure that all government bills get paid, no ques-tions asked.

All that is needed, then, is for Con-gress to appropriate the budget and design an eff ective policy for man-aging this crisis and those that will come after it. No one is calling for wealthy taxpayers or foreign lenders to “pay for” the response. Th at is not how a government that controls its own currency fi nances itself. So, let us stop asking the trivial question of how to pay for it. Finding the mon-ey is never the problem. Th e focus should be on creating good jobs for the unemployed. — Project Syndicate

Pavlina R Tcherneva, associate pro-fessor of economics at Bard College, is a research scholar at the Levy Eco-nomics Institute and author of the forthcoming book, The Case for a Job Guarantee.

What would Roosevelt do?BY PAV L I N A R TC H E R N E VA

MONDAY MARCH 23, 2020 • THEEDGE FINANCIAL DAILY

‘Tipping point’ at New York area hospitals as Covid-19 cases mountHealthcare workers are already stretched to the limits with supplies of protective gear also running low

BY C A L E B M E L BY, D AV I D V O R E A C O S , N E I L W E I N B E R G & H E N RY G O L D M A N

A doctor recovering from Cov-id-19 who took a test last Thursday says he will return to work treating patients to-day. Staff at one hospital sys-tem got a foreboding email:

patients with severe respiratory symptoms doubled in the past week.

After harried preparations, hospitals in the New York area are being pummelled with pa-tients, including a surprising number of young people. Healthcare workers, including those who recently became sick with the virus, are pushing to respond in every way possible.

At the same time, supplies of protective gear are running dangerously low at many facilities. Tensions are fl aring among staff who feel they are poorly equipped and un-protected.

“Th is is the tipping point,” said Anne Gold-man, vice president for non-education mem-bers at the United Federation of Teachers, which represents some healthcare workers. “We’re pretty much saturated with critical-ly ill.”

Help coming?Politicians and health offi cials say some re-lief is on the way: Governor Andrew Cuomo announced on Saturday fi eld hospitals, thou-sands of ventilators and a fl ood of protective gear. He said New York needed another 50,000 hospital beds.

But in the wait, the workers and the hos-pitals are up against the disease’s spear-tip — and it is jolting.

Just a few days ago, many intensive care units resembled ghost towns, as patients were cleared out to make way for an infl ux of new patients.

In New Jersey, Holy Name Medical Center has admitted 60 confi rmed or suspected Covid-19 patients. Th e 321-bed facility in Teaneck is creating dozens of special new rooms.

“We’re making it work,” said Adam Jar-rett, Holy Name’s chief medical offi cer. But he said, they worry “that at some point we’re going to get overwhelmed.”

New York hospitals pitch tents, nix surgeries to grid for infl uxSeventeen staff members have tested posi-tive, including one who is “very sick,” Jarrett said. Holy Name’s chief executive officer, Michael Maron, learned last Friday that he tested positive. “He’s working from home as a lot of our staff are,” Jarrett said.

A primary task at many hospitals has been to clear beds for new patients.

At Northwell Health, New York state’s larg-est healthcare provider, inpatient capacity ranges from 63% to about 90% after the chain discharged patients and cancelled elective surgeries, said Terence Lynam, a spokes-man. Th e 5,500-bed system will be able to add about 1,000 beds, he added.

At a Mount Sinai hospital on Manhattan’s

Upper East Side, patients who do not have res-piratory symptoms appear to be staying away, according to Jolion McGreevy, medical director of the hospital’s emergency department. Th e total number of patients has dropped from an average of about 350 a day before the pan-demic to about 200 now, he said.

The sick youngGoldman, who is also a nurse, says that Elm-hurst Hospital and New York University's Brooklyn campus are seeing their intensive care units fi lled with a share of patients under 40 years old they had not anticipated.

“It’s not who we were expecting,” she says.Over half of all Covid-19 patients in New

York are between 18 and 49, the state says.Th e swell is pushing out patients with oth-

er serious conditions, Goldman says. Cancer patients are having chemotherapy treatments postponed, and wait times for treatment of even severe injuries, such as broken limbs, are spiking.

BY N AT H A N L AY N E & D AV I D M O R G A N

NEARLY one in four Americans were under orders to close up shop and stay at home on Saturday, as lawmakers in Washington neared a deal that could pump a record US$1 trillion (RM4.43 trillion) into the economy to limit the economic damage from Covid-19.

New Jersey's governor followed four other states — California, New York, Illinois and Connecticut — that have imposed unprec-edented restrictions to slow the spread of infections, which have risen exponentially.

Governors in other states urged citizens to avoid large gatherings, even if restrictions were not in place.

“It’s like we are all lost in a movie that we can’t relate to in any way,” West Virginia gov-ernor Jim Justice said, as he urged residents of his state to take the threat more seriously.

At least 23,941 cases of the novel Covid-19 virus have been reported in the US and 306

Americans stay home as Congress nears US$1 trillion stimuluspeople have died from the disease as of Sat-urday evening, according to a Reuters tally of state and local government websites.

In Washington, Republican and Demo-cratic leaders appeared to be nearing a deal to pump more than US$1 trillion into the economy, adding to the hundreds of billions of dollars in fi scal and monetary stimulus that has already been deployed to prop up the world’s largest economy. “I think we're clearly going to get there,” said Senate Re-publican Leader Mitch McConnell, who scheduled a vote today.

Hard-hit airlines are pressing for US$29 billion in cash, promising in return not to furlough employees before September. But lawmakers said they were inclined to off er loans instead.

Two members of the US House of Rep-resentatives have tested positive, and US Vice President Mike Pence and his wife tested negative after an unidentified aide

was diagnosed with the virus. Pence staffers said the aide had mild

symptoms and had not had close contact with Pence nor President Donald Trump. Trump tested negative for the virus last week, according to his doctor.

ReadinessAs hospitals braced for an infl ux of patients, Dr Anthony Fauci, the US government’s top infectious disease expert, urged Americans to postpone non-essential surgeries to keep beds available.

Th e Trump administration has struggled to line up tests to diagnose the disease, masks to slow its transmission, and medical equip-ment to treat those who have contracted it.

Th e US Food and Drug Administration has approved a test that can deliver a result in 45 minutes, rather than days, according to Cepheid, its maker.

At the White House, offi cials said they

were delivering more tests and equipment where they were needed, but declined to say whether they had met benchmarks they had laid out earlier in the week.

State and local offi cials say they are scrambling for supplies.

“We’ve gotten no help from the federal government, or limited help,” Illinois gov-ernor JB Pritzker said at a news briefi ng.

New York governor Andrew Cuomo said the state had identifi ed 6,000 ventilators to help sick patients keep breathing, but needed 30,000 m

MONDAY MARCH 23, 2020 ISSUE 3092/2020 FINANCIAL DAILY2020/03/23 · T ets.com Robert Kuok Hock Nien...

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