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Business Times
06-05-2025
- Business
- Business Times
Malaysia gains US glove share as China hit by tariffs; Top Glove to benefit
[KUALA LUMPUR] Malaysia is poised to claim more than half of the US' rubber glove market this year, with its share expected to rise to 55 per cent – up from just over 47 per cent in 2024 – on the back of fresh US tariffs on Chinese-made gloves, said a top official. Investment, Trade and Industry Minister Tengku Zafrul Aziz said on Tuesday (May 6) that the change is opening doors for Malaysian exporters, as US buyers pivot to tariff-free and cost-competitive suppliers. Speaking at a quarterly briefing, he said that the country's glove industry – already the world's largest – stands to gain significantly from ongoing trade realignments. Washington's higher tariffs on Chinese products are also creating opportunities for other Malaysian exports, he added. Malaysia exported RM15.4 billion (S$4.7 billion) worth of rubber gloves in 2024, and its industry players are 'competitive and ready to meet increased demand', the minister noted. Its shipments to the US amounted to more than RM7.4 billion, making Malaysia one of the top five rubber exporters to the country. The US glove market is expected to reach nearly US$4.2 billion by 2030, said Malaysia's Ministry of Investment, Trade and Industry. UOB Kay Hian estimates that as at December 2024, Chinese gloves made up 42 per cent of US medical glove imports, just behind Malaysia's 44 per cent share. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up With US glove consumption projected to climb to between 90 billion and 100 billion pieces in 2025 – up from 70 billion to 75 billion in 2023 – the gap is expected to widen in Malaysia's favour as tariffs push demand away from China. According to an earlier report by The Straits Times, China-made gloves were priced around US$15 per 1,000-piece carton. Meanwhile, Malaysian gloves were sold at a range between US$17 and US$18 per carton. On Apr 2, the US imposed a 24 per cent tariff targeting Malaysian goods, alongside a broader 10 percent duty on imports from all countries. While the Malaysia-specific tariff is under a 90-day suspension for negotiations, the global levy continues. In contrast, tariffs on Chinese goods remained at 145 per cent. Malaysia is home to some of the world's largest rubber glove manufacturers, including Top Glove, Hartalega, Kossan Rubber Industries, and Supermax Corp. Top Glove commands a substantial global market share, estimated at around 25 per cent. Meanwhile, Tengku Zafrul said that a government support package for industries affected by global trade shifts and reciprocal tariffs was being finalised and would be announced by July. 'The priority now is to engage with affected companies to assess the supply chain impact,' he noted. The package, announced in part by Prime Minister Anwar Ibrahim on Monday, includes an additional RM1 billion in guarantees under the Business Financing Guarantee Scheme to help small and medium-sized exporters access commercial loans.
Business Times
24-04-2025
- Business
- Business Times
KLCI tumbles as RM10b flees – Malaysia sees worst quarterly outflow in 7 years
[KUALA LUMPUR] Malaysia's equity rally has hit a wall as the FBM KLCI tumbled 7.3 per cent in the first quarter – making it one of the region's worst performers. Foreign investors pulled more than RM10 billion (S$3 billion) from the market over the three-month period, marking the biggest quarterly outflow since the landmark 2018 general election. A cocktail of global trade tensions, delayed initial public offerings (IPOs) and investor unease over US President Donald Trump's second term has soured the mood and upended early-year optimism. The sell-off, led by persistent foreign outflows and rising geopolitical headwinds, has wiped out much of the euphoria that drove the KLCI nearly 16 per cent higher in 2024, when it closed the year at 1,642.33 – its highest level since 2017. That rally, fuelled by expectations of upbeat macro prospects, US rate cuts and resurgent foreign inflows, now looks increasingly fragile. Sentiment has turned sharply negative from the final three months of 2024 and deteriorated further since with hopes of a dovish US Federal Reserve fading and concerns over Trump's intensifying protectionist trade agenda. Foreign funds have been net sellers for 26 straight weeks since November, pulling the index down to 1,513.65. The index has fallen 7.3 per cent in the first quarter of this year, underperforming the Asean-5 average decline of 4 per cent. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up IPO pipeline stalls The chill has also hit Malaysia's IPO pipeline, which was the biggest star last year by deal count among regional exchanges. The exchange drew 55 listings, raising RM7.4 billion in 2024. At least two listings – Cuckoo International and SPB Development – have been postponed, citing unstable market conditions. Bloomberg reported that advisers for South Korea's OCI Holdings have paused work on the IPO of its Malaysian polysilicon unit due to global market volatility. Despite these listing delays, Bursa Malaysia chairman Abdul Wahid Omar in an event in early April affirmed the bourse's target of 60 IPOs for the year, aiming for a combined market capitalisation of RM40.2 billion. That may sound a tad ambitious in today's climate – especially after 2024's glittering run, in which Bursa chalked up the highest number of new listings in two decades. That included the notable debut of 99 Speed Mart Retail, Malaysia's largest IPO in eight years and the biggest retail float in South-east Asia since 2020. As at Apr 15, Bursa Malaysia recorded 16 IPOs for the year. More than half closed above their offer price on debut – though most of the strong performers hit the market before February, which signals a slowdown in investor appetite since. All IPOs listed since March have experienced a marked decline in share prices on their maiden day of trading, with the notable exception of public bus services provider HI Mobility – which not only traded higher on its debut but has continued to outperform other recent IPOs. From sunny to gloomy 'The optimism that propelled last year's rally, particularly from the data centre boom in Johor, has waned,' said Neoh Jia Man, portfolio manager at Tradeview Capital. He noted that the technology sector has lost momentum, especially after Washington introduced the Artificial Intelligence Diffusion Rule, which dampened investor appetite for tech-related counters. Fourth-quarter earnings in 2024 broadly missed expectations, said Neoh, adding that companies grappled with rising operating costs, higher taxes and an uneven demand recovery. 'Investors are also nervous about the risk of retaliatory tariffs from the US, adding further strain to emerging-market sentiment,' he told The Business Times. Noting the significant capital flight, Apex Securities head of research Kenneth Leong said: 'Investors are now watching for clarity on the upcoming tariff negotiations and domestic fiscal direction.' Defensive tilt RHB Investment Bank slashed its year-end FBM KLCI target to 1,650 from 1,750, citing the unpredictability of US trade policy under the Trump administration. 'The risk of transactional tariffs leaves investor sentiment on edge,' said Alexander Chia, head of regional equity research at RHB. The brokerage recommends a defensive stance with higher cash allocations and selective exposure to quality domestic names. MIDF Research highlighted resilience in real estate investment trusts and financials, buoyed by attractive dividend yields. It also favours ringgit-centric stocks with minimal foreign revenue exposure. Macquarie echoed that view, noting that Malaysian, Indonesian and Philippine equities are trading at steep discounts to historical price to earnings levels, suggesting bottom-up stock picking over index-focused strategies. Fiscal cushion Malaysia spends heavily to shield consumers from rising fuel costs, with Ron95 petrol capped at RM2.05 per litre – the lowest in South-east Asia TAN AI LENG, BT Energy remains a potential bright spot – not for exports but domestic stability. Lower oil prices could help alleviate inflationary pressures in Malaysia, where energy costs ripple across transportation, manufacturing and food supply chains. Macquarie projects Brent crude to average between US$60 and US$68 per barrel till 2026, a level that could ease the fiscal pressure of Malaysia's fuel subsidy regime. Despite being a net oil and gas exporter, Malaysia spends heavily to shield consumers from rising fuel costs, with Ron95 petrol capped at RM2.05 per litre – the lowest in South-east Asia. Analysts expect the Malaysian government to delay adjustments to the Ron95 petrol price, citing the country's resource surplus and the narrowing gap between market and subsidised prices. 'We think it likely Malaysia will now defer any reform on Ron95 prices, given the narrowing gap between the market and subsidised price, and given a less predictable economic backdrop,' said analysts from Macquarie in an Apr 14 report. Still, downside risks loom. OCBC warned that if US tariffs extend to Malaysian semiconductor exports, which make up nearly a third of shipments to the US, Bank Negara Malaysia may be forced to cut rates sooner than anticipated. GDP downgrades, ringgit outlook The ringgit has shown modest strength, trading at 4.4348 per US dollar as at Mar 31, up 0.8 per cent from 4.4715 at the start of the year. Bloomberg Weaker external demand is prompting economists to lower Malaysia's 2025 growth outlook. OCBC now expects gross domestic product to expand 4.3 per cent, down from 4.5 per cent, while RHB cut its forecast to 4.5 per cent from 5 per cent. Citing broader downward revisions in regional forecasts, the International Monetary Fund on Apr 23 lowered its real GDP growth outlook for Malaysia this year to 4.1 per cent, down from the 4.7 per cent it predicted in January. MIDF and Kenanga Research remain more upbeat on the country's economic growth, with forecasts of 4.6 per cent and 4.8 per cent, respectively, pointing to resilient consumer spending and investment. Official data released on Apr 18 showed that the economy expanded 4.4 per cent year-on-year in the first quarter – slower than the 5 per cent pace in the previous quarter and below the Bloomberg median estimate of 4.8 per cent. The Department of Statistics Malaysia said the growth was underpinned by solid domestic activity and a healthy labour market. The Overnight Policy Rate is expected to remain at 3 per cent for now, though some analysts expect rate cuts could be on the table if downside risks materialise. The ringgit has shown modest strength, trading at 4.4348 per US dollar as at Mar 31, up 0.8 per cent from 4.4715 at the start of the year. MIDF forecasts the currency will strengthen further to 4.23 by year-end, though capital flow volatility tied to US policy remains a key risk. Earnings crunch The first-quarter corporate reporting season, beginning in May, could be a crucial inflection point. Investors will be closely watching for signs of resilience or further weakness as global uncertainty looms over markets. Tradeview's Neoh warned that volatility is likely to remain elevated in the months ahead as the persistent uncertainty surrounding US trade policy will continue to drive capital flows. 'Coming closer, investors will be paying close attention to corporate earnings releases next month, but more critically, to the forward-looking guidance offered by corporations given the prevailing circumstances,' said Apex's Leong. He noted that beyond corporate earnings announcements, the tabling of the 13th Malaysia Plan in July will also be closely watched. The 13th Malaysia Plan (2026-2030) is expected to outline strategies emphasising talent development and innovation to propel Malaysia towards a high-income nation status.
The Sun
22-04-2025
- Business
- The Sun
HEB Group declares 1.46 sen dividend after posting record earnings in FY24
PETALING JAYA: Engineering and project management consultant HSS Engineers Bhd (HEB Group) declared a final single-tier dividend of 1.46 sen per share in respect of the financial year ended Dec 31, 2024 (FY24), compared to 1.21 sen per share paid out in the previous year (FY23). The FY24 dividend payout is estimated at RM7.4 million or about 30% of profit after tax (PAT), in line with the dividend policy targeted at 30% of annual PAT, subject to approval by shareholders at the group's annual general meeting on June 11. The dividend payment reflects the group's impressive financial results, with net profit increasing 23% to a record high of RM25.2 million in FY24 from RM20.4 million in FY23. The improved performance was fuelled by the group's expanding presence in international markets and deepening involvement in emerging sectors. Executive vice-chairman Tan Sri Kuna Sittampalam said: 'We are glad to reward our shareholders with higher dividends as we reap growing financial gains from our rising regional presence and diversified sector coverage. The historic net profit reflects the strength of our adept engineering services, deployed to transformational projects across various industries and countries.' Looking ahead, he said they aim to sustain their earnings momentum. 'We look forward to reprising our prominent role in transportation and water-related projects while accelerating our involvement in data centres, artificial intelligence-powered drone solutions, and renewable energy,' he said. As at Dec 31, 2024, the group's order book stood at RM2.1 billion and will be billed progressively over the next eight years. The order book, the biggest in the group's history, includes new contract wins in FY24 amounting to over RM900 million across various sectors and countries. Notable wins last year include Westports 2 Expansion Development Phase 1, two new data centre projects in Johor, the Phnom Penh-Bavet Highway in Cambodia and the group's largest-ever contract – the Baghdad Metro project in Iraq's capital. The group is actively pursuing more opportunities in the infrastructure sector, with a tender book of RM504 million worth of projects across the domains of highways, roads, rail, ports, water infrastructure, data centres, and renewable energy.
