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HOME: Up to 10 years’ jail for unlisted public companies offering shares without prospectus p3
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Putrajaya signs
agreements with
Pharmaniaga
and Duopharma
to supply 18.4 mil
Covid-19 vaccine doses
Report on Page 2.

LET’S GET STARTED

 W E D N E S D AY J A N U A RY 2 7 , 2 0 2 1
the edge ceo morning brief
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KUALA LUMPUR (Jan 26): Two govern-
ment-linked pharmaceutical companies have
inked agreements with Putrajaya to supply
a combined 18.4 million Covid-19 vaccine
doses to the Ministry of Health (MoH).
Pharmaniaga Bhd and Duopharma Bio-
tech Bhd said in their own respective bourse
filings on Tuesday that they had entered into
a term sheet agreement with the govern-
ment for the purchase and distribution of
Covid-19 vaccine in the country.
Pharmaniaga said its wholly-owned
subsidiary Pharmaniaga LifeScience Sdn
Bhd (PLS) had entered into a term sheet
agreement with MoH for the purchase and
distribution of 12 million doses of vaccine
developed by Sinovac Life Sciences Co Ltd
(Sinovac LS), a subsidiary of Sinovac Bi-
otech Ltd.
It said the agreement will enable PLS to
supply 12 million doses of finished Covid-19
CoronaVac, SARS-CoV-2 Vaccine (Vero
Cell), Inactivated (developed by Sinovac
LS), and filled and finished by PLS to be
delivered to hospitals, clinics and any other
facilities nationwide as instructed by MoH.
Duopharma, on the other hand, will
be supplying 6.4 million doses of the Rus-
sian-developed “Sputnik V” Covid-19 vac-
cine.
The group confirmed that it will procure
and supply to MoH the vaccine developed
by the Gamaleya National Research Institute
of Epidemiology and Microbiology.
It said its subsidiary, Duopharma (M)
Sdn Bhd (DMSB) had signed a term sheet
agreement with MoH and the Russian Di-
rect Investment Fund (RDIF) to secure 6.4
million doses of Sputnik V.
RDIF is the appointed marketing agent
for Gamaleya for all international markets,
with established partnerships in India, Chi-
na, and South Korea to manufacture the
vaccine.
Both companies said the supplies of the
vaccines are subject to approval by MoH’s
National Pharmaceutical Regulatory Agen-
cy (NPRA) and Drug Control Authority.
On the timeline, Pharmaniaga said sub-
ject to approval by NPRA, the finished Cov-
id-19 vaccine is expected to be delivered to
2 THEEDGE CEO MORNING BRIEF
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H O M E
Putrajaya signs
agreements with
Pharmaniaga
and Duopharma
to supply 18.4 mil
Covid-19 vaccine
doses
BY SYAHIRAH SYED JAAFAR
theedgemarkets.com
BLOOMBERG
MoH by April 2021, while Duopharma said
supply of the Sputnik V vaccine will be in
phases over a period within 2021.
In its own statement, MoH said the Cov-
id-19 CoronaVac vaccine will be adminis-
tered in two doses to each recipient, with
the second dose coming 14 days after the
first one. The 12 million doses are expect-
ed to cover six million people or 18.75% of
Malaysians aged 18 and above.
The Sputnik V vaccine will also admin-
ister two doses, with the second dose tak-
en 21 days after the initial one. It will cover
an additional 3.2 million people or 10% of
Malaysians aged 18 and above.
The race to get a Covid-19 vaccine has
become the subject of much public interest
publisher + . Ho Kay Tat
ceo
editor - in - chief
. Azam Aris
chief commercial officer . Sharon Teh
chief operating officer . Lim Shiew Yuin
editors . Kathy Fong . Jenny Ng .
Tan Choe Choe . Lam Jian Wyn
to contact editors : eeditor@bizedge.com
to advertise : advertising@bizedge.com
as citizens await news of when inoculation
can begin in Malaysia.
This has also stirred strong investing in-
terest in companies that are venturing into
vaccine distributions. The government’s
agreements with Pharmaniaga and Duop-
harma raises the question on the role of these
companies that have jumped on the vaccine
distribution bandwagon.
As it is, MoH said the evaluation process
alone for a vaccine to be approved for dis-
tribution and use in Malaysia will take five
phases, with the first phase — which is the
checking of the vaccine dossiers or research
documents — typically taking between 90
and 120 days.
Still, there are visibly more companies
announcing their involvement in vaccine
distributions such as Yong Tai Bhd, Bintai
Kinden Corp Bhd and INIX Technologies
Holdings Bhd.
Bioalpha Holdings Bhd is the latest to
jump on the bandwagon when it announced
on Monday that it had entered into a two-
year procurement and distribution agree-
ment with Shanghai Bukun Trading Co Ltd
for the procurement and distribution of vac-
cines in Malaysia, including the Covid-19
vaccine developed by Sinovac Biotech.
Yong Tai said last month that it had inked
a heads of agreement with Shenzhen Kang-
tai Biological Products Co Ltd for the de-
velopment and exclusive commercialisation
of the latter’s inactivated Covid-19 vaccine
in Malaysia. Under the deal, Yong Tai will
supply 100 million doses of the vaccine over
a five-year period.
Bintai Kinden, a mechanical and elec-
trical engineering services company, has
also said it is partnering US-based Gener-
ex Biotechnology Corp and its subsidiary
NuGenerex Immuno-Oncology Inc to dis-
tribute and sell their Covid-19 vaccine in
Southeast Asia.
Any supply of Covid-19 vaccine will be
subject to the approval of NPRA. Notwith-
standing this, the vaccination process involv-
ing millions of people is an arduous process,
and questions do arise as to what approach
private companies will use in distributing
their supplies of vaccines.
 W E D N E S D AY J A N U A RY 2 7 , 2 0 2 1
H O M E
Up to 10 years’
KUALA LUMPUR (Jan 26): The Se-
curities Commission Malaysia (SC) has
jail for unlisted
cautioned unlisted public companies
(UPC) that offering shares to retail in-
public companies
vestors without a prospectus is a serious
violation of the law.
offering shares
Under the Capital Markets and Ser-
vices Act 2007 (CMSA), a prospectus is
without
required to be issued when shares of a
UPC are offered to retail investors, and
prospectus
that it must also be registered with the
SC, said the regulator in a statement.
A person found guilty of breaching
the law under the CMSA may be pun-
ished with a fine not exceeding RM10 BY EMIR ZAINUL
million or imprisonment not exceeding theedgemarkets.com
ten years, or both.
Warning notice
KUALA LUMPUR (Jan 26): The Na-
tional Security Council (MKN) through
for all govt
the National Majlis Cyber Security Agen-
cy (NACSA) has issued a warning notice
agencies following
to all government agencies to take the
necessary steps to prevent and minimise
threat of possible
the impact of possible hacking attempts
against their official websites.
website hacking
The MKN, in a statement here today,
said the action was taken following the
— MKN
viral video of a threat to hack government
websites posted by ‘Anonymous Malay-
sia’ recently.
It said NACSA was also working close-
ly with the Royal Malaysia Police to co-
ordinate and take the necessary actions.
“The government views seriously and
has always given priority to the security
aspects of the government’s information
technology infrastructure and the coun-
try’s critical systems by emphasising on
the actions to strengthen the information
technology system including improving
the knowledge and skills of the relevant
officials,” it said.
The action is clearly underlined in
the Malaysian Cyber Security Strategy
launched in October 2020, it added.
In the 55-second video, ‘Anonymous
3 THEEDGE CEO MORNING BRIEF
The commission has issued the re-
minder as it was concerned about an
increasing number of queries and com-
plaints pertaining to UPCs offering their
shares, including preference shares, to
both retail and sophisticated investors.
In certain cases, the SC said, the
shares are marketed or offered through
phone calls, followed by one-on-one
meetings with agents of the UPC.
“The SC today reminded unlisted
public companies (UPCs) seeking to
raise funds from members of the public
to comply with the CMSA and relevant
guidelines, especially when the offer is
made to retail investors,” it said.
The commission stressed that UPCs
have the duty to provide all relevant in-
formation to investors, including so-
phisticated investors, to enable them to
make an informed assessment, includ-
ing the merits of investing in the shares
of the UPCs and the extent of the risks
involved.
Before investing in shares of a UPC,
the SC said investors should ask for and
review the contents of the registered pro-
spectus or information memorandum to
understand the nature and risks of their
investment, especially how their invest-
ments will be utilised by the UPC. “They
(investors) should also conduct their own
research and where necessary, seek pro-
fessional advice,” it added.
Malaysia’ claimed that Malaysia’s cyber-
security system was at a low level and
could cause hackers to sell leaked infor-
mation, apart from the fact that the 2017
telecommunications company data hack
that affected 46 million mobile users as
of today.
Meanwhile, CyberSecurity Malaysia,
an agency under the Ministry of Commu-
nications and Multimedia, in a statement
said the link could be referred to for the
best practices to avoid falling victim to
cyber-attacks and hacking attempts.
Among the suggestions are to ensure
Bernama that anti-virus software is always updat-
ed and to regularly back up critical in-
REUTERS INDIA formation.
All organisations are also advised to
constantly evaluate the weaknesses and
carry out penetration tests on their sys-
tems, in addition to reporting security in-
cidents to the authorities, so that remedial
action can be taken as soon as possible.
The public can report any cyberse-
curity incident to Cyber999 via email at
cyber999@cybersecurity.my, or by
contacting the hotline 1-300-88-2999
(office hour) or +60 19 2665850, fax to
+603 8008 7000, or SMS to 15888.
 W E D N E S D AY J A N U A RY 2 7 , 2 0 2 1
Frenzied buying
in Public Bank
shares; volume
swells to 141 mil
shares ex-date
BY ARJUNA CHANDRAN SHANKAR
theedgemarkets.com
KUALA LUMPUR (Jan 26): Frenzied
buying emerged in Public Bank Bhd’s
shares after its share price was adjusted
to the bonus issue of 15.53 billion shares.
Its trading volume swelled to 141.89 mil-
lion — the highest level since May last year.
The banking stock climbed as much as
71 sen, or 16.7%, to RM4.97 against its
reference price of RM4.26.
At the day’s peak of RM4.97, Pub-
lic Bank’s market capitalisation (cap) hit
RM96.4 billion, exceeding Malayan Bank-
ing Bhd’s (Maybank), the largest company
on Bursa Malaysia.
Public Bank shares pared some gains
to close at RM4.40, still up 3.29% or 14
sen with some 141.89 million shares trad-
ed — 31 times its 200-day average trading
volume of 4.61 million shares.
At the closing bell, Public Bank’s market
KUALA LUMPUR (Jan 26): Poh Huat
Resources Holdings Bhd’s main operat-
ing subsidiary in Malaysia has discovered
543 positive Covid-19 cases among its
employees.
According to a bourse filing, the furni-
ture company’s subsidiary Poh Huat Fur-
niture Industries (M) Sdn Bhd (PHFI)
went through a voluntary Covid-19 screen-
ing of all of its employees (foreign and lo-
cal) at all its factories located in the Bukit
Pasir Industrial Area in Muar, Johor.
The screening exercise covered 1,400
employees at all of PHFI’s plant premises
and corporate offices in Bukit Pasir, Muar,
revealing that 543 employees were positive
for Covid-19.
“PHFI is cooperating and working
closely with the Ministry of Health (MoH)
to implement the mitigating steps to con-
tain the spread of Covid-19 on the prem-
ises, and safeguard the health of employ-
ees who may have been exposed to the
virus,” it said.
The group has also taken the addi-
tional step of temporarily suspending its
Malaysian operations from yesterday (Jan
25) to Feb 3 or until further advised by
4 THEEDGE CEO MORNING BRIEF
H O M E
cap stood at about RM85 billion.
At RM85 billion, Public Bank is now
not far from Maybank, which has the larg-
est market cap on Bursa Malaysia.
Maybank fell six sen to close at RM7.82,
translating into a market value of RM89.26
billion.
Some quarters believe the adjustment
for bonus issue has made Public Bank’s
shares more affordable.
CGS-CIMB Securities analyst Winson
Ng wrote in a note today that its adjusted
target price is at RM5 after taking into
account the expansion in the number of
issued shares in Public Bank and the ad-
justed reference price for the stock.
543 Covid-19
cases found
among workers
at Poh Huat
furniture
subsidiary
BY ARJUNA CHANDRAN SHANKAR
theedgemarkets.com
the MoH, it added.
The group’s Vietnam operations, mean-
while, are free from Covid-19-related in-
cidents and remain in full operations, Poh
Huat noted.
The temporary closure of PHFI is ex-
pected to result in a delay of shipments for
several customers in the US.
“The management is currently in dis-
cussion with the affected customers for
the rescheduling of the delivery dates for
THE EDGE FILE PHOTO
Ng said CGS-CIMB is positive about
Public Bank’s bonus issue as it increases
the liquidity of its shares, and the lower
share price following the exercise raises the
affordability of the stock for retail investors.
“Public Bank remains an ‘add’ and our
top pick for the sector as we regard the
bank as the most defensive amid our ex-
pected industry-wide rise in gross impaired
loan ratio in 2021F as a result of the Cov-
id-19 pandemic.
“A potential rerating catalyst is the ex-
pected recovery in core net profit growth
to our projected rate of 12% in 2021F. A
potential downside risk to our call is a spike
in 2021F loan loss provisioning,” he said.
these orders, and expects that there will
not be any adverse impact on the group.”
“PHFI expects to be able to mitigate the
delay in shipment as it has certain amount
of ready inventories to meet some of these
orders and, if necessary, increase produc-
tion with extended shifts upon re-com-
mencement of manufacturing activities.
The group can divert some of its Malaysian
orders to its Vietnamese subsidiary should
the need arise,” it commented.
On the financial impact of this devel-
opment, Poh Huat said that it does not
expect any material impact on its finan-
cial performance, other than the costs
incurred for the swab test, disinfection
process and daily meal allowance for for-
eign workers.
“Barring any prolonged interruption or
closure of operations of PHFI, the board
does not expect any material adverse im-
pact on revenue or earnings of the group
for the financial year ending [Oct 31,]
2021,” Poh Huat said.
As at the time of writing today, Shares in
Poh Huat were trading 1.93% or three sen
lower at RM1.55, valuing it at RM431.36
million. It had seen 648,400 shares done.
 W E D N E S D AY J A N U A RY 2 7 , 2 0 2 1
Hartalega still has room to grow
but some analysts cut target prices
BY SYAFIQAH SALIM
theedgemarkets.com
KUALA LUMPUR (Jan 26): Hartalega
Holdings Bhd’s earnings growth is expect-
ed to remain strong in 2021, according to
investment analysts, but some of them have
trimmed their target prices (TPs) consid-
ering the supply-demand conditions and
average selling prices (ASPs) to normalise
not far from now.
Among the stockbroking firms that
have revised down their TPs for Hartale-
ga, which posted a record-breaking RM1
billion net profit for the third quarter end-
ed Dec 31, 2020 (3QFY21), are Maybank
IB Research, JF Apex Research and MIDF
Research. Nonetheless, the revised TPs are
still higher than the market price.
Maybank IB Research, which maintains
its “buy” recommendation, trimmed its
TP to RM16.40 from RM20.60 previous-
ly, as it rolled forward its valuation base
year to the financial year ending March
31, 2024 (FY24) estimates to better re-
flect a sustainable valuation in a balanced
demand-supply environment.
“At our TP, the implied ex-cash PE
[price-to-earnings] in FY24E is 39x
(+1SD [standard deviation] to its five-year
mean), similar to the level it was trading
at before Covid-19. Dividend yield is (an-
ticipated to be in the range of) 4%-8%
in FY21E-FY22E,” said its analyst Lee
Yen Ling.
Lee expects Hartalega to achieve 50%
quarter-on-quarter (q-o-q) growth in net
profit for 4QFY21 due to higher ASP (cir-
ca +45% q-o-q).
The analyst raises the estimate of earn-
ings per share (EPS) for FY21 by 9%,
however, she maintains the forecasts for
FY22 and FY23.
Despite the record-high quarterly net
profit, Hartalega’s share price dropped
56 sen or 4.3% to RM12.44, bringing its
market capitalisation to RM42.6 billion.
A total of 4.67 million shares were traded.
Its peers Top Glove Corp Bhd’s share
price also fell 32 sen or 4.9% to RM6.20,
Kossan Rubber Industries Bhd lost 17 sen
or 3.8% to RM4.33, while Supermax de-
clined 35 sen or 5% to RM6.65.
To recap, Hartalega reported that its
net profit for 3QFY21 surged to a record
high of RM1 billion, up nearly 84% against
RM544.96 million in 2QFY21, meanwhile
quarterly revenue grew from RM1.35 bil-
lion to RM2.13 billion, boosted by higher
5 THEEDGE CEO MORNING BRIEF
H O M E
The stockbroking firms’ TPs and recommendations for Hartalega
STOCKBROKING FIRMS TP RECOMMENDATION
Maybank IB Research RM16.40 Buy
JF Apex Research RM14.70 Hold
MIDF Research RM18.25 Buy
RHB Research Institute RM23.88 Buy
HLIB Research RM19.06 Buy
CGS-CIMB Research RM21.80 Add
Kenanga Research RM21.00 Outperform
Public Invest Research RM24.50 Outperform
Source: Brokers’ reports
billion upon full commission],” it said.
Meanwhile, MIDF Research, which
The current share maintains a “buy” call, said it cut Har-
price is looking beyond talega’s TP to RM18.25 from RM22.96
its prevailing peak previously, as the research house pegged
earnings and starts to the TP to 31 times FY22 forecast EPS
of 58.9.
price in recovery theme “The 31x PER is based on Hartalega’s
for this year upon 10-year mean, which we opine is more
massive vaccination. reflective of its long-term prospects. Pre-
viously, we ascribed it to 39x PER, which
is 0.5SD above its long-term mean,” said
its analyst Ng Bei Shan.
sales revenue which was boosted by bigger Nonetheless, MIDF believes that de-
sales volume, hike in ASPs, lower energy mand for rubber gloves will remain robust
and upkeep expenses. in the near-to-medium term as they are
JF Apex Research maintains a “hold” part of the essential personal protection
call on the nitrile glove manufacturer, and equipment for frontline workers, thus it
trimmed its TP to RM14.70, as it assigns increased earnings forecast estimates for
lower PE of 30 times for calendar year FY21 by 49% on further upside of ASPs.
2021 (CY21) in view of window opportu- Still, there are glove bulls who have
nity getting slimmer upon wide adoption raised TPs. These include RHB Research
of Covid-19 vaccines followed by incom- Institute and Hong Leong Investment
ing competition from new entrants which Bank (HLIB) Research.
could pose a threat to the ASPs. RHB keeps its “buy” call with a slightly
“Our valuation was lower than the av- higher TP of RM23.88 on higher net profit
erage five-year mean P/E of 42.3x. We peg forecasts compared with RM23.50 pre-
our valuation to CY21 instead of FY21 viously, 84% upside with circa 4% FY21
considering the impact of earnings normal- (March) dividend yield.
isation in FY22F after exceptional strong “Looking ahead, 4QFY21 is set to rise,
profit growth in FY21F pursuant to the as its ASP uptrend has remained intact.
pandemic,” the research house said. On top of the spectacular earnings, we
It said the market is forward looking like the company for its gold standard in
and hence, it opines that the current share Covid-19 prevention among workers,” said
price is looking beyond its prevailing peak RHB analyst Alan Lim.
earnings and starts to price in recovery HLIB Research maintains a “buy” call
theme for this year upon massive vacci- for the group with a higher TP of RM19.06
nation. from RM18.35 based on 21.5 times PE
“In view of our lower-than-expected multiple (-1.25 standard deviation below
forecasts (earlier), we lift our FY21F and five-year mean) from 24 times previously.
FY22F net profit estimates by respective “We note that ASPs rose drastically
11.1% and 20.8% by increasing our mar- q-o-q (+58.2%). After factoring in higher
gin assumption coupled with higher sales ASPs going forward, our FY21/22/23 earn-
volume upon full commission of Plant 7 ings forecasts rise by 4.9%/9.2%/1.4%,”
[which will have annual capacity of 2.7 said analyst Gan Huan Wen.
 W E D N E S D AY J A N U A RY 2 7 , 2 0 2 1 6 THEEDGE CEO MORNING BRIEF

H O M E

Catcha Group-linked SPAC files for IPO

in the US to raise US$250m
BY JOYCE GOH
theedgemarkets.com

KUALA LUMPUR (Jan 26): Catcha

Group intends to list its special purpose
acquisition company (SPAC) called Cat-
cha Investment to raise US$250 million
on the New York Stock Exchange.
The blank cheque company is on a
lookout for businesses in the “new econ-
omy sectors” such as digital media sec-
tors, financial technology, or digital ser-
vices across Asia Pacific, according to the
filings to the US Securities and Exchange
Commission (SEC).
The filing shows that Catcha Group on
Monday made a submission for an initial
public offering on Wall Street.
The company will be led by the
co-founders of Catcha Group Patrick
Grove, who will serve as CEO and chair-
man, and Luke Elliott, who will serve as
president and director.
Catcha Group has made over 50 in-
vestments globally which are held directly
or indirectly, and brought six digital busi-
nesses from their early stages to a public ue to enjoy an outsized growth trajectory,
listing or sale, with an aggregate valuation particularly in the new economy sectors,
of over US$1 billion. The blank cheque and that this will result in opportunities
Among those currently on Catcha In- company is on a for attractive risk-adjusted returns from
vestment’s investment advisory board are lookout for businesses our initial business combination,” it added.
David Gowdey, formerly from TPG and in the “new economy The sponsor for the SPAC is Catcha
currently a managing partner at Jungle sectors” such as Holdings LLC, a Cayman Islands limited
Ventures in Singapore, a regional VC that liability company.
manages US$352 million assets under
digital media sectors, JP Morgan is listed as the book run-
management, and Robert Kuok’s grand-
financial technology. ning manager.
son Kuok Meng Xiong, the founder and
managing partner of Singapore-based K3 Malaysian companies making way
Ventures, one of the early investors into to Wall Street
tech giant Grab and who has other invest- US$250 million by offering 25 million Just a few weeks ago, Genting Bhd’s
ments including Bytedance and SpaceX. units at US$10 each. Every unit will con- life-sciences division merged with NAS-
Also on the investment advisory board sist of one share of common stock and one- DAQ-listed GX Acquisition Corp to form
are Khailee Ng, managing partner of 500 half of a warrant, exercisable at US$11.50, a SPAC in an attempt to create a public-
Startups, a Silicon Valley-based venture according to the filing. ly-listed leader in allogeneic cellular therapy.
capital firm,Thomas Tsao, co-founder and Catcha Investment noted that the in- Earlier this month, Celularity signed
managing partner of Gobi Partners, a ven- vestment advisory board will assist the a definitive merger agreement with GX
ture capital firm headquartered in Shang- management team in sourcing suitable Acquisition Corp, of which the companies
hai, and Helen Wong, partner at Qiming acquisition targets and provide business are planning to take it public by the sec-
Venture Partners, focusing on TMT sector. insights when the SPAC assesses poten- ond quarter of 2021, subject to approval
“We have not selected any business tial business combination targets and as of both Celularity and GX’s shareholders.
combination target and we have not, nor it works to drive additional value in the Also in the US listing pipeline is Grab
has anyone on our behalf, initiated any sub- businesses that it acquires. Holdings Inc. Bloomberg reported that
stantive discussions, directly or indirectly, Catcha Investment noted its intention to Grab has picked Morgan Stanley and
with any business combination target. focus its search on a target with operations JPMorgan Chase & Co as its advisors for
“We will not be limited to a particular or prospective operations in technology, a potential US initial public offering that
industry or geographic region in our iden- digital media sectors, financial technology, could raise at least US$2 billion.
tification and acquisition of a target com- or digital services, which it refers to as the The listing could happen as soon as
pany,” said the SPAC in the filing. “new economy sectors”, across Asia Pacific. the second half of this year, according to
Catcha Investment plans to raise “We believe that Asia Pacific will contin- Bloomberg.
 W E D N E S D AY J A N U A RY 2 7 , 2 0 2 1 7 THEEDGE CEO MORNING BRIEF

Anytime
Anywhere
We are here to keep you informed
 W E D N E S D AY J A N U A RY 2 7 , 2 0 2 1 8 THEEDGE CEO MORNING BRIEF

H O M E

KUALA LUMPUR (Jan 26): Atrium Real
Estate Investment Trust (Atrium REIT)
said its fourth quarter net property income
(NPI) rose 20.64% to RM9.30 million,
from RM7.71 million in the preceding
quarter, thanks to rental income contribu-
tion from its Atrium Bayan Lepas (ABLI)
property in Penang.
In a bourse filing, the industrial proper-
ty REIT said gross revenue for the fourth
quarter ended Dec 31, 2020 (4QFY20) in-
creased 16.13% to RM8.85 million, from
RM7.62 million in 3QFY20.
On a year-on-year basis, the NPI in-
creased 20.98% from RM7.47 million in
4QFY19, while revenue rose 16.28% from
RM7.61 million.
Atium REIT declared a distribution
per unit (DPU) of three sen, payable on
Feb 26, bringing the cumulative distri-
bution for FY20 to nine sen, from 6.63
sen in FY19.
Full-year NPI increased 40.4% to
RM32.24 million, from RM21.41 mil-
lion in FY19, as revenue rose 41.74% to
RM31.69 million from RM22.36 million.
Atrium REIT’s Atrium REIT said CJ Century Logis-
tics Sdn Bhd, a tenant at its Atrium USJ-
4Q NPI rises Block B property, will be vacating the
premises in January 2021.
on revenue “However, the manager has secured
our existing tenant, Rohlig Malaysia Sdn
contribution from Bhd (from Atrium USJ-Block A) to take
over the premises. The new tenancy will
Bayan Lepas be for a period of three years and is tar-
geted to commence on Feb 1.
property “The manager is in the midst of final-
izing the terms of the tenancy agreement
with Rohlig.
BY ARJUNA CHANDRAN SHANKAR “The occupancy rate for the trust’s
theedgemarkets.com portfolio of properties as at Dec 31,
2020 was 100%. Barring any unforeseen
circumstances, the manager expects the
trust’s existing portfolio of properties to
maintain 100% occupancy throughout the
financial year 2021,” it added.
Atrium REIT units finished un-
changed at 23 sen today, valuing the trust
at RM251.69 million. The counter saw
21,900 shares done.

Analysts turn
KUALA LUMPUR (Jan 26): The imple- al income of IGB REIT as the group col-
mentation of the second Movement Con- lects turnover rent from food and beverages

cautious on IGB
trol Order (MCO 2.0) and resurgence of tenants.
Covid-19 cases have clouded the outlook Following this, Low revised IGB REIT’s

REIT, no thanks
of retail real estate investment trust (REIT) TP lower to RM1.61 from RM1.66, with
IGB REIT. a “neutral” call as MIDF continues to see

Investment analysts have trimmed IGB
REIT’s target price (TP) although the
group’s earnings for the fourth quarter ended
Dec 31, 2020 (4QFY20) beat market con-
sensus expectations.
Analysts including those from Kenanga
Research, MIDF Research and Hong Le-
ong Investment Bank (HLIB) Research have
cut IGB REIT’s TP to between RM1.60
and RM1.88.
As at noon break, IGB REIT, which
owns the MidValley Mega Mall and The
Gardens Mall, closed at RM1.64, valuing
it at RM5.84 billion.
Kenanga Research analyst Marie Vaz
said IGB REIT’s FY20 realised net income
(RNI) of RM236.8 million came in above the
research house’s expectations, as Kenanga
was conservative in its 4Q earnings outlook
in light of the spike in Covid-19 cases.
However, she cautions that the group’s
near-term outlook remains uncertain due to
the spike of Covid-19 cases, noting the like-
lihood of cutting earnings forecast if stricter
lockdowns are imposed.
According toVaz, the impact of MCO 2.0,
which was enforced on Jan 13, will continue
to put a strain on Malaysian retail REITs as
it threatens shoppers’ footfall, car traffic vol-
ume and could result in higher temporary
closure of retail shops.
“We do not expect the acquisition of
to MCO 2.0
BY SYAFIQAH SALIM
theedgemarkets.com
Southkey Mall in Johor in the near term
and reckon that it would take at least one
reversion cycle or longer in light of the Cov-
id-19 pandemic for the asset to stabilise be-
fore being acquired by IGB REIT, likely by
FY22-FY23,” she said.
For now, Vaz maintains a “market per-
form” call on IGB REIT and TP of RM1.60
(from RM1.64 previously). She said Kenan-
ga will continue to monitor the situation
closely but opt to remain conservative on
earnings and valuation outlook.
MIDF Research analyst Jessica Low Jze
Teing expects shopper footfall to be low in
1QFY21, which in turn would reduce rent-
challenging outlook for retail malls in Klang
Valley in 1HFY21, adding that they expect
earnings to recover in 2HFY21 when vac-
cine is widely available.
“Meanwhile, dividend yield is estimated
at 4.9% for FY21,” Low said.
HLIB Research analyst Farah Diyana
Kamaludin commented that the ongoing
MCO, which is scheduled to end on Feb
4, alongside the rising Covid-19 cases may
put a dent on Chinese New Year sales per-
formance year-on-year (y-o-y).
“We gathered that IGB REIT is open to
providing rental assistance to its tenants that
needed support on a case-to-case basis. We
believe IGB REIT’s low exposure to tour-
ists (less than 10% exposure to international
tourists) and its prominent location will aid
in surviving this challenging environment.
“Post earnings adjustments, our TP fell to
RM1.88 (from RM2.01). Our TP is based
on FY21 DPU [distribution per unit] on
targeted yield of 4.5% which is derived from
two-year historical average yield spread be-
tween IGB REIT and 10-year MGS [Malay-
sian Government Securities] yield. Maintain
‘buy’,” she said.
Furthermore, Farah Diyana said HLIB
continues to favour IGB REIT for its robust
asset quality in prominent locations with low
tourist exposure that the research firm be-
lieves will drive a quick recovery post-MCO.
 W E D N E S D AY J A N U A RY 2 7 , 2 0 2 1 9 THEEDGE CEO MORNING BRIEF

H O M E

Batu Kawan
KUALA LUMPUR (Jan 26): Batu Kawan The offer will remain open for accept-
Bhd (BKB), which has made a takeover of- ances until 5pm on Feb 2, 2021.

garners enough
fer for all the shares it does not already own Bursa Malaysia Securities will suspend
in Chemical Company of Malaysia Bhd the trading of the CCM shares on the main

acceptance
(CCM) at RM3.10 per share, now holds a market upon the expiry of five market days
96.7% stake in CCM, comprising 162.17 from the closing date of the offer.

to take CCM
million shares in the company. The suspension will result in the securi-
BKB and persons acting in concert with ties of CCM no longer being traded on the

private
it (PACs) had received valid acceptances local exchange, as the offeror will procure
of not less than nine-tenths in the nominal CCM to take the requisite steps to with-
value of the ordinary shares in CCM as at draw its listing status.
5pm today, said the company in a filing to As at market closing today, BKB added
Bursa Malaysia. Bernama eight sen to RM18.00, while CCM was
“As such, the offeror (BKB) will invoke unchanged at RM3.10.
the provisions of Section 222 (1) of the
Capital Markets and Services Act 2007
(CMSA) to compulsorily acquire any re-
maining offer shares from the holders of
the offer shares (holders) who have not ac-
cepted the offer and/or who have failed or
refused to transfer the Offer shares to the
offeror (Dissenting Shareholders),”it said.
Accordingly, it added, the offeror will
issue a compulsory acquisition notice
under Section 222 (1) of the CMSA,
which will be sent to all Dissenting
Shareholders.

NEWS IN BRIEF

RGT’s 2QFY21 revenue surges 165%

Advancecon bags RM60.6m ECRL subcontract on hygiene care products demand
KUALA LUMPUR (Jan 26): Advancecon Holdings Bhd has bagged a RM60.6 KUALA LUMPUR (Jan 26): RGT Bhd’s net
million subcontract for the proposed construction and completion of subgrade profit for the second quarter ended Dec
works of Package 3, Section 4 for the East Coast Rail Link (ECRL) project. In a 31, 2020 (2QFY21) swelled to RM4.09
filing with Bursa Malaysia today, Advancecon said its wholly-owned subsidiary million, from RM1.01 million posted in the
Advancecon Infra Sdn Bhd (AISB) has accepted the letter of acceptance from China same quarter last year. Revenue surged
Communications Construction (ECRL) Sdn Bhd for the appointment of AISB as 165% to RM45.37 million from RM17.14
the subcontractor. The contract period spans March 1, 2021 to April 15, 2023. million previously, underpinned by strong
Advancecon said there are no foreseeable significant risks other than operational demand for its hygiene care products.
risk associated with the contract during In a filing with Bursa Malaysia today,
the contract period. “The contract executive director and chief executive
is expected to contribute positively officer Datuk Lim Seat Hoe said RGT
towards the future earnings of the group was honoured to be part of the effort to
for the duration of the contract, and help contain the Covid-19 pandemic. In
will not have any effect on the share another filing, RGT’s 70%-owned plastic
capital and substantial shareholders’ products subsidiary RGT Industries Sdn
shareholdings,” it said. — by Anis Hazim Bhd (RISB) has entered into a sale and
Sharudin/theedgemarkets.com purchase agreement with real estate
company BKNT Resources Sdn Bhd to
acquire property for facility expansion
Chin Teck 1Q net profit doubles on higher palm prices in Penang’s Bukit Minyak Industrial Park
KUALA LUMPUR (Jan 26): Chin Teck Plantations Bhd said its net profit doubled to RM15.77 for RM14 million. “RISB was set up with
million for the first quarter ended Nov 30, 2020 (1QFY21), from RM7.81 million a year the objective that it would support RGT’s
earlier. In a bourse filing, the group said the higher earnings were on the back of higher in-house demand for precision spray
revenue, thanks to higher prices for fresh fruit bunches (FFB), crude palm oil (CPO) and painting services under a controlled
palm kernel (PK). It added that the FFB production and purchases also increased, resulting cleanroom environment for hygiene
in higher CPO and PK production. Chin Teck said revenue was up 36.61% at RM45.41 care products. Based on our estimated
million, from RM33.24 million in 1QFY20. On a quarter-on-quarter basis, the group said its yearly quantity, the future sales volume is
net profit rose 15% from the RM13.72 million in 4QFY20, while revenue increased 15.96% expected to outgrow the current capacity
from RM39.16 million. “The prevailing strong selling prices of CPO are expected to continue by June 30, 2022, hence the need for the
and this would have a favourable impact on the financial performance for the financial year proposed facility expansion,” it added. —
ending Aug 31, 2021,” said Chin Teck. — by Arjuna Chandran Shankar/theedgemarkets.com Bernama
 W E D N E S D AY J A N U A RY 2 7 , 2 0 2 1
Property market to see recovery
in 2022 — Rahim & Co
BY E. JACQUI CHAN
theedgemarkets.com
KUALA LUMPUR (Jan 26):The property
market is expected to be soft this year and
recovery is likely to be delayed to 2022, ac-
cording to Rahim & Co. Optimism is held
for the turning point to be in the latter parts
of 2021 with the vaccine about to be mobi-
lised, but with the more recent resurgence of
cases and reimplementation of lockdowns,
a further recovery delay to 2022 would not
be a surprise, it said in its Property Market
Review 2020/2021.
“We expect the residential market to re-
main focused on the affordable segment, as
overhang is still a concern. Secondary sales
are expected to dominate the market with
price consolidation and the Home Owner-
ship Campaign 2021 will give the market
a boost,” said research director Sulaiman
Saheh in a virtual press conference today.
In the office market, concerns about the
incoming supply remains. Rentals and oc-
cupancy rates will continue to be under
pressure, influenced primarily by reloca-
tion activities rather than new tenancies.
“Older buildings are looking at asset en-
hancement exercises or even being repur-
posed, while co-working spaces will contin-
ue to expand, especially in Transit Oriented
Developments,” said Sulaiman.
Meanwhile, retail will face more chal-
lenges and retailers are expected to re-strat-
egise to offer better values and experiential
retail options. E-commerce trends will con-
tinue and synergies with brick and mortar
outlets and as the popularity of e-wallets
continues, a cashless society is emerging,
said Rahim & Co.
Meanwhile, Sulaiman noted that the
industrial sector is attracting more atten-
tion than others at the moment.The sector
will continue to be driven by the logistics
sector and there will be demand for large
warehousing facilities with built-to-suit ar-
rangements.
“Advancement of technology through
IR 4.0 will shape new forms of industrial
parks, and managed industrial parks are
the preferred choice.There is relatively low
incoming supply and yields are relatively
more attractive as investment assets,” said
Sulaiman.
The consultancy noted that despite
having decreased by 29.8% and 11.1% in
volume and value of transactions respec-
tively in the first three quarters of 2020,
the industrial sector was still seen to be
10 THEEDGE CEO MORNING BRIEF
H O M E
the more stable sector. This is boosted by
the overwhelming demand for e-commerce
transactions, which will continue to hold
the spotlight moving forward.
Also, considering the slower relative pace
of incoming supply, especially for managed
industrial parks with built-to-suit arrange-
ments, industrial property investments are
to be keenly observed this year.
The pandemic has stunted GDP growth
but Rahim & Co maintained a resilient out-
look for the coming years, as the world grad-
ually readjust itself.
In end-2020, the GDP growth was fore-
casted to contract by 4.5% but with the
production of vaccines and having survived
the initial pandemic shock, 2021 held a
better recovery forecast of 6.5% to 7.5%.
“However, the numbers are due to the
low base in 2020.The projected growth may
look encouraging but because of the drop
in 2020, the absolute figure is still compa-
rable to pre-2019 levels,” said Sulaiman.
As of 3Q2020, the overall property mar-
ket transactions fell by 15.8% and 216% in
volume and value respectively, compared
with the same period in 2019. It stood at
204,721 units, worth RM80.71 billion.
Rahim & Co noted that the residential
sector saw a decline in the first nine months
of 2020 by 14.3% in volume and 14.8%
in value, in spite of a better year-on-year
performance in the third quarter, when the
country entered the Recovery Movement
Control Order (RMCO) phase.
“Progress in housing developments were
disrupted and ultimately caused delays in
completion targets, resulting in completion
numbers to be 33.4% lower (at 64,080
units) than the previous period. In addi-
tion, overhang numbers had also grown
by 14.8% to 57,390 units worth RM42.49
billion of dwelling units (residential, ser-
viced apartment and SOHO combined).
While this may be due to the pandemic’s
From left: Siva,
Abdul Rahim and
Sulaiman at the
launch of Rahim
& Co’s Property
Market Review
2020/2021 today.
effect, the persisting overhang numbers is
evident of a problem that is yet to be tack-
led effectively,” it said.
According to director ChoyYue Kwong:
“Unless we get to the root cause [of the
overhang], we will never solve this problem.
Right now, more properties are being built.
An in-depth study should be done and per-
manent solutions to solve this issue should
be looked at.”
For executive chairman Tan Sri Abdul
Rahim Abdul Rahman, he said: “Accord-
ing to statistics, there is still a shortage of
about one million houses in Malaysia. So
I believe there is mismatch in pricing and
type of housing. A problem is that land is
a state matter, so every state should look at
the availability of affordable housing and
its problems.”
The office market saw effective occu-
pancy rates decline, especially during the
MCO phase, as remote working became
the norm.
CEO of Estate Agency Siva Shanker
highlighted that: “The occupancy rate is
now at around the 70% bracket, which I
think is probably the lowest we have seen
in a long time. Remote working is expect-
ed to add further pressure on office space
but the saving grace is that there has been
no exodus in the market.
“As supply exceeds demand, there will
be some pressure on the rents, but I don’t
believe we will see a crash in rents. As the
vaccine rollout begins, I think remote work-
ing will reduce and people will start coming
back to the office; office space will still have
a role to play,” he added.
The pandemic aside, pre-existing prob-
lems from affordability, oversupply and in-
come levels to cost of living remains. They
need to be solved and tackled effectively
and holistically, to ensure the long-term
sustainability of the nation’s property mar-
ket, Rahim & Co said.
 W E D N E S D AY J A N U A RY 2 7 , 2 0 2 1
KUALA LUMPUR (Jan 26): Plantation as-
sociations are appealing to the Sabah govern-
ment to extend more government resources
to help smallholders located in remote areas
of the state facilitate Covid-19 screenings for
their workers.
In a joint statement, the Malaysian Palm
Oil Association (MPOA) and the Malaysian
Estate Owners Association (MEOA) said
there are currently 93 Social Security Or-
ganisation (Socso) approved swab testing
service providers in Sabah and the associa-
tions were assured that the number of testing
providers will be increased.
The two associations called on their mem-
bers, who represent 43% of Sabah’s total
oil palm planted area, to adhere to the new
standard operating procedures in place and
to conduct Covid-19 screenings to cover all
of their workers and the larger community
within their respective operations.
They urged planters to work closely with
Health Ministry personnel and private swab
testing service providers approved by Socso
to accept the testing, as well as fully coop-
erate with risk assessments, demonstrating
SOPs in place and providing isolation and
quarantine facilities if needed.
The Sabah government announced
yesterday that it and the industry there had
reached an agreement to roll out a joint ap-
proach in curbing the spread of Covid-19
by implementing a voluntary 30-day lock-
KUALA LUMPUR (Jan 26): The imple-
mentation of Malaysian Sustainable Palm
Oil (MSPO) certification for organised
smallholders had been fully achieved by
the end of 2020, the Malaysian Palm Oil
Board (MPOB) said.
It said the certification carried out with
the involvement of eight federal and state
government agencies entailed the partici-
pation of 233,191 smallholders with total
oil palm cultivated areas of ​​724,633.32
hectares.
The agencies involved are the Federal
Land Development Authority (FELDA)
with a total cultivated area of ​​472,023.91
hectares (100,060 people), Federal Land
Consolidation and Rehabilitation Author-
ity (138,816.32 hectares; 89,440 people),
and Rubber Industry Smallholders De-
velopment Authority (2 ​​ 5,973.89 hectares;
14,389 people).
The state agencies involved in manag-
ing smallholders are the Sarawak Land
Consolidation and Rehabilitation Board
(51,641 hectares; 19,384 smallholders)
and South Kelantan Development Au-
thority (16,934.39 hectares; 2,766 small-
holders).
The other agencies are the Sabah Land
Development Board (16,651.71 hectares;
11 THEEDGE CEO MORNING BRIEF
H O M E
amid strict compliance to the relevant SOPs.
Help smallholders Upon detecting positive cases, plantations
must immediately cease operations to miti-
arrange Covid-19 gate disease spread, with reopening depend-
ent on the Health Ministry’s risk assessments.
screenings As a result, there is now restricted access
into estates in the state, with strict SOPs in
for workers, place for the movement of food, supplies
and services.
plantation groups Mandatory social distancing and
mask-wearing is required, with no social
tell Sabah govt gatherings or other group activities allowed
within the estates.
Both associations welcomed the move and
BY ARJUNA CHANDRAN SHANKAR noted that the Sabah government will en-
theedgemarkets.com hance policing and have check-points where
plantations are located to monitor move-
ment controls.
“MPOA and MEOA will continue to of-
fer their constructive participation with the
authorities to starve the Covid-19 virus of
its victims, by keeping all workers fully em-
ployed and secure under the state-assisted
voluntary lockdowns during this period while
the swab screening is being carried out.
“The Sabah state government and the
relevant stakeholders should continue to be
engaged in working together towards acceler-
ating an end to our common adversary, while
down in the plantation sectors to facilitate we continue to support the hardworking and
the mass screening of oil palm plantation diligent measures taken by the state to man-
workers in the state. age the Covid-19 pandemic in Sabah,” the
Daily plantation operations will continue associations said.
Organised
5,895 people), Perak Islamic Economy
Development Corporation (1,635.82
smallholders
hectares; 904 people) and Sarawak Land
Development Board (57 hectares; 353
achieved
people).
The MPOB said the achievements of
full MSPO
the oil palm plantation and oil palm mill
sectors had almost reached their full target.
certification
It said as at Dec 31, 2020, a total of 5.20
​​
million hectares or 88.25% of the 5.9 mil-
by end-2020
lion hectares of oil palm-planted areas in
Malaysia had obtained MSPO certificates.
— MPOB
A total of 434 oil palm mills or 96.02%
of the 452 oil palm mills had also received
MSPO certificates, it added.
“For independent smallholders, a total
Bernama of 311,739.51 hectares (31.61%) under
oil palm cultivation had obtained MSPO
[certification], involving 94,328 people,”
it said.
The MPOB said smallholders, who have
yet to implement MSPO certification, will
receive a reminder letter to be issued start-
ing from Jan 1, 2021.
A compound will be imposed starting
from July 1, 2021, and from Jan 1, 2022,
smallholders who still fail to register or
begin the MSPO certification process will
have their licence revoked, suspended or
not renewed.
 W E D N E S D AY J A N U A RY 2 7 , 2 0 2 1 12 THEEDGE CEO MORNING BRIEF

H O M E

Covid-19:
KUALA LUMPUR (Jan 26): Malaysia’s new the total recoveries to 149,160.
Covid-19 cases rose to 3,585 today, from
Seven new clusters identified by MoH
Malaysia’s new
3,048 reported on Monday, marking the
third straight day of cases staying above the Dr Noor Hisham said seven new clusters

cases rise to
3,000 mark with 11 more deaths recorded. have been identified by the Ministry of
Among the new infections today, two were Health (MoH), bringing the total active

3,585 with 85%

imported — meaning they had contracted clusters monitored by the ministry to 356.
the virus from abroad — while 3,583 were lo- The seven new clusters include three

involving locals;
cal transmissions, said health director-general workplace-linked clusters, namely the Jalan
(DG) Tan Sri Dr Noor Hisham Abdullah. Cochrane cluster in Titiwangsa, Kuala

death toll hits 700

Dr Noor Hisham said among the lo-
cally transmitted cases, 3,053 or 85.2%
involved Malaysians, while 530 or 14.8%
were foreigners.
This raised the cumulative Covid-19
infections to 190,434 from just 113,010
as at Dec 31, 2020. The 11 additional fa-
talities also pushed the coronavirus death
toll to 700, according to his statement.
Meanwhile, active cases today dropped
for the fourth consecutive day to 40,574,
from a high of 42,814 last Friday (Jan 22).
But this also marked a week of active cases
staying above the 40,000 level.
Selangor recorded the highest number
of new infections with 1,295 cases, push-
ing the state’s tally to 56,664 — the high-
est among all states and federal territories.
This was followed by Kuala Lumpur
with 610 cases, pushing its tally to 22,275,
Johor with 516 cases (17,276) and Sabah
BY SYAFIQAH SALIM
theedgemarkets.com
with 303 cases (47,442).
As for the 11 fatalities, four deaths were
recorded in Kuala Lumpur, three in Sar-
awak while one each was reported in Perak,
Johor, Selangor and Penang respectively.
The deceased involving 10 Malaysians
and one foreigner were aged between 42
and 92 years, said the DG.
Currently, there are 280 patients being
treated in intensive care units (ICUs) with
111 of them needing ventilators to breathe.
For recoveries, 4,076 patients have
been discharged today, exceeding the
number of new infections, thus pushing
Lumpur with 26 cases; The Jalan Plati-
num cluster in Johor Bahru, Johor with 33
cases; and the Intan Delima cluster in Kua-
la Pilah, Negeri Sembilan with 25 cases.
Meanwhile, two clusters are linked to the
infections among the community, namely
the Jalan Padi Mahsuri cluster in Kulai, Jo-
hor with 25 cases and the Kampung Bukit
Putera in Setiu, Terengganu with 25 cases.
The remaining clusters are the Keladi
Saga cluster in Kulim, Kedah with 34 cas-
es and the Tembok Bukit Besi cluster in
Dungun, Terengganu with 99 cases.
To date, 753 Covid-19 clusters have
been reported in the country.
A total of 397 clusters have been declared
ended as no new cases were detected in 28
days.These include two clusters which came
to an end today, namely the Teguli cluster in
Sabah and the Desa Pinang cluster in Kuala
Lumpur and Selangor.

NEWS IN BRIEF

Ardern says New Zealand won’t

Lilly antibody combo therapy cuts risk of COVID-19 deaths open border to the world this year
(Jan 26): Eli Lilly and Co said on Tuesday treatment with a combination of two of (Jan 26): New Zealand is likely to keep its
its antibodies helped significantly reduce risk of hospitalizations and death due to border closed to the world through most of
COVID-19 in a late-stage trial. The results from over 1,000 participants of the study, 2021 amid uncertainty over the rollout of
which is testing the combination of bamlanivimab and etesevimab, show there were Covid-19 vaccines, Prime Minister Jacinda
11 COVID-19-related hospitalizations and deaths in patients taking therapy and 36 Ardern said. “We can expect our borders to be
events in patients taking placebo, representing a 70% risk reduction, the company impacted for much of this year,” Ardern told
said. Lilly said the study has met both the main goal of reducing risk of death and a news conference Tuesday in Wellington.
hospitalization and all key secondary goals, providing evidence that the therapy “We will continue to pursue travel bubbles
reduced viral load and sped up symptom resolution. There were a total of 10 deaths, with Australia and the Pacific, but the rest of
all of which occurred in patients taking placebo, and no deaths in patients taking the world simply poses too great a risk to our
bamlanivimab and etesevimab together, the company said. — Reuters health and our economy to take a risk at this
stage.” New Zealand’s success in combating
the virus has allowed it to lift restrictions
AstraZeneca offers small concession, EU pleads for UK-made shots amid and get its economy moving again much
vaccine row — sources sooner than initially expected, but the closed
BRUSSELS (Jan 26): AstraZeneca has offered to bring forward some deliveries of its border is decimating its tourism industry.
Covid-19 vaccine to the European Union while the bloc has asked the British drug While the government today announced it
maker if it can divert doses from the UK to make up for a shortfall in supplies, European expects to give regulatory approval for the
officials told Reuters. The Anglo-Swedish company unexpectedly announced last Friday Pfizer/BioNTech vaccine next
it would cut supplies to the EU of its vaccine candidate in the first quarter of this year, week, Ardern said mass
a move that a senior EU official told Reuters meant a 60% reduction to 31 million doses immunization will not begin
for the bloc. Two European officials told Reuters on Tuesday that AstraZeneca at two until midyear and she was
extraordinary meetings on Monday offered the EU to bring forward to Feb 7 the start taking a “conservative”
of deliveries from an initial plan to begin on Feb 15. One of the sources, briefed on talks, approach to letting
said that AstraZeneca had also revised upwards its supply goals for February compared foreigners into the
to the cuts announced last week, but the company offered no clarity on supplies for country again. —
March. — Reuters Bloomberg
 W E D N E S D AY J A N U A RY 2 7 , 2 0 2 1
(Jan 26): Pony Ma got US$6.9 billion richer
on Monday after one of the companies his
Tencent Holdings Ltd backs revealed its IPO
plans, while Jack Ma’s public reappearance
Wednesday added US$1.6 billion to his net
worth.
Even though the Hong Kong market
has proved particularly volatile lately — the
benchmark Hang Seng Index gave up all of
of its Monday gain on Tuesday — it’s been
one of the world’s highlights this month.
Tencent and Alibaba Group Holding
Ltd, along with food-delivery giant Meituan
and carmaker Geely Automobile Holdings
Ltd, were among the stocks helping propel
the rally. Their top executives have made a
combined US$32 billion this month through
Monday, and they’re not the only ones ben-
efiting, according to the Bloomberg Billion-
aires Index.
The Top 10 richest moguls with com-
panies that have a primary listing in Hong
Kong have added more than US$60 billion
of wealth in January — or US$3.8 billion
(Jan 26): Ant Group Co could resume its
plans for an initial public offering once
problems are resolved, China’s central bank
chief said, offering some relief to global in-
vestors seeking signs on what the future
holds for the world’s largest fintech giant.
People’s Bank of China Governor Yi
Gang said relevant agencies are still in-
vestigating issues related to monopolies
at billionaire Jack Ma’s Ant Group, add-
ing that the matters were “complicated”
and some risks were related to consumer
privacy. To resolve the problems, regula-
tors need a clear legal framework, Yi said
on a panel at the World Economic Forum
on Tuesday.
“I would say that this is a process and
also once the problem solved, it will go
back to the track to continue considera-
tion according to law,”Yi said in English.
13 THEEDGE CEO MORNING BRIEF
W O R L D
From Pony Ma
yone elese’s in Asia last year, has regained
US$2.6 billion in 2021. His electric-vehicle
to Jack Ma, the
startup said Sunday it’s selling HK$26 bil-
lion (US$3.35 billion) of shares, triggering
rich win big with
a 52% surge in the stock.
While Hong Kong’s economy got badly
wild HK stocks
hit from the coronavirus crisis and a polit-
ical crackdown, money has kept flowing to
the city. Mainlanders taking advantage of
bargain prices after international investors
BY VENUS FENG were forced to dump some newly banned
Bloomberg Chinese stocks have helped boost the mar-
ket, just as concerns over stricter regulatory
for each trading day. This doesn’t include rules governing internet giants in China have
Jack Ma, whose Alibaba trades in Hong eased. At the same time, companies linked
Kong but has its primary listing is in New to Chinese consumers — like Meituan —
York. His net worth is up US$3.5 billion this have benefited as the nation was one of the
month to US$54.1 billion as he resurfaced few able to control the Covid-19 pandemic
in a video after weeks of speculation about and the government has pledged to increase
his whereabouts following a Chinese govern- consumption.
ment clampdown that had left his business The Hang Seng Index soared 11% in Jan-
empire in crisis. uary through Monday, when it hit its highest
Even China Evergrande Group’s Hui Ka level since June 2018. It fell 2.6% onTuesday.
Yan, whose net worth sank more than an- Pony Ma’s US$18.6 billion wealth surge
this month is the biggest after Elon Musk’s,
while Tencent co-founder Zhang Zhidong
has gained US$8.5 billion. Zhong Shanshan
of bottled-water maker Nongfu Spring Co,
who became Asia’s richest person at the end
of 2020 and started the year by takingWarren
Buffett’s spot as the world’s sixth wealthiest,
has added US$16.2 billion in 2021. Meitu-
an’s Wang Xing has amassed US$7.8 billion.
Xiaomi Corp’s Lei Jun is the only ma-
jor tycoon whose net worth has dropped in
January.The US blacklisted the smartphone
maker in an unexpected move that sank its
shares a record 10% on Jan 15.
Read also: South Korea’s Kosdaq tops
1,000 for first time since dot-com bubble
Click here
Ant IPO could
Chinese regulators are asking Ant to
work on a timetable to overhaul its busi-
resume once
ness after abruptly halting its US$35 bil-
lion IPO in November. The fate of Ma’s
issues resolved,
sprawling fintech empire remains uncer-
tain after China issued a slew of draft rules
China central
that threatened to curb growth for some
of Ant’s most lucrative businesses.
bank says
The message fromYi is the latest sign that
Ant has avoided a worst-case scenario where
it needs to shutter businesses completely. Ma
resurfaced in January, ending a months-long
Bloomberg period away from public view that fueled
intense speculation about his plight.
While regulators stopped short of di-
rectly asking for a breakup of the company
in December, the central bank stressed
that Ant needs to “understand the neces-
sity of overhauling” and come up with a
timetable as soon as possible.
 W E D N E S D AY J A N U A RY 2 7 , 2 0 2 1
IMF lifts global
growth forecast
for 2021, still
sees ‘exceptional
uncertainty’
BY ANDREA SHALAL
Reuters
WASHINGTON (Jan 26): The Interna-
tional Monetary Fund on Tuesday raised
its forecast for global economic growth in
2021 and said the coronavirus-triggered
downturn in 2020 would be nearly a full
percentage point less severe than expected.
It said multiple vaccine approvals and
the launch of vaccinations in some coun-
tries in December had boosted hopes of
an eventual end to the pandemic that has
now infected nearly 100 million people
and claimed the lives of over 2.1 million
globally.
But it warned that the world economy
continued to face “exceptional uncertain-
ty” and new waves of Covid-19 infections
and variants posed risks, and global activity
would remain well below pre-Covid pro-
jections made one year ago.
Close to 90 million people are likely to
fall below the extreme poverty threshold
during 2020-2021, with the pandemic wip-
ing out progress made in reducing poverty
over the past two decades. Large numbers
of people remained unemployed and un-
deremployed in many countries including
the United States.
(Jan 26): Bitcoin’s price could exceed
$50,000 over the longer term as the digi-
tal asset vies with gold for investment flows,
according to cryptocurrency exchange
Luno and brokerage OSL.
“We’re talking about Bitcoin over the
next three, five, 10 years slowly inching
away at gold’s market capitalization,” Vi-
jay Ayyar, head of Asia Pacific with crypto
exchange Luno in Singapore, said in an
online question and answer session with
Bloomberg Tuesday. If that happens, “you
are way over $50,000,” he said.
Bitcoin quadrupled last year, eventually
reaching an all-time high of almost $42,000
in early January before sliding back by about
$10,000. The rally split opinion, with some
commentators pointing to increased interest
from long-term investors and others citing
speculative buying. While Bitcoin has been
popular for trading, “increasingly the new to
14 THEEDGE CEO MORNING BRIEF
W O R L D
In its latest World Economic Outlook,
the IMF forecast a 2020 global contraction
of 3.5%, an improvement of 0.9 percentage
points from the 4.4% slump predicted in
October, reflecting stronger-than-expected
momentum in the second half of 2020.
It predicted global growth of 5.5% in
2021, an increase of 0.3 percentage points
from the October forecast, citing expec-
tations of a vaccine-powered uptick later
in the year and added policy support in
the United States, Japan and a few other
large economies.
It said the U.S. economy — the larg-
est in the world — was expected to grow
by 5.1% in 2021, an upward revision of
2 percentage points attributed to carryo-
ver from strong momentum in the second
half of 2020 and the benefit accruing from
US$900 billion in additional fiscal support
approved in December.
Bitcoin seen
topping
US$50,000 in
long term as it
vies with gold
BY ERIC LAM & GREGOR STUART HUNTER
Bloomberg
market money that we are seeing is buying
Bitcoin as a hedge to inflation and as digital
gold,” said Matt Long, head of distribution
and prime brokerage at digital-asset platform
OSL in Hong Kong.
Predicting a price for Bitcoin is chal-
REUTERS
The forecast would likely rise further if
the US Congress passes a US$1.9 trillion
relief package proposed by newly-inaugu-
rated President Joe Biden, economists say.
China’s economy is expected to expand
by 8.1% in 2021 and 5.6% in 2022, com-
pared with its October forecasts of 8.2%
and 5.8% respectively, while India’s econ-
omy is seen growing 11.5% in 2021, up
2.7 percentage points from the October
forecast, after a stronger-than-expected
recovering in 2020.
The Fund said countries should contin-
ue to support their economies until activ-
ity normalized to limit persistent damage
from the deep recession of the past year.
Low-income countries would need con-
tinued support through grants, low-inter-
est loans and debt relief, and some coun-
tries may require debt restructuring, the
IMF said.
BLOOMBERG
Bitcoin quadrupled last year, eventually reaching
an all-time high of almost US$42,000 in early
January before sliding back by about US$10,000.
lenging but it’s likely to rise longer term
as funds and family offices assign 0.5% or
1% of their portfolios to it, Long added.
Bitcoin, which has climbed 9% this year,
was trading at about $31,500 as of 12:47
p.m. in Tokyo on Tuesday.
 W E D N E S D AY J A N U A RY 2 7 , 2 0 2 1
UK jobless rate
rises to highest
since 2016
BY DAVID MILLIKEN &
WILLIAM SCHOMBERG
Reuters
LONDON (Jan 26): Britain’s unem-
ployment rate rose to 5.0%, its highest
since early 2016, in the three months to
November as the coronavirus pandemic
continued to take its toll on the economy
and the country went back into a lock-
down, official figures showed.
Separate data, also released by the Of-
fice for National Statistics, showed the
number of employees on company pay-
rolls in December was down 2.7% on a
year earlier and 828,000 lower than at
the start of the pandemic in February.
British unemployment has been kept
down by the government’s Job Retention
Scheme, which supported 2.4 million jobs
as of Oct 31, down from a peak of 8.9
million in May.
The programme is Britain’s most
expensive Covid-19 economic support
measure, costing £46.4 billion (US$63
billion) up to mid-December, and is due
to end on April 30.
Finance minister Rishi Sunak will set
out future job support measures at his
JAKARTA (Jan 26): Indonesia has received
investment commitments of up to US$10
billion from global firms for its ambitious
sovereign wealth fund, a senior minister
said on Tuesday, ahead of its launch ex-
pected this year.
The Indonesia Investment Authori-
ty (INA) aims to attract foreign funds as
co-investors, unlike other sovereign wealth
funds set up by more developed countries
to manage oil revenues or foreign exchange
reserves.
Airlangga Hartarto, Indonesia’s chief
economic minister, told a business forum
the INA had been promoted among more
than 50 global investors and more com-
mitments had been secured.
With a target of managing US$20 bil-
lion, the INA will be seeded by Indonesia’s
government with US$5 billion in cash and
other assets.
Canadian pension fund Caisse de dépôt
et placement du Québec (CDPQ) has
signed an informal letter of interest about
investing up to US$2 billion, alongside an
up to US$1.5 billion commitment from
15 THEEDGE CEO MORNING BRIEF
W O R L D
annual budget on March 3. Rising Cov-
id-19 cases last year repeatedly forced
him to scrap plans to end the Job Re-
tention Scheme.
“This crisis has gone on far longer
than any of us hoped — and every job
lost as a result is a tragedy,” Sunak said
after Tuesday’s data.
“Whilst the NHS (National Health
Service) is working hard to protect peo-
ple with the vaccine, we’re throwing
everything we’ve got at supporting busi-
nesses, individuals, and families.”
Last Friday’s data showed that the
number of people in employment
dropped 88,000 in the three months to
Indonesia says
new sovereign
wealth fund
attracts US$10b
commitment
BY TABITA DIELA
Reuters
Dutch pension fund APG, the minister’s
presentation showed.
Also listed was Singapore sovereign
wealth fund GIC, while Australia’s in-
vestment bank Macquarie has offered to
manage a toll road fund and could con-
tribute another US$300 million, the pres-
entation showed.
APG, Macquarie, CDPQ and GIC did
not immediately respond to separate re-
quests from Reuters for confirmation.
BLOOMBERG
the end of November, a smaller fall than
the 100,000 drop forecast by economists
in a Reuters poll.
The jobless rate was below the 5.1%
poll forecast.
Bank of England Governor Andrew
Bailey said this month that he believed
the underlying jobless rate was higher,
as the official definition excludes peo-
ple without work who have temporarily
postponed their job search due to the
pandemic.
Britain went into a new Covid-19 lock-
down on Jan 5 due to a rapidly rising
death toll that is now close to 100,000,
the highest in Europe.
Indonesia has previously reported in-
vestment interest of up to US$6 billion
by the US International Development Fi-
nance Corporation and Japan Bank for
International Cooperation.
Airlangga said the Abu Dhabi Invest-
ment Authority (ADIA) had also been ap-
proached.
The fund’s supervisory council will in-
clude finance minister Sri Mulyani Indra-
wati and state-owned enterprise minister
Erick Thohir.
Erick told Tempo magazine the council
had considered about 30 names as possible
candidates for chief executive.
Those included tech investor and coal
businessman Pandu Sjahrir, Indika Ener-
gy’s Arsjad Rasjid, and Arief Budiman, a
former chief financial officer of state en-
ergy firm Pertamina, Erick said in the in-
terview.
Bloomberg News reported last week Pan-
du, a nephew of a senior government min-
ister, was considered a frontrunner.
Airlangga made no mention of the can-
didates in Tuesday’s presentation.
 W E D N E S D AY J A N U A RY 2 7 , 2 0 2 1
Philip Morris faces risk of US cigarette
alternative block
BY CORINNE GRETLER & SUSAN DECKER
Bloomberg
(Jan 26): Philip Morris International Inc
faces the possibility of having imports of
its IQOS heated-tobacco sticks to the US
blocked as early as November, in an inten-
sifying legal battle with British American
Tobacco Plc over cigarette alternatives.
BAT’s subsidiary Reynolds American
Inc seeks to block imports of the sticks, as it
alleges that the tobacco heating technology
used in IQOS devices infringed its patents.
The six-day trial at the US International
Trade Commission in Washington, DC be-
gan on Monday, with a judge scheduled to
release his findings in May.
Tobacco firms are spending billions of
dollars to develop smokeless alternatives
such as nicotine pouches, e-cigarettes and
tobacco-heating devices, as fewer people
smoke traditional cigarettes. Philip Mor-
ris’s IQOS device is the only heat-not-burn
product to be authorised for sale in the US,
where it’s marketed by Altria Group Inc.
The device, where the tobacco is heated
enough to create an aerosol but not enough
to combust, also got the US Food and Drug
Administration’s nod last year to be mar-
keted, as reducing consumers’ exposure
to harmful chemicals found in cigarettes,
giving Philip Morris even more of an edge
against competitors.
Pressure is on to develop new markets,
as tobacco stocks fell in the past year,
even as the overall US market surged. Al-
tria dropped 18% and Philip Morris’s US
shares were down 2.7% in 2020, while BAT
was down 16% in London. The S&P 500,
meanwhile, rose 16% during that period.
Reynolds sued in April, with a case in
federal court in Alexandria, Virginia, and
the complaint at the ITC. Reynolds claims
that Philip Morris and Altria copied patent-
ed technology that it had developed for its
Vuse Vibe and Vuse Solo vaping products.
“Given the significant investment we
have made in developing our products,
we simply cannot allow competitors to use
our patented innovations and technology
in their devices,” BAT said by email.
Altria responded with its own patent-in-
fringement claims in the Virginia case, and
a separate suit against Reynolds in May.
Altria also lodged petitions with the US
Patent and Trademark Office challenging
the validity of a half-dozen Reynolds’ pat-
ents including the three in the ITC case.
“BAT’s attempt to secure an importa-
16 THEEDGE CEO MORNING BRIEF
W O R L D
tion ban against IQOS in the US is part of
a broader global strategy meant to under-
mine the heated-tobacco segment, where
they lag far behind, and protect their core
cigarette business,” Philip Morris said.
Reynolds and Altria have accused each
other of infringing patents for things like
the pod assembly, charging case and fla-
vor enhancements. In the ITC case, Reyn-
olds has the support of the trade agency’s
staff, which acts as a third party to the case
on behalf of the public. Staff lawyer Sarah
Sladic, in opening arguments Monday, rec-
ommended that the judge find that Altria
infringed two patents for a smoking article
with a heater that creates an aerosol, but
that there was no violation of a third pat-
ent, for the control body.
Altria and Philip Morris have argued
that, even if a violation is found, IQOS
is important in efforts to reduce smoking
and shouldn’t be excluded from the US
market. Philip Morris has set an aspira-
tional target three years ago that at least
40 million adult smokers worldwide will
have stopped smoking and switched to its
smoke-free products by 2025.
The commission rarely opts against an
import ban after finding a violation, and
Sladic said this isn’t the case to make an
exception. It’s scheduled to issue a final
decision by September and the ban, if or-
dered then, would take effect in November.
There’s no indication that IQOS will
be “robustly adopted” by US consumers,
and the FDA has not found that the de-
vices will reduce the harm to the health of
smokers, Sladic told the judge. The IQOS
products are made in Malaysia, Switzerland
and Italy, according to Reynolds’ original
complaint.
BLOOMBERG
Reynolds lawyer David Maiorana of
Jones Day said Philip Morris has “blown
public interest way out of proportion
here” and coached groups to submit fil-
ings with the agency opposing any im-
port ban on public health grounds.
Studies show that smokers “like and
enjoy the experience that IQOS provides,
which is very different from e-cigarettes
and unlike other reduced-risk alterna-
tives,” Altria and Philip Morris lawyer
Max Grant of Latham & Watkins said
in opening arguments.
While Administrative Law Judge
Clark Cheney isn’t bound by the staff ’s
recommendations, they can be persua-
sive to both the judge and the commis-
sioners who will make the final decision.
The IQOS device is critical to Philip
Morris’ commercial strategy, which is fo-
cused on disrupting combustible tobac-
co, according to Nico von Stackelberg,
founder at Inevitable Capital Partners,
a strategy consulting firm.
“It’s one of Philip Morris’ most
promising bets on a highly-profitable
next-generation future,” he said. “The
two parties may settle their respective
court cases and Philip Morris may agree
to license BAT’s patents.”
The cases are In the Matter of Cer-
tain Tobacco Heating Articles, 337-1199,
US International Trade Commission
(Washington); RAI Strategic Holdings
Inc v. Altria Client Services LLC, 20-
393, US District Court for the Eastern
District of Virginia (Alexandria); and Al-
tria Client Services v. RJ Reynolds Va-
por Co, 20-472, US District Court for
the Middle District off North Carolina
(Greensboro).
 W E D N E S D AY J A N U A RY 2 7 , 2 0 2 1
New adventures for hedge fund rogue
in US$200m Swiss fraud trial
(Jan 26): A German hedge-fund manager
who fended off U.S. extradition over an
alleged US$200-million fraud is finding
legal troubles closer to home.
Florian Homm’s trial on charges of
fraud, criminal mismanagement, money
laundering and forgery was due to begin
in a Swiss court on Tuesday.
Swiss prosecutors, in a 275-page in-
dictment, allege the founder and chief in-
vestment officer of Cayman Islands-based
Absolute Capital Management Holdings
Ltd. made “massive” investments in thin-
ly-traded penny stocks through a series
of cross trades to fraudulently inflate
their value.
“This artificial growth in the perfor-
mance of Absolute Funds has also gen-
erated an increase” in Absolute Capital’s
share price “from which Florian Homm
also directly benefited as majority share-
holder,” the Swiss prosecutors said.
Absolute Capital gained a veneer of
respectability by Homm’s decision to list
Absolute Capital on London’s Alterna-
tive Investment Market (AIM) in 2006,
the prosecutors said.
“This allowed Homm to bring greater
visibility, attractiveness and credibility to
the company and above all to sell more
easily the ACMH shares he owned,” ac-
cording to the Swiss indictment.
U.S. prosecutors in Los Angeles put
it more plainly in 2013 when they an-
nounced an indictment of the German
17 THEEDGE CEO MORNING BRIEF
W O R L D
BY HUGO MILLER
Bloomberg
citizen on similar charges, calling his
strategy “portfolio pumping.”
Homm denies having anything to do
with price manipulations or cross trades,
according to his lawyer, Marc Engler,
who plans to ask for his acquittal. Homm
is going on trial in Switzerland because
much of the marketing and recruitment
of investors was done through a Swiss-
based company, Sigla Zurichfinanz AG.
Homm hasn’t shied away from contro-
versy, calling his 2012 memoir “Rogue
Financier: the Adventures of an Es-
tranged Capitalist.” He lived on the
Spanish island of Majorca while oper-
ating the alleged scam before resigning
from his firm in the middle of the night
in September 2007 following accusations
from a “whistleblower,” according to U.S.
prosecutors.
Uffizi arrest
He was arrested in Florence’s Uffizi Gal-
lery by Italian police acting on a request
from American authorities. He was able
to return to his native country. German
law prevents him being extradited to the
U.S., according to the 2019 Swiss indict-
ment, which lists him as a current resi-
dent of Germany.
Three Swiss colleagues of Homm, who
cannot be named under Swiss law, are
BLOOMBERG
also on trial on charges of aggravated
money laundering and forgery. Miriam
Mazou, a lawyer for one of the defend-
ants, said she will fight to prove her cli-
ent’s innocence, and that the allegations
made against him in the indictment are
“imprecise, unclear and confusing.”
A lawyer for a second defendant de-
clined to comment and the counsel for
the third didn’t return a message seek-
ing comment.
Penny stocks
Homm arranged for most of the pur-
chases of the penny stocks to be made
through Hunter World Markets, a Los
Angeles-based broker run by one of his
accomplices, according to prosecutors.
Todd Ficeto, the president of Hunter
World Markets, was convicted of seven
counts of securities fraud in a 2019 trial
and sentenced to six years in prison. Gary
Lincenberg, his lawyer, said his client
maintains his innocence but decided to
not contest the verdict.
Prosecutors allege that Homm and his
colleagues used an instant-messaging sys-
tem to arrange the cross trades, boosting
the value of the previously illiquid stocks
and in turn the value of Absolute Capital.
Once the penny-stock values surged,
Homm sold them for a profit to the hedge
funds he managed, while also boosting
the perceived profitability of those funds,
the prosecutors said.
 W E D N E S D AY J A N U A RY 2 7 , 2 0 2 1
‘This is not normal’ — Wall Street
grows wary of stock bubbles
LONDON/NEW YORK (Jan 26): Grow-
ing concerns about stock bubbles on Wall
Street are sparking fears of a pullback,
highlighted by the wild ride for shares
such as GameStop Corp.
A flood of money supply, ultra-low or
zero interest rates and Covid-19 vaccine
rollouts have sparked a “buy everything”
rally, helping world stocks add a whopping
US$33 trillion in value from their lows of
last March.
Surges in share prices of some loss-mak-
ing firms, red-hot public markets and am-
ateur investors chasing stocks have drawn
concern as the benchmark S&P 500 has
gained more than 70% since March.
Elevated retail participation has con-
tributed to soaring prices.
“For retail traders, the warning signals
on this ... (are) if you are trading it, you
are taking so much of an extra risk com-
pared to normal activity. This is not nor-
mal activity,” said JJ Kinahan, chief market
strategist at TD Ameritrade.
As a prime example, investors point-
ed to shares of US videogame retailer
GameStop, which, after rising about 250%
already this year, more than doubled on
Monday before paring back. Traders said
short-sellers were quickly buying back in
to the stock to cover potential losses while
retail investors were piling in to benefit
from the surge.
“Retail investors are a huge part of it,”
said Christopher Murphy, co-head of de-
rivatives strategy at Susquehanna Financial
Group, referring to GameStop.
Early in Monday’s trading session, users
of several major retail trading platforms,
including those of Charles Schwab Corp
and Robinhood, reported operational
problems, according to outage monitor-
ing website Downdetector.com.
The problems were the latest in a string
of technical glitches among retail broker-
ages, which have faced a massive surge in
volumes over the past year. Overall, around
16.4 billion shares traded hands on Mon-
day, compared with a month-to-date aver-
age of around 14.5 billion shares, accord-
ing to Cboe Global Markets.
The euphoria is also evident in the
small-cap Russell 2000 index, whose com-
ponent companies with a negative oper-
ating profit outperformed the wider in-
dex by nearly 50 percentage points over
Note: There will be no market summary today due to technical issues
18 THEEDGE CEO MORNING BRIEF
W O R L D
BY T HYAGARAJU ADINARAYAN,
LEWIS KRAUSKOPF & JOHN MCCRANK
Reuters
For retail traders, the
warning signals on
this ... (are) if you
are trading it, you are
taking so much of an
extra risk compared to
normal activity. This is
not normal activity,”
said JJ Kinahan, chief
market strategist at
TD Ameritrade.
the last year, a Reuters analysis of Refinitiv
data showed.
“Pockets of the market have recently
demonstrated investor behaviour consist-
ent with bubble-like sentiment,” Goldman
Sachs analysts led by David Kostin wrote
in a note.
Goldman noted the outperformance of
negative earners was still a far cry from the
140 percentage points clocked during the
dotcom boom of 1999-2000 and more in
line with that of the immediate aftermath
of the 2008 financial crisis.
“You don’t have to reach 1999-2000
levels of frothiness to have the market
go down and to go down in a meaning-
ful way,” said Matt Maley, chief market
strategist at Miller Tabak.
For examples of these selective bub-
bles, investors point to electric vehicle-re-
lated stocks — Tesla Inc is up 8-fold and
electric vehicle charging equipment mak-
er Blink Charging by 2,000% in the last
52 weeks, while an IPO index has surged
200% since last March versus a mere 57%
for the benchmark S&P 500 index.
US-listed shares of Canadian tech spe-
cialist Blackberry also surged on Monday
while the company said it was not aware
of a reason.
Deutsche Bank said in a research note
that average call volumes over the last three
months have hit a new peak with the bulk
of the increase driven by small contract
issues, reflecting retail buying.
Stocks with the highest call volume as
a percentage of the market capitalization
were Fubotv, GameStop and Riot Block-
chain, said Deutsche.
Ninety percent of the respondents in a
recent survey by Deutsche Bank said they
saw price bubbles in some parts of markets,
with a majority expecting Tesla to halve in
value by the end of 2021.
Among the investors that have ex-
pressed concern are Jeremy Grantham
of money manager GMO, who said ear-
lier this month that the long bull market
since 2009 has finally matured into an
“epic bubble.”
Baupost Group founder Seth Klarman
told clients recently that risk “has simply
vanished,” according to the Financial Times.
However, not all the major banks see
bubbles.
“Everyone’s asking us about bubbles
... even the frothiest equity indices still lag
well behind performance during previous
bubbles,” said Robert Buckland, Citi eq-
uity strategist.
The S&P trades at 22 times 12-month
forward earnings, below the peak of 25
times seen ahead of the dotcom crisis.
Citing premia over rock-bottom bond
yields, Citi believes equity markets have a
long way to go yet.
A possible rollback of US Federal Re-
serve easing is seen as a threat to markets.
“Equity bubbles are not delicate,” Buck-
land added. “They don’t burst on the first
hint of tightening from central banks.”