The week that was

Fourth interest rate cut

BANK Negara on Tuesday slashed its overnight policy rate (OPR) by 25 basis points to 1.75%, the lowest since the current interest rate framework was introduced in 2004.

So far this year, Bank Negara has reduced interest rate by 125 basis points.

Analysts said this week’s decision reflected the deterioration in global economic conditions since Bank Negara’s last assessment in May, and the growing risk of a resurgence in Covid-19 cases worldwide.

For borrowers, the lower interest rates would help relief some pressure of the loan moratorium expiry date on Sept 30.

The moratorium on loan repayments by financial institutions, which took effect on April 1 was estimated at Rm51.4bil as of July 6, according finance minister Tengku Datuk Seri Zafrul Aziz.

Of the total, Rm17.9bil was utilised by the business sector while Rm33.38bil was utilised by the public.

Tech stocks index at 16-year high

IN one corner of the local stock market, shares in technology companies are racing ahead of the crowd.

The Bursa Malaysia Technology Index of 38 stocks has surged 95% from its March low to reach its highest level since July 2004.

This is faster than the broader Bursa Malaysia Emas Index’s 35% increase over the same period.

Shares in technology companies around the world have been rallying from the depth of the Covid-19 pandemic with the ferocity last seen in the late 1990s, prior to be dotcom bubble burst 20 years ago.

At current price levels, the valuations of mega tech-oriented stocks like Apple Inc and Microsoft are pricey based on their own lofty historical averages, but investors are drawing some comfort that these companies are likely to do well regardless of the state of the global economy.

Airasia hogs the headlines

SHARES in Airasia Group tumbled 17% on Wednesday, one of its worst single day decline, after the company’s auditors raised concerns about the airline’s ability to continue its business.

Airasia responded to say it has triggered the prescribed criteria of Bursa Malaysia’s

Practice Note 17 (PN17) but it won’t be classified as such under the capital market’s Covid19 relief measures.

The low cost carrier added that it would re-assess its condition and announce whether it continues to trigger any of the criteria in PN17 upon the expiry of the 12-month grace period.

Like other airlines around the world, Airasia has been hit hard as the Covid-19 pandemic sapped demand for air travel.

Earlier on Monday, the company posted a net loss of Rm803mil for the first three-month ended March 31.

Yesterday, Airasia said the company is confident of the successful continuation of its business based on government actions, outcome of talks with banks and investors and implementation of action plans.

Going for gold

THE price of gold in the spot market rose above the US$1,800 an ounce level for the first time in nearly nine years as virus-fearing investors sought safe-haven holdings.

Earlier this week, the World Gold Council said gold-backed exchange traded funds added 104 tonnes of the metal worth Us$5.6bil to their hoard in June.

This brings the total inflow in the first half to 734 tonnes that lifted the global holdings of the yellow metal as an investment to an alltime high 3,621 tonnes.

To put things into context, WGC said the inflow during the first half was significantly higher than the multi-decade record level of purchases by central bank in 2018 and 2019.

Analysts said the buoyant gold market has almost perfect conditions – low interest rates, cheap liquidity and frothy stock prices.

KNM Group founder retires

KNM Group Bhd founder Lee Swee Eng retired this week after 30 years.

The 64-year old engineer relinquished his posts as group chief executive officer and executive director yesterday. He was replaced by the group’s chief financial officer (CFO) Tan Koon Ping, while Wong Toh Sing was appointed as the group’s new CFO.

Lee together with his spouse Gan Siew Liat started the process equipment maker and energy company about 30 years ago. KNM was listed on Bursa Malaysia in 2003. Gan, who was previously an executive director, was designated as the company’s vice-chairman yesterday.