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The Week Ahead: 1MDB (Tanore) trial date and regional stimulus

TheEdge Mon, Aug 19, 2019 02:00pm - 6 months ago

High Court judge Collin Lawrence Sequerah will likely decide on Monday (Aug 19) the commencement date for Datuk Seri Najib Razak’s 1Malaysia Development Bhd (1MDB) trial — also known as the Tanore case — which cannot run concurrently with the RM42 million SRC International Sdn Bhd corruption trial (SRC case) as the accused of criminal cases have to be present at all proceedings.

Tanore Finance Corp is the source of the US$681 million (RM2.6 billion “donation” at the material time), which found its way to the former prime minister’s personal bank account in March 2013, about a month ahead of the 13th general election (GE13) on May 5, according to the US Department of Justice’s investigations.

Tanore got US$1.26 billion of 1MDB’s third bond issuance — totalling US$3 billion — in 2013, arranged by Goldman Sachs.

Both the prosecution and defence are scheduled to appear before Sequerah, who previously fixed the Tanore trial dates from Aug 19 to 22, Aug 26 to 29, Sept 3 to 30, Oct 1 to 31 and Nov 4 to 7 and Nov 11 to 14.

Expectations are for the proceedings proper to begin on Aug 29, given that a criminal trial can only start 14 days after Aug 14 — the date the defence received the witness statements from the prosecution. Some preliminary proceedings could well take place on Monday before the resumption of the SRC trial.

The SRC case, which began on April 3 and was targeted to conclude last Friday (Aug 16), was postponed for three days last Thursday (Aug 15) as Najib was given a three-day sick leave for conjunctivitis.

On the economic front, investors and businesses are on the lookout for stimulus packages to ease headwinds from the prolonged US-China trade war. The governments of Hong Kong and Thailand announced sizeable economic packages last Thursday (Aug 15) to ease the people’s burden and bolster their respective economies.

Hong Kong — which cut its 2019 gross domestic product (GDP) growth forecast to between 0% and 1% from between 2% and 3% — unveiled a HK$19.1 billion package that include subsidies for the underprivileged and business enterprises as well as higher salary tax rebates, which it said was not related to political pressure from citizen protests that began in June over an extradition law amendment.

Thailand’s planned US$10 billion (THB316 billion) stimulus to ease trade war pains — to be tabled to the Cabinet on Tuesday (Aug 20) — reportedly include THB57 billion (RM7.7 billion) in agriculture subsidies, cash for low-income earners and tax breaks on domestic tourism spending. Thailand will also give visa exemptions for visitors from China and India in an attempt to shore up tourism, with foreign tourist receipt accounting for 12% of Thailand’s GDP. Thailand is slated to release the second-

quarter GDP growth reading on Monday (Aug 19). Data trackers will also be looking out for clues as to why the Bank of Thailand last Wednesday unexpectedly cut its benchmark interest rate by 25 basis points to 1.5% for the first time in four years.

Stimulus talk may well feature in Singapore Prime Minister Lee Hsien Loong’s National Day Rally 2019 speech on Sunday (Aug 18) evening. The city state this month slashed 2019 GDP growth to between 0% and 1% from between 1.5% and 2.5% previously, following weak 2Q GDP reading, prompting talk of stimulus targeted at manufacturing and trade-related industries ahead of the annual budget in February 2020.

Indonesia, which has launched a series of stimulus packages and is reportedly seeking to cut corporate tax rates from 25% to 20% to attract more investments, would be surprising consensus if its central bank cuts its policy rate again on Thursday (Aug 22). Bank Indonesia had on July 18 cut its benchmark rate for the first time in nearly two years to 5.75%, ahead of the US Federal Open Market Committee’s widely expected 25-bp cut on

July 31. Minutes for this FOMC meeting will be released on Aug 22.

Bank Negara Malaysia, which made a pre-emptive 25-bp rate cut to 3% in May, is slated to release its reserves data for mid-August on Thursday

(Aug 22) after releasing strong 2Q GDP reading of 4.9% last Friday, up from 4.5% in 1Q2019. This puts Malaysia in good stead to meet at least the mid-point of 2019’s GDP growth forecast of 4.3% to 4.8%, unless growth slumps below 4% in the second half of the year.

On the Malaysian corporate front, the quarterly earnings reporting season will pick up steam this week. Companies expected to release financials for the quarter ended June 30 include MSM Malaysia Holdings Bhd, Kuala Lumpur Kepong Bhd, Kossan Rubber Industries Bhd, AirAsia X Bhd, Gas Malaysia Bhd, Petronas Dagangan Bhd, Heineken Malaysia Bhd, KLCCP Stapled Group, Media Prima Bhd and Malakoff Corp Bhd.

Companies having their respective annual shareholders’ meeting this week include Perusahaan Sadur Timah Malaysia Bhd and Boilermech Holdings Bhd on Aug 19; Matrix Concepts Holdings Bhd on Aug 21; Bintai Kinden Corp Bhd, JMR Conglomeration Bhd, TASCO Bhd and Fintec Global Bhd on Aug 22; United Malacca Bhd and Nexgram Holdings Bhd on Aug 23 and Tiong Nam Logistics Holdings Bhd on Aug 24.

Meanwhile, Focus Point Holdings Bhd and G3 Global Bhd have extraordinary general meetings scheduled for Aug 19 and Aug 22 respectively.

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