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Showing posts with label Finance. Show all posts
Showing posts with label Finance. Show all posts

Sunday 17 December 2023

Goodbye 2023; Hello 2024

 


2023 will be remembered as a tipping point year when almost all mega-trends of finance, technology, trade, geopolitics, war and climate heating showed signs of acceleration in speed, scale and scope.


You can call this a state of permacrises, a series of cascading shocks that seem to be building up to a bigger shock sometime in the future.

In finance, the year began with the collapse of Silicon Valley Bank on 10 March 2023, followed by Signature Bank. The Fed and FDIC (Federal Deposit Insurance Corporation) acted fast to guarantee all deposits to stop what is now called “Twitter Deposit Runs” against banks. In Switzerland, Credit Suisse was taken over by UBS on 19 March, after the bank lost nearly US$ 75 billion worth of deposits in three months. Swiss financial credibility was hurt when Credit Suisse AT1 (Tier One bonds) bond-holders became outraged that they should suffer write-downs ahead of equity holders.



Although prompt action by the Fed and Suisse financial authorities averted global contagion and restored calm to financial markets, the Fed hiked interest rates four times in 2023 to 5.25-5.5% to tackle inflation. This month, gold prices touched a record high of US$2,100 per ounce, signalling anticipated inflation abatement, but escalated geopolitical tensions.




In technology, 2023 marked the seismic arrival of generative artificial intelligence (AI), through the public launch of ChatGPT in November 2022. Commercialized AI is considered the next big thing after the internet, sparking off a US tech stock rally, led by the Magnificent Seven companies in AI-related software and hardware. The rally averted a year of portfolio losses in financial markets hurt by interest rate hikes.

In trade, the latest UNCTAD Global Trade Update found that global trade will shrink by 5% to US$ 30.7 trillion in 2023, with trade in goods declining by nearly US$2 trillion, whereas trade in services would expand by US$500 billion. The outlook for 2024 is pessimistic because trade issues are now geopolitical, rather than purely market-driven. Global supply chains are either decoupling or de-risking to avoid possible sanctions which have been imposed for geopolitical reasons.




Geopolitics dominated headlines in 2023, as diplomacy played second fiddle to the militarization or weaponization of everything.

The biggest risk faced by businesses today is national security risk, in case companies or financial institutions are caught in geopolitical tit-for-tat arising from binary differences in values. Where national security is concerned, the business must bear all the costs of supply chain restructuring with no questions asked, or face possible existential shutdowns.

War broke out in Gaza/Israel In October with a scale of civilian slaughter more horrific and intense than the Ukraine war, which began in February 2022. The latest war count to June 2023 by The Armed Conflict Survey 2023 (1 May 2022–30 June 2023), showed global fatalities and events increasing horrendously by 14% and 28% respectively.



The authoritative Stockholm International Peace and Research Institute (SIPRI) reported that 56 countries were involved in armed conflict in 2022, 5 more than in 2021. Three (Ukraine, Myanmar and Nigeria) involved 10,000 or more estimated deaths, with 16 cases involving 1000–9999 deaths. Expect more conflicts when natural disasters hurt food, water and energy supplies.




As 100,000 or so delegates leave the United Arab Emirates at the end of the COP28 this month, the UN painted an upbeat tone that the Conference marked the “beginning of the end” of the fossil-fuel era.  Scientists confirm that we have already passed the point of being able to limit carbon emissions for the average global temperature to remain below 1.5 degrees Celsius above pre-industrial levels.   Most studies show that if most governments fail to meet their current commitments to NetZero, the planet will be struggling with temperatures above 2 degrees Celsius, meaning more natural disasters, rising seas and/or migration/conflicts.  Every three weeks, the US has experienced at least one natural disaster costing more than $1 billion in damages.  

As one cynic said, natural disasters are where the rich just pay in money, but the poor pay in their lives.

Putting all these mega-trend micro-disasters together suggests that a mega-system disaster may be on the cards. Historically, these seismic-scale disturbances are settled through a massive recession, like the 1930s Great Depression, or wars, which wipe out debt and make everyone poorer.

So far, the world has neglected to address these looming issues by either denying or postponement - printing more money and incurring more debt. Painkillers do not fix structural imbalances.

As my favourite poet TS Eliot said, the world ends not with a bang, but with a whimper. The world is in permacrises, with no one fully in charge. Democratic governance is in flux when no one can agree on the problems, let alone the solutions.

2024 will see some decisive but messy elections, especially in the US where both Presidential candidates may either be impeached or convicted by then. This cannot auger well for everyone, because 2023 marks the turning point when the US lost the respect of the Global South over its catastrophic handling of Ukraine and Gaza, both of which will be fought to the last Ukrainian or Palestinian. The morality of allowing other people to fight and die for one’s benefit shows not hypocrisy but hegemonic-scale cowardice.

The bottom line is that there is no shortage of technology or money to deal with the global existential threats of climate change and social imbalances. We cannot align policy intent (what politicians say they will do) with the reality that current policies are not delivering.

If man-made or natural calamities are looming, do we mitigate or adapt? On a single planet, we can run but not hide. So each of us must decide to do what we can, rather than relying on politicians to fix themselves, let alone our problems.

There is a wise saying about Christmas charity: give with warm hands. Do that now, or we will be giving with boiled hands or none at all.

Best wishes for 2024.

Andrew Sheng, Asia News Network



Thursday 11 May 2023

Will US debt ceiling deadlock push capital to yuan market?




Every few years, there is a bipartisan political farce over the debt ceiling negotiations in the US. It may look like a routine political drama, but quantitative change can lead to a qualitative difference, especially at a time when a global de-dollarization trend is gaining momentum, that is to say, the US trick of raising the debt limit to mitigate its default risk may now be very close to pushing the US treasuries to a dangerous tipping point.

The de-dollarization caused by the US debt crisis and the abuse of the dollar hegemony created unprecedented opportunities for the yuan internationalization, with more and more countries expressing willingness to settle trade in the yuan, but China must proceed with caution.

With the US on track to default without a debt ceiling increase, US President Joe Biden's talks with House of Representatives Speaker Kevin McCarthy on Tuesday failed to make any meaningful progress, with political divides remaining between the two parties, Reuters reported. Biden even told the media that he has been looking at the 14th Amendment as a way to unilaterally work around the debt ceiling, though it will not be a viable short-term solution.

The political stalemate over raising the debt limit has already led to US Treasury Secretary Janet Yellen warning of an "economic catastrophe" if the US fails to meet all government payment obligations, which could happen "potentially as early as June 1."

So far, most people still believe that the two parties will eventually reach a deal to avoid an ugly sovereign default before the deadline, just like what happened every time in the past debt ceiling struggles.

But unlike in the past, a new question has been raised in the market, that is, are the US treasuries still highly liquid? The US dollar's credit is the cornerstone of US treasuries. Because the dollar is an international settlement currency and US treasuries have stable yields and are highly liquid, countries are willing to hold US debt, making the US the world's largest debtor.

Yet, things may be different now with countries accelerating their de-dollarization efforts. The past year saw growing number of countries and regions such as India, Brazil, and the EU trying to establish new settlement systems for their trade.

Under the influence of the de-dollarization wave, some countries have reduced their holdings of US treasuries. Japan, the world's largest holder of US debts, slashed its holdings by $224.5 billion and China by $173.2 billion in 2022.

Moreover, the US' unlimited expansion of the size of its debt has also upset the market with the risks in the US treasuries. According to Yellen's testimony in a congressional hearing in March, gross federal debt would swell to $51 trillion after a decade. The scale and speed of the debt expansion means the US is getting increasingly closer to a real explosion of a debt crisis.

Also, the root cause of the US banking crisis this year is the holding of a large number of US treasuries assets, which shrank significantly in value as interest rates continued to climb. That could be a warning to various governments and precipitated them to speed up the pace of de-dollarization. Since the collapse of the Silicon Valley Bank, international investors stepped up sell-off of treasuries, and prices of all kinds of safe-haven assets like gold have surged.

Of course, de-dollarization is likely to be a long-term process, but once it started, the US treasuries could lose its aura quickly, especially as the US government repeatedly raises debt ceiling or faces risk of default. In other words, as the world realizes that the US cannot and does not have the willingness to control or reduce the size of its debt, the credibility of the US debt as a safe-haven asset is collapsing rapidly.

It should be noted that amid the de-dollarization trend, the yuan internationalization has made a series of positive new developments and breakthroughs. The yuan's international status as a trading currency has been significantly improved recently.

To ensure future development of the yuan internationalization, China needs to ensure liquidity and maintain exchange rate stability. Thus, China's financial markets as well as the yuan's onshore and offshore markets need more preparation to adapt to the new needs. 

Source link

 

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Related posts:

 

'Dedollarisation' is feasible

 

Abuse of hegemony is why de-dollarisation is trending

 

China, Brazil to trade in local currencies 

 

 

World witness peace, development, cooperation, yuan settlement, as Brazil's President Lula starts China tour, shrugs off noise from the West, ties see deeper and wider potential for growth

 

 

 

 

Any contagion from US banking crisis?

 

The strong dollar should not become a sharp blade to cut the world, THE NEED FOR BRETTON WOODS III

 

 

Whither the ringgit? US Inflation & workforce are the bigger problems

In desperation, US tries to drag EU into its camp

 

 


Saturday 22 April 2023

Ending the dollar dominance as USA Weaponising global money

 

 
Dedol­lar­ise move: a file pic­ture of us bank­notes. Eco­nom­ists say there are incent­ives to move away from using the green­back as the primary cur­rency for trade set­tle­ment and reserves. — afp

THE US-dollar dominance as the anchor of the international financial system is being challenged on several fronts simultaneously – and ever more intensely – in recent months.

From several countries opting to conduct trade in their local currencies, instead of using the US dollars to the BRICS nations of Brazil, Russia, India, China, South Africa seeking to develop a new common currency for the economic bloc, the risk of the mighty greenback being dethroned appears serious.

As some economists say, it is no longer a question of “if” the US dollar’s dominance will crack, but “when”. Is this a good thing for small and open economies like Malaysia?

According to economists, there are incentives to move away from using the US dollar as the primary currency for trade settlement and reserves.

Bank Muamalat Malaysia Bhd chief economist and social finance head Mohd Afzanizam Abdul Rashid points out that the high dependence on the US dollar will make the global economy highly susceptible to changes in the US monetary policy.

The move to dedollarise will not only reduce financial-market volatility caused by US monetary conditions, but it can also help reduce costs, he says. 

 Afz­an­izam: Hedging is cost to busi­nesses and investors. there­fore, the incent­ives to do away with the us dol­lar is high.

Afzanizam explains: “Any change in the US monetary policy will affect the global financial market. This is a problem, as it can sometimes create excessive volatility in foreign-exchange markets.”

“Because of this, companies and investors have to hedge their exposure to mitigate currency risks. Hedging is cost to businesses and investors. Therefore, the incentives to do away with the US dollar is high,” he says. 

 Afzanizam tells Starbizweek if there were currencies that could provide better alternatives in terms of stability and predictability, dedollarisation would certainly gain further traction.

According to Sunway University economics professor Yeah Kim Leng, dedollarisation, that results in improved global economic and financial stability leading to increased trade and investment flows, will be beneficial to small and open economies like Malaysia.

“As a trading nation, pragmatic and nimble government and company-level policies and strategies are vital to cope with the potential fallouts and opportunities arising from dedollarisation that may or may not lead to a more stable and progressive global economic order,” he explains.

Cost and benefit

Malaysia is seen to be moving towards dedollarisation. Early this month, the country reached a deal with India, one of its major trading partners, to settle trade in Indian rupees instead of the US dollar.

In addition, Malaysia revived the idea of setting up an Asian Monetary Fund (AMF), proposing to initiate discussions on the matter with China, which is reportedly open to the idea.

These small steps are part of an ongoing global shift away from US dollar dependence.

Socio-economic Research Centre executive director Lee Heng Guie says there are potential costs and challenges during the transition process.

“Malaysia may face heightened exchange rate volatility if the dedollarisation is disorderly and abrupt, causing a plunge in the US dollar against major foreign currencies. The wide and deep US dollar fluctuations could impact trade, investment and capital flows,” the economist explains.

For example, a sharp appreciation of the ringgit against the US dollar could lower the cost of servicing Malaysia’s Us-dollardenominated debt, but it could dampen the country’s export competitiveness and lower exchange rate translation gains in domestic currency for the export-oriented industries such as palm oil, rubber products and crude petroleum.

“Portfolio investors may undertake portfolio adjustment in anticipation of the dedollarisation. This could induce assets price fluctuations in the debt and equities markets as investors stay on the sidelines, while assessing the potential risks and costs associated with a disorderly transition of the dedollarisation,” Lee says. 

 Lee: the wide and deep us dol­lar fluc­tu­ations could impact trade, invest­ment and cap­ital flows.

Regardless of the transition costs and risks, Malaysia has to continue strengthen its domestic financial markets, enhance policy credibility, and foster regional and multilateral cooperation in the provision of liquidity arrangement.

“The development of deep and liquid domestic financial markets is a prerequisite for buffering against the impact of dedollarisation,” he says.

Meanwhile, Malaysia University of Science and Technology economics professor Geoffrey Williams sees two basic scenarios pertaining to dedollarisation. 

Wil­li­ams: the use of the us dol­lar will slowly decrease.

 “The first is that the use of the US dollar will slowly decrease, as more countries settle trade and investment in bilateral currencies. This will continue as BRICS and smaller countries get onboard.

“The second scenario is that there will be a tipping point where the US dollar will quickly lose reserve currency status as happened to pound sterling after World War II. There are many possible triggers of this, but they are very speculative and involve a major crisis,” he adds.

Williams says the United States will defend the dollar and so long as the dollar is used for oil, metals and commodity trades as well as intergovernmental settlement of debt, it will retain its role.

Gradual transition for stability

It is estimated that the US dollar accounts for 88% of global trades, based on Bureau for International Settlements’ triennial central bank survey 2022.

As it stands, central banks around the world still hold significant amounts of US dollars in their reserves. An estimate by the International Monetary Fund implied that the greenback accounted for about 60% of global foreign exchange reserves as at end2022.

Nevertheless, economists expect the numbers to be on a declining trend, as countries are diversifying away from the US dollar. The dedollarisation process, however, will likely be gradual to minimise disruption to global financial systems and markets.

As Afzanizam puts it, any abrupt transition to other currencies can create uneasiness and uncertainties among businesses and investors.

Therefore, allowing ample time would facilitate the changes and reduce the inevitable market volatility, he says.

The enormous and deep US debt markets have been touted as a major factor for the continuing dominance of the US dollar in global financial markets, according to Yeah. 

Yeah: the yuan is expec­ted to see a rising role as one of sev­eral altern­at­ives.

 Therefore, as countries diversify their reserve currencies and reduce dependence on the US dollar, one could expect global financial markets to face higher volatility and uncertainty, he says.

On Malaysia’s effort to wean off US dollar dependence, Yeah points out that it will be a gradual process.

“This will be in line with global shifts in international trade, capital flows and financial markets, whereby the process is driven by market forces and factors such as transaction costs, riskiness, accessibility and convenience,” he says.

As a start, Malaysia can consider trading its oil and other natural resources in local currencies with countries with which it has bilateral agreements, says HELP University economist Paolo Casadio.

Further, he notes, Malaysia can have a meaningful and impactful transition towards less reliance on US dollar by coordinating its effort with other economic blocs, such as BRICS, to set up a new system.

“There are long-term benefits for Malaysia as well as for all the other developing countries in eliminating the (US dollar) monopoly,” Casadio says, pointing to a more stable and equitable exchange rate as an example.

Asian fund proposal

On the setting up of the AMF, Williams says while it is a feasible strategy to reduce reliance on the US dollar, such a move will require “buy-in” across many countries in the region. In particular, pertinent issues such as who will to provide the finance, and securing consensus on the terms on which access to that finance is made available, have to be ironed out.

“It is not just a financial issue, but geopolitical too,” he stresses.

“The main issue is who will fund it, and what will be the contribution rates for each member. It is likely that most will come from China, unless Japan and South Korea join in. Otherwise, most Asian countries are too small to contribute much,” he adds.

Williams says new arrangements, such as the 12-member Comprehensive and Progressive Agreement for Trans-pacific Partnership, of which Malaysia is a part, are indications of ongoing shifts in global economic arrangements away from dominance of the United States and other developed economies such as the European Union (EU).

“Moving to bilateral currencies for trade and investment is feasible, but more at risk to exchange fluctuations and liquidity issues. So, it would be a move to multiple currency options, not just one,” he says.

He notes before US or Eu-based systems such as the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, could be replaced, there has to be a viable and reliable alternative for interbank transfers and e-payments.

“Although the systems are contestable and replaceable by new and local providers, the truth is that only stable, reliable and secure financial systems will survive. The US dollar still provides this,” Williams argues.

Importantly, for Malaysia as a small country, it should go with the flow and remain neutral in the shifting geopolitical dynamics, while trade and debt, in whatever currency is best, he says.

Potential alternatives

Amid the ongoing currency shift, China’s yuan, is increasingly seen a potential alternative to the US dollar. This is by virtue of China being the second-largest economy in the world after the United States. However, the country’s strict capital controls are a hindrance.

“As the world’s second-largest economy, China’s yuan is expected to see a rising role as one of several alternatives, including the euro, to the US dollar. Countries trading with China are already increasingly using yuan for payments and settlements,” Yeah says.

“Its internationalisation, however, is being constrained by strict capital controls and lack of liquidity for international transactions outside of China,” he adds.

Concurring with Yeah, Afzanizam says, for the yuan to play an even greater role as an alternative international currency, China’s capital account has to be more open, allowing free flow of funds to allow greater flexibility, especially in terms of the supply of yuan.

Casadio, on the other hand, argues there is no alternative to the US dollar in the prevailing system.

Rather, a “gold-backed system of currencies that constitutes an alternative” is a more viable option, this will provide an equitable system of exchange rates and a stable international financial system, he explains.

“There is a clear shift, at the international level, towards a system in which the dollar has no more monopolistic power as the international currency. The system that is going to emerge from this will limit monopolies and excess financing deficits, thanks to it being anchored to gold,” says Casadio.

Charles Schwab Corp says that there aren’t any viable reserve-currency alternatives to the US dollar.

“A reserve currency needs to be freely convertible and have deep and liquid bond markets to be considered safe for foreign central banks to hold. Central banks need to know that their money is easily and readily available when needed, particularly in times of stress.

“The United States, with a large, open, and liquid market for Treasury securities, fits that role,” the investment bank explains in its commentary.

“That’s why when the Covid crisis hit the global economy, the US Federal Reserve (Fed) expanded its swap lines with foreign central banks to enable access to dollars for countries that were struggling to access dollars for trade and debt payments. While other major countries’ markets have these qualities, the size and openness of the US market is difficult to match,” it adds.

Depreciating dollar

In the meantime, the US dollar is expected to weaken further against most currencies through the year on anticipation of slower interest rate hikes by the Fed.

The greenback has already been on a declining trend over the past few months. This is evidenced by the downtrend of the US dollar index - a gauge of its performance against a basket of major currencies - with the DXY falling to around 100 to 102 points from its multi-year high of 114 to 115 points in September 2022.

From the Malaysian perspective, the ringgit has been volatile against the greenback.

The local note is trading RM4.43 against the US dollar. This is an improvement from RM4.75 in early November last year, but a poorer position from RM4.24 at end-january this year.

With the expected weakening of the US dollar, the ringgit is forecast to strengthen to RM4.15-RM4.25 towards the second half of this year, says Dr Yeah.

“The US economy is anticipated to weaken significantly in the second half and that could warrant unwinding the high interest rates,” he explains.

Similarly bearish on the greenback, Afzanizam says he expects the ringgit to strengthen to RM4.20 against the US dollar by the end of 2023.

“The expectation of slower rate increase in the United States and the potential cut in the federal fund rate could lead to a weaker US dollar,” he explains.

Although on a decline, the US dollar’s dominance is expected to persist due to the absence of a viable alternative.

“The pace of its decline, however, could accelerate if US economic growth sputters, fiscal and debt woes mount and high inflation and interest rates destabilise its banking system.

“Continuing US economic instability coupled with the government’s penchant to apply sanctions for geopolitical reasons will also motivate the rest of the world to band together to find a viable alternative while reducing dependence on the dollar for trade, financing and foreign reserves,” he adds. 

  Source link

 

Operational challenges in move away from the greenback

 

Death of the dollar

The United States' way of weaponising the dollar to control global trade is losing ground and more and more countries are shying away from using the greenback. — Reuters

Weaponising global money 

The US dollar system will be dominant for a while yet, but the more the dollar is weaponised in terms of sanctions, the more users will want to dedollarise. — Reuters

 https://www.thestar.com.my/business/business-news/2023/04/22/weaponising-global-money

 

Related posts:

 

Abuse of hegemony is why de-dollarisation is trending 

 

China, Brazil to trade in local currencies 

 

'Dedollarisation' is feasible

 

The strong dollar should not become a sharp blade to cut the world, THE NEED FOR BRETTON WOODS III

 

Whither the ringgit? US Inflation & workforce are the bigger problems

 Whither the ringgit? US Inflation & workforce are the bigger problems

 

Global de-dollarisation fast underway; US Printed More Money in One Month Than in Two Centuries, US$ is fast becoming Banana Currency

 

 

Yuan’s rising global influence

  

 

Malaysia not in crisis as State of economy goes beyond ringgit's showing

Thursday 16 March 2023

Oppstar soars 225% on ACE Market debut, makes sterling debut on ACE Market

From left: Oppstar chief financial officer Chin Fung Wei, independent non-executive director Datuk Mohd Sofi Osman, independent non-executive chairman Datuk Siti Hamisah Tapsir, executive director and CEO Ng Meng Thai, executive director and chief technology officer Cheah Hun Wah, chief operating officer Tan Chun Chiat, independent non-executive director Datuk Margaret Yeo and independent non-executive director Foong Pak Chee 

Oppstar soars 225% on ACE Market debut

 

KUALA LUMPUR: Oppstar Bhd made its debut on the ACE Market of Bursa Malaysia at RM2.05 a share, a 225.4% premium over the issue price of 63 sen a share.

The stock was the most actively traded with 19.26 million shares exchanging hands.

The integrated circuit design service provider successfully raised RM104.25mil from the initial public offering exercise via the issuance of 165.48 million new ordinary shares.

Oppstar will utilise RM50mil to expand its workforce and RM25.00mil for the establishment of new offices both locally and regionally.

Meanwhile, another RM12mil will go towards research and development expenditure along with RM12.65mil for working capital.

The remaining RM4.6mil will be allocated for its listing related expenses.

“Our vision for the company is simple and clear and it is to show the global players that Malaysia is not only known for its back-end semiconductor value chain, but also has the capability to go into front-end semiconductor IC design.

"I am proud to say that we now serve clients in countries such as China, Malaysia, Japan, Singapore, as well as the USA.

"As we gradually progress, we continually ask ourselves what we can do to expand our business and continue to build up Malaysia’s profile in the front-end semiconductor space. This was where the rationale to go for a listing came about leading up to this today," said Oppstar executive director and CEO Ng Meng Thai said in a statement. 

Source link

 

Oppstar makes sterling debut on ACE Market

 

PETALING JAYA: Oppstar Bhd will focus on building its human resource capital post-listing, as the technology sector is set to grow from the opportunities presented by 5G, artificial intelligence and the Internet of Things.

The integrated circuit design service provider’s chief executive officer Ng Meng Thai said the bulk of the proceeds raised from Oppstar’s listing on the ACE Market of Bursa Malaysia yesterday would be used for the workforce expansion.

“At the moment we have 220 engineers and we have plans to increase that number to 500 in the next three years. With an enlarged workforce, we also hope to grow our revenue and profitability accordingly,” he said after the company’s listing yesterday.

The group is collaborating with various universities in the country to secure future design engineers.

“We started a programme in 2020 where we hire third-year university students for three months. They work part time for 20 hours a week and are paid RM1,500 a month. Upon graduating, they are required to work for us for a year. This is how we build our talent pool.

“When it comes to business, the multinational corporations (MNCs) are our customers. However these MNCs become our competitors when it comes to hiring. This is why other than fundraising, our objective in carrying out the listing exercise is also about hiring and retention,” said Ng.

Oppstar raised RM104.3mil from the public issue of 165.48 million new shares. The company made its debut in the market opening at RM2.05 per share, or a RM1.42 premium above the offer price of 63 sen per share.

The stock closed its maiden trading day up 285.7% or RM1.80 higher at RM2.43 a share. The share price hit a high of RM2.95 and a low of RM2 in intraday trade. Oppstar’s listing did not have an offer for sale of shares from its shareholders.

Oppstar chief financial officer Chin Fung Wei said the group intends to implement a long-term incentive plan of up to 15% of the total number of issued shares of the company for its employees.

“Prior to our initial public offering (IPO), we already had more than 20 shareholders. In fact, every one of our employees, except for those that came on board after the IPO’s closing date, is a shareholder of the company. This is one of our remuneration methods for our employees, apart from their monthly salary,” he said.

Ng added the group’s listing showed Malaysia was not only known for its back-end semiconductor value chain, but also had the capabilities to go into front-end semiconductor integrated circuit design.

“We serve clients in countries such as China, Malaysia, Japan, Singapore, as well as the US. Our expansion plans will enable us to groom future talent and grow our geographical presence which will progressively help strengthen Malaysia’s front-end semiconductor ecosystem in line with our vision,” he said.

The group plans to payout at least 25% of its annual earnings as dividends. AmInvestment Research said the US-China trade war bodes well for Oppstar because China is compelled to develop its own semiconductor capabilities. 

Source link

Related posts:

IC designer Oppstar focuses on talent, IPO offers good value for mony

  Oppstar is one the few Malaysian companies in the front-end of the semiconductor industry, offering a full spectrum of IC design services...

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KLSE Screener
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12 hours agoOppstar makes sterling debut on ACE Market. TheStar Thu, Mar 16, 2023 12:00am - 8 hours View Original. From left: Oppstar chief financial ..
 

ACE-Market listed Oppstar debuts at RM2.05, 225% premium ...

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1 day agoACE-Market listed Oppstar debuts at RM2.05, 225% premium against IPO price of 63 sen.
 

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7 Mar 2023PETALING JAYA: Oppstar Bhd, which is en route to a listing on Bursa Malaysia's ACE Market on March 15, saw its initial public offering (IPO) ...
 
 
 

Thursday 12 January 2023

Southeast Asia, too, is losing patience with King Dollar’s clout

Southeast Asia, like much of the rest of the world, is losing patience with King Dollar.

The westernization of the world’s reserve currency, as through sanctions on those deemed bad actors — such as Russia for its war in Ukraine — has pushed even the typically diplomatic Southeast Asians to warn the US of the consequences.

In a conference in Singapore on Tuesday (Jan 10), multiple former officials spoke about de-dollarisation efforts underway and what economies in the region should be doing to mitigate the risks of a still-strong dollar that’s weakened local currencies and become a tool of economic statecraft.

“The US dollar is a hex on all of us,” George Yeo, former foreign minister of Singapore, said at the conference hosted by the ISEAS-Yusof Ishak Institute. “If you weaponise the international financial system, alternatives will grow to replace it” and the US dollar will lose its advantage. 


While few expect to see the end of King Dollar’s global sovereign status anytime soon, Yeo urged that the risk of it happening be taken more seriously.

“When this will happen, no one knows, but financial markets must watch it very closely,” said Yeo, who is a visiting scholar at the National University of Singapore’s Lee Kuan Yew School of Public Policy.

After gaining 6.2% in 2022, the US dollar is down 0.67% in the first several days of this year, through the end of Tuesday, according to the Bloomberg Dollar Spot Index.

Yeo noted that in times of crisis, the US dollar rises further — as with levies on Russia that have left Russian banks estranged from a network that facilitates tens of millions of transactions every day, forcing them to lean on their own, much smaller version instead. That’s put more pressure on third-party countries, too, which have to unduly rely on US dollar use.

Following on Yeo’s remarks later in the conference, former Indonesian trade minister Thomas Lembong applauded Southeast Asia's central banks that already have developed direct digital payments systems with local currencies, and encouraged officials to find more ways to avoid leaning too hard on the greenback.

“I have believed for a very long time that reserve currency diversification is absolutely critical,” said Lembong, who’s also a co-founder and managing partner at Quvat Management Pte Ltd. Supplementing US dollar use in transactions with use of the euro, renminbi, and the yen, among others, would lead to more stable liquidity, and ultimately more stable economic growth, he said.

The 10 Asean countries are just too disparate to establish a common currency as with the euro bloc. But Lembong said he was “deeply passionate” on this subject of the US dollar as a global reserve currency.

The direct digital payments systems — which have boosted local currency settlement between Malaysia, Indonesia, Singapore and Thailand — are “another great outlet for our financial infrastructure”, he said.- Bloomberg

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