Malaysia’s palm oil industry wading through slippery future

Following rapid growth in the past few years, the Malaysian palm oil industry experienced unprecedented lower productivity in 2012 with lower crude palm oil (CPO) production, as well as lower palm oil prices and exports. The average CPO price for the year slipped 14% to MYR 2,764 per tonne from a record-high of MYR 3,219 per tonne in 2011, while export revenue for palm products declined 11% to MYR 71.5bn.

CPO production in 2012 declined marginally to 18.79mn tonnes, attributed to lower fresh fruit bunch (FFB) yield due to tree stress after a strong FFB production period in 2011. Higher palm oil opening stocks, higher imports by 6.5% and lower palm oil exports by 2.4% contributed to the huge closing stocks for the year. Meanwhile, the oil palm planted area in 2012 increased 1.5% to 5.08mn hectares due to increase in planted area in Sarawak.

Effective Jan 1, 2013, Malaysia lowered its CPO export tax rates to create a level playing field vis-à-vis its Indonesian peers and provide an export outlet for the huge stockpiles. The government has also shown keen interest in subsiding oil palm replanting scheme and raising domestic demand for palm biodiesel to prevent escalating stockpile. CPO prices are envisaged to stage a modest recovery in 2013, barring any changes to the global economic recovery.

Salient points 

• Palm oil stocks  in 2012 closed at record-high 2.63mn tonnes, a surge of 27.7% y/y.  Higher palm oil opening stock and imports as well as lower palm oil exports contributed  to the huge closing stocks. 
• The average CPO  price in 2012 was MYR 2,764, down 14.1% against record-high MYR 3,219 in 2011, mainly due to concerns over the build-up in palm oil stocks. 
• The average FFB yield decreased 4.1% to 18.89 tonnes per hectare in 2012 after  experiencing a year of high yield, while the national oil extraction rate (OER) remained steady at 20.35%.

Source: MPOB

Much more in the EMD report: Malaysia Palm Oil Industry 

 

Rise in Romania’s public debt eases as fiscal consolidation advances.

Romania’s public debt edged up a modest 0.1pps ytd to 34.8% of GDP [ESA methodology] at the end of October 2012 – after it nearly tripled since the end of 2008. The domestic public debt expanded sharply by more than three times while the external public debt advanced at a slower pace yet still more than doubling. Notably however, a large part of the domestic debt is denominated in foreign currency – actually more than half of it [54.8% at the end of October].

Romania public debt

Much more in the EMD report: Romania Country Report

 

Deleveraging continues in Romania

Foreign banks’ exposure against Romanian banking system down 11% y/y at mid-2012, XR effects filtered out.

The exposure* to Romanian banks of BIS-reporting Western banks, assets alone, decreased sharply by 4.1% q/q in Q2 of 2012, according to our calculations based on BIS data. Q3 data will be released in January 2013. Q2 marked the fifth consecutive quarter of decrease in this regard and the sense of flow for the foreign banks’ resources is unlikely to change any soon. Phasing out foreign currency lending from among the banks’ range of products goes hand in hand with the consolidation of deposit base as the main source of financing for local branches.

* exchange rate adjusted

Assets and liabilities of BIS banks versus Romania [banking and non-banking sector]

These are only a few of the insights in the new Intellinews Report : Romania Financial Sector. Learn more and purchase now>>

 

Romania’s central bank admits inflation slips outside target band by end-2013

Romania’s central bank has raised the year-end inflation projections by 1.9pps to 5.1% y/y for 2012 and by 0.5pps to 3.5% y/y for 2013, according to its Quarterly Inflation Report released on Nov 7. The IMF expert team visiting Romania expressed concerns with the price stability.

Consumer price inflation eased to 5% y/y in October after peaking to 5.3% y/y in September, the statistics office reported. CORE2 inflation was 3.2% y/y in September. The average consumer prices in the 12 months ending October were 3.1% up y/y, accelerating from 3% y/y growth registered last month.

 

 

 

 

PLUS:
FOCUS STORY: Are there grounds for euroscepticism in Romania?

This is only a small extract of the insights in the new Intellinews : Romania Country Report; read more and purchase now>>

 

Romania’s economy wears weary outlook

Romania’s economy increased by 0.7% y/y in H1 and will end with  negative for the year, less than -1%.  Bullish expectations were ruined by  poor use of EU funds and by  below-average agricultural production. The IMF and the government expect a much stronger advance in 2012 of 2.5%, according to the Fund’s World Economic Outlook. But even this will not help the country return to  pre-crisis 2008 GDP levels.

Romania’s statistics office revised the estimate for the country’s Q2 GDP to 1.1% y/y, down from 1.2% y/y previously announced on September 6, according to the newly introduced T+95 estimate. The adjustment is minor and does not send positive signals for the country’s economic growth,  already expected to slow  in H2.

These are only a few of the insights in the new IntelliNews : Romania Country Report. Learn more and purchase now>>

 

Romania’s GDP mirage: fact or fiction?

Romania’s seasonally-adjusted GDP edged up by 0.5% q/q in Q2, after it has stagnated for three years around the same level. Against the past quarter, the domestic demand strengthened robustly driven by both consumption (1.6% up q/q) and gross fix capital formation (gfcf, 4.4% up q/q). On the opposite, the external demand weakened visibly by 1.4% q/q. The imports edged up by 1.2% q/q contributing, besides the export’s weakening, to the deterioration of the external balance.

GDP and main elements by utilisation, quarterly, seasonally adjusted [2000=100]

These are only a few of the insights in the new IntelliNews : Romania Country Report. Learn more and purchase now>>

 

Unofficial data leaked from central bank paints bleak picture of Romanian banking system

Romanian banks incurred aggregated losses of RON 325mn (EUR 73mn at eop XR) in Q2, 2012, according to our calculations based on central bank data. Out of 41 banks, 23 reported profits and 18 losses, according to unofficial data leaked from the central bank. The banking system thus dipped back into the red after it posted aggregated RON 125mn (EUR 29mn, @ eop XR) profit in Q1.

Big picture: dividends vs. interest incomes derived by BIS-reporting banks in Romania [and elsewhere in region].

Nonetheless, this picture has to be put in the context of foreign financial groups. The foreign banks derive two types of benefits from their Romanian subsidiaries: firstly via dividends [probably the smallest portion of the benefits these days, most of the time re-invested when they were higher in the past] and secondly via the interest for the money lent at an interest rate that is driven by the country’s sovereign rating – meaning at high interest rates. The ROA for the foreign financial groups have thus nothing to do with the ROA reported by their local subsidiaries [assuming they finance their own subsidiaries, which is mostly the case].

Much more in the Emerging Markets Direct report: Romania Financial Sector

 

Singapore property market proves to be resilient

SG Property provides an overview of the property industry in the Asia-Pacific and Singapore, covering the residential, industrial, office and retail sectors. The Singapore property market in 2011 proved to be resilient due to several factors, such as high Singapore dollar liquidity, a low interest rate environment and no shortage of housing loans. According to the Urban Redevelopment Authority (URA), developers sold 18,787 units of new homes in 2011, up 8.3% y/y. In 2011, prices of residential properties increased 5.9% as compared to 17.6% in 2010.

The report presents the market trends and outlook for the industry which include the property regulations, government land sales (GLS) programme and office shadow space. URA statistics showed the rate of increase in Singapore property prices moderating in line with the government’s property cooling measures, such as sellers and buyers stamp duty.

The report also includes the major players in the property industry and their financial highlights and SWOT analysis. Most property developers saw an improvement in their revenue and net income in Q1/2012, despite the uncertain global economic climate.

Key findings

• The property price index for landed and non-landed private residential units rose from 199.1 points in Q1/2011 to 206 points in Q1/2012. The property rental index also increased y/y from 155.3 points to 159.6 points in Q1/2012.
• According to the URA, the total of number of private residential property transactions in 2011 declined 10.1% y/y to 35,394 deals with a value of SGD 53.3bn. Meanwhile, the vacancy rate of private residential units increased slightly from 5.9% in Q4/2011 to 6% in Q1/2012 with more supply in the pipeline.
• The Singapore office demand started moderating in H2/2011 given the grim economic outlook. URA data showed that the rental index for office space in central area increased by 8% in 2011, compared to 12.4% increase in 2010.

Source: CEIC

This is only a small extract of the insights in the Singapore Property Industry report; read more and purchase>>

 

A quick peek into Romania’s economy and banking figures

The stock of provisions held by the Romanian banks increased by RON 3,161mn (EUR 722mn, or some 0.9% of their assets) in the first quarter of 2012, according to IntelliNews calculations based on the central bank data. Romania’s non-performing loans ratio reached 15.88% at the end of March, up from 14.33% at the end of 2011 and 12.71% at the end of March 2011. The loan loss provision cost thus neared the record level of EUR 747mn registered back in the second quarter of 2010, marking a visible deterioration from the moderate EUR 171mn provision cost in Q4/2011 or the average quarterly provision cost of EUR 416mn last year.

The banks derived an aggregate profit of EUR 28mn in Q1, according to IntelliNews calculations. The aggregate profit was close to zero in the final quarter of last year, according to adjusted data, while the banks incurred losses of EUR 181mn in full 2011 – compared to a combined loss of EUR 79mn reported the under preliminary [unrevised] data. The Romanian banks also posted an aggregate loss of EUR 123mn in 2010.

These are only a few of the findings in the new Intellinews Romania Country Report. Learn more and purchase now>>

 

Fiscal slippage risks remain high in Romania

Public debt service surged by 161% year over year in April and the co-financing also surged by 106% year over year as the government had to cover from own funds the sluggish payment flow from the EU to keep the projects on track. The government hiked the year-end cash deficit target to 2.2% of GDP from 1.9% previously, but meeting the new target is very unlikely.

The first-quarter deficit target was met only due to unsustainable policies – companies were forced to pay in advance their profit tax for the quarter, while the payment arrears of the central and local governments increased, the country’s independent fiscal supervisory body explained.

These are only a few of the insights from the IntelliNews Romania Country Report, May 2012. Read more and purchase>>