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South-East Asia needs US$210bil annual investment on renewables, says IRENA

South-East Asian nations need to more than double their annual investment on renewables to accelerate energy transition and to meet climate goals, a report released this week by the International Renewable Energy Agency (IRENA) showed.

IRENA said, in the long term, average annual investment of US$210 billion was needed on renewable energy, energy efficiency and to support technologies and infrastructure in the period to 2050 to limit a global temperature rise to 1.5 degrees Celsius.

The investment is more than two and a half times the amount currently planned by Southeast Asian governments to reach their goals, IRENA said.

“Coal retirement, coupled with renewables and regional grid interconnection, is an indispensable step to aligning with net-zero targets,” IRENA’s Director-General Francesco La Camera said.

Southeast Asia is home to 25% of the world’s geothermal generation capacity, but the region also has major coal reserves. The region’s biggest economy Indonesia is the world’s top exporter of thermal coal.

While half of the members of the Association of South-East Asian Nations (Asean) have pledged to stop using coal in the power sector, La Camera said climate commitments required concerted and accelerated action “that must begin now to have a hope of success.”

The region aims to have 23% of its primary energy supplied by renewables by 2025, however, investments in recent years show mixed progress, IRENA said.

“Accelerating energy transition is crucial in order to meet climate goals and support the region’s economic growth,” said Nuki Agya Utama, executive director of the ASEAN Centre for Energy, adding the bloc remained committed to its 2025 goals.

IRENA said countries could by investing more in renewables reduce their energy costs and avoid as much as $1.5 trillion of costs related to health and environmental damage from fossil fuels up to 2050.

Source: Reuters

South-East Asia needs US$210bil annual investment on renewables, says IRENA

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The buoyant market for the global halal economy is expected to reach US$4.96 trillion (RM22.34 trillion) by 2030, from US$2.3 trillion in 2020, according to research and consulting firm Frost & Sullivan.

In a report on Tuesday (Sept 6), the firm said that the halal economy is experiencing an upward trend, as demand for halal products from Muslims and non-Muslim nations increases.

It said the main factors driving the halal industry are favourable population demographics, government policies, and private-sector initiatives.

It said growing non-Muslim demand for halal food will be driven by its association with safe and healthy eating, while halal fashion and tourism should also find increasing acceptance among more conservative non-Muslim consumers.

Frost & Sullivan senior economist Neha Anna Thomas said with higher levels of halal trade and Islamic finance potentially accelerating infrastructure development, the halal economy is poised to become more integrated with global trade and supply chains.

“Further, governments are strengthening regulatory and policy support through national master plans and certification scope expansion, which will boost the halal industry’s growth,” she said.

Thomas added that transparency and traceability along the halal product value chain are crucial.

“Due to this, governments should encourage the adoption of advanced technologies, such as the blockchain and the Internet of Things, when developing halal economy master plans, while businesses can partner with tech start-ups,” she said.

Frost & Sullivan said that to tap into growth opportunities of the halal market:

  • Global governments must seek to unify halal standards and accreditation processes to help reduce the number of certification requirements and promote halal commerce.
  • Food manufacturers should collaborate with technology companies to improve traceability and transparency while increasing consumer trust.
  • Global drug manufacturers and raw material suppliers should incorporate halal-certified products into their offerings, potentially through joint ventures, to tap into growing halal pharmaceutical demand from Islamic countries.

Source: The Edge Markets

Global halal economy to hit US$4.96 trillion by 2030, says Frost & Sullivan

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Global semiconductor equipment billings rose 6% year-on-year (y-o-y) to US$26.43 billion (RM118.93 billion) in the second quarter of 2022 (2Q22), according to US-based Semiconductor Equipment and Materials International (SEMI).

In its Worldwide Semiconductor Equipment Market Statistics (WWSEMS) report released on Wednesday (Sept 7), SEMI said the figure was up 7% quarter-on-quarter (q-o-q).

Compiled from data submitted by members of SEMI and the Semiconductor Equipment Association of Japan, the WWSEMS report is a summary of the monthly billings figures for the global semiconductor equipment industry.

Following are quarterly billings data in billions of US dollars with q-o-q and y-o-y changes by region:

Source: The Edge Markets

Global semiconductor equipment billings up 6% y-o-y to US26.4b in 2Q22, says SEMI

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Global semiconductor industry sales rose 7.3% year-on-year (y-o-y) to US$49 billion in July 2022, from US$45.7 billion, according to the US-based Semiconductor Industry Association (SIA).

In a statement on its website on Tuesday (Sept 6), the SIA however said the figure was 2.3% lower from the June 2022 total of US$50.2 billion.

Monthly sales are compiled by the World Semiconductor Trade Statistics (WSTS) organisation and represent a three-month moving average.

SIA president and CEO John Neuffer said global semiconductor sales remained strong in July, easily topping the total from last July, but market growth has slowed substantially in recent months, with year-to-year sales increases dropping into the single digits for the first time since December 2020.

“Sales into the Americas market increased 20.9% y-o-y to lead all regions,” he said.

The SIA said that in addition to the Americas, year-to-year sales were up in the Europe (15.2%) and Japan (13.1%), and Asia-Pacific/all others (4.1%), but down in China (-1.8%).

Month-to-month sales increased in Europe (2.7%) and Japan (0.6%), but decreased in the Americas (-2.3%), China (-3.5%), and Asia-Pacific/all others (-3.5%).

Source: The Edge Markets

Global semiconductor sales up 7.3% y-o-y in July, but growth slowed, says SIA

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The ASEAN Business Advisory Council (ASEAN-BAC) and non-ASEAN Business Council are ramping up efforts to increase and facilitate trade and investment opportunities within the region to leverage the regional comprehensive economic partnership (RCEP) which came into force earlier this year.

Speaking to Bernama in conjunction with the ASEAN 55th anniversary, Tan Sri Dr Munir Abdul Majid, the chairman of ASEAN-BAC said there is no doubt that the RCEP offers huge economic opportunities, especially when the member economies are still striving to recover post-COVID-19.

As it enters into force, the trade pact would pave the way for the creation of the world’s largest free trade area. In Malaysia, the RCEP came into force on March 18.

“On the plus side, this world’s largest regional free trade agreement is 30 per cent of almost everything – of global gross domestic product, population and et cetera – but on the minus side it is still only 30 per cent of that everything, not 100 per cent.

“There will be this regional growth and, in time, increase in that 30 per cent which makes it both a pre-eminent regional platform for expanded economic activity and cooperation, as well as a reminder of how much better it would be if there was world-wide openness and understanding on trade and investment,” he said.

According to World Bank data, the agreement would cover 2.3 billion people or 30 per cent of the world’s population, contributing US$25.8 trillion or about 30 per cent of global gross domestic product and account for US$12.7 trillion, over a quarter of global trade in goods and services, and 31 per cent of global foreign direct investment inflows.

Still, Munir said that having the RCEP is something precious to build upon, and China sees this.

As the pact took effect, China has published a national guideline for high-quality RCEP implementation in six areas: trade and investment; upgrading manufacturing; cooperation on standards; financial support; business environment; and support services for enterprises.

“Efforts will also be made to expand renminbi settlement. China has targeted various markets. Implementation to achieve strategic objectives are planned at local and provincial level,” he shared.

Establishing RCEP blueprint 

Munir recommended that Malaysia should also do the same to take advantage of RCEP by coming out with a similarly detailed blueprint to secure RCEP success for the country, rather than just rest on the laurels of expected gains in exports of US$0.2 billion, as projected by the United Nations Conference on Trade and Development (UNCTAD) in a study published by UNCTAD in mid-December 2021.

A study by the Asian Development Bank revealed that the RCEP would increase the member economies’ incomes by 0.6 per cent by 2030, adding US$245 billion (RM1.1 trillion) annually to regional income and 2.8 million jobs to regional employment.

Meanwhile, Malaysia’s Ministry of International Trade and Industry data saw that for the period between March and June 30, the country’s export value for the export of goods under the RCEP stood at RM31.9 million.

“Malaysia can achieve more, and not just in terms of trade alone, by being similarly focused on strategic planning and execution,” Munir stressed.

Interestingly, he said, China has expressed interest to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership  (CPTPP), as it sees opportunities to penetrate markets such as Canada and Mexico on that platform.

“Malaysia should similarly take the opportunity of penetrating those markets by ratifying the CPTPP soon. Vietnam, a member of both the RCEP and the CPTPP, has seen huge investments coming in and expanded exports going out,” he revealed.

Despite being an active participant in the CPTPP negotiations, Malaysia has yet to ratify the agreement.

If ratified, the country is expected to benefit in the medium to long term as part of the pact in five sectors, namely electrical and electronics, palm oil, chemicals, optical and scientific equipment, and plastics.

Do not be complacent 

Munir noted that ASEAN remains one of the fastest growing regions in the world, with factor endowments favouring continued expansion of the economy.

But he is concerned that while the region is a magnet to investments which is a blessing, it causes member countries to be complacent and not work together enough to achieve the reality of a single market, the third most populous, approaching an economy of US$4 trillion.

“With RCEP, the discipline of adhering to integration agreements would force ASEAN to be more integrated itself,” he said, adding that ASEAN must work together to minimise the impact and to work together to exploit new opportunities and to become more efficient.

He said ASEAN still needs to harmonise standards to achieve sustainable growth, not just growth at all cost, particularly to the environment.

The danger is, something already happening in the advanced economies, the abandonment of Sustainable Development Goals (SDG) standards, like clean energy, in the pressure-cooker of economic challenges, he concluded.

‘Stronger Together’ ASEAN

In conjunction with the ASEAN 55th anniversary month, Munir, who is well known in the Malaysian corporate world said there has been no time for celebration post the pandemic.

“We are barely out of the frying pan and already are in the fire. Shortages, surge in food and gas prices, inflation, rise in interest rates, are all not conducive to global economic recovery, and many major economies are in fact weakening – which contract markets for ASEAN exports,” he said.

In line with the global economy, the ASEAN economy remains weak amid rising inflation with the inflation rate projected to increase to 4.7 per cent this year from 3.7 per cent, according to the Asian Development Bank (ADB).

Among the 10 member economies, ADB said Laos has one of the highest inflation rates in the region, at 23.6 per cent year-on-year in June, while Vietnam recorded the lowest inflation rate at 3.37 per cent followed by Malaysia (second lowest inflation rate) at 3.4 per cent.

“Combined with geopolitical tensions, the world is not in a good place and ASEAN not excepted… but the most important thing is to achieve results and follow-through whatever the mode of the meetings – which ASEAN has plenty of,” he said.

Munir also shared that at the ASEAN-BAC Malaysian and regional level, the council has employed a hybrid form of activity to push further cooperation in the ASEAN Economic Community (AEC).

Themed ‘Stronger Together’, this year’s ASEAN Day invited and welcomes forward-minded people of ASEAN to come in synchronisation and work collectively to face the challenges of the 21st Century. 

Established on Aug 8, 1967 in Bangkok, Thailand, the ASEAN founding members are Indonesia, Malaysia, the Philippines, Singapore and Thailand. Brunei Darussalam joined the pact in 1984, Vietnam (1995), Laos and Myanmar (1997) and Cambodia (1999).

Source: Bernama

RCEP is ASEAN’s investment magnet, boosted further by CPTPP

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Big data can support over US$100 billion (US$1=RM4.463) worth of opportunities in Southeast Asia, particularly across the five focus countries, namely Cambodia, Indonesia, Myanmar, the Philippines, and Thailand, according to Asian Development Bank (ADB).

In its newly-launched report titled “Harnessing the Potential of Big Data in Post-Pandemic Southeast Asia”, ADB said the use of digital technologies to provide personalised and remote learning, as well as online job matching, could contribute US$77.1 billion annually to the gross domestic product (GDP) of these Southeast Asian countries by 2030.

Similarly, it said the use of analytics to direct highly targeted health interventions for at-risk populations could lead to an increase of US$15.5 billion in GDP of these countries by 2030.

“The application of remote monitoring systems could bring US$9.4 billion in annual cost savings to the healthcare system of these Southeast Asian countries by 2030, through reduced hospital visits, length of patients’ stays and medical procedures,” it said in the report launched on Wednesday (Aug 17).

According to the report, big data refers to datasets whose size is beyond the ability of typical database software tools to capture, store, manage and analyse.

The report is the last of four reports from a regional study completed in 2021 and funded by the technical assistance of ADB on policy advice for Covid-19 economic recovery in Southeast Asia.

The focus countries are Cambodia, Indonesia, Myanmar, the Philippines, and Thailand, which tapped ADB’s Covid-19 pandemic recovery option facility.

Meanwhile, ADB advisor and head of economic research and regional cooperation department’s statistics and data innovation, Elaine Tan, said that to ensure governments could roll out more timely and fine-tuned policies, particularly amid the current challenging environment, they could make good use of the data collected from their agencies.

“I think a great potential in big data is in fact from within the government, and its administrative data which is collected by different government agencies.

“If they can integrate them into one common database, that would create a great potential to identify the need of the people quickly, as well as in formulating policies (more accordingly),” she said at a webinar held in conjunction with the launching ceremony.

Tan also noted that to determine a policy or programme, a government should make the decision based on the aggregated data derived from a sum of individual behaviours, instead of just focusing on an individual behaviour alone.

Source: Bernama

Big data can support over US$100 bil worth of opportunities in Southeast Asia, says ADB report

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The world’s third largest economy recovered to its pre-pandemic size in the second quarter, as consumer spending picked up following the end of coronavirus curbs on businesses.

Gross domestic product (GDP) grew at an annualised pace of 2.2% in the second quarter of this year, coming in below the median estimate of 2.6%, cabinet office data showed yesterday. That lifted the size of the economy to 542.1 trillion yen (US$4.1 trillion or RM18.25 trillion), above what it was at the end of 2019. First quarter GDP was revised to an expansion from a prior contraction.

“The economy managed to return to its pre-pandemic size, but its recovery pace has been slower than other nations,” said economist Takeshi Minami at Norinchukin Research Institute. “I expect growth to continue in the third quarter too, but it will likely be losing momentum down the road.”

The end of pandemic restrictions on businesses in late March helped spur the economy. Consumer spending, which accounts for more than half of Japan’s economic output, led the growth, as did capital expenditure.

The relaxing of Covid rules resulted in increased spending at restaurants and hotels, as well as on clothes, according to the cabinet office.

Still, the gains were more limited than expected a few months ago, showing that pent-up demand among consumers has been moderate.

“Going forward, we expect growth to slow in the third quarter. Persistent cost-push inflation and a surge in new Covid-19 cases point to downside risks to the recovery. These will probably outweigh any boost from inventory rebuilding,” said Bloomberg economist Yuki Masujima.

While the economy regained its pre-pandemic size, economists expect the central bank to stick to its current easing policy, and the government to continue providing support for households hit by both the pandemic and rising prices. Other developed economies are doing the opposite by raising interest rates to cool demand and rampant inflation.

Japan’s milestone also comes behind the United States, which recovered its pre-pandemic economy size a year ago, while much of Europe regained it at the end of 2021.

The report came out as downside risks mount at home and abroad. Japan has been reporting record Covid infection cases with daily numbers continuing to top 200,000 this month.

The government has so far kept economic activity as normal as possible without bringing back restrictions. But high-frequency data suggest people’s mobility is falling.

In Japan’s key trading partners, growth is slowing as the US and Europe fight inflation and China sticks to its zero-Covid policy. The war in Ukraine continues to disrupt food and energy supplies while the crisis in Taiwan is adding to geopolitical risks.

Inflation remains relatively moderate in Japan, but consumption may cool with prices rising faster than wages.

After factoring in inflation, paychecks in Japan have been falling for three months in a row through June.

Prime Minister Fumio Kishida reshuffled his cabinet last week but signalled that the core parts of his policies will remain the same.

Kishida also suggested he’ll remain flexible on fiscal support, although he’ll focus on spending existing reserve funds first before reaching for additional debt issuance.

Kishida ordered another set of measures to contain inflation by early September, with a boost in funding for regional governments and a continued cap on imported wheat prices. He emphasised that wage gains need to be sustained, while saying that the additional support measures will concentrate on food, regional grants and energy.

For now, the measures will be supported by existing reserve funds, though Kishida said he’ll remain flexible in his approach.

“Inflation can cool consumption, although oil prices may stabilise with the global economy slowing down,” said Norinchukin’s Minami. “As downside risks mount in the world economy, there’s a risk that Japan’s economy could contract at some stage toward the end of the year.”

Bank of Japan governor Haruhiko Kuroda has repeatedly said that the central bank must retain its easing programme to support the economy until inflation becomes sustainable. He’s still seeking healthy wage gains, and price rises that go beyond a boom in commodities.

So far, economists expect growth in Japan to remain moderate for the rest of the year, slowing as the months progress. For the third quarter, analysts expect annualised gains of 3.2%. 

Source: Bloomberg

Economy bounces back to pre-pandemic levels

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GLOBAL chip sales increased 21.1% year-on-year (y-o-y) in April 2022 to US$50.9bil (RM227bil) and shows little signs of abating.

The World Semiconductor Trade Statistics (WSTS), a body that tracks the industry, projects global chip sales for 2022 to rise by 10.4% y-o-y to a record high of US$613.5bil (RM2.73 trillion).

This will mark a third consecutive year of growth.

As for 2023, WSTS expects a growth of 5.1% to reach a staggering US$680bil (RM3 trillion).

McKinsey in a recent report states that chip sales saw a surge of more than 20% to around US$600bil (RM2.67 trillion) in 2021.

It expects the chip industry’s annual growth to average from 6% to 8% until 2030.

McKinsey says that about 70% of the growth will be driven by the automotive, computation and data storage as well as wireless segments of business.

The report further suggests that automotive will contribute to 20% of the expansion of the chip sector in the coming years while the computation and data-storage market will see an increase of 4% to 6%, supported by applications like artificial intelligence and cloud computing.

Meanwhile, in the wireless segment, the majority of the expansion is accounted for by smartphones and backed by growth in 5G. Meanwhile, Antoine Huchez, a consulting manager from Frost and Sullivan Asia Pacific, says foundries are diversifying their supply chain globally in order to be more resilient in meeting the growing demand for chips worldwide, regardless of the US Chips Act.

“GlobalFoundries Inc for example, is currently expanding its fabrication plants (fabs) in Singapore. They also recently signed an agreement with STMicroelectronics to set up a fab in France. The group also has plans for capacity expansion in the United States and Germany,” says Huchez.

He added that the Chips Act coupled with the establishment of new fabs from GlobalFoundries will spur demand for Malaysia’s back-end process.

“Over the last two years we have seen new investments from Intel, TF-AMD Microelectronics, Infineon Technologies AG and Lam Research Corp in manufacturing, testing and packaging facilities, mainly in Penang. We forecast that this trend might continue,” Huchez says.

Afifah Abdul Malek, equity analyst of BIMB Securities Sdn Bhd notes that the outlook remains optimistic for Malaysia’s semiconductor ecosystem following the Chips Act. Given that the US is one of Malaysia’s largest trading partners, the analyst foresees that there will be a rise in business opportunities for industry players in the country.

“Thus, it is important to ensure the readiness of our local companies in filling up the coming demand for semiconductors. The government should continue to roll out incentives to equip and support ongoing expansion plans in the industry so that we are set to attract investments from other countries,” says Afifah.

Huchez highlighted that on top of coming up with new incentives and policies to leverage on the momentum of the rising demand in the chip industry, the Malaysian government should also look into capacity development for the front-end and back-end segments of chip manufacturing in the country.

“Based on developments in other countries in South-East Asia, notably Thailand (in June 2021 whereby the Thai Board of Investment approved new incentives for investments in semiconductor manufacturing), it is important for Malaysia to do the same as well and look into advancing areas like research and development and equipment manufacturing.

“Talent nurturing is also critical in Asean, as well as globally. The availability of talent is and will remain a key challenge for the industry’s future,” he says.

Meanwhile, Nomura Asset Management UK, senior equity analyst, Takeshi Kawamoto, said though the Chips Act may not negatively impact the back-end package and test activities that Malaysia is known for, in the long run corporations in the country need to consider building outsourced semiconductor assembly and test facilities in the US to be the beneficiaries of new chip supply chains that will be established over there.

“The majority of the funds from the Chips Act will be spent on front-end wafer fabrication, not the back-end segments, so in the near future, Malaysia may not see the effects. However, in the long term, the Chips Act could divert some investment dollars that may have been heading over to Malaysia back to the US,” says Kawamoto.

He added that it is vital for the government to continue to roll out incentives to attract foreign direct investment (FDI) for the purpose of maintaining the fast-growing chip industry of the country.

“Since Malaysia is friendly with all major semiconductor producing nations, if the country plays its cards right, it has the potential to become the “Switzerland of the semiconductor industry”, says Kawamoto.

Interestingly, geopolitics is also playing an increasingly important role in the country’s decision making for economic growth.

“Malaysia’s semiconductor sector is already benefiting from the China-US trade war as companies adopted a “China+1” strategy.

“While Taiwan’s domestic direct investments may not be impacted by tensions with China, its FDI are likely to face uncertainties. In this sense, Malaysia, though not the sole one, could be one of the beneficiaries in this situation,” Huchez says.

Source: The Star

Positive industry outlook

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The economy in the Asia-Pacific (APAC) region is in a better position, with many countries still in expansion or recovery mode from the pandemic.

In a research note today, Moody’s Analytics said, however, if conditions outside of the APAC region continue to deteriorate, recession risks will increase, particularly as exports are a critical growth driver, with the United States and Europe important sources of demand.

“Moreover, central banks in Asia are stepping up monetary policy tightening, which will increasingly pressure improved domestic demand,” it said.

It said that given the heightened risk of recession, it is not surprising that global businesses have become more anxious. The weekly Moody’s Analytics business survey confirmed that sentiment has been deteriorating since early 2022.

“There is not always a strong causal link between sentiment and the real economy. With so much thrown at households and businesses over the past two years, there is heightened risk that this ongoing anxiety will contribute to a deterioration in hiring, investment and spending.

“This concern has increased weight — business expectations for economic conditions six months ahead are expected to deteriorate markedly and are at the lowest level since the global financial crisis in 2009,” it added.

Meanwhile, in the separate note, Moody’s Analytics said total debt-to-gross domestic product (GDP) ratios across the APAC region have remained well above pre-pandemic levels, although some countries such as Singapore, Malaysia and Indonesia record lower debt ratios in 2021 compared with 2020.

It said this was due partly to the success of containing domestic COVID-19 cases while keeping production lines open.

On the household debt, it said the government fiscal policies across Southeast Asia have offered support to stabilise household debt in 2021.

“However, the household debt-to-GDP ratios in Malaysia and Thailand remain among the highest in Southeast Asia and are at risk of non-performance as interest rates normalise.

“Elevated household debt remains a major problem despite a recent slowdown in the pace of household debt growth and many Southeast Asian countries are also facing skyrocketing housing prices as hot money and speculation continue to push up prices,” it said.

Source: Bernama

Asia-Pacific economy in better position, still in recovery mode — Moody’s Analytics

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Global information technology (IT) spending is projected to rise 3% year-on-year in 2022 to US$4.5 trillion (about RM20.02 trillion), according to Gartner Inc.

In a statement on Thursday (July 14), the firm said while IT spending is expected to grow in 2022, it will be at a much slower pace than in 2021 due to spending cutbacks on PCs, tablets and printers by consumers, causing spending on devices to shrink 5%.

Gartner distinguished research vice president John-David Lovelock said inflation is top of mind for everyone.

“Central banks around the world are focusing on fighting inflation, with overall inflation rates expected to be reduced through the end of 2023.

“However, current levels of volatility being seen in both inflation and currency exchange rates are not expected to deter chief information officers’ (CIOs) investment plans for 2022.

“Organisations that do not invest in the short term will likely fall behind in the medium term and risk not being around in the long term,” he said.

Gartner said price increases and delivery uncertainty, exacerbated by the Russian invasion of Ukraine, had accelerated the transition in purchasing preference among CIOs, and enterprises in general, from ownership to service — pushing cloud spending to an 18.4% growth in 2021 and an expected growth of 22.1% in 2022.

It said not only is cloud service demand reshaping the IT services industry, but it is also driving spending on servers to a 16.6% growth in 2022, as hyperscalers build out their data centres.

Gartner said spending on data centre systems is forecast to experience the strongest growth of all segments in 2022 at 11.1%.

Cloud consulting and implementation and cloud managed services are expected to grow 17.2% in 2022, from US$217 billion in 2021 to US$255 billion in 2022, helping to drive the overall IT services segment to a 6.2% growth in 2022.

Worldwide IT spending forecasts (millions of US dollars)

 2021 spending2021growth (%)2022 spending2022growth (%)2023 spending2023growth (%)
Data centre systems 191,001 6.4 212,218 11.1 221,590 4.4
IT services1,207,96612.81,283,1926.21,389,1698.3
Communications services 1,458,527 3.8 1,464,551 0.4 1,505,733 2.8
Overall IT4,401,94410.24,534,6323.04,809,5616.1

Source: Gartner (July 2022)

IT talent crunch

Gartner said the critical IT skills shortage being felt across the globe is expected to abate by the end of 2023, when the corporate drive to complete digital transformations slows down and there is time for upskilling and reskilling of existing staff.

However, it said that in the near term, CIOs will be forced to take action to balance increased IT demand and dwindling IT staffing levels.

The Gartner Global Labor Market Survey of nearly 18,000 employees in the first quarter of 2022 showed compensation is the No. 1 driver of IT talent attraction and retention.

Technology service providers are increasing prices for IT to allow for competitive salaries.

This is driving an increase in spending on software and services through 2022 and 2023.

Worldwide software spending is expected to grow 9.6% to US$806.8 billion in 2022, while global spending on IT services is forecast to reach US$1.3 trillion.

Lovelock said that additionally, CIOs are using more IT services to assist in the lack of skilled IT staff. Tasks that require lower skill sets tend to be outsourced to managed service firms to alleviate staff time, while critical strategy work, which requires high-end skills unobtainable by many enterprises, will increasingly be fulfilled by external consultants.

Source: The Edge Markets

Global IT spending to rise to US$4.5 trillion in 2022, says Gartner

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KUALA LUMPUR (July 13): Global sales of total semiconductor manufacturing equipment by original equipment manufacturers are forecast to reach a record US$117.5 billion (about RM520.88 billion) in 2022, up 14.7% from the previous industry high of US$102.5 billion in 2021, and increase to US$120.8 billion in 2023.

In the mid-year total semiconductor equipment forecast — OEM perspective released on Tuesday (July 12) by US-based Semiconductor Equipment and Materials International (SEMI), both the front-end and back-end semiconductor equipment segments are said to be contributing to the market expansion.

SEMI said the wafer fab equipment segment, which includes wafer processing, fab facilities, and mask/reticle equipment, is projected to expand 15.4% to a new industry record of US$101 billion in 2022, followed by a 3.2% increase to US$104.3 billion in 2023.

SEMI president and chief executive officer Ajit Manocha said in line with the semiconductor industry’s determined push to increase and upgrade capacity, the wafer fab equipment segment is poised to reach the US$100 billion milestone for the first time in 2022.

“Secular trends across a diverse range of markets, coupled with strong investments in digital infrastructure, are powering another record year,” he said.

SEMI said that driven by demand for both leading-edge and mature process nodes, the foundry and logic segments are expected to increase 20.6% year-on-year to US$55.2 billion in 2022, and another 7.9% to US$59.5 billion in 2023.

It said the two segments account for more than half of total wafer fab equipment sales.

The association said strong demand for memory and storage continues to contribute to DRAM and NAND equipment spending this year.

The DRAM equipment segment is leading the expansion in 2022, with expected growth of 8% to US$17.1 billion.

The NAND equipment market is projected to grow 6.8% to US$21.1 billion this year. DRAM and NAND equipment expenditures are expected to slip 7.7% and 2.4% respectively in 2023.

After surging 86.5% in 2021, the assembly and packaging equipment segment is expected to grow 8.2% to US$7.8 billion in 2022 and edge down 0.5% to US$7.7 billion in 2023.

The semiconductor test equipment market is forecast to grow 12.1% to US$8.8 billion in 2022, and another 0.4% in 2023, on demand for high-performance computing applications.

SEMI said that regionally, Taiwan, China, and South Korea are projected to remain the top three equipment buyers in 2022.

It said Taiwan is expected to regain the top position in 2022 and 2023, followed by China and South Korea.

Equipment spending for other regions tracked, except for the rest of the world, which is expected to grow in 2022 and 2023.

Source: The Edge Markets

Global semiconductor equipment sales on track to hit US$118b in 2022, says SEMI

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A green recovery from the Covid-19 pandemic in Southeast Asia has the potential to create US$172 billion (RM760.2 billion) in investment opportunities annually and generate more than 30 million jobs by 2030, according to the Asian Development Bank (ADB).

A new report by the bank identifies five areas that support a post-Covid-19 recovery through greener development, namely productive and regenerative agriculture, healthy and productive oceans, sustainable urban development and transport models, circular economy models, and renewable and efficient energy.

In a statement today, director general for Southeast Asia Ramesh Subramaniam said this report highlights key policy priorities for economies in the region that can help ensure that both socioeconomic and environmental aspirations are served in their pursuit of economic recovery.

“While several countries in the region have begun to support a green recovery, more needs to be done.

“We must encourage additional green stimulus, design carbon pricing schemes, reduce dependence on fossil-fuel intensive power, and attract private sector investors to large-scale renewable energy, sustainable transport, and clean urban projects,” he said.

A green recovery from Covid-19 is crucial to ensure an economically and environmentally resilient future, ADB said, noting that without concerted actions to address the environmental crises of climate change and biodiversity loss, the region’s long-term growth prospects could be constrained.

Other policy options identified in the report, the bank said, include intensifying research on green technologies, encouraging women entrepreneurs to participate in green business opportunities, and managing biodiversity better through open and integrated data systems.

“To implement a green recovery, Southeast Asian governments also need to identify sustainable sources of financing that will fund climate-friendly infrastructure investments and leverage green growth opportunities,” ADB said.

According to the report, financing approaches should include mobilising domestic resources through environmental and carbon taxes, reducing subsidies for fossil fuels, mobilising private investors by addressing risks related to green investments, and leveraging public and private finance through green funds such as the  Asean Catalytic Green Finance Facility.

It also called for a strong collaboration among neighboring economies and new partnerships with various stakeholders to ensure benefits accrue throughout the region.

ADB expressed its commitment to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty.

Source: Bernama

ADB: Southeast Asia’s green recovery can create RM760 bln investment opportunities yearly

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ASEAN is reopening its borders to tourism, which will be a strong boost to Asean GDP and employment. This in turn should support equity prices.

Asean equities earnings should be supported by multiple factors, such as Asean equities’ pro-cyclical tilt, an improving situation in China, and a sustainable earnings rebound from historical lows.

While Asean central banks are expected to normalise policy quicker than expected due to rising inflation, we believe the pace of tightening in Asean will unlikely be as urgent as the US.

As a whole, we remain cautiously optimistic on Asean equities. Valuations are marginally expensive at the moment, but multiples should look more palatable over time if our earnings forecasts materialise. Using our target P/E ratio of 16.0X, we forecast an attractive upside potential of 21 per cent by end-2024.

Investors looking to gain exposure to Asean equities can consider our two recommended products: Premia Dow Jones EM Asean Titans 100 ETF and Principal Asean Dynamic Fund – MYR.

Asean equities (gauged by the MSCI AC Asean Index) broadly comprise equities from Asean-5, namely Singapore, Indonesia, Thailand, Malaysia, and Philippines. While equities have generally done poorly in 2022, Asean equities have managed to remain relatively resilient, falling by just nine per cent year-to-date, compared to its global equity peers which have fallen almost 20 per cent year-to-date (in US dollar terms).

In this article, we reiterate our cautiously optimistic view on Asean equities as a whole, particularly as Asean reopens itself to the world.

MSCI AC Asean Index contains equities from Asean-5 countries.

Reopening will be shot in the arm for Asean

While Asean had an initially slow vaccination rollout, many key Asean countries now have vaccination rates above the global average, with Singapore leading the pack. As a result, Asean is now on the cusp of a full reopening, and the number of hotel searches already far surpasses pre-pandemic levels. Even though a complete tourism rebound is unlikely due to China’s strict border controls, the low pandemic-era base should still contribute to strong growth in tourism revenues.

The improvement in tourism outlook will be a significant boost to the region’s growth momentum in 2H22. Based on World Travel & Tourism Council data, in 2019 (pre-pandemic), the travel and tourism industry contributed a notable 12 per cent of Asean’s GDP and hired 42.6 million workers which represented 13 per cent of total employment.

In other words, the expected rebound in tourism should not only have a direct effect on GDP but also an indirect effect through higher employment rates within Asean.

Thus, we expect the region’s growth to see a steady rebound from 2H22 onwards, which is in line with Asian Development Bank estimates of around five per cent GDP growth in 2022 and 2023. Historically, Asean equity prices have generally tracked the region’s economic momentum, and we expect the improving macro backdrop in 2H22 should support equity prices.

Asean equities have held up relatively well compared to peers.

Asean equities likely to see solid earnings rebound

We expect Asean equities to see a solid earnings rebound of six per cent in 2022 and 13 per cent in 2023, buoyed by the improving macro outlook. Across its 10-year history, this is relatively high as positive year-on-year EPS growth averages around 10 per cent.

On a relative basis, Asean equities are also expected to generate stronger earnings growth than most global and EM peers. Even though global earnings are starting to see profit headwinds due to rising input costs and moderating global growth, we see sufficient support for Asean equity earnings arising from factors like Asean equities’ pro-cyclical tilt; improving situation in China; and for a sustainable earnings rebound from historical lows.

First, Asean equities have heavy allocations into traditionally cyclical sectors like financials (37 per cent), which are highly levered to economic growth. When growth momentum in the region improves, earnings tend to pick up as well.

Thus, with our view of an improving macro backdrop, we expect greater earnings upside given Asean equities’ pro-cyclical tilt. From the bottom up, we expect the Asean Financials sector to form the backbone of the region’s EPS strength.

The major banks are expected to generate above long-term average EPS growth, supporting earnings for the broader index.

In addition, a positive turn in China on lockdowns and government policy could become a big upside to the Asean equities, especially as many negative factors have already been priced in through lower equity prices and reflected in weaker economic data.

This should then lead to positive spillover effects on the Asean economy and equities in a variety of ways, such as greater tourism revenue from Chinese tourists (which make up 20 per cent of Asean tourist arrivals); stronger demand for Asean exports (China is the largest single-country trading partner of Asean); and easing of supply-chain bottlenecks and shipping delays.

While the Chinese pandemic situation remains very fluid, we reiterate that the risk-reward remains very much tilted towards a positive outcome for China. With these earnings tailwinds in mind, we believe it may finally be time for Asean equity earnings to see a stronger recovery. In 2020, we saw their largest YoY EPS decline in history (minus 34 per cent), resulting in an unprecedented EPS collapse to 10-year lows across many Asean equity indices.

The subsequent EPS rebound in 2021 was relatively lacklustre on an absolute and relative basis, and Asean continues to be one of the few exceptions where EPS has not fully recovered from 2019 to 2021.

The slow recovery in Asean equity earnings was due to the severity of Covid-19, which led to significant earnings uncertainties in the region. However, as we have highlighted above, pandemic uncertainties are easing while earnings tailwinds are present. Thus, we no longer expect earnings to lag behind and see a sustainable rebound over the next two years.

Most Asean countries have above-average full-vaccination rates.

Key risk – inflation and monetary policy

Despite our optimism over the growth recovery, we note that soaring inflation and tighter monetary policy within Asean will pose as key equity risks. Inflation amongst several Asean-5 countries has picked up significantly this year and is on track to exceed medium-term inflation targets set by their respective central banks.

Central banks have already begun to tighten policy (e.g. BNM’s [Malaysia] surprise rate hike in May), while others are feeling the increased pressure to hike rates, including Philippines which has signalled two rate hikes of 25bps each by Aug 2022.

However, while we expect Asean central banks to normalise policy quicker than expected, we believe the pace of tightening will unlikely be as urgent as the US. The Asean economic recovery remains fragile, unlike the US, and that means that Asean policymakers will likely be more mindful to not derail the positive growth momentum. Furthermore, Asean-5 CPI inflation remains far from record highs unlike in the US (Chart 10), and this is partially helped by a large number of price controls on food and energy prices as well as lower services inflation within Asean-5.

Cautiously optimistic on Asean equities especially as a reopening play

To summarise, we remain cautiously optimistic on Asean equities, especially as a play on the reopening theme observed across the region. We believe the reopening will have a notable effect on Asean equities due to the latter’s pro-cyclical tilt, while our expectation of the China situation improving should also have positive spillover effects on the Asean economy and equities.

Coupled with the fact that earnings have thus far only seen a lacklustre rebound from historical lows, we believe there is further room for a stronger and more sustainable rebound over the next two years.

With that in mind, investors should note that valuations for Asean equities are marginally expensive at the moment, trading at about a three per cent premium to its 10-year historical average.

These elevated valuations were the result of the historic earnings collapse described previously, but we expect multiples to look more palatable over time if our earnings forecasts materialise. Using our target PE ratio of 16 times, we forecast an upside potential of 21 per cent by end-2024.

Source: The Borneo Post

Asean: A region of reopenings and recovery

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The global 5G network automation market is gathering momentum and expected to reach US$5 billion (about RM22.04 billion) by 2026 from approximately US$3.5 billion in 2021.

In a statement on Wednesday (June 22), Frost & Sullivan said with the 5G network moving to the cloud, the network is now software-based and requires automation to succeed operationally and financially.

Frost & Sullivan ICT industry principal Troy Morley said network automation is an essential part of 5G because it enables efficiency and cost savings for communications service providers (CSPs).

“While the entire 5G network will benefit from network automation, the most significant growth opportunity lies within the 5G RAN, where CSPs invest the largest portion of their capital expenditures and operating expenditures (opex),” he said.

Morley said with nearly 70% of infrastructure spend, slight improvements in the RAN due to network automation would lead to significant payback for CSPs, particularly concerning opex.

“Further, the new architecture of the 5G RAN has opened the market to many new suppliers bringing in specialists in machine learning and artificial intelligence,” he said.

Source: The Edge Markets

Global 5G network automation market expected to hit US$5 billion by 2026

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The rise of e-commerce and the logistical nightmare created by the Covid-19 pandemic have caused a surge in demand for warehouse space in the United States, and big investment funds have taken note.

“It’s been a tremendous struggle to find the appropriate location for clients,“ said Michael Schipper of Blau & Berg, a commercial real estate specialist in New Jersey and New York.

Available space has been dwindling steadily for a year and a half, and the vacancy rate is now 3.4 percent, although developers delivered 90 million square feet of new warehouse space in the first three months of the year, according to commercial real estate firm Jones Lang LaSalle.

Demand is so strong that purchase prices have tripled or quadrupled in just six years in northern New Jersey.

Nationally, average rental costs have jumped 22 percent in two years, according to analytics firm Beroe.

“Demand for space from logistics and distribution activities driven by e-commerce industry” is the major factor in the US market, according to Beroe, which notes that demand has exceeded supply for 18 months.

In addition, unlike traditional storage sites, fulfilling online orders requires technologically advanced warehouses, said Mark Manduca, chief investment officer at GXO, a supply chain management company.

Beroe said this equipment, which requires massive investments, allows firms “to improve warehouse efficiency and to speed up warehouse activities to meet the same-day delivery demands.”

Pioneered by Amazon, other retailers were obliged to scramble to catch up to the new standard of immediate delivery set by the Seattle-based online sales giant.

In recent years, a lot of those companies have been rapidly ramping up their own e-commerce efforts, Manduca said.

“Those are the people that are really driving that demand for last mile warehousing,“ he said.

The demands of instant delivery have forced many sellers to acquire multiple storage locations to get closer to customers, especially in urban areas where real estate was already expensive.

The coronavirus pandemic accelerated that trend, as e-commerce sales surged by 56 percent between early 2020 and early 2022.

A correction coming?

Another pandemic effect was the logistical mess caused by Covid-lockdowns and health restrictions.

That revealed storage capacity “in the wrong place, supply chain issues, and more recently, inventory rebuilds that have kind of almost overshot to a certain degree,“ Manduca said.

To address those issues, he says, many companies are “now looking at facilities closer to home, which is naturally increasing the demand for warehousing,“ he said.

Amid the rise in demand, private equity firm Blackstone has invested heavily in the sector, and currently owns $170 billion worth of warehouses. It now rivals Prologis, the world’s number one.

“We’re also now seeing a surge in corporations increasing inventory holdings to mitigate supply chain issues” and are therefore looking for additional storage space, Blackstone President Jon Gray said in April.

Other private equity giants, such as KKR, Carlyle, Apollo or Sweden’s EQT have all bought sites to ride the wave.

But Schipper cautions that while the warehousing industry “has a long term positive trajectory, … I think that there needs to be a pause.”

“You cannot run up in parabolic fashion forever,“ he said, noting that the current tightening of credit conditions also could play a role.

One sign of a possible correction coming: Amazon’s decision to sublet or renegotiate the rent for 30 million square feet of warehouse space.

“You’re going to see demand for space go down and rental rates will stop going up at the pace that they’re going up. There’s just not any way around it,“ Ward Fitzgerald, chief executive of EQT Exeter Property Group, warned in the Wall Street Journal.

“They’ll continue their trajectory maybe 12 months from now, but … there’s going to be a correction.”

While demand could keep rising for some time, Schipper said, “The question really is how much? And for how long?

“I don’t think anybody knows the answer.”

Source: AFP

Warehouse business catches fire, boosted by pandemic, e-commerce

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Global government IT spending is forecast to increase 5% year-on-year to US$565.7 billion in 2022.

In a statement on Monday (June 13), technology and consulting firm Gartner Inc director analyst Daniel Snyder said the last few years of enduring pandemic challenges have mobilised a wave of digital transformation activities in government organisations across the world.

Gartner said that in 2022, government IT spending is forecast to increase across all segments except internal services and telecom services.

It said continuing the trend from 2021, software is forecast to record the strongest growth across all segments in 2022.

It said as legacy modernisation continues to be a priority in government organisations, growth in the data center systems segment will continue to slow through the forecast period.

Gartner said governments continue to invest in critical application software that directly support end-user interfaces driving strong growth in this segment.

It said spending on telecom services is set to decrease in 2022 as governments reduce spending on expensive legacy systems in favour of digital service delivery models.

The firm said anything-as-a-service (XaaS) is gaining popularity across government organisations as it provides better return on investment, normalising IT spend over time, making budgeting for IT more predictable while avoiding the accrual of technical debt.

Gartner predicts that by 2026, most government agencies’ new IT investments will be made in XaaS solutions.

Snyder said the pandemic sped up public-sector adoption of cloud solutions and the XaaS model for accelerated legacy modernisation and new service implementations.

“Fifty-four percent of government CIOs responding to the 2022 Gartner CIO Survey indicated that they expect to allocate additional funding to cloud platforms in 2022, while 35% will decrease investments in legacy infrastructure and data center technologies,” he said.

Worldwide Government IT Spending, 2021-2022 (Millions of US Dollars)

 2021 Spending2021 Growth (%)2022 Spending2022 Growth (%)2023 Spending2023 Growth (%)
Data Center Systems25,0857.326,1374.226,6421.9
Internal Services68,241-2.168,188-0.170,7673.8
IT Services191,84110.7204,2066.5220,9978.2
Telecom Services69,1901.167,102-3.067,1930.1

Source: Gartner (June 2022)

Source: The Edge Markets

Global government IT spending to grow 5% to US$565.7b in 2022, says Gartner

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Global fab equipment spending for front-end facilities is expected to increase 20% year-on-year (y-o-y) to an all-time high of US$109 billion in 2022.

In a statement on Monday (June 13), the US-based Semiconductor Equipment Materials International (SEMI) said this marked a third consecutive year of growth following a 42% surge in 2021.

SEMI in its latest quarterly World Fab Forecast report said fab equipment investment in 2023 is expected to remain strong.

SEMI president and CEO Ajit Manocha said the global semiconductor equipment industry remains on track to cross the US$100 billion threshold for the first time.

“This historic milestone puts an exclamation point on the current run of unprecedented industry growth,” he said.

By region

SEMI said Taiwan is expected to lead fab equipment spending in 2022, increasing investments 52% y-o-y to US$34 billion, followed by South Korea at US$25.5 billion, a 7% rise, and China at US$17 billion, a 14% drop from its peak last year.

It said Europe/Mideast is forecast to log record high spending of US$9.3 billion this year and, while comparatively smaller than outlays in other regions, its investments would represent a staggering growth of 176% y-o-y.

Taiwan, South Korea and Southeast Asia are also expected to register record-high investments in 2023.

In the Americas, the report shows fab equipment spending reaching US$9.3 billion in 2023, a 13% y-o-y rise following a 19% y-o-y increase in 2022, with the region retaining its fourth-place ranking both years in worldwide fab equipment spending.


The SEMI World Fab Forecast report shows the global industry increasing capacity by 8% this year after a 7% rise in 2021.

Capacity growth is expected to continue in 2023, rising 6%.

The fab equipment industry last saw a y-o-y growth rate of 8% in 2010, when it topped 16 million wafers per month (200mm equivalents) — nearly half of the 29 million wafers per month (200mm equivalents) projected for 2023.

Over 85% of equipment spending in 2022 will stem from capacity increases at 158 fabs and production lines, a proportion expected to edge down to 83% next year as 129 known fabs and lines add capacity. 

SEMI said that as expected, the foundry sector, with a share of about 53%, will account for the bulk of equipment spending in 2022 and 2023, followed by memory at 33% in 2022 and 34% in 2023.

It said the two sectors also account for the largest capacity increases.

Source: The Edge Markets

Global fab equipment spending to hit record US$109 bil in 2022, says SEMI

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Digitisation will be the main driver of economic recovery in Asean following the devasting Covid-19 pandemic, said World Economic Forum (WEF) panellist and QI Group executive chairman Datuk Seri Vijay Eswaran on June 13.

He noted that in 2021, the number of internet users in Asean grew by over 10% to 400 million people, and almost 70% of Asean’s population is now online — well above the global rate of 60%.

“The region’s digital economy is now valued at over US$100 billion (RM439 billion).

“However, for many Asean residents, expensive or poor internet quality or digital devices, lack of digital skills, as well as trust and security concerns prevent them from fully reaping their fair share of benefits from an inclusive digital economy,” he said in a statement.

As such, Vijay opined that Asean needs to upskill its workforce quickly to tackle barriers to digital adoption, and noted the urgent need for further upskilling and reskilling initiatives to ensure that the digital generation is equipped for a post-pandemic world and beyond.

“To drive digital transformation and to accommodate the new normal, businesses must quickly work with forward-thinking vendors or businesses that can successfully and securely facilitate digital transformation today and prevent obstacles tomorrow,” he added. 

Source: Bernama

Asean must upskill, reskill for digitalisation

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The ASEAN region will continue to be a supportive and attractive investment destination in the long term as its young population promises a vibrant economy, backed by primary economic sectors that include commodities, plantations as well as oil and gas. 

UOB Asset Management Malaysia chief executive officer Lim Suet Ling said that being the fourth largest economy with over 600 million people, ASEAN has grown to be more educated and has an advantage as one of the biggest manufacturers in the global supply chain.

“And with the COVID-19 lockdowns in China, there is diversification (in supply chain) and I think Malaysia is benefitting from it especially on the electronic and electrical (E&E) side.

“On foreign direct investments (FDIs), we are relatively cheaper than China, thus we believe the FDIs will continue to come in for diversification,” she said in a panel session at the Invest ASEAN 2022 titled ‘Markets and Smart Money: Fight or Flight’ today. 

However, to enhance Malaysia’s position as a preferred investment destination, Lim hopes to see more Internet unicorns appearing or being listed.

She stressed that trade agreements among ASEAN countries could also be strengthened by forging deeper collaboration to create better investment opportunities. 

On investing, Lim advised investors be more defensive while staying cautious in their holdings for the time being amid a slowing down on interest rates hike expectation by the US Federal Reserve (Fed).

Lim also noted that they could move more towards utilities or assets that has regular income. 

“Other growth sectors include tourism and medical related stocks. But we are not only looking at bigger caps, but also the smaller and undervalued ones as we believe there are opportunities that are yet to be discovered,” said Lim. 

Maybank Islamic Asset Management chief investment officer Muhammad Riduan Jasni said in the same panel session that the performance of sukuk issuance is more resilient from bond as the growth for the shariah industry is overwhelming following the higher awareness among the Muslim countries.

“The sukuk performance is decent with the Islamic benchmark to outperform the conventional benchmark as the investment becomes more attractive.

“You can see a lot of demand coming from corporates, the pension funds, and this will definitely help drive growth for the industry,” he said.

Therefore, he said, the action will encourage the stability and growth of the Islamic investment industry in Malaysia.

Source: Bernama

ASEAN continues to be attractive for long-term investment

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Global semiconductor industry sales were rose 21.1% year-on-year in April 2022 to US$50.9 billion from US$42 billion a year earlier, said the US-based Semiconductor Industry Association (SIA).

In a statement on its website on Monday (June 6), SIA said the figure was 0.7% higher than the March 2022 total of US$50.6 billion.

Monthly sales are compiled by the World Semiconductor Trade Statistics (WSTS) organization and represent a three-month moving average.

SIA president and CEO John Neuffer said global semiconductor sales have increased by more than 20% on a year-to-year basis for 13 consecutive months, indicating consistently high and growing demand for semiconductors across a range of critical sectors.

“High global chip demand will necessitate more semiconductor research, design, and manufacturing in the years ahead, and we urge leaders in Washington to enact innovation and competitiveness legislation that ensures more of this chip production and innovation occurs on U.S. shores,” he said.

SIA said sales were up compared to April 2021 in the Americas (40.9%), Europe (19.2%), Japan (18.5%), Asia-Pacific/all others (18.1%), and China (13.3%).

It said month-to-month sales increased in the Americas (3.1%), Japan (1.6%), and Asia-Pacific/all others (1.2%), but fell slightly in China (-0.6%), and Europe (-3.3%).

Source: The Edge Markets

Global semiconductor sales rose 21.1% y-o-y in April to US$50.9 billion, says SIA

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Members of the Asia-Pacific Economic Cooperation (APEC) are intensifying coordination to develop measures that promote the uptake of new-technology vehicles in a bid to meet climate commitments and to realise the APEC Putrajaya Vision 2040.

In his remarks at the APEC Automotive Dialogue, deputy director-general of Thailand’s Office of Industrial Economics Krit Chansuwan said in line with the bio-circular-green (BCG) economy model as part of APEC 2022 priorities, the region’s auto industry should seize the momentum and push ahead with its net zero and low emission commitment to contribute to economic recovery and address global environmental concerns.

“While electric vehicles have been the go-to solution for the auto industry to achieve a net zero or low-carbon future, we need to remember that each APEC economy is unique, therefore, we need multiple approaches to achieve our climate commitments.

“Both policymakers and industry players recognise the critical role of policy because without it, the industry will not be able to fast-track technology deployment and make the necessary transition,” he said.

He said APEC member economies have made notable progress in the past years in transitioning to electric vehicles through the redevelopment of regulatory regimes, common standards and targets to encourage the shift to a low-carbon-vehicles option.

“More needs to be done as member economies race to achieve their commitment of reducing global carbon dioxide emissions by 45 per cent, from 2010 levels, by 2030.

“Officials and industry experts deliberated policies to reduce the price of new-technology vehicles, looking at tax credits, subsidies and rebates, among others,” he said.

He added that officials and experts recognised the urgent need to incentivise innovation, research and development, manufacturing and recycling the components of new-technology vehicles such as batteries and semiconductors.

APEC officials and senior auto industry representatives convened in Bangkok last week for the APEC Automotive Dialogue to deliberate on the benefits of environmental and vehicle safety regulatory cooperation, convergence and harmonisation in advancing trade facilitation as well as promote connectivity in the region.

The APEC Automotive Dialogue is a forum for industry and government to discuss a broad range of issues that affect auto trade.

The dialogue will continue collaborating with other APEC groups such as the Energy Working Group and Transportation Working Group to identify and integrate new and emerging sustainable transportation and mobility technology and services.

Source: Bernama

APEC auto industry accelerates update of new technology vehicles

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Leveraging advances in electronics and digital trade could support Southeast Asia’s recovery from the Covid-19 pandemic, according to Asian Development Bank (ADB).

In the report entitled “Post Covid-19 Economic Recovery in Southeast Asia”, ADB highlighted that the regional economy rebounded to 5.9% from a flat growth in 2020 and it projected an expansion of 4.7% this year.

“Recovery prospects in Southeast Asia are encouraging, but not without persistent risks, including heightened uncertainty from the Russian invasion of Ukraine and the evolving conflict, the emergence of coronavirus variants and the scarring effects of the pandemic through large employment and education losses, production disruptions and fragile business confidence, and declining productivity growth.

“Supporting industries with the competitive advantage to propel a green, resilient, and inclusive recovery will not only require sector-specific interventions by governments, but cross-cutting measures that encourage an enabling business environment, improved infrastructure, and stronger intra-regional linkages,” said ADB director general for Southeast Asia Ramesh Subramaniam.

Meanwhile, the report also highlighted that the outbreak has posed new challenges for the tourism industry and it constitutes approximately 20% of Southeast Asia’s gross domestic product.

ADB suggested restoring tourism demand through strong marketing campaigns, safer travel standards, more diversified tourism offerings, better paid and more skilled workers, and stronger crisis management response to build industry resilience.

On digital trade, ADB foresaw a strong growth potential in the region post pandemic.

“Much of the region’s digital trade now concentrates on digital marketplaces and information technology and business process outsourcing (IT-BPO), while software development is picking up in some countries.

“As demand for digital products and services grows, it is important to enhance digital connectivity, invest in logistics and distribution facilities, develop an IT–BPO road map, support skills development and training, and rethink digital regulations to protect consumers,” it said.

Source: The Edge Markets

Digital trade, technology could aid Southeast Asia’s recovery from the pandemic, says ADB

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The United States’ (US) investments and trade in Southeast Asian (SEA) countries would be a boon for economic interaction, said Singapore Institute of International Affairs senior fellow Dr Oh Ei Sun. 

He said many SEA countries are looking to secure US investments during the two-day ASEAN-US Special Summit, especially after battling the aftermath of the COVID-19 pandemic in the past two years. 

“If the US is trying to make us (SEA countries) to be more pro-US, then I think more investments with the region will be a good move,” he said during Bernama TV’s ‘The Brief’ news programme today. 

Oh also said that the summit, slated to start on Friday (Malaysian time), will likely discuss China-US relations and the geopolitical tension between Russia and Ukraine. 

He opined that the US is likely to push the region to adopt a more stringent stand against Russia with regard to the war in Ukraine. 

ASEAN leaders, with the exception of the Philippines and Myanmar, are scheduled to participate in the special summit.

Subsequently, a Joint Vision Statement — which would underscore the commitments and aspirations to enhance ASEAN-US partnership in the interest of peace, stability, security and shared prosperity for all — can be expected following the conclusion of the high-level meeting.

The special summit marks the 45th anniversary of the ASEAN-US dialogue and the second special summit hosted by a US president in the US after then-president Barack Obama welcomed ASEAN leaders in California back in Feb 2016.

Prime Minister Datuk Seri Ismail Sabri Yaakob will lead the Malaysian delegation to the ASEAN-US Special Summit in Washington D.C. from May 12 to 13.

Malaysia is expected to garner RM14.62 billion in new investments from the US following the Trade and Investment Mission led by Senior Minister and International Trade and Industry Minister Datuk Seri Mohamed Azmin Ali.

Source: Bernama

US investments in SEA countries creates better economic interaction – analyst

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Global semiconductor revenue is projected to total US$676 billion in 2022, an increase of 13.6% from 2021.

Technology and consulting firm Gartner Inc research vice president Alan Priestley in a statement on Tuesday (April 26) said the semiconductor average selling price (ASP) hike from the chip shortage continues to be a key driver for growth in the global semiconductor market in 2022, but overall semiconductor component supply constraints are expected to gradually ease through 2022 and prices will stabilise with the improving inventory situation.

He said that overall, the outlook for global semiconductor revenue has been increased from the previous quarter’s forecast by US$37 billion to US$676 billion.

He said automotive applications will continue to experience component supply constraints — particularly in microcontrollers, power management integrated circuits and voltage regulators — extending into 2023.

Slowing growth in PCs, smartphones and server end markets is expected to gradually slow down the growth of semiconductor revenue as semiconductor supply and demand gradually comes into balance during 2022, he said.

Semiconductor revenue forecast, worldwide, 2021-2023 (billions of US dollars)

Revenue ($B)595.0676.0700.5
Growth (%)26.313.63.6

Source: Gartner (April 2022)

Chip shortage

Gartner said the chip shortage will continue to be a concern for the supply chain of electronics equipment in 2022 and will have different effects in major electronic equipment markets depending on different semiconductor device types.

It said most semiconductor shortages eased in PCs and smartphones as production moved into the off season combined with increased semiconductor supply into the market. However, some semiconductor device types will continue to be in shortage in the automotive supply chain through late 2022.

Priestley said although unit production of automotive vehicles will grow below expectation at 12.5% in 2022, semiconductor device ASPs are expected to remain high due to continued tight supply driving the automotive semiconductor market to double-digit growth (19%) in 2022.

“Automotive HPC, EV/HEV and advanced driver assistance systems will lead the growth in automotive electronics sectors through the forecast period,” he said.

Memory market

Gartner said the memory market will remain the largest semiconductor device market through the forecast period and is projected to account for 31.4% of the overall semiconductor market in 2022.

It said DRAM and NAND are expected to be in undersupply in the second quarter of 2022.

Gartner said the NAND market will enter oversupply in the fourth quarter of 2022, while DRAM is expected to move into oversupply in the second half of 2023.

The combination of megabyte shipments and higher annual ASPs this year will sustain revenue growth for both markets in 2022, with projected growth of 22.8% for DRAM and 38.1% for NAND.

Migration to 5G

Semiconductor revenue for smartphones is forecast to increase 15.2% in 2022, as 5G smartphone unit production is expected to grow by 45.3% in 2022, reaching 808 million units and representing 55% of all smartphones produced.

Aggressive migration from 4G to 5G from major smartphone chipset vendors has temporarily led to a shortage in 4G system-on-chip integrated baseband ICs which began in the second half of 2021.

Rising 5G-integrated baseband IC inventory will result in declining prices for 5G smartphones and accelerate the penetration of 5G further through the forecast period.

Source: The Edge Markets

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