Short Position – Electric Vehicle Assembly Plant, Betting on Change, Market Collapsing


electric vehicle assembly plant

THIS week, Melaka Chief Minister Datuk Seri Sulaiman Md Ali (file photo) said his state would soon see a massive investment of RM 1 billion by a company seeking to build the first assembly plant of electric vehicles (EV) in the country.

The investment will be made by local company Fieldman EV Sdn Bhd, which was established in 2018 to research renewable energy resources that can be imported into Malaysia, according to information published on its website.

He says he has a plan underway to bring the very first EV taxi to Malaysia.

The project is planned to be built on 200 ha in the industrial zone of Elkay Lipat Kajang in Jasin.

The chief minister also said that Fieldman EV has obtained the exclusive distribution rights for electric vehicles in Malaysia and Southeast Asia from Chinese company Changan Automobile Corp.

Changan is an established automaker, one of the Big Four in China, and has joint ventures with Mazda and Ford.

It is not yet clear whether the manufacturing plant will assemble Changan’s electric vehicles.

The electric vehicle factory is expected to create 5,000 jobs and a downstream industry for local players.

The news is clearly positive with electric vehicles being all the rage these days.

However, the electric vehicle industry, while booming, is not easy to explore.

Critics say electric vehicles will not have an easy route to enter the Malaysian market.

One of the reasons is that cheap fuel is still popular with Malaysians.

Second, there will always be concerns from users about ‘range anxiety’ – worry about how far away one can use an EV before needing to charge it, and the availability or absence of charging stations.

Although electric vehicles enjoy tax exemptions in Malaysia, there are still no subsidies to purchase them, as in some countries like China, Japan and the West.

Finally, Malaysians are constantly worried about the used value of their cars and this could hurt EVs.

That said, electric vehicles do have their appeal. It is often said that electric vehicles are better in terms of fuel efficiency, performance, convenience, maintenance and lower taxes, and that they are also greener with much lower emissions.

It is clear that the Fieldman EV project will be one that will be closely watched.

Focus on change

It IS the start of a new year and already the local banking fraternity has seen changes in human capital within the industry.

Are industry shifts a sign that both banking and deal-making are on the road to recovery?

Without a doubt, 2021 has been an “exceptionally difficult year” for the investment banking (IB) industry, according to Asia Money.

Lagging behind pre-pandemic levels, IB activity in Malaysia was fairly subdued last year, not thanks to the uncertain and murky outlook for the pandemic.

Bankers say most investors took a wait-and-see stance last year, hoping to strike deals in a more stable political and economic environment.

Its closest neighbor, Singapore, however, did relatively well.

IB activities in the city-state, according to reports, raised more than US $ 1 billion or some RM 4.2 billion in 2021, a jump of more than 34% from 2020 even as merger and acquisition (M&A) operations reached a record level.

Investment bankers in Singapore walked away with substantial bonuses.

Their employers, however, said they paid these people to “retain talent” and not just to “reward” them.

Back in Malaysia, it remains to be seen whether new appointments and new moves in the industry can make a difference in the fortunes of those who hired them.

RHB Investment Bank Bhd this week appointed Harris Ishak, formerly of CIMB Investment Bank, as the new regional head of mergers and acquisitions.

It was also announced that Malayan Banking Bhd Group President and CEO Datuk Seri Abdul Farid Alias ​​will not seek renewal of his contract which expires August 1 of this year.

It remains to be seen who will succeed Farid and where he will evolve.

There is no doubt that there will be more changes to come as the banking industry prepares for a completely different landscape this year.

The market is patiently waiting to see which parties get the five digital banking licenses that are expected to be distributed in the coming months.

The market sparkles

TWENTY twenty-two is a rough start. Foreign participation in Malaysian stocks is at an all-time low and the volume and value of trade has shrunk significantly from the rebound in the recovery we saw in 2020, fueled by low interest rates and liquidity. .

With the market now returning to pre-pandemic levels, this will not be good for the market and businesses that will rely on a warm market to make things happen.

Typically, a vibrant stock market is a barometer of what is going on economically in a country.

Some would say this is a leading indicator and when a market is hot business starts to materialize.

Businesses will also be emboldened to make scalable decisions that will typically increase investment, risk taking and hiring which will then translate into other aspects of the real economy.

But with the market sluggish and on a streak where it has had more years down than years up in recent times, a sense of aimlessness is starting to permeate the market.

Having foreign investors is the key.

They are claimed to be the fifth gear in the market and often add to the sizzle of any sustainability in the stock market.

But with shareholding now at its lowest, it increases the risk that Malaysian stocks will be a game of merry-go-round for large institutions and even individual interest, which is already starting to ebb compared to the frothy period after the first check. of movement. orders and stimulus plans have been announced.

The reality is that these factors should serve as a wake-up call for Malaysian companies to make the changes necessary to attract foreign interests and regain the confidence of local investors.

If the market becomes consistently sluggish, it will likely perpetuate Malaysian investor interest elsewhere, be it overseas markets or even cryptocurrencies.

Such an event would make it even more difficult for listed companies to regain favor with investors near and far, and will have lasting implications for the future of the domestic stock market.


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