e-Wallet initiative fails to lift CIMB Group and Axiata

By FARA AISYAH / Pic By TMR File

THE government’s announcement on the e-Wallet initiative, e-Tunai Rakyat programme, to subsidiaries of CIMB Group Holdings Bhd and Axiata Group Bhd failed to translate to gains in their respective share prices.

CIMB Group’s 52%-owned Touch ‘n Go eWallet and Boost, which is a wholly owned subsidiary of Axiata, announced last Friday they have been selected for the e-Wallet programme, in addition to GrabPay.

Investors were, however, unimpressed by the announcement as CIMB Group’s share price fell six sen or 1.13% to RM5.27, giving the banking group a RM52.29 billion market capitalisation.

“CIMB Group’s share price declining could be due to profittaking activities rather than anything else,” MIDF Amanah Investment Bank Bhd senior analyst Imran Yassin Yusof told The Malaysian Reserve last week.

Axiata, meanwhile, closed two sen or 0.48% higher to RM4.22, giving the telecommunication company a market capitalisation of RM38.67 billion.

Rakuten Trade Sdn Bhd research VP Vincent Lau said the price action of both counters was due to the window dressing activity by fund managers. “Last Thursday, the focus was on the banking sector which is why the share prices of the banks increased.

Last Friday, the focus was on consumer counters such as Nestle (M) Bhd, PPB Group Bhd and Dutch Lady Milk Industries Bhd.

“In addition, Touch ‘n Go is owned only by 52% so, it doesn’t benefit CIMB Group as much as Boost will to Axiata,” Lau said.

In addition, Axiata last Friday announced that Axiata Investments (UK) Ltd and Ncell Pte Ltd have been granted provisional orders by the International Centre for the Settlement of Investment Disputes (BIT Arbitration) against tax payment judgement related to its investment in Nepal.

The ruling by the tribunal granted Axiata UK and Ncell provisional measures including restraining the Nepalese government and its organs, agencies and officials, the Large Taxpayers Office (LTPO) and the Inland Revenue Department from taking any steps to enforce the demand letter served by the LTPO against Ncell dated Dec 6, 2019, that demanded Ncell to pay NPR22.45 billion (RM818.4 million) in allegedly outstanding capital gains tax in relation to the sale by TeliaSonera Norway Nepal Holdings AS to Axiata UK of 100% of the share capital of Reynolds Holdings Ltd.

The tribunal also restrained Nepal from taking any steps which would alter the status quo between Axiata UK, Ncell and the country or aggravate the present dispute.

“We view this positively as this could help to resolve the investment disputes in Nepal and removes the risk of provision in the coming quarter. As our RM4 target price only suggesting a 5% downside from the current price, we upgrade our rating to ‘Neutral’,” Public Investment Bank Bhd analyst Eltricia Foong said in a note last week.

Finance Minister Lim Guan Eng said in a statement the implementation of the e-Tunai Rakyat initiative is on track for launch in January 2020.

The RM450 million one-off digital stimulus announced by the Ministry of Finance under Budget 2020 aims to accelerate the use and adoption of e-Wallets and digital payments among Malaysian consumers and merchants.