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GOLD rose, holding above $5,000 an ounce for a second day, as a weak dollar helped to extend a rally fueled by geopolitical risks and investor flight from sovereign bonds and currencies.

Bullion jumped as much as 1.1% early on Tuesday, its seventh straight day of gains. A gauge of the dollar fell to the lowest in nearly four years during the previous session, making gold more affordable for most buyers, while US President Donald Trump threatened to hike tariffs on South Korean goods to 25%.

Gold’s dramatic rally – the metal has more than doubled over the last two years – drives home bullion’s historic role as a gauge of fear in markets. Fresh from its best annual performance since 1979, it’s gained a further 17% so far this year due largely to the so-called debasement trade, whereby investors retreat from currencies and Treasuries. A massive selloff in the Japanese bond market is the latest example of investors rejecting heavy fiscal spending.

In recent weeks, the Trump administration’s actions — attacks on the independence of the Federal Reserve, threats to annex Greenland, military intervention in Venezuela — have also shaken markets. The US leader’s warning to South Korea follows a threat to Canada over the weekend to impose 100% tariffs if Ottawa makes a trade deal with China.

Options traders are betting gold will rally further as investors diversify from American assets. Implied volatility of Comex gold futures climbed to the highest since the peak of the Covid-19 pandemic in March 2020, while volatility on State Street’s SPDR Gold Shares — the world’s largest gold-backed exchange-traded fund — has also broken out higher.

Looking ahead, investors will also be keeping a close tab on the Federal Reserve’s actions on Wednesday, with the US central bank widely expected to halt its rate-cutting cycle as a steadier jobs market restores a degree of consensus after months of growing division.

Gold rose 0.9% to $5,051.50 an ounce as of 8:15 a.m. in Singapore. Silver advanced 3.6% to $107.49 an ounce, having hit an all-time high above $117.71 in the previous session before retreating. Platinum and palladium climbed, while the Bloomberg Dollar Spot Index was flat after falling 0.4% in the previous session. –BLOOMBERG

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MALAYSIA’S corporate bond market is expected to remain robust in 2026, with gross issuance projected at RM130 billion to RM140 billion, following a record-breaking year in 2025.

The Malaysian corporate bond market saw a record high in issuances last year, with gross issuance totalling RM174.4 billion from 205 issuers, significantly exceeding the RM124.2 billion registered in 2024, which involved 171 issuers.

The financial sector once again led the market, contributing RM57.6 billion, followed by the real estate sector with RM27 billion.

“We expect corporate bond financing to remain strong in 2026, albeit at a more moderate level than 2025,” RAM Rating Services Bhd said.

“Gross issuance is projected to reach RM130 billion-RM140 billion, still above the historical average (2017-2024) of around RM122 billion, supported by financial institutions’ capital raising plans, continued refinancing activities amid favourable rates, infrastructure funding needs and the positive market momentum carried over from 2025,” the rating agency added.

In the government bond space, gross issuance of Malaysian Government Securities (MGS) and Government Investment Issues (GII) eased to RM168.5 billion in 2025 from RM176.7 billion the previous year.

Issuance is projected to rise to RM175 billion to RM185 billion in 2026 due to increased refinancing needs for maturing debts.

However, net supply next year is expected to be lower because of a smaller government deficit financing requirement.

Foreign investor participation in the Malaysian bond market strengthened markedly last year, with foreign net inflows jumping to RM25.6 billion from RM4.8 billion in 2024, marking the largest inflow since 2021.

The inflows were concentrated in April at RM10.2 billion and May at RM13.4 billion, driven by expectations of the US Federal Reserve’s (Fed) rate cuts.

“We expect foreign investor demand for Malaysian bonds to stay healthy in 2026, backed by resilient domestic economic conditions and global monetary easing prospects, which should enhance the yield differential in favour of ringgit bonds,” the report said.

The report added that the timing and pace of US monetary policy adjustments will continue to drive global fund flows.

“Given increasing signs of economic weakness in the US, we expect the Fed to cumulatively reduce rates by at least 50 basis points (bps) by year end,” RAM Ratings stated.

It noted that, “as we expect the Overnight Policy Rate (OPR) to stay unchanged at 2.75% this year, Fed cuts will help further improve the attractiveness of Malaysian bonds.” — TMR

• This article first appeared in The Malaysian Reserve weekly print edition

The post Corporate bond issuance at RM130b-RM140b in 2026 appeared first on The Malaysian Reserve.

The stock faced a brutal sell-off on Jan 19, plummeting as much as 65% or 29 sen to a 3-year low of 15.5 sen

by RUPINDER SINGH

SMRT Holdings Bhd’s market capitalisation more than halved a week ago following a scathing report by Hong Leong Investment Bank Bhd (HLIB Research), which projected a potential revenue shortfall from its primary contributor, Tenaga Nasional Bhd (TNB).

The stock faced a brutal sell-off on Jan 19, plummeting as much as 65% or 29 sen to a three-year low of 15.5 sen.

The drop brought the counter within just one sen of hitting its 30-sen limit down threshold.

The volatility prompted Bursa Malaysia to suspend Intra-day Short Selling (IDSS) shortly after the opening bell on Jan 19; trading resumed at 8:30am on Jan 20.

SMRT emerged as the most actively traded stock on the exchange, with 186.2 million shares changing hands.

The Wipeout

Before the downgrade, SMRT entered the week with a market capitalisation of about RM203 million, based on its Jan 16 closing price of 44.5 sen.

At its intra-day low of 15.5 sen on Jan 19, the group’s valuation briefly shrank to roughly RM71 million, translating into a wipeout of about RM133 million in shareholder value from its Jan 16’s peak.

As of the morning of Jan 20, the stock showed signs of stabilising, trading 2.7% higher at 19 sen, which lifted its market capitalisation to around RM87 million — representing a total loss of RM116 million in shareholder wealth over two trading sessions.

The catalyst for the rout was HLIB Research’s decision to slash its target price (TP) for SMRT by nearly 75% to 32 sen from RM1.24 and downgrade the stock from ‘Buy’ to ‘Sell’.

The research house cited a sharp slowdown in deployment activity for TNB, which underpinned previous growth projections for the group’s wireless connectivity business.

“This came as a negative surprise and indicates a sharp earnings reset, given that c38% of group earnings were previously driven by one-off deployment revenue,” HLIB Research said.

“The anticipated step-down in TNB’s contribution invalidates our prior ‘Buy’ thesis.”

HLIB Research noted that SMRT, through its subsidiary N’osairis Technology Solutions Snd Bhd (NTS), provides end-to-end wireless network connectivity solutions.

In the first quarter of 2026 (1Q26), around 38% of group earnings came from one-off deployment projects, with the remaining 62% contributed by recurring managed services.

“We estimate that >90% of the one-off component is attributable to TNB,” the research house said.

Management has guided that site deployments are expected to fall to fewer than 100 sites from financial year 2027 (FY27) onwards, compared to a historical run rate of about 3,000 sites.

“As a result, upcoming TNB deployments are likely to be immaterial relative to historical run rates, suggesting a steep decline in one-off revenue from this customer going forward,” HLIB Research said.

HLIB Research subsequently cut FY26F, FY27F and FY28F earnings forecasts by 18%, 41% and 44%, respectively and rebased SMRT’s valuation multiple to eight times price-to-earnings (PER) from 20 times previously.

“Our previous ‘Buy’ thesis on SMRT was anchored on earnings upside from TNB, driven by a large pool of unconnected sites and TNB’s Smart Grid rollout.

“With new site deployment now expected to slow materially, our earlier thesis is no longer intact,” the research house said.

Contracts Remain Intact

In response, SMRT issued a clarification on Bursa Malaysia, referring to an article published by a local business daily on Jan 19, stressing that its contracts with its major customer remain intact, and that concerns raised relate only to a potential slowdown in future one-off deployment revenue.

“For clarity, the company’s IT services revenue is derived from two business activities,” SMRT said. These comprise “one-off revenue from new deployments” and “recurring revenue from managed services”. It explained that for new deployments, “the company designs communication system, supplies the necessary hardware and carries out configuration and integration work to deploy the communication system at customer’s sites”.

For managed services, the company stated that once deployment is completed, it provides 24/7 service, monitoring and technical support on the communication systems throughout the duration of the contract, typically spanning three to five years after deployment and subject to renewal.

SMRT stated that “the company’s contracts with its major customer for both the above-mentioned business activities remain in place”, adding that “the statements in the article relate only to a possible slowdown in future one-off revenue from new deployments”.

The company clarified that despite this, its existing managed services contracts with its major customer continues to generate recurring revenue, and the managed services business activity remains the its largest revenue generating business activity.

Regarding the expected slowdown, SMRT said it “anticipates a possible slowdown in one-off revenue from new deployments due to a possible increase in number of companies within the space of such deployment services”.

But it also stressed that “whether the possible slowdown in revenue of the company actually materialises, is dependent on the volume of new deployment contracts that the company receives from its major customer”.

Looking ahead, SMRT said it will continue tendering for new deployment contracts with its major customer while continuing to provide managed services to existing sites, noting that its managed services contracts continue to generate recurring revenue and remain in place.

The group also highlighted overseas expansion, stating that its revenue from foreign customers has grown by approximately 63% from FY23 to FY25, supported by managed services and deployment activities in Indonesia and the Philippines.

SMRT further pointed to its strategic technology collaboration and engagement agreement with Kuasa Aktif Sdn Bhd, saying that “the rationale for the collaboration agreement and gaining access to the patented technology is to explore the possibility of incorporating additional technology solutions to the company’s deployment services”, with the aim of improving efficiency and broadening connectivity.

“By incorporating patented technology, the company’s deployment services may also become more exclusive and defensible, given that they will be patent protected,” it said.

However, SMRT cautioned that it is unable to quantify the impact to its revenue from FY27 onwards, as this depends on the timing and volume of future deployment contracts awarded to

Limited Alternatives, Valuation Reset

Meanwhile, HLIB Research noted that alternative growth avenues, including the financial services industry and early-stage penetration into Indonesia’s power sector, could provide some diversification, but are unlikely to fully offset the earnings shortfall from TNB in the near term.

“While growth from financial service industry and early-stage penetration into Indonesia’s power sector could provide alternative earnings drivers, we see limited scope for these to fully offset the near-term earnings gap from TNB,” it said.

HLIB Research also noted that SMRT’s collaboration with Kuasa Aktif “offers longer-term optionality via IP-protected solutions but has yet to yield a commercial product for TNB”.

In light of the weaker earnings outlook, HLIB Research rebased SMRT’s valuation to eight times PER, down from 20 times previously.

“We downgrade the stock to ‘Sell’ (from ‘Buy’) with a lower TP of 32 sen (from RM1.24), as earnings visibility deteriorates amid an expected sharp step-down in TNB’s contribution,” the research house said.

• This article first appeared in The Malaysian Reserve weekly print edition

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