Exports boost for economy
Stronger ringgit to drive auto stocks
Mohd Irwan: Malaysia's 2017 GDP growth can hit 5%
CYBERJAYA: Malaysia's economy can grow 5% or more this year, based on the country's first-half performance, said Treasury Secretary-General Tan Sri Dr Mohd Irwan Serigar Abdullah.
"The country's economy is performing well, and I personally think we can achieve 5% or more in GDP growth, backed by the strengthening economic environment, the increase in exports and investments, and job creation.
"We also see the oil price stabilising at between US$47 and US$50 per barrel, and I think the ringgit will be getting better," he said, commenting on a recent Bloomberg report, "The Ringgit Is Easily Asia'ss Strongest Currency", which said the ringgit was the most stable major Asian currency during the first quarter of this year.
Malaysia's economy recorded 5.6% in the first quarter of this year, boosted by strong domestic demand and private expenditure.
Mohd Irwan, who is also chairman of the Malaysian Global Innovation and Creativity Centre (MaGIC), was speaking to reporters after launching MaGIC's Global Accelerator Programme in Cyberjaya on Tuesday.
He said Malaysia's economy was never "in doom and gloom", and that the economic slowdown was due to the volatility in oil price and global market sentiment.
Asked if Malaysia would revise the GDP projection, Mohd Irwan said, the Government was meeting with the Economic Planning Unit (EPU) and Bank Negara to see whether there was a need to revise it in Budget 2018, scheduled to be tabled on Oct 27.
Yesterday, Prime Minister Datuk Seri Najib Tun Razak said in his blog posting that Malaysia was able to record achievements that it could be proud of despite challenges such asthe global market uncertainty and falling oil prices.
He said that overall, the country's economic performance for the first quarter of 2017 remained stable and strong, expanding by 5.6%, with foreign direct investment rising to RM17 billion.
Source - Bernama
Ringgit higher versus US dollar on Monday
KUALA LUMPUR: The ringgit opened higher on Monday following the bearish sentiment in the market for the US dollar after the release of its first-quarter gross domestic product (GDP) data last week, a dealer said.
At 9am, the ringgit traded at 4.2900/2970 against the greenback from 4.2920/2950 on Friday.
The dealer said at the beginning of this year, the Donald Trump-fuelled US dollar rally left the currency vulnerable to heavy losses and after six months, the greenback still lacked strong and fresh catalysts.
The US released its better-than-expected GDP data last week which showed that the US economy advanced 1.4%. Corporate profits, however, declined despite the upbeat data.
Overall, investors remained focus on central banks' intentions to tighten monetary policies.
Against a basket of major currencies, the ringgit traded mixed.
It rose against the Singapore dollar to 3.1155/1210 from 3.1181/1220 on Friday and strengthened against the yen to 3.8194/8267 from 3.8328/8365.
The local note fell against the British pound to 5.5787/5904 from 5.5757/5801 and eased slightly against the euro to 4.8970/9055 from 4.8963/8015 on Friday.
Ringgit is Asia's strongest currency
KUALA LUMPUR: Malaysian assets are back in favour as investors focus on encouraging signs of an economic turnaround instead of a scandal that has touched the top of government and as far as Hollywood.
The stark shift means that Prime Minister Datuk Seri Najib Tun Razak, who has weathered political attacks and protests going back to 2015 over allegations involving state-owned 1Malaysia Development Bhd., may call an early election to cement his hold on power.
The ringgit is easily the strongest major Asian currency this quarter, climbing more than twice as much as the next best, the Chinese yuan. Global funds have bought the most Malaysian stocks year-to-date since the same period in 2013, and net inflows to the bond market surged in April and May.
Malaysia has been rocked by far-reaching investigations into investment fund 1MDB, yet double-digit acceleration in the country’s exports has lifted the economy, which grew 5.6% on-year in the first quarter, the most since early 2015.
“As long as we see improvement on the macro data with the support of global conditions and stable energy prices, we will keep our cautiously positive stance for Malaysia,” London-based Aksoy said.
Overseas investors have purchased US$2.48bil of Malaysian equities this year, the biggest stock inflow in Southeast Asia. The FTSE Bursa Malaysia index hit its highest in two years on June 16 as technology, banks and construction shares soared.
Samsung Asset Management is buying Malaysian banking, property and construction stocks on bets the government will pump prime ahead of the election, according to Hong Kong-based fund manager Alan Richardson. Meanwhile, it’s paring technology and commodity-related holdings.
“Domestic cyclicals will outperform while global cyclicals will underperform,” Richardson said. This is due to “a combination of global monetary stimulus and domestic early election stimulus.”
The stock market’s gains came as the ringgit rebounded from a 19-year low. After missing out on an earlier rally in regional currencies, it strengthened as growth quickened and concerns eased over an earlier move by the central bank to deter currency speculators.
Bond investors have also returned. Malaysian debt securities drew more than RM16bil (US$3.7bil) in April and May after recording the longest stretch of outflows in two years. The yield on 10-year notes has fallen 56 basis points to 3.9% since reaching an eight-year high in November.
Still, not everyone is convinced. Nomura Holdings Inc. is underweight on Malaysian stocks, citing expensive valuations and doubts that the growth momentum can be sustained.
“I find it difficult to justify buying Malaysia’s genuine story while ignoring the risks on valuations and also the existing risk that the Malaysian market comes with,” said Mixo Das, Nomura’s Southeast Asian equity strategist in Singapore. “The market probably goes up a bit more till the election, but what happens after it?”
A general election isn’t due until mid-2018, but there’s growing speculationthat Najib will call for polls this year with growth holding up and the opposition parties racked by infighting. The premier said earlier this month that preparations for the election were going well.
The economic outlook has helped to counter headlines involving 1MDB, which is at the center of money-laundering allegations and probes in several countries. The U.S. Justice Department is seeking to recover US$1.8bil in assets it says were bought with funds misappropriated from 1MDB.
Complaints filed in a U.S. court alleged that from 2009 through 2015 more than US$4.5bil belonging to 1MDB was diverted by officials of the fund and their associates. Najib, who until last year was the chairman of 1MDB’s advisory board, has denied wrongdoing and was cleared by Malaysia’s attorney general.
For Schroder Investment Management Ltd., economic factors trump politics when investing in Malaysian bonds. It also favors the ringgit due to the nation’s positive outlook.
“Key considerations are improving fiscal dynamics, dynamics around central bank policy, attractive economic policies, sensitivity to developed market and China developments,” said Manu George, a Singapore-based fixed-income director at the firm. - Bloomberg
Source: The Star
Ringgit seen stabilising further on weakening US dollar
Malaysia’s CPI up 3.9%
Source: The Star
Malaysian bank credit profiles stable amid growing challenges
PETALING JAYA: A combination of slower growth and higher leverage in Malaysia increases credit risks for the country’s banks, S&P Global Rating said.
“Malaysia’s economic expansion shifted to a lower gear two years ago, and the momentum has not returned. A weak energy sector, subdued global demand, and tightened domestic spending continue to drag on growth,” said S&P Global Ratings credit analyst Rujun Duan.
Meanwhile, however, corporate and household indebtedness has been steadily rising in an environment of low interest rates and easing credit conditions.
“In 2016, the Malaysian banks we rate reported weak earnings growth, and we expect their full year profitability to remain sluggish in 2017,
“A weakening bank earnings trend comes on the back of slower loan growth, tight margins, and weakening asset quality in a few areas, such as commodities-related overseas loan portfolios and household credit.
“In addition, banks face potential risks due to their exposure to industries with structural or cyclical difficulties, such as commercial real estate and automobiles.
“Heightened leverage in households and the corporate sector, low commodity prices, and oversupply in commercial property add to asset-quality
vulnerabilities,” she said.
The international rating agency said in its view, however, a number of counterbalancing factors support Malaysian banks credit profile.
Industry-wide impaired loan ratios are hovering around a historical low of 1.6%. Capital and liquidity buffers are more than ample to absorb increased stresses.
Separately, it believe prudential measures implemented by the regulators and tighter underwriting standards enforced by banks will also help to keep credit risks at bay.
Heightened volatility in the Malaysia’s exchange rate has a limited direct impact on the country’s banks. This is because ringgit assets make up the bulk of bank balance sheets in Malaysia, and foreign currency liabilities are well matched by foreign currency assets.
Prudent oversight from the regulator also helps to mitigate the relevant risks, S&P Global noted.
Despite the clear merits of a more consolidated banking sector for Malaysia, the research agency said a number of stumbling blocks could make consolidation a protracted process, especially in a slowing growth environment. Obstacles include difficulties in extracting synergies from deals, or agreeing on retrenchments and restructuring.
Source: The Star
Ringgit marginally higher at opening
KUALA LUMPUR, June 13 — The ringgit opened marginally higher this morning on higher interest for the local currency, a dealer said.
At 9am, the local unit was quoted at 4.2630/2670 against the greenback from last Friday's 4.2635/2665.
FXTM Research Analyst Lukman Otunuga said caution still lingered in the air as traders were alert of macroeconomic events that could spark extreme volatility in the market.
“With political uncertainty in the United States and soft economic data weighing heavily on the US dollar, the outlook remains tilted to the downside,” he said.
Lukman noted that investors were still questioning US President Donald Trump's impeachable offence by sharing classified information with Russia and attempting to interfere with US-Russia relations.
Against a basket of major currencies, the ringgit was traded lower except against the British pound.
It slipped marginally against the Singapore dollar to 3.0798/0838 from 3.0795/0827 and depreciated versus the yen to 3.8755/8805 from 3.8615/8653 last Friday.
The local unit edged up to 5.3987/4042 from 5.4291/4351 compared with the British pound and declined against the euro to 4.7716/7769 from 4.7628/7674 last Friday.
The foreign exchange market was closed yesterday for the Nuzul Al-Quran public holiday. — Bernama
Source: Malay Mail
Malaysia’s exports still grow at a robust pace
Expansion due to strong E&E demand, higher commodity prices