Malaysian bonds stay attractive – foreign holdings at 25%

INVE$T #58 | Market Sentiments – 21 May 2021


According to Securities Commission (SC) chairman Datuk Syed Zaid Albar, Malaysian bonds continue to attract interest, with foreign holdings amounting to 25% of outstanding government bonds. As at end April 2021, foreign investment in the government bond market stood at RM232bil. In his keynote address at the MARC virtual Malaysian bond and sukuk conference themed “Riding the Wave” he noted the SC has long recognised the role of private debt securities as a source of funding, particularly for large-scale, long-term projects. It also increases private sector participation in economic development. According to the Asian Development Bank, in gross domestic product (GDP) terms, the three largest bond markets in Asia are Japan, followed by South Korea and Malaysia. Given the outlays required for infrastructure development, opportunities abound for the Malaysian bond and sukuk markets to continue to be a major funding source for nation building initiatives. This, however, is not unique to Malaysia. In fact, 79% of the respondents to the 2020 Global Infrastructure Index believe that infrastructure investments will be one of the main drivers that will create new jobs and boost their economies. At end2020, the domestic bond market grew to RM1.6 trillion (government bonds constituting 53% and corporate bonds 47%) despite the challenging environment, up from RM1.49 trillion as at end2019. While this augers well for the country’s recovery and future growth, more needs to be done for growth to be sustainable. There was a need to broaden the credit spectrum to include smaller bond issuers, given the significant contribution of MSMEs (micro, small and medium enterprises) to GDP and employment. The challenge is adapting the bond and sukuk markets to provide cost-effective means for small and lower-rated issuers to raise funds to meet their growth and expansion plans. This is particularly important because the greater or more inventive use of traditional assets alone will not be enough to foster better growth. Securitisation transactions embedded with the necessary safeguards had the potential to be a valuable financing tool, transforming illiquid assets into liquid and tradable assets.

Malaysia’s economic performance doesn’t depend only on Covid-19, MCO impact: MARC research head

According to Malaysian Rating Corp Bhd (MARC) head of economic research Firdaos Rosli, Malaysia’s economic performance depends largely on internal and external factors, and not only on how the Covid-19 pandemic and the movement control order (MCO) play out. There have been narratives by economists and opinion makers that the country’s economy is dependent on the MCO, given its impact on business activities and the economy in general. However, it is not really dependent on the pandemic per se as all economic sectors are open, even with the MCO in place. He was presenting on ‘Economic Report & Capital Market Outlook 2021’ at the MARC Malaysian Bond and Sukuk Conference 2021. We are seeing that economic activities are running as usual, and that will give some rebound compared to what it was in the previous year. Externally, the performance of Malaysia’s economy is linked to its major export markets. Major trade partners such as the US and the UK have ramped up their Covid-19 inoculation drive, which will translate into heightened demand for Malaysian exports, particularly for electrical & electronic and petroleum products. There has not been much communication on the government’s medium to long-term economic action plan as it is busy fighting the pandemic. There is the need for signals on policy since the pandemic differs from the Asian and the global economic crises in the past, which were due to financial and trade factors. This crisis is non-financial and non-export led, which means that as the balloon is squeezed, the economy will still be in contraction mode. The country will see continued positive growth in the future as the government eases the restrictions. On foreign direct investments (FDI) in equities, the foreign investors have left the market, but in the debt market there has been a healthy inflow since the start of the year. However, for manufacturing FDI, it is a completely different perspective altogether. As far as incentives are concerned, what Malaysia has been offering are generic, whether it is pioneer status or tax perks, as there is nothing it can offer that its neighbours cannot. To gain a competitive edge, there has to be something “magical” that the government can offer to attract such investments. The country can examine the trade agreements which it has participated in but has yet to ratify, such as the Comprehensive and Progressive Transpacific Partnership and the Regional Comprehensive Economic Partnership, to obtain such advantage. While this would be one way to look at it, the other is the autonomous liberalisation route, similar to what was done in the 1980s following the commodity crisis, where liberalised foreign equity in manufacturing allowed 100% equity to foreign manufacturers. But such a move will require indepth policy justification. On the possibility of more stimulus measures, his educated guess was that they will be related to the social security net, particularly with regard to employment and the job market. This was in reference to Finance Minister’s statement that the reason behind the government’s decision to keep the economy open was primarily to address the unemployment rate. Noting that in the past, the unemployment rate following a crisis is responsible for projecting the country’s growth trajectory in the post-crisis era. The country would likely see slow growth in private consumption if it is not able to contain the unemployment rate this time around. However, he is not sure that more cash handout is the answer as people are likely to turn it into savings but it is left to be seen what the government has in store.

Eye On The Markets This week

On Thursday (20May), the Ringgit was 4.1443 against the USD from 4.1310 on Monday (17May). Meanwhile, the Ringgit was 3.1085 to the Sing Dollar on Thursday (20May). On Monday (17May), the FBM KLCI opened at 1577.49. As at Friday (21May) 10:00am, the FBM KLCI is down 12.42 points for the week at 1565.07. Over in US, the overnight Dow Jones Industrial Average closed up 188.11 points (+0.55%) to 34,084.15 whilst the NASDAQ added 236.00 points (+1.77%) to 13,535.74.

Malaysia’s economy further improving in Q2 – Statistics Dept

Invest #59 | Market Sentiments – 28 May 2021


Inve$t #59 | Market Sentiments – 28 May 2021

According to the Department of Statistics Malaysia (DoSM) chief statistician Datuk Seri Dr Mohd Uzir Mahidin, Malaysia’s economy is expected to further improve in Q2 2021 especially on the back of a low base as the economy contracted 17.1 per cent in the second quarter of 2020, based on the performance of several key economic indicators. However, the recovery is also highly dependent on the extent to which the infection of Covid-19 could be brought under control and the consequence of movement control order (MCO) 3.0 with tightened standard operating procedures for the economic sectors and social aspects. Further to this, the leading index (LI) for March 2021 achieved strong growth at 17.3 per cent, mainly due to the low base effect of March 2020 following a nationwide lockdown and the better performance of LI components. Taken together, the LI performance and the current state of Covid-19 outbreak, it seems that the near term economic prospect is encouraging but prevailing challenges persist. The utmost commitment in easing the current pandemic situation is vital so as to regain the economic momentum in the upcoming months. Malaysia’s economic situation, gross domestic product (GDP) declined marginally by 0.5 per cent in Q1 21, continuing its recovery from a contraction of 3.4 per cent in the preceding quarter. The improvement was supported by the expansion in the manufacturing sector, the rebound of the agriculture sector and the better performance recorded by all economic sectors compared to the last two quarters. Malaysia’s economy in this quarter gradually recovered as more economic activities were allowed to operate following MCO 2.0, less stringent than the MCO 1.0 imposed in March 2020. Various stimulus packages introduced also steered the economic recovery and cushioned the potential economic losses of this country. Adding to this, the encouraging economic environment during Q1 2021 was largely driven by the better performance of key economic indicators in March 2021. Malaysia’s current account balance continued to record a surplus registering RM12.3 billion in the Q1 2021 compared to RM18.6 billion in the previous quarter, contributed by the positive momentum of the net exports of goods. Whereas foreign direct investment recorded a higher inflow of RM9.1 billion against RM6.8 billion in the preceding quarter owing to higher inflow in equity and reinvestment of earnings and lower inflow in debt instruments. Concurrently, direct investment abroad by Malaysian companies has also increased, gaining from the reopening of the global economy, posting RM7.8 billion in Q1 2021 from RM5.2 billion in the preceding quarter due to the high investment in equity abroad and retained earnings in this quarter. Meanwhile, Malaysia’s trade continued to rise, with total trade recording a double-digit increase of 14.8 per cent year-on-year (y-o-y). In line with this, Malaysia’s trade balance remained surplus at RM58.6 billion. In terms of the labour market, amid targeted measures to manage the Covid- 19 pandemic in the country, uneven recovery momentum in the labour market was observed as the number of employed persons decreased slightly y-o-y by 0.04 per cent to 15.24 million persons while the unemployment rate remained high above four per cent registering 4.8 per cent in the Q1 2021. From the view point of labour demand, the number of jobs in the economic sector decreased marginally as filled jobs declined while vacancies posted a small increase. Overall, the labour market remains in a challenging situation as it has not returned to the way it was during pre-Covid times.

Malaysia to see 6% to 7.5% GDP growth in 2021 if Covid-19 can be stabilised — Mustapa

According to Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed, Malaysia can achieve its 2021 gross domestic product (GDP) growth target of between 6% and 7.5% if the Covid-19 health crisis can be stabilised after the eventual lifting of the Movement Control Order (MCO 3.0). The availability of vaccines and a comprehensive vaccination rollout for Malaysians would have a positive impact on the country’s economy. If assuming that the percentage of Malaysians vaccinated goes according to schedule or can be accelerated, while the Covid-19 situation can be placed under control, then we will be able to see a positive decline in infections. And this will definitely have a positive impact on the position of the Malaysian economy. The Leading Index (IP) surged 17.3% in March 2021, much higher than an increase of 8.2% in January and 8.6% in February. The good performance was in line with the country’s GDP growth of 6% in March 2021. This growth momentum would be affected if the government decided to implement full-scale movement restrictions from May 25 to June 7, 2021. Full-pledged movement restrictions will cause the unemployment rate to rise sharply, the number of poor households will increase, the performance of small and large companies will be affected, and the fiscal position will be in a more challenging condition. During an engagement with industry representatives, micro, small and medium enterprises, and hawker associations on May 22 and 23, 2021, most of them agreed with the government’s decision to implement MCO 3.0.

Eye On The Markets This week

On Thursday (27May), the Ringgit was 4.1390 against the USD from 4.1425 on Monday (24May). Meanwhile, the Ringgit was 3.1257 to the Sing Dollar on Thursday (27May). On Monday (24May), the FBM KLCI opened at 1563.78. As at Friday (28May) 10:00am, the FBM KLCI is up 19.66 points for the week at 1583.44. Over in US, the overnight Dow Jones Industrial Average closed up 141.59 points (+0.41%) to 34,464.64 whilst the NASD

Banks maintain strong capitalisation levels

INVE$T #60 | MARKET SENTIMENTS – 04 June 2021

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According to Bank Negara in its Monthly Highlights – April 2021 report, all banks remained well-capitalised to withstand potential shocks and to continue supporting credit flows to the economy. Banks’ excess capital buffers amounted to RM124.2bil as at April 2021. The banking system’s asset quality also remained sound. Overall gross and net impaired loans ratios were sustained at 1.6% and 1.0%, as impairments moderated slightly during the month. However, banks continued to set aside additional provisions against potential credit losses, which currently stand at 1.7% of total banking system loans. Net financing expanded by 4.9% in April, reflecting the increase in outstanding corporate bond growth which stood at 7.7% versus 5.9% in March, while outstanding loan growth was sustained at 3.9% for both March and April. Outstanding household loan growth increased to 6.2% (March: 5.7%) as loan disbursements grew at a higher pace compared to loan repayments across most purposes. Businesses’ outstanding loan growth moderated to 0.4% (March: 1.1%), mainly reflecting lower growth in loans for working capital purpose. Domestic financial market conditions improved in April amid a confluence of external and domestic factors. Domestic bond yields moderated amid positive investor sentiments driven by Malaysia’s retention in the FTSE Russell World Government Bond Index and the decline in longer-term sovereign bond yields in most advanced economies after the sharp increase earlier in the year. Specifically, the 10-year Malaysian Government Securities yield declined by 12.2 basis points during the month. The ringgit appreciated by 1.3% against the US dollar supported by portfolio inflows to the domestic bond market and broad weakening in the US dollar. The FBM KLCI increased by 1.8%, supported mainly by the healthcare sector amid concerns surrounding the global and domestic resurgence of Covid-19 cases. Malaysia’s headline inflation rose to 4.7% in April versus 1.7% in March due to higher domestic fuel prices. Headline inflation is expected to temporarily spike in the second quarter, and moderate thereafter as the base effect subsides. Underlying inflation, as measured by core inflation, remained stable at 0.7%. Exports expanded further by 31.0% in March versus 17.6% in February, driven primarily by robust manufactured exports.

Banks to continue providing assistance – affected borrowers should contact their lenders

According to the Association of Banks in Malaysia (ABM), member banks will continue to offer financial assistance to borrowers affected by the latest movement control order (MCO) amid the Covid-19 pandemic. Any individual customers who have lost employment are eligible for financial assistance under the Targeted Repayment Assistance (TRA) programme. Customers who have lost their employment are eligible for loan deferment (moratorium) for a period of three months or 50% reduction in the monthly instalment payment for a period of six months. Currently, member banks of ABM offer financial assistance under the TRA programme, which has been in place since Oct 1, 2020. Meanwhile, customers who have experienced a reduction in income including household income are also eligible for a commensurate reduction in monthly instalments. B40 borrowers who are registered under Bantuan Sara Hidup (BSH) or Bantuan Prihatin Rakyat (BPR) are eligible to opt for this specific repayment assistance. Micro-enterprises with loan facilities of not more than RM150,000 can also opt for this repayment assistance. Moreover, micro-enterprises can also request for assistance through Agensi Kaunseling dan Pengurusan Kredit’s (AKPK) dedicated micro business helpdesk at microhelpdesk. The virtual helpdesk provides free financial advice and facilitates applications for repayment assistance. Moving forward, the TRA programme has been expanded to include all small and medium enterprise (SME) businesses that are not permitted to operate during the latest MCO. All affected borrowers including individuals, micro-enterprises and SMEs who wish to avail of this latest TRA only need to contact their respective banks to indicate which option they want to choose. The banks will automatically approve all selections by borrowers that fulfil the relevant criteria. Also member banks have made it convenient for borrowers to opt for financial assistance by simplifying the process for the TRA programme. In view of the movement restrictions, affected borrowers can also opt for the financial assistance package at bank branches, online or over the phone. Customers should check their respective banks’ websites for information on any changes in operating hours and over-thecounter services. Meanwhile, according to Bank Negara, borrowers’ central credit reference information system (CCRIS) records would not be affected by the TRA programme received this year. Hence, borrowers need not worry about the impact on their future credit profile. All affected borrowers, including SMEs, are urged to come forward and contact their banks via the banks’ official channels to discuss the best options available. As a reminder, borrowers are to be wary of scammers and apply for financial assistance through official bank channels. It also cautioned borrowers not to deal with any third parties claiming to be agents or representatives of banks with regards to repayment assistance. Member banks do not appoint or engage third parties or agents for purposes of the repayment assistance. Under the TRA programme, banks have received 1.6 million applications, of which 95% have been approved up till March 26, 2021.

Eye On The Markets This week

On Thursday (3Jun), the Ringgit was 4.1225 against the USD from 4.1290 on Monday (31May). Meanwhile, the Ringgit was 3.1127 to the Sing Dollar on Thursday (3Jun). On Monday (31May), the FBM KLCI opened at 1571.04. As at Friday (4Jun) 10:00am, the FBM KLCI is up 7.15 points for the week at 1578.19. Over in US, the overnight Dow Jones Industrial Average closed down 23.34 points (-0.07%) to 34,577.04 whilst the NASDAQ shed 141.82 points (-1.03%) to 13,614.51.

Upcoming Mid Year Market Outlook

Market Outlook 2H 2021 – PROFITING FROM RECOVERY



Market Outlook 2H 2021


Date: 3 July 2021 [Saturday]
Time: 9:30 a.m. – 12:30 p.m.

The global economy is expected to recover now that mass vaccinations are being rolled out. This Show-Me-The-Money Market Outlook webinar will focus on the opportunities in 2H 2021 for investors. Join us for this free event by registering below:


  • Market Overview and Behind The Action – Sectors to Look Out For – Pankaj C. Kumar
  • Riding The Waves of Opportunities in 2H 2021 – Kong Seh Siang – CGS-CIMB Securities
  • Technical Market Outlook with the TAD System – Fred Tam and Afnan Firdaus – F1 Academy

Followed by a Fireside Chat session moderated by Mr. Pankaj with Q&A session.


Govt channelling RM5.08b to micro SMEs under GKP, payment of RM1.5b starts on June 10

Market Sentiments | INVE$T #61

Download INVE$T #61

According to Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz, a total of RM5.08 billion has been allocated and will be channelled to nearly one million micro small and medium enterprises (micro SMEs) under the Geran Khas Prihatin (GKP) to tide over their difficulties since Covid-19 hit the country. The government hopes the direct assistance channelled to the micro SMEs will ease their burden, especially those affected by the implementation of the Movement Control Order (MCO) 3.0. Under PEMERKASA, announced on March 17, 2021, the government decided to provide GKP 3.0 of RM1,000 to more than one million micro traders to ensure the continuity of their business, especially in managing their cash flow. The government gave a similar commitment under PEMERKASA Plus, which was unveiled on May 31, 2021, where an additional amount of RM500 would be disbursed, increasing the total payment to RM1,500 for each micro SME to help them navigate through MCO 3.0. This means the total payment of GKP 3.0 is RM1.5 billion. He was pleased to inform that nearly one million micro SMEs involving existing recipients of MCO 1.0 and MCO 2.0, as well as micro SMEs that have been approved under MCO 3.0, will receive a payment of RM1,000 from June 10 (Thursday) in stages involving financial implications of almost RM1.0 billion. The payment will be credited directly to the bank account registered in the GKP system and the approval status can be checked from June 8, 2021 at the following link https://gkp.hasil. An additional payment of RM500, involving an allocation of almost RM500 million, will be paid in July 2021 bringing the total amount under GKP 3.0 to RM1.5 billion.

Bursa Malaysia warns of investment scams impersonating legitimate institutions

According to Bursa Malaysia Bhd, investors are advised to be on high alert to protect themselves and others from becoming victims of investment fraud. It has recently observed an increase in the number of scams involving the misuse of the Bursa Malaysia name and corporate logo. In times of uncertainty, such as the current COVID-19 pandemic, scammers try to lure victims into participating in dubious investment schemes and activities. They often use unlicensed or unregistered companies, websites and promotional material that mimic legitimate financial institutions to deceive the investing public. Investment scams typically carry the Bursa Malaysia name and logo on marketing-related materials and social media postings, offering high investment returns with a guarantee of little or no risk. Investors are directed to ‘spoof’ websites and phone numbers set up by scammers, these fake websites look nearly identical to the actual sites of legitimate financial institutions. Calls to the phone numbers provided reach the scammer who pretends to be an employee who will then direct investors to transfer funds to an account with a different name. Hence, it reminded the public to invest only with licensed parties. An updated investor alert list of unauthorised websites, investment products, companies and individuals, is available at Bursa Academy at https://www. en/sc- investor-alert. Additionally, investors should verify the information and not rely on unsolicited marketing materials. Investors should also compare and confirm websites or social media pages. Fake websites or social media pages will often have odd-looking (or low resolution) logos that do not match the legitimate company’s logo. Investors should also avoid unusual payment methods and seek independent, professional advice. Be suspicious of unsolicited investment offers made online, on social media or over the phone. Bursa Malaysia said it does not engage third-party agents to represent it. If you receive unsolicited and or suspicious communications relating to or claiming to be agents of Bursa Malaysia, we recommend contacting us directly at 03-2732 0067 or via e-mail at bursa2u@ to authenticate the content of any such communication.

Eye On The Markets This week

On Thursday (10Jun), the Ringgit was 4.1185 against the USD from 4.1200 on Tuesday (8Jun). Meanwhile, the Ringgit was 3.1082 to the Sing Dollar on Thursday (10Jun). On Tuesday (8Jun), the FBM KLCI opened at 1581.44. As at Friday (11Jun) 10:00am, the FBM KLCI is down 4.43 points for the week at 1577.01. Over in US, the overnight Dow Jones Industrial Average closed up 19.10 points (+0.06%) to 34,466.24 whilst the NASDAQ added 108.58 points (+0.78%) to 14,020.33.

It’s All Transitory

Behind The Action: Pankaj C Kumar – Friday, 11 June 2021


According to the US Treasury Secretary and former Fed Chair, Jenet Yellen, while inflationary pressure is likely to persist and continue on a y-o-y basis, it is not permanent. She also commented that the US should push for the US$4 trillion spending plan, a move that will see not only higher inflation into next year but also higher interest rates. At the same G7 summit, finance ministers entered into a landmark decision that will pave the way for the imposition of a minimum global corporate tax of at least 15%. Locally, EPF announced a stellar 1Q 2021 performance with gross investment income rising by 59% y-o-y to RM19.29bil, with 74% of the income derived from its equity exposure. Interestingly, EPF also revealed that it had to-date approved RM57.97bil in i-Sinar withdrawals for 6.49mil members, while under the i-Lestari facility, RM20.8bil has been paid out to 5.27mil members.


The May 2021 Institute for Supply Management (ISM) for the Non-Manufacturing sector rose to 64.0 from 62.7 in the preceding month. Investors’ focus this week was obviously on inflation readings, both from the US and China. US Consumer Price Index (CPI) for May came in at its fastest pace in 13 years with a jump of 5% y-o-y, ahead of market expectations of a 4.7% rise, while the core inflation rate jumped 3.8% y-o-y against a forecast of 3.5% increase. Meanwhile, China’s May 2021 CPI increased by 1.3% y-o-y but the Producer Price Index (PPI) surged 9% y-o-y, a fresh 13-year high. On external trade, Chinese exports for May 2021 came in 27.9% higher y-o-y but imports surged 51.1%, which was the highest in more than 10 years. China’s trade balance with the US remains in its favour as the May trade surplus came in at US$31.8bil, up 13.1% from April’s surplus of US$28.1bil. Locally, Bank Negara revealed that Malaysia’s total international reserves as at 31-May stood at US$110.9bil, US$0.3bil higher compared with US$110.6bil as at May 12. Malaysia also reported approved investments data this week which showed foreign direct investments (FDIs) for the 1Q of 2021 leapfrogging to RM54.9bil from RM11.4bil a year ago, a jump of 383% y-o-y. In related news, Austria’s AT&S, a printed circuit board and integrated circuit substrates manufacturer, unveiled its plan to have its Southeast Asia production hub in Malaysia and with a proposed investment of €1.7bil or RM8.5bil. In other news, Malaysia’s unemployment rate for April 2021 improved by 0.1 percentage points to 4.6% while Malaysia’s May palm oil stock level rose 1.5% to reach 1.57mil tonnes as crude palm oil production increased 2.8% but exports fell by 6%.


The FBM KLCI 30-stock index will see one change that will take effect from Monday, June 21, 2021, with Mr. D.I.Y. Group (M) replacing Supermax. Meanwhile, Jardine Cycle & Carriage Limited only managed to secure 88.04% of Cycle & Carriage Bintang at the close of the offer period to take the latter private at RM2.40 per share. In other M&A activities, Kuala Lumpur Kepong (KLK) announced a deal to buy a 56.2% stake in IJM Plantations (IJMP) from its parent company, IJM Corporation at RM3.10 per share, valuing the deal at RM1.534bil. KLK will also extend a mandatory general offer to acquire all the remaining IJMP shares not already held by KLK and persons It’s All Transitory Pankaj C Kumar BEHIND THE ACTION acting in concert upon the execution of the Sale and Purchase Agreement, and the same becoming unconditional, at a cash offer price of RM3.10 per IJMP share. Top Glove meanwhile reported its 3Q FY2021 report card that missed market expectations with both revenue and net earnings falling by 22.4% and 29% to RM4.16bil and RM2.03bil respectively as the effect of lower average selling prices kicks in. Equity Global equity markets closed mixed to firmer the past week with markets that trended higher experiencing gains of between 0.1% and 1.2% while markets that fell eased between 0.1% and 0.8%. The KLCI closed the four-day trading period 0.7% lower at 1,579.90 pts. For the week, net foreign outflow amounted to RM295mil as retailers and local institutions maintained their respective net buying interest at RM271.1mil and RM23.9mil.

Eye On Week Ahead

A slew of economic data points out of the US are due next week. On Tuesday, the monthly retail sales will be out with consensus looking at a flat m-o-m growth of zero percent. On the same day, the IPI and PPI too are expected to be released while housing starts and building permits are due on Wednesday, as the market is looking at 1.57mil and 1.73mil annualized rate respectively. The most anticipated event next week is the 2-day Federal Open Market Committee (FOMC) meeting on Tuesday and Wednesday. The market anticipates no change to the US Fed Fund Rate but the Fed’s assessment of the factors that determine its rate moves and its tapering plans, if any, will be closely monitored.