Immediate increase in minimum wage may reverse business recovery – FMM

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According to President of The Federation of Malaysian Manufacturers (FMM) Tan Sri Soh Thian Lai, FMM has raised concerns that the immediate jump to RM1,500 for minimum wage from May 1 may result in a steep cost increase and reverse the otherwise optimistic business recovery for 2022. The increase from the current RM1,200/RM1,100 to RM1,500 represents an immediate increase of 25-36% on the basic salary which will have a tremendous knock-on effect on the overall payroll cost and have a spiralling impact on business cost that could potentially derail the economic recovery. The industry has repeatedly affirmed that it is supportive of a review of the minimum wages but based on the current economic factors where the business environment continues to be fragile, a progressive adjustment with a RM150 increase in 2022 and a further increase of RM150 in 2023 to reach the RM1,500 minimum wage would be more manageable for the industry. The small and medium enterprises (SMEs), especially those in the suburban areas would be most impacted by this sharp rise in wage cost given that only the micro-enterprises will be exempted for a period of eight months until December 2022. The economy would also see an immediate monthly outflow of close to RM500 million with the repatriation of funds by foreign workers (based on 1.6 million legal foreign workers) with no direct positive impact on the local economy. As it is, the industry is facing an influx of cost increases as businesses continue to rebuild their performance to the pre-pandemic levels, including raw materials cost, logistics cost, and higher energy prices due to the rising commodity prices. Ultimately, the increase in minimum wages is going to further push cost of production and lead to greater inflationary pressures. 

Near-term economic growth momentum to ease based on February’s Leading Index – DOSM 

According to Department of Statistics Malaysia (DOSM) chief statistician Datuk Seri Dr Mohd Uzir Mahidin, Malaysia’s Leading Index (LI) recorded a healthier month-on-month (m-o-m) trend in February 2022, increasing to 110.8 points from 110.1 points in the preceding month. However, the annual LI showed a slower performance at negative 0.5%, signifying that near-term growth momentum would ease amid continued economic recovery. This was influenced by cautious investor sentiment in the stock market which was reflected by the downtrend in the Bursa Malaysia Industrial Index, backed by the healthcare and utilities indices during the month. On the m-o-m LI increase of 0.5% in the reference month, this was mainly contributed by growth in real imports of other basic precious and other non-ferrous metals (0.6%), real imports of semiconductors (0.4%) and Bursa Malaysia Industrial Index (0.2%). The LI is a predictive tool used to anticipate economic upturns and downturns in an average of four to six months ahead. The ongoing international crises have exerted further pressure on global economic growth through trade, inflation and financial markets, which in turn could disrupt the growth prospects of the Malaysian economy. Pertaining to current economic perspective, the Coincident Index sustained its growth by expanding 6.4% to 120.4 points in February 2022, from 113.2 points a year earlier. 

Bursa Q1 net profit falls 44% as revenue slides from pandemic high 

Bursa Malaysia Bhd’s net profit fell 44% to RM67.97 million in the first quarter ended March 31, 2022 from RM121.39 million reported in the same quarter of the previous year, attributed to a lower operating revenue due to a decline in securities trading revenue. Revenue for the quarter stood at RM165.3 million, a 29.4% drop from RM232.28 million reported previously. The securities market segment saw a 40.2% decline in profit to RM104.4 million in Q1’22 from RM174.6 million Q1’21 due to lower revenue, while its derivatives market segment posted a RM12.9 million profit for the quarter from RM11.6 million reported previously on the back of higher revenue. In addition, Bursa’s exchange holding company saw a lower loss of RM4.3 million for the quarter against RM5.1 million reported previously due to lower corporate social responsibility expenses and its others segment saw a 22% hike in profit of RM2.1 million from RM1.7 million. Its overhead rose by 12.3% to RM22.5 million from RM20 million in Q1’21 mainly due to higher depreciation and amortisation of assets. 

According to Bursa CEO Datuk Umar Swift on the results, he pointed out that the average daily trading value of securities continued to normalise to pre-pandemic levels which contributed to the decline in profit for the quarter. However, profit after tax is 4.6% higher than the fourth quarter ended Dec 31, 2021 of RM65million, mainly contributed by a 2.8% higher average daily trading value registered this quarter. However, with the reopening of the economy and international borders, Bank Negara Malaysia expects Malaysia’s growth forecast to be between 5.3% to 6.3%. As such, better economic growth can be expected as the nation moves towards the endemic phase, and we anticipate more trading opportunities for investors due to movements in CPO prices, interest rate policies and the FBM KLCI. To sustain the interest of global investors, the bourse will continue to enhance the attractiveness of listed issuers through initiatives such as the Public Listed Companies Transformation programme launched earlier this year. Further, and in line with the Sustainable and Responsible Investment and environmental social governance agendas, the exchange will continue to deliver new product and service offerings as well as the new voluntary carbon trading platform, which will enhance the breadth and depth of the ecosystem. 

Eye On The Markets 

This week, on Friday (29Apr), the Ringgit opened at 4.3630 against the USD from 4.3335 on Monday (25Apr). Meanwhile, the Ringgit was 3.1500 to the Sing Dollar on Friday (29Apr). On Monday (25Apr), the FBM KLCI opened at 1599.38. As at Friday (29Apr) 10:00am, the FBM KLCI is down 1.85 points for the week at 1597.53. Over in US, the overnight Dow Jones Industrial Average closed up 614.46 points (+1.85%) to 33,916.39 whilst the NASDAQ added 382.60 points (+3.06%) to 12,871.53. 

 

Capital market stakeholders should align focus, assess impact to best cater to needs – SC 

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According to Securities Commission Malaysia (SC) executive director (Islamic capital market development) Sharifatul Hanizah Said Ali, while the Malaysian capital market is set to benefit from the projected domestic economic recovery, it is essential for the stakeholders to align focus and assess the impact to deploy different approaches and initiatives that best cater to the market’s needs. The SC has produced the Capital Market Master Plan 3 (CMP3), a five-year strategic plan for the growth of Malaysia’s capital market. The strategic initiatives over the next five years will be guided by key development and regulatory priorities. These strategic thrusts focus on catalysing competitive growth, empowering investors for a better future, and shaping a stakeholder economy, whilst embedding shared accountability, prioritising efficiency, and outcomes, as well as embracing technology. She said this in her keynote address at the ninth Malaysian Financial Planning Council e-Conference. The SC aims to facilitate a conducive environment to support investor empowerment and elevate financial literacy in line with the CMP3. The Malaysian capital market has remained resilient with a 3.0 per cent growth to RM3.5 trillion in 2021 from RM3.4 trillion in 2020. Notwithstanding the various challenges brought by the fluctuating economic conditions, the capital market continued to play its critical roles in financing the economy with a notable increase in fundraising activities and encouraging the growth of the overall fund management industry. Total funds raised in the capital market remained robust, rising to RM130.9 billion in 2021 — above the five-year pre-pandemic average of RM121.4 billion. It is imperative to raise the bar on professional standards and conduct requirements to enhance professionalism in the financial planning industry. The SC issued Guidelines on Conduct for Capital Market Intermediaries on April 1, which also applies to licensed financial planners to foster good business conduct and a good corporate culture that is centred on the fair treatment of clients and to promote trust in all intermediaries. While regulation can play a role to promote the right culture, the industry must also continue to shape the right behaviours within their own organisations. To this end, it is commendable to see the industry’s harmonisation and elevation of the code of ethics and best practice standards by the relevant certification associations. 

Malaysia’s total trade soars to new high of RM236.6bln in March : DOSM 

According to the Department of Statistics Malaysia (DOSM) chief statistician Datuk Seri Dr Mohd Uzir Mahidin, Malaysia’s total trade recorded a double digit growth of 27.3 per cent year-on-year (y-o-y) in March 2022 to reach a new high of RM236.6 billion. Export and import values in March once again broke the record for all-time highs at RM131.6 billion and RM104.9 billion, respectively. Malaysia’s imports surpassed the RM100 billion mark for the first time ever, in line with the surge in intermediate goods, signifying a positive sign of domestic economic activity. Trade surplus widened by 10.3 per cent from RM24.2 billion in the preceding year to RM26.7 billion, marking 23 consecutive months of trade surplus since May 2020. Malaysia’s exports accelerated by 25.4 per cent from RM105.0 billion to RM131.6 billion, surpassing the RM100 billion mark for the seventh consecutive month since September 2021. Export value growth in March 2022 was supported by both domestic exports and re-exports. Domestic exports were valued at RM106.9 billion, contributing 81.2 per cent to total exports, picking up strongly by 22.8 per cent y-o-y. Meanwhile, re-exports amounted to RM24.7 billion, expanded by 38.0 per cent compared to March 2021. Along with the export performance, imports also registered a strong growth of 29.9 per cent from RM80.8 billion to RM104.9 billion. In comparison to February 2022, the performance of total trade, exports, imports and trade surplus showed the increases of 28.1 per cent, 28.7 per cent, 27.3 per cent, and 34.8 per cent, respectively. An outstanding annual growth in exports was portrayed in 166 out of 255 commodity groups, showing increases compared to the same month of the previous year, led by thermionic valves and tubes. As for imports, 186 of 259 groups posted a positive growth. The rise in exports was attributable mainly to higher exports to Singapore (+RM5.1 billion), followed by Japan (+RM2.1 billion), South Korea (+RM1.8 billion), the European Union (+RM1.8 billion), China (+RM1.7 billion), Taiwan (+RM1.4 billion), Thailand (+RM1.4 billion), Indonesia (+RM1.4 billion), and the United States (+RM1.3 billion). On top of that, China was a key contributor to the increase in imports, which increased by RM3.4 billion, followed by Saudi Arabia (+RM2.9 billion), Taiwan (+RM2.8 billion), Indonesia (+RM2.5 billion), Singapore (+RM2.3 billion), the United States (+RM1.4 billion), and Thailand (+RM1.2 billion). The expansion of export was driven by electrical and electronics products (+RM13.0 billion); petroleum products (+RM4.6 billion); palm oil and palm oil-based agriculture products (+RM3.1 billion); liquefied natural gas (+RM2.5 billion); crude petroleum (+RM1.6 billion); and palm oil-based manufactured products (+RM1.1 billion). Meanwhile, the rise in imports were noted for electrical and electronics products (+RM7.1 billion); crude petroleum (+RM6.1 billion); petroleum products (+RM3.0 billion); chemical and chemical products (+RM2.2 billion); machinery, equipment and parts (+RM1.6 billion); metalliferous ores and metal scrap (+RM1.2 billion); and coal (+RM1.2 billion). On the performance for the first quarter of 2022, the total trade, exports, imports, and trade surplus continued to record strong double-digit growth. The total trade went up by 23.6 per cent, supported by the expansion in exports (+22.2 per cent), as well as imports (+25.2 per cent). Consequently, trade surplus recorded a higher value of RM65.1 billion. 

Local bourse market cap down slightly in March as investors booked profit – Bursa 

According to Bursa Malaysia, the total market capitalisation of the local bourse slightly moderated to RM1.795 trillion in March this year compared with RM1.81 trillion reported in the previous corresponding month. The reduction was due to investors booking their profit in the plantation and energy sectors, subsequent to the record high commodity prices last month. Meanwhile, foreign inflows further accelerated to RM3.29 billion in March as foreign investors turned net buyers in financial services, industrial and plantation sectors. However, foreign investors emerged as net sellers in the technology, telecoms and utility sectors. In March, total average daily volume further escalated to RM2.96 billion, with strengthened trading activities among foreign and local institutional investors. In terms of stocks, counters that saw the biggest foreign inflows were Petronas Chemicals Group Bhd (RM1.1 billion), Public Bank Bhd (RM935 million), Malayan Banking Bhd (RM348 million), Kuala Lumpur Kepong Bhd (KLK) (RM345 million) and Hong Seng Consolidated Bhd (RM174 million). Foreign investors further increased their stakes in plantation stocks with a total of RM962 million inflow in March, despite the moderation in crude palm oil price after hitting its peak last month. Meanwhile, local institutions sold RM692 million worth of plantation stocks, while local retailers offloaded RM181 million in the same month. The stock exchange also highlighted selected plantation stocks, such as KLK, which saw a RM345 million inflow by foreign investors, while local institutions took profit, resulting in an outflow of RM342 million. 

Eye On The Markets 

This week, on Friday (22Apr), the Ringgit opened at 4.3060 against the USD from 4.2390 on Monday (18Apr). Meanwhile, the Ringgit was 3.1554 to the Sing Dollar on Friday (22Apr). On Monday (18Apr), the FBM KLCI opened at 1591.64. As at Friday (22Apr) 10:00am, the FBM KLCI is down 4.70 points for the week at 1596.34. Over in US, the overnight Dow Jones Industrial Average closed down 368.03 points (-1.05%) to 34,792.76 whilst the NASDAQ shed 278.41 points (-2.07%) to 13,174.65.  

KLCI 1 Year Chart

Malaysia’s economic recovery on track but risks abound – SERC 

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According to Socio Economic Research Centre Malaysia (SERC) executive director Lee Heng Guie, Malaysia’s economic recovery remains on track with a 5.2% growth forecast, but it could be dampened by prolonged supply chain disruption, persistent high inflation, and sharp slowdown in China with global stagflation pressures now a serious risk. The supply chain disruption is worsened by Russia’s invasion of Ukraine, which has induced massive negative supply and price shocks. Persistent high inflation and high oil price shock represent a double blow to the world economy that could impact growth momentum. The sharp slowdown in China and the lockdown in its major cities could have further impact on the regional supply chain and hence on Malaysia. He was speaking during SERC’s first-quarter 2022 (Q1’22) economy tracker briefing. The country’s economic recovery rides on the back of a stronger revival in domestic demand and a rebound in the services and the construction sectors. Services such as tourism, retail, transport, and aviation will see faster growth (6.1%) on border reopening and pent-up demand amid increased operating costs and other risks including climate change, stagflation and geopolitical tension. The construction sector is estimated to see 6.5% growth due to ongoing large infrastructure projects and small-scale projects. Private consumption is estimated to see a 6.5% growth due to Employee Provident Fund withdrawals as well as a recovery in income and employment, but inflation and living cost concerns will dampen consumer sentiment. The labour market is gradually recovering with the unemployment rate in February 2022 at 4.2% compared with 5.3% in May 2020. Private investment (5.0% growth) continues to remain in cautious mode while public investment is forecast to see 9.4% growth. Exports are estimated to grow moderately (4.4%) on continued external demand from key trade partners, strong global demand for electrical and electronic products and improvement in commodity production. However, external demand will slow if the global economy tanks, with higher freight and container rate and logistic costs, supply chain disruptions, as well as workers’ shortage and higher cost of doing business. Imports are estimated to expand at a 4.9% rate on the continued expansion of manufactured exports and improved domestic demand. Although trade with Russia is only at 0.4% (Ukraine at 0.1%) of Malaysia’s total trade, the war has caused prices of wheat, corn and chemical fertiliser to rise, which means costlier feed, fertiliser, pesticides and other raw materials. But the European Union may purchase more palm oil as a result of shortages in rapeseed and sunflower oil supply from Ukraine. Besides, Malaysia benefits from higher crude oil-related revenue, although it would be offset by bloated fuel subsidies and other subsidies. The financial market can expect volatility due to the war and the situation in the commodity market. There will be a flight to quality as investors lighten their portfolios. To reform the economy beyond the pandemic, the country must be prepared to withstand any future shocks, whether financial, economic, or non-economic. Now there’s a reserve coming from oil and from commodity prices, the surplus of which should be saved for future shocks. The ringgit is also expected to remain weak for the rest of the year. 

Banks expected to see higher earnings this year – Moody’s 

According to Moody’s Investors Service, the pre-tax profitability of banks is expected to see an improvement this year on bigger net interest margins (NIMs) and lower loan-loss provisions. This is supported by an anticipated increase in interest rates in the later part of the year and quicker loan growth, which will then lend support to an increase in NIMs. Banks may continue to take precaution against potential credit losses from loans that are under the repayment assistance programme. This would see loan-loss provision declining but remaining higher than pre-pandemic levels. It expects impaired loans to increase in 2022, but only moderately because the economic recovery and continued aid from the government will support borrowers’ repayment capacity. Regulatory measures such as the targeted repayment assistance programme for vulnerable borrowers affected by the pandemic helped banks maintain stable asset quality. The asset-weighted average of the six largest Malaysian banks’ impaired loan ratios decreased modestly to 1.8% as of Sept 30, 2021 from 2% a year earlier, although about 28% of total loans at the banks were under the repayment assistance scheme, some of which can become impaired. Meanwhile, an earlier announced one-off prosperity tax will see some impact to sector-wide net profitability of the banks, but its impact will be partially offset by the strong pre-tax earnings growth. It expects banks’ capital ratios to be broadly stable at high levels in 2022 because internal capital generation will keep pace with increases in capital consumption due to faster loan growth. Prudent dividend policies and dividend reinvestment plans will help banks preserve capital to fund an acceleration of credit growth. The industry’s common equity tier 1 ratio was at a strong level and stood at 14.6% at the end of last year. The research house is also expecting industry-wide loan growth to strengthen to 6%-7% in 2022 from 4.5% last year, supported by recovering credit demand from the retail and corporate segments. Loan growth will be supported by the country’s real gross domestic product (GDP) growth, which would accelerate to around 6% in 2022 from 3.1% in 2021. It would be driven by increases in domestic consumption amid an improving labour market and export growth. The government has set its expansionary budget to RM332bil for this year from the previous year, and this will further support economic recovery. On another matter, the debt servicing capacity of corporates and households will remain strong and support banks’ asset quality. 

Foreign inflows positive – MIDF 

According to MIDF Research data, the foreign inflow to Bursa Malaysia continued last week, with net buying of RM312.4mil. The positive trend was in line with Asean markets, which has continued to see net inflows albeit at a slower pace. Cumulatively for the week, Indonesia, Malaysia and Thailand registered a total net inflow of US$421.3mil (RM1.7bil), which was slightly more than half the net inflow recorded in the previous week. On the Malaysian market, foreign investors have been net buyers for 12 of the first 14 weeks of 2022, recording a net purchase of RM6.97bil of local equity so far this year. The most favoured sectors by foreign investors last week continued to be financial services, industrial product and services, and plantation. These saw net inflows of RM329.9mil, RM57.3mil and RM45.1mil respectively. Meanwhile, local institutions remained net sellers on Bursa Malaysia with RM303.19mil in net equities sold over the past week. Retailers also adopted a net selling position with RM9.21mil net of equities sold over the last five trading sessions. Year-to-date, local institutions are net sellers to the tune of RM7.38bil while local retailers are net buyers with a RM410mil surplus in equities. In terms of market participation, foreign investors saw a 10.39% decline in average daily traded value over the past week while local institutions and retailers saw an increase of 13.5% and 13.66% respectively. 

Malaysia records highest IPO proceeds among Asean members in Q1 2022 – EY 

According to Ernst & Young (EY), Malaysia led other Asean countries in initial public offering (IPO) proceeds during the first quarter (Q1) of 2022 as exchanges in the bloc recorded a year-on-year      (y-o-y) decline of 57 per cent in total proceeds for the period. Asean’s exchanges saw a higher number of IPOs ― 29 IPOs in Q1 2022 versus 22 a year earlier ― but proceeds fell to US$1 billion (RM4.23 billion) from US$2.4 billion previously. During this quarter, the Indonesia Stock Exchange (IDX) was most active by deal numbers (12 IPOs raising US$219 million), while Malaysia’s exchanges led by proceeds (US$362 million via five IPOs). ET attributed the marked decline in Asean’s IPO proceeds to the lack of a mega IPO being posted in Q1 2022, compared to one mega IPO a year ago.  

According to Max Loh, Ernst & Young LLP’s Singapore and Brunei managing partner and EY Asean IPO leader, geopolitical tensions, the ongoing Covid-19 situation, supply chain woes, tightening of monetary policy and escalating costs were a few factors weighing down economic and IPO activity in Asean. The IPO market remains receptive to quality high-growth companies, but volatility, uncertainty and valuation expectations will need to be tempered before a resurgence in IPO activity can happen. Meanwhile, the global IPO market also witnessed a weaker performance in Q1 2022, with 321 deals raising US$54.4 billion in proceeds ― a decrease of 37 per cent and 51 per cent y-o-y, respectively. In contrast, the Asia-Pacific region surpassed its Q1 2021 IPO proceeds performance ― when it raised the highest Q1 proceeds in 21 years ― by recording 188 IPOs raising US$42.7 billion (19 per cent higher proceeds) in the quarter under review. The region accounted for 78 per cent of global IPO proceeds due to the listing of four mega IPOs.  

According to EY global IPO leader Paul Go, a decrease in IPO activity was not unexpected when compared with Q1 2021 as the latter was the most active quarter in the last 21 years. However, the market shock from geopolitical tensions and other economic concerns in the second half of the quarter created volatility and impacted the capital markets. The global IPO market would remain volatile in Q2 2022 amid many uncertainties, with a backlog of IPO candidates, and pipelines would continue to build up. With the prevailing headwinds arising from geopolitical tensions and conflicts, inflation and interest rate hikes, it will be imperative for IPO-bound companies to take a fresh look at how these challenges will affect their markets, customers and suppliers to their business. 

Eye On The Markets 

This week, on Friday (15Apr), the Ringgit opened at 4.2335 against the USD from 4.2280 on Monday (11Apr). Meanwhile, the Ringgit was 3.1195 to the Sing Dollar on Friday (15Apr). On Monday (11Apr), the FBM KLCI opened at 1607.95. As at Friday (15Apr) 10:00am, the FBM KLCI is down 13.27 points for the week at 1594.68. Over in US, the overnight Dow Jones Industrial Average closed down 113.36 points (-0.33%) to 34,451.23 whilst the NASDAQ shed 292.51 points (-2.14%) to 13,351.08. 

Moody’s: Malaysia to record 6.0pc economic growth in 2022 

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According to Moody’s Investors Service assistant vice-president/analyst Nishad Majmudar, Malaysia’s economy is likely to grow 6.0 per cent this year, driven by the reopening of international borders, high vaccination rates, and as the country enters the transition to the endemic phase. The reopening of international borders would bolster the tourism-related services sector. As for the transition into the endemic phase, over time, he expects that it would support greater economic activity and private consumption in the country. Another factor is the expected weaker growth in key export markets like the European Union, which accounts for about 10 per cent of exports. Nevertheless, Malaysia is exporting quite a diverse basket of goods whereby demand remains in the strong part of the cycle, such as electronics and oil and gas sector, which should perform well with the high prices. He was speaking at Moody’s virtual media roundtable titled “Inside Asean: Malaysia”. However, there were several downside risks, including the Ukraine-Russia conflict, as well as the potential of a surge in inflation to prompt Bank Negara Malaysia (BNM) to react more quickly in terms of policy rate normalisation. The Ukraine-Russia conflict is the biggest downside risk for growth. Moody’s has already marked down the forecast for a number of G20 economies, mostly in Europe but also in Asia Pacific and that BNM is expected to raise its policy rate in the second half of 2022. Another round of border closures due to a new variant threat would be another potential risk but the Malaysian government had indicated its interest to keep the economy open and treat Covid-19 as an endemic. Additionally, a volatile political environment would undermine Malaysia’s credibility and effectiveness of institutions, as well as threaten the stability of capital flows and investment, which could be another potential downside risk for Malaysia. In his assessment over the last few years, some of the political noises have not affected the functioning of key economic institutions such as the Finance Ministry, Bank Negara, and securities regulators. However, the uncertainties around the election timing and the relatively thin majority in Parliament, have constrained the fiscal reform process most notably and made it difficult for any of the governments over the last three years, to focus on some of these reforms. If the general elections were to come soon, it could potentially lead to a more volatile political environment and political noises, but would not affect the functioning of the key institutions overall. Meanwhile, Brent crude price is expected to remain above US$100 per barrel this year. According to Moody’s analyst Hui Ting Sim, the rating agency expects Petroliam Nasional Bhd (Petronas) to spend more of its capital spending this year, which could benefit the exploration and production contractors and oilfield services companies. In terms of top-line, they are quite positive as there will be more business for the players in the oilfield service industry. The outlook for earnings and cashflows potentially could be less positive because these companies will incur higher operating costs this year because of the inflationary pressure that leads to higher utility, equipment, and labour costs. Profitability of these companies will depend on their ability to pass through the increase in costs to oil and gas producers. 

MIDF Research: Foreign investors remain net buyers last week with inflow of RM536.5m 

According to MIDF Research, foreign investors were the only net buyers for the week ended April 1, with the net inflows amounting to RM536.5 million. In its equity strategy report, the investment bank said international funds have been net buyers on Bursa Malaysia for 11 out of the first 13 weeks of 2022, with a net inflow of RM6.66 billion year-to-date. Foreign investors were net buyers in all the trading days last week, with the largest amount recorded on Friday at RM194.8 million and the smallest on Tuesday at RM30.7 million. Financial services, plantation and industrial products and services continue to be the most favoured sectors by foreign investors last week, with net inflows of RM335.6 million, RM100.4 million and RM54.6 million, respectively. As for local retailers, the research house said the local retailer movements were rather mixed last week with three days of net selling and two days of net buying, culminating with a net selling position at -RM72.74 million for the week. They were net sellers on Wednesday (RM36.12 million), Thursday (RM30.56 million) and Friday (RM80.96 million), and were net buyers on Monday (RM17.39 million) and Tuesday (RM57.51 million). Local institutions remained as net sellers with the largest selling recorded on Monday at       -RM138.2 million and the smallest amount on Wednesday at -RM51.4 million. Local institutions’ net buys were in the healthcare and construction sectors at RM62.8 million and RM4.0 million, respectively. Overall, local institutions were net sellers at -RM463.75 million. On a year-to-date basis, local institutions are net sellers to the tune of RM7.08 billion, while local retailers and foreign investors have been net buyers at RM0.42 billion and RM6.7 billion, respectively. In terms of participation, only foreign investors recorded an increase in average daily trade value at 5.95 per cent, while local institutions and local retailers recorded declines of 20.47 per cent and 13.49 per cent, respectively. 

Govt remains country’s top bond issuer 

According to Bond Pricing Agency Malaysia Sdn Bhd’s (BPAM), the Malaysian government has been named the overall top bond issuer for the first quarter (1Q) of 2022, with a total issuance of RM50bil. The government also issued the top traded bond overall for the quarter under review at RM205.06bil. The government had also been the top bond issuer overall and issued the top traded bond in the fourth quarter of last year. National mortgage corporation Cagamas Bhd was the top corporate bond issuer (RM1.88bil) for 1Q this year and also issued the top traded corporate bond (RM590mil). Maybank Islamic Bank Bhd was the top sukuk issuer (RM4bil) in the quarter, while DanaInfra Nasional Bhd issued the top traded sukuk (RM2.8bil). Malaysian Trustees Bhd emerged as the top bond trustee overall both by value (RM9.48bil) and issuance (101 issues) for the quarter under review. It was also the top sukuk trustee by value (RM7.68bil). PB Trustees Services Bhd was the top conventional bond trustee by value (RM2.4bil). These quarterly reports highlight the Malaysian bond market performance and rankings of key bond market players in the given period. BPAM is the only registered bond pricing agency accredited by the Securities Commission. 

Eye On The Markets 

This week, on Friday (8Apr), the Ringgit opened at 4.2205 against the USD from 4.2140 on Monday (4Apr). Meanwhile, the Ringgit was 3.0982 to the Sing Dollar on Friday (8Apr). On Monday (4Apr), the FBM KLCI opened at 1602.03. As at Friday (1Apr) 10:00am, the FBM KLCI is down 0.97 points for the week at 1601.06. Over in US, the overnight Dow Jones Industrial Average closed up 87.06 points (+0.25%) to 34,583.57 whilst the NASDAQ added 8.48 points (+0.06%) to 13,897.30. 

BNM: Malaysia’s diversified economic structure will mitigate disruption risk caused by Russia-Ukraine conflict 

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According to Bank Negara Malaysia (BNM) governor Tan Sri Nor Shamsiah Mohd Yunus, although Malaysia as a small and open economy will be affected by disruptions caused by the Russia-Ukraine conflict, the impact on growth will be mitigated by a highly diversified economic structure, which has always been the country’s source of strength. The ongoing military conflict in Ukraine is expected to weigh on growth prospects via several channels, including disruptions from the trade and financial sanctions, higher commodity prices and volatile financial markets. But having said that, she also highlighted that Malaysia has a diversified economy with various sources of growth and an export structure, which underpins its economic resilience. For instance, being a net commodity exporter, Malaysia would gain from the surge in crude oil and crude palm oil prices. The higher export proceeds would widen Malaysia’s trade surplus and benefit firms and workers in the commodities industry. However, the conflict situation in Ukraine remains highly fluid. Things can change very quickly, and how it affects the Malaysian economy will ultimately depend on the length of the conflict, the extent of the countermeasures and the resulting disruptions to global supply chains. The central bank will continue to monitor this closely and update the assessments accordingly. The conflict in Ukraine had already affected global growth and trade activity. The central bank’s baseline forecasts assume that global growth will still remain above the long-term average of between 3.8% and 4.3%. It is also projecting that the Brent crude oil price will range between US$100 (about RM420.50) and US$120 per barrel and that the bank had also built in the supply chain disruptions, especially in commodities and auto related industries. The central bank has projected Malaysia’s economy to grow by between 5.3% and 6.3% in 2022 amid the reopening of the economy and international borders. 

Sub-Title: Bursa launches new programme to raise velocity 

According to Bursa Malaysia CEO Datuk Muhamad Umar Swift, Bursa Malaysia has launched Bursa Research Incentive Scheme (Bursa RISE) with the objective to improve the trading velocity and corporate profile of participating public-listed companies (PLCs) through research coverage and marketing activities. The new programme would be carried out by licensed research houses to create better appreciation of the PLC’s fundamentals, leading to better value recognition for the companies. Bursa RISE is an initiative in line with the evolving capital market landscape where investors seek greater stakeholder engagement and more transparent communication. With the increasing emphasis on sustainable practices, Bursa RISE will help participating PLCs raise the bar in corporate governance, transparency and disclosure through more frequent and meaningful stakeholder engagements. The programme would also include the Investor Relations (IR) and Public Relations (PR) Incentive Programme, that provides IR and PR support to participating PLCs to enable better engagement with their stakeholders, shareholders, the investment community, the media and the public more effectively. Bursa RISE will complement and support the PLC Transformation Programme which has the objective of encouraging PLCs to be more transparent in their performance, allowing investors to gain better insight to facilitate informed investment decision making. Further data based on a study of a past research programme has shown that velocity for participating PLCs had improved as a result of increased research and profiling. With greater engagement and marketing efforts, investors are expected to pay more attention to the participating PLCs. All these programmes that have been put in place are expected to improve corporate accessibility for participating PLCs, while generating positive outcomes for PLCs, and greater opportunities for investors and stakeholders. A total of 60 participating PLCs were selected based on a set of quantitative and qualitative criteria. The research reports produced under Bursa RISE will be available at https://www.bursamarketplace.com. 

Malaysia’s currency in circulation up 15.1% to RM150.1b in 2021, strongest growth in two decades 

According to Bank Negara Malaysia (BNM) in its 2021 Annual Report, Malaysia’s currency in circulation (CIC) grew by 15.1% year-on-year to RM150.1 billion as of end-2021 from RM130.4 billion a year ago, the strongest annual growth in the last two decades. Businesses and households preferred to hold extra cash in hand for precautionary reasons amid the prolonged Covid-19 pandemic, and a similar trend was observed across many other countries globally. There was also sufficient availability of cash during the unexpected severe floods that affected several parts of the country at the end of 2021. Despite growing demand for cash, the share of coins in CIC fell from 5.1% in the pre-pandemic year of 2019 to 4.3% in 2021 as coins do not command the same status as banknotes as a store of value and a medium of exchange. Through various efforts, in particular deployment of coin deposit machines by financial institutions at selected branches, 60.4 million pieces of coins, equivalent to 7.6% of total coins issued in 2021, were recirculated. To maintain the high quality of CIC, BNM shredded 24.6% of the total volume of banknotes processed, the highest rate in the last five years. In prioritising the issuance of fit banknotes, 57% out of 2.72 billion pieces of banknotes issued in 2021 were fit banknotes as this was not only more cost-effective but also reduced the carbon footprint (given that banknote printing is both water- and energy-intensive). Overall, currency operations nationwide remained uninterrupted last year despite challenges associated with the prolonged Covid-19 pandemic. The availability and accessibility of cash by businesses and households was sustained while maintaining the high quality of CIC and a comparatively low counterfeit rate. 

Eye On The Markets 

This week, on Friday (1Apr), the Ringgit opened at 4 2120 against the USD from 4.2090 on Monday (28Mar). Meanwhile, the Ringgit was 3.1049 to the Sing Dollar on Friday (1Apr). On Monday (28Mar), the FBM KLCI opened at 1606.14. As at Friday (1Apr) 10:00am, the FBM KLCI is down 13.29 points for the week at 1592.85. Over in US, the overnight Dow Jones Industrial Average closed down 550.46 points (-1.56%) to 34,678.35 whilst the NASDAQ shed 221.76 points (-1.54%) to 14,220.52.