INVE$T | Market Sentiments
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.