INVE$T | Market Sentiments
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.
