INVE$T | Market Sentiments
According to Bank Negara Malaysia, Malaysia’s banking system remains well capitalised to support economic recovery. The capital ratios rose marginally in May 2022, driven by valuation gains on available-for-sale financial instruments as bond yields eased temporarily during the period. As at end-May 2022, the banking system recorded RM121.5 billion in excess capital buffers. The overall gross and net impaired loans ratios remained broadly stable at 1.6% and 1% respectively, reflecting the marginal increase in impairments from the business and household segments, following the tapering of repayment assistance measures since the first quarter of 2022. Total provisions remained at a prudent level, accounting for 1.8% of total banking system loans and 109.1% of impaired loans. As of end-May 2022, total provisions and regulatory reserves stood at RM40.7 billion (end-April: RM40.2 billion). On the domestic financial market, market adjustments remained orderly, following a decrease in the 10-year Malaysian Government Securities yield by 21 basis points (bps) during the month, supported by foreign portfolio inflows into the domestic bond market. By contrast, regional bond yields rose by 24.5bps on average. The local financial market was also driven by tighter global financial conditions due to expectations for faster and larger policy rate hikes by advanced economies, especially the US, amid higher and more prolonged inflationary pressures.
Malaysia’s economic recovery remains in sight amid global uncertainty – DOSM
According to the Department of Statistics Malaysia Chief statistician Datuk Seri Dr Mohd Uzir Mahidin, economic recovery remains in sight with a better trend as signalled by Malaysia’s macroeconomic performance in April 2022 amid global uncertainty. More than two years after an unprecedented global health crisis that profoundly altered the world’s socioeconomic landscape, nations had started the recovery process with extensive exit strategy activities to boost economic viability and public health. While the public had started to adjust to endemicity, a new threat comes in the form of supply chain disruptions due to the ongoing geopolitical tension between Russia and Ukraine; uncertain weather conditions; and escalating demand following the easing of health restrictions in most countries. Based on Malaysia’s macroeconomic performance in April 2022, the country is blessed with natural resources and commodities such as petroleum products and palm oil. As a net commodity exporter, Malaysia also benefits from higher commodity prices resulting in total trade chalking up a double-digit annual growth of 21.3 per cent to RM231.4 billion. Exports rose 20.7 per cent to RM127.5 billion while imports went up 22.0 per cent to RM103.9 billion. The trade balance rose 15.7 per cent and continued to remain in surplus at RM23.5 billion. Malaysia’s trade performance in May 2022 remained resilient, recording the fastest growth since November 2021, with total trade surpassing RM1 trillion. Going forward, Malaysia is expected to maintain a better economic recovery in the upcoming months. The Leading Index (LI) for April recorded 110.8 points with an improved negative growth of 0.5 per cent year-on-year compared to negative 1.4 per cent in March 2022. It is hoped that the economic recovery remains in sight with a better trend amid global uncertainty. In line with this, the S&P Global Ratings recently revised Malaysia’s long-term sovereign credit ratings outlook to ‘stable’ from ‘negative’ as it believes Malaysia is on a strong economic recovery path compared to other countries at similar income levels.
EPF outsourced RM167.63b to fund managers as at Dec 31,2021
According to the Employees Provident Fund (EPF) chairman Tan Sri Ahmad Badri Mohd Zahir, the fund outsourced RM167.63 billion to external fund managers as at Dec 31, 2021, representing an increase of 8%, compared with RM155.18 billion at end 2020. This allocation, invested across equity and fixed-income instruments, represented 16.66% of EPF’s total investment assets. EPF’s line of external fund managers fared well in 2021 and delivered commendable results that were within the fund’s objectives and expectations for the year. The fund managers have been instrumental in enhancing the performance of EPF’s assets and as the funds grow, EPF will continue with this diversification strategy and leverage on their insights and skillsets that complement EPF’s own internal fund management capabilities. In conjunction with the EPF External Fund Managers Awards, EPF announced 22 awards presented to the top external fund managers in recognition of their performance in managing EPF’s portfolios in 2021. For the financial year ended 2021, EPF delivered a dividend rate of 6.10% with a payout of RM50.45 billion for Simpanan Konvensional, and a rate of 5.65% with a payout of RM6.27 billion for Simpanan Shariah. Cumulatively, the total payout for 2021 was RM56.72 billion.
Eye On The Markets
This week, on Friday (1 July), the Ringgit opened at 4.4060 against the USD from 4.4010 on Monday (27June). Meanwhile, the Ringgit was 3.1684 to the Sing Dollar on Friday (1July). On Monday (27June), the FBM KLCI opened at 1438.82. As at Friday (1July) 10:00am, the FBM KLCI is up 9.95 points for the week at 1448.77. Over in US, the overnight Dow Jones Industrial Average closed down 253.88 points (+0.82%) to 30,775.43 whilst the NASDAQ shed 149.16 points (-1.33%) to 11,028.74.