Inve$t | Market Sentiments | 23 December 2022
According to Prime Minister Datuk Seri Anwar Ibrahim, who is also the Finance Minister, Malaysia’s gross domestic product (GDP) growth for this year is very likely to exceed the earlier projection of between 6.5% and 7%. He said that sentiment remains positive at the end of 2022, with encouraging economic performance following the reopening of the economy amid the transition to the Covid-19 endemic phase. He noted during the tabling of the Consolidated Fund (Expenditure on Account) Bill 2022 and motion for interim development expenditure estimates for 2023 in the Dewan Rakyat that the unemployment rate also dropped to 3.6% in October 2022. However, labour participation has not returned fully to the level before the Covid-19 crisis when the unemployment rate was 3.3%. The jobless rate for youth below 25 years old is still worryingly high at 10%.
He said the entanglement of geopolitical conflicts has led to global inflationary pressures and weakened economic growth, and the surge in commodity and food prices has adversely impacted Malaysians in terms of cost of living. He noted that the International Monetary Fund has forecast that global economic growth would slow from 3.2% in 2022 to 2.7% in 2023. To deal with this significant global impact, the federal government is adopting a whole-of-nation principle. All quarters should join the government in formulating a comprehensive approach. He added that the wealthy and conglomerates that have raked in huge earnings due to rising commodity prices and government subsidies must also contribute towards improving the people’s well-being, especially the B40 and M40 groups and petty traders. He said Padiberas Nasional Bhd, for example, has agreed to contribute RM10mil this year and RM50mil next year to help poor paddy farmers. The government, will spare no effort to strengthen the economic indicators, restore investor confidence and rebuild the country.
The PM also said he was touched by the reception and support received from other countries that have extended their commitment and assistance to explore potential trade and investment opportunities with Malaysia. For example, His Majesty the Sultan of Brunei (Sultan Hassanal Bolkiah) has offered to have the Brunei Investment Agency explore new investments in Malaysia and hence benefit both countries. He added the International Trade and Industry Ministry and Finance Ministry have been tasked to improve the facilities for business operations and raise the quality of investments in order to generate high-income jobs for Malaysians, especially the youth. At the same time, the administration of foreign workers has been centralised at the Home Ministry to ensure that industry players can flourish, particularly those in the commodity, construction and tourism sectors.
Bursa Malaysia and RAM collaborate on a new debt fundraising platform
Bursa Malaysia Berhad and RAM Holdings Berhad entered into a shareholders’ agreement (SHA) on Thursday (22Dec) to develop a new debt fundraising platform that will facilitate listed and unlisted small to mid-sized companies tap into a new pool of capital outside of traditional wholesale markets, offering a new avenue and greater flexibility to these companies looking to raise funds. The platform provides for a ‘bond-like’ experience allowing investors to invest in investment notes with credit and ESG ratings as easily as they would invest in shares in a transparent and regulated market, facilitating informed investment decisions.
Pursuant to the terms of the SHA, the joint venture shall be carried out through a new company (Newco) to be incorporated under the Companies Act 2016, whereby Bursa Malaysia will hold a 51% equity interest and RAM will hold the remaining 49%. Newco will submit an application for registration under the Securities Commission’s (SC) revised Guidelines on Recognized Markets (RMO) which was recently issued on 15 November 2022.
According to Datuk Muhamad Umar Swift, Chief Executive Officer of Bursa Malaysia, this agreement marks a significant milestone in Bursa Malaysia’s journey to become a multi-asset exchange. The collaboration with RAM will broaden fund raising avenues for both PLCs and unlisted entities – specifically enabling better access to both conventional and Shariah investment notes. It would be able to provide new fixed income investment opportunities to both retail and sophisticated investors. This will further create an alternative fund-raising avenue for businesses which are currently underserved in this challenging environment and for those that are not yet ready to list on the Exchange.
According to Chris Lee, Group CEO and Executive Director of RAM, to enhance transparency in the ecosystem of debt-based financing and investment, RAM will contribute its expertise in credit rating, ESG ratings and fixed income pricing.
Eye On The Markets
This week, on Friday (23Dec), the Ringgit opened at 4.4350 against the USD from 4.4240 on Monday (19Dec). Meanwhile, the Ringgit was 3.2763 to the Sing Dollar on Friday (23Dec). On Monday (19Dec), the FBM KLCI opened at 1476.72. As at Friday (23Dec) 10:00am, the FBM KLCI is down 11.62 points for the week at 1465.10. Over in US, the overnight Dow Jones Industrial Average closed down 348.99 points (-1.05%) to 33,027.49 whilst the NASDAQ shed 233.25 points (-2.18%) to 10,476.12.