Market Sentiments | Inve$t | 10 February 2023
According to MIDF Research, Malaysia’s labour market recovery continued as the unemployment rate was maintained at 3.6% in Dec 2022. The unemployment rate for youth aged 15-24 descended to a new pandemic low of 11.8% but remained higher than the pre-pandemic level of 10.4% in 2019. Labour force and employment continued expanding 2.4% year-on-year (y-o-y) and 3.1% y-o-y respectively supported by robust domestic economic growth and an upbeat external front.
Unemployment dipped further by 12.8% y-o-y, marking the 16 consecutive months of contraction rate. Outside labour force reduced by 1.3% y-o-y, registering the 14 straight months of negative growth rate. Employment growth for 2022 hit a new record high at 3.5% with solid support from additional job gains of employer by 9.5%, employee (1.8%), own account worker (9.7%) and unpaid family workers (6.2%). The jobless rate averaged lower at 3.8% but still higher than the pre-pandemic 2019’s average of 3.3%. Even though robust economic growth pace recorded last year, labour shortages, tightness in global supply chain and Covid-19 concerns are among downside factors for solid recovery of the job market.
Manufacturing employment contribution to total employment declined to 14.5% in 2022, the lowest ever recorded. However manufacturing employment rose slower than total employment growth at 3.2% versus 3.5% in 2022 respectively despite of booming external trade sector during the pandemic years. The average monthly wage level stayed on an uptrend from RM2,765 in 2016 to RM3,420 in 2022.
By sub-sector, electrical and electronics (E&E) related industries remained the main employment pool, particularly electronic integrated circuits, electrical resistor component and computers and peripherals equipment which accommodated 12.2% of the manufacturing job market in 2022.
On the external front, the US job market improved in the first month of 2023 with the jobless rate descending to 3.4%, the lowest since May 1969, despite the elevated inflationary pressure and tightening monetary policy. The research house foresees the jobless rate declining steadily following the improving local economic activities and international borders reopening in China.
BNM international reserves rose to US$115.2b as at Jan 31
According to Bank Negara Malaysia (BNM), its international reserves rose to US$115.2 billion (RM496.63 billion) as at Jan 31, from US$114.9 billion as at Jan 13. The reserves position is sufficient to finance 5.3 months of imports of goods and services, and is one times the total short-term external debt. Of the five main components of the reserves, only one component — foreign currency reserves — rose. It climbed to US$103 billion from US$102.6 billion.
Three were unchanged, including International Monetary Fund reserves, which stood at US$1.4 billion, IMF-linked special drawing rights or SDR, which stayed at US$5.7 billion, and gold at US$2.3 billion. Other reserve assets dipped slightly to US$2.8 billion from US$2.9 billion.
The central bank’s total assets rose to RM623.55 billion as at Jan 31, from RM621.81 billion as at Jan 13, while currency in circulation rose to RM166.1 billion from RM164.62 billion.
Foreign net selling of RM380.8m on Bursa Malaysia last week – MIDF
According to MIDF Research, in a statement on Tuesday 7Feb, foreign investors net sold RM380.8 million worth of Malaysian equities on Bursa Malaysia last week, 89.6% higher than in the week prior. It was the fourth consecutive week of net foreign selling, noting that it was a shortened trading week of four days due to the Federal Territory Day holiday on Wednesday.
Foreign investors net bought RM35.6 million on Thursday, but net sold RM48.6 million on Monday, RM98.9 million on Tuesday and RM68.1 million on Friday. There may be renewed signs of political uncertainties that have emerged following the sacking and suspension of senior and influential Umno members, as the party is part of the unity government. The appointment of the prime minister’s daughter as his economic and senior adviser also sparked debates from various parties.
The top three sectors which saw net inflows by foreign investors last week were consumer products and services at RM58.7 million, technology at RM23.7 million as well as telecommunications and media at RM15.7 million. The bottom three sectors with net outflows were financial services at RM174.0 million, healthcare at RM43.3 million and plantation at RM35.9 million. Year-to-date, foreign investors have net sold RM89.1 million.
MIDF Research said that local institutions maintained their streak of net buying to RM130.6 million last week. Local institutions net bought RM9.6 million on Monday, RM59.3 million on Tuesday, RM0.5 million on Thursday and RM61.2 million on Friday. Year-to-date, local institutions have net bought RM816.0 million. Local retailers turned net buyers last week, reversing the net selling trend of three consecutive weeks. They net bought RM49.4 million as of last Friday. They only net sold RM36.0 million on Thursday but were net buyers of RM38.9 million on Monday, RM39.6 million on Tuesday and RM6.9 million on Friday. In terms of participation, there was an increase in average daily trading volume across the board by 64.7%, 19.6% and 7.8% from foreign investors, local institutions and local retailers respectively.
Eye On The Markets
This week, on Friday (10Feb), the Ringgit opened at 4.3260 against the USD from 4.3085 on Tuesday (7Feb). Meanwhile, the Ringgit was 3.263 to the Sing Dollar on Friday (10Feb). On Tuesday (7Feb), the FBM KLCI opened at 1487.82. As at Friday (10Feb) 10:00am, the FBM KLCI is down 19.35 points for the week at 1468.47. Over in US, the overnight Dow Jones Industrial Average closed down 249.13 points (-0.73%) to 33,699.88 whilst the NASDAQ shed 120.94 points (-1.02%) to 11,789.58.