Inve$t | Market Sentiments | 10 March 2023
Prime Minister Datuk Seri Anwar Ibrahim said Bursa Malaysia and the London Stock Exchange Group (LSEG) will be rolling out a Centralised Sustainability Reporting platform in April. The platform will enable companies, both public-listed companies as well as non-listed small and medium enterprises (SMEs), to calculate their carbon emissions impact. It will also help the companies to disclose standardised common environmental, social and governance (ESG) data in a way that conforms to established global standards. This platform has the potential to become a key enabler to Malaysia’s pivot to green and support sustainable development while creating high-skilled jobs for progress towards a high-income nation.
The Prime Minister, in his keynote address at Invest Malaysia 2023 event organised by Bursa Malaysia and co-hosted by Maybank on Wednesday, said that Malaysia is not only open but also accelerates the transition and transformation of industries and local players towards ESG adoption, even for SMEs. For example, through the Ministry of International Trade and Industry (MITI), consultation and engagement with local and international stakeholders are ongoing to develop the National ESG framework for the manufacturing sector by 2024.
He added that Malaysia is taking a leadership role in the low carbon journey, by bringing a platform to help companies measure, monitor, and drive reduction in carbon. With the growing need for companies to scale their businesses, he said the Securities Commission Malaysia (SC) together with Bursa Malaysia will introduce the LEAP Market Transfer Framework for companies to migrate from the LEAP Market to the ACE Market. At the same time, Bursa Malaysia will introduce a new Recognised Approved Adviser Framework that will expand the pool of advisers for the ACE Market.
He said that New Investment Policy is a forward-looking framework to ensure Malaysia remains ready to cater to changes in the global economy and to spur investment in future growth sectors. In many ways, it guides, facilitates and helps implement reforms to strengthen the fundamentals of the investment ecosystem. Being open to innovation in emerging opportunities, part of this is dealing with the review of Intellectual Property (IP) policies to address issues such as ‘evergreening’ or artificial extensions of market exclusivity that exist in certain sectors.
BNM keeps OPR unchanged at 2.75%
At its meeting on Thursday March 9, the Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR) at 2.75 percent. In a statement, BNM said that that in the global economy, there were some positive developments with the reopening of China’s economy and better-than-expected growth outturns in major economies, supported by resilient domestic demand. Nevertheless, the global economy continues to be weighed down by elevated cost pressures and higher interest rates.
Headline inflation moderated slightly from high levels in recent months, but core inflation remained above historical averages. Some central banks are expected to continue raising interest rates to manage inflationary pressures. This will continue to pose headwinds to the global growth outlook. The growth outlook remains subject to downside risks, mainly from an escalation of geopolitical tensions, higher-than-anticipated inflation outturns, and a sharp tightening in financial market conditions.
The Malaysian economy expanded strongly by 8.7% in 2022 driven by the recovery in private and public sector spending following the full reopening of the economy. After the strong performance in 2022, the economy is expected to moderate in 2023 amid a slower global economy. Growth will remain driven by domestic demand. Household spending will be underpinned by sustained improvements in employment and income prospects. Tourist arrivals are expected to continue rising, further lifting tourism-related activities. The continued progress of multi-year infrastructure projects will support investment activity. The implementation of projects from the recently re-tabled Budget 2023 would provide upside risks to the domestic growth outlook. Downside risks continue to stem mainly from global developments, including from weaker-than-expected growth outturns or much tighter and more volatile global financial conditions.
Headline and core inflation are expected to moderate over the course of 2023, but will continue to be elevated amid lingering demand and cost factors. The extent of upward pressures to inflation will remain partly contained by existing price controls and fuel subsidies, and the remaining spare capacity in the economy. The balance of risk to the inflation outlook is tilted to the upside and continues to be highly subject to any changes to domestic policy on subsidies and price controls, as well as global commodity price developments.
At the current OPR level, the stance of monetary policy remains accommodative and supportive of economic growth. The MPC will continue to assess the impact of the cumulative OPR adjustments, given the lag effects of monetary policy on the economy. The MPC remains vigilant to cost factors, including those arising from financial market developments, that could affect the inflation outlook. Further normalisation to the degree of monetary policy accommodation would be informed by the evolving conditions and their implications to the domestic inflation and growth outlook. The MPC will continue to calibrate the monetary policy settings that balance the risks to domestic inflation and sustainable growth.
Eye On The Markets
This week, on Friday (10Mar), the Ringgit opened at 4.5225 against the USD from 4.4725 on Monday (6Mar). Meanwhile, the Ringgit was 3.3422 to the Sing Dollar on Friday (10Mar). On Monday (6Mar), the FBM KLCI opened at 1458.77. As at Friday (10Mar) 10:00am, the FBM KLCI is down 18.7 points for the week at 1440.07. Over in US, the overnight Dow Jones Industrial Average closed down 543.54 points (-1.66%) to 32,254.86 whilst the NASDAQ shed 237.65 points (-2.05%) to 11,338.36.
