Moody’s: Malaysia to record 6.0pc economic growth in 2022 

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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. 

BNM: Malaysia’s diversified economic structure will mitigate disruption risk caused by Russia-Ukraine conflict 

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According to Bank Negara Malaysia (BNM) governor Tan Sri Nor Shamsiah Mohd Yunus, although Malaysia as a small and open economy will be affected by disruptions caused by the Russia-Ukraine conflict, the impact on growth will be mitigated by a highly diversified economic structure, which has always been the country’s source of strength. The ongoing military conflict in Ukraine is expected to weigh on growth prospects via several channels, including disruptions from the trade and financial sanctions, higher commodity prices and volatile financial markets. But having said that, she also highlighted that Malaysia has a diversified economy with various sources of growth and an export structure, which underpins its economic resilience. For instance, being a net commodity exporter, Malaysia would gain from the surge in crude oil and crude palm oil prices. The higher export proceeds would widen Malaysia’s trade surplus and benefit firms and workers in the commodities industry. However, the conflict situation in Ukraine remains highly fluid. Things can change very quickly, and how it affects the Malaysian economy will ultimately depend on the length of the conflict, the extent of the countermeasures and the resulting disruptions to global supply chains. The central bank will continue to monitor this closely and update the assessments accordingly. The conflict in Ukraine had already affected global growth and trade activity. The central bank’s baseline forecasts assume that global growth will still remain above the long-term average of between 3.8% and 4.3%. It is also projecting that the Brent crude oil price will range between US$100 (about RM420.50) and US$120 per barrel and that the bank had also built in the supply chain disruptions, especially in commodities and auto related industries. The central bank has projected Malaysia’s economy to grow by between 5.3% and 6.3% in 2022 amid the reopening of the economy and international borders. 

Sub-Title: Bursa launches new programme to raise velocity 

According to Bursa Malaysia CEO Datuk Muhamad Umar Swift, Bursa Malaysia has launched Bursa Research Incentive Scheme (Bursa RISE) with the objective to improve the trading velocity and corporate profile of participating public-listed companies (PLCs) through research coverage and marketing activities. The new programme would be carried out by licensed research houses to create better appreciation of the PLC’s fundamentals, leading to better value recognition for the companies. Bursa RISE is an initiative in line with the evolving capital market landscape where investors seek greater stakeholder engagement and more transparent communication. With the increasing emphasis on sustainable practices, Bursa RISE will help participating PLCs raise the bar in corporate governance, transparency and disclosure through more frequent and meaningful stakeholder engagements. The programme would also include the Investor Relations (IR) and Public Relations (PR) Incentive Programme, that provides IR and PR support to participating PLCs to enable better engagement with their stakeholders, shareholders, the investment community, the media and the public more effectively. Bursa RISE will complement and support the PLC Transformation Programme which has the objective of encouraging PLCs to be more transparent in their performance, allowing investors to gain better insight to facilitate informed investment decision making. Further data based on a study of a past research programme has shown that velocity for participating PLCs had improved as a result of increased research and profiling. With greater engagement and marketing efforts, investors are expected to pay more attention to the participating PLCs. All these programmes that have been put in place are expected to improve corporate accessibility for participating PLCs, while generating positive outcomes for PLCs, and greater opportunities for investors and stakeholders. A total of 60 participating PLCs were selected based on a set of quantitative and qualitative criteria. The research reports produced under Bursa RISE will be available at https://www.bursamarketplace.com. 

Malaysia’s currency in circulation up 15.1% to RM150.1b in 2021, strongest growth in two decades 

According to Bank Negara Malaysia (BNM) in its 2021 Annual Report, Malaysia’s currency in circulation (CIC) grew by 15.1% year-on-year to RM150.1 billion as of end-2021 from RM130.4 billion a year ago, the strongest annual growth in the last two decades. Businesses and households preferred to hold extra cash in hand for precautionary reasons amid the prolonged Covid-19 pandemic, and a similar trend was observed across many other countries globally. There was also sufficient availability of cash during the unexpected severe floods that affected several parts of the country at the end of 2021. Despite growing demand for cash, the share of coins in CIC fell from 5.1% in the pre-pandemic year of 2019 to 4.3% in 2021 as coins do not command the same status as banknotes as a store of value and a medium of exchange. Through various efforts, in particular deployment of coin deposit machines by financial institutions at selected branches, 60.4 million pieces of coins, equivalent to 7.6% of total coins issued in 2021, were recirculated. To maintain the high quality of CIC, BNM shredded 24.6% of the total volume of banknotes processed, the highest rate in the last five years. In prioritising the issuance of fit banknotes, 57% out of 2.72 billion pieces of banknotes issued in 2021 were fit banknotes as this was not only more cost-effective but also reduced the carbon footprint (given that banknote printing is both water- and energy-intensive). Overall, currency operations nationwide remained uninterrupted last year despite challenges associated with the prolonged Covid-19 pandemic. The availability and accessibility of cash by businesses and households was sustained while maintaining the high quality of CIC and a comparatively low counterfeit rate. 

Eye On The Markets 

This week, on Friday (1Apr), the Ringgit opened at 4 2120 against the USD from 4.2090 on Monday (28Mar). Meanwhile, the Ringgit was 3.1049 to the Sing Dollar on Friday (1Apr). On Monday (28Mar), the FBM KLCI opened at 1606.14. As at Friday (1Apr) 10:00am, the FBM KLCI is down 13.29 points for the week at 1592.85. Over in US, the overnight Dow Jones Industrial Average closed down 550.46 points (-1.56%) to 34,678.35 whilst the NASDAQ shed 221.76 points (-1.54%) to 14,220.52. 

BNM evaluating potential of central bank digital currency 

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According to Deputy Finance Minister I Datuk Mohd Shahar Abdullah, Bank Negara Malaysia (BNM) is actively evaluating the potential of a central bank digital currency (CBDC) driven by the growing technology and payment landscape. He was speaking during a winding-up debate on the motion of thanks for the Royal Address for his ministry in the Dewan Negara. The CBDC is different from a cryptocurrency in that the former would be a digital currency issued by the central bank to achieve public policy objectives, such as increasing efficiencies of cross-border payments and progressing financial inclusion. As an example, BNM has recently cooperated with the central banks of Australia, Singapore and South Africa through the Dunbar project to develop a shared platform prototype which enables international settlements using various CBDCs by reducing dependency on intermediaries. This prototype platform has the potential to reduce the cost and time taken to carry out cross-border transactions. The outcome of the project would be used by BNM and the other central banks to develop a more efficient next-generation payment infrastructure. In line with the government’s stand, cryptocurrencies such as Bitcoin are not suitable for use as payment instruments due to various obstacles, including price fluctuations, exposure to cyberthreats, lack of scalability and negative impact on the environment. Hence, such currencies are not recognised as legal tenders in Malaysia. 

Sustainability theme key to recovery, ESG a driving force for upcycle phase – CGS-CIMB Research 

According to CGS-CIMB Research, a new recovery theme for the local construction sector could likely come from sustainability practices. The rising adoption of sustainable construction will emerge as a longer-term sector recovery theme. This will happen on the back of new macro policy measures and the reactivation of the RM31bil MRT 3 project. These would mitigate short-to-medium term sector risks, such as weak visibility in other new mega jobs, limitations in the government’s fiscal space and uncertainties surrounding mega contracts due to the political landscape. Malaysia’s construction sector has been one of the biggest casualties of the Covid-19 pandemic, with much work and projects experiencing severe slowdowns or even coming to a complete halt as a result of the movement control orders and stringent standard operating procedures. The industry is now struggling to get back on its feet as new jobs dry up largely due to cutbacks in government spending. A sustainability theme may provide better visibility and an alternative view in terms of resetting the government’s strategy in rolling out new contracts and better positioning for contractors in tendering for upcoming new mega projects. It will also provide investors with a better perspective on the potential longer-term winners and beneficiaries of the rollout of new contracts that are more aligned to the sustainability agenda. While historically sector-wide sustainability strategies and plans were somewhat fragmented, the government has placed greater emphasis on the domestic construction sector’s pathway to higher sustainability standards, as seen in the 12th Malaysia Plan (12MP). These sustainability initiatives will cause Malaysia’s construction industry to enter into a “transformation phase” this year as the research house was seeing a shift towards climate action and sustainable mega projects. Water, flood mitigation and transport projects are key potential beneficiaries of this theme, which bodes well for Gamuda Bhd, IJM Corp Bhd and HSS Engineers Bhd. The construction sector accounts for 6% of global gross domestic product which implies that development activities will always be an integral part of economic activity and growth. This is particularly so for developing countries like Malaysia. Also the construction sector is the largest global consumer of building materials and accounts for 25% to 40% of global carbon emissions. This directly relates to the building material supply chain and the manner in which main building materials are produced. Cement and steel historically make up 30% to 40% of total construction input. Construction activities have been linked to up to 50% of climate change, 40% of global energy usage and 50% of landfill waste. This also extends to air, water and noise pollution and the destruction of natural habitats. The research house’s assessment of the sustainability theme on the overall local construction sector’s environmental, social and governance (ESG) spectrum points to opportunities to further transform and revamp the sector in its post-Covid-19 pandemic recovery phase in 2022 and potentially back to its upcycle phase over the longer-run. If policy and implementation of the various sustainability initiatives under the 12MP and the National Construction Policy 2030 gain greater traction in the later part of the 12MP period (2021 to 2025). This, and with proper planning and execution, could translate into several positives, mainly a revival in private and public sector job flows coupled with the emergence of new infrastructure project proposals beyond the legacy contracts. Other positives include a revisit of other legacy mega developments such as the estimated RM50bil to RM100bil gross development value Bandar Malaysia, the emergence of new growth areas such as those proposed under the RM5bil Penang South Islands project and the rollout of backlog water infrastructure projects. Issues like labour shortage and a continuous rise in raw material prices will continue to impact earnings for some time. 

According to World Bank’s East Asia and Pacific regional vice president Manuela V Ferro, Malaysia needs an underlying structural economic transformation to increase productivity growth. While the country has done relatively well compared to its regional peers, it has lagged its global aspirational peers that have nearly three times the productivity levels. Further, there are significant variations in productivity levels among firms within Malaysia. Pre-pandemic estimates suggest that smaller firms generally lag significantly behind their larger counterparts. Firms in the top 25% of the productivity distribution are nearly 12 times more productive than those in the bottom 25%. The pandemic has further exacerbated these differences. In recent years, spending on research and development (R&D) activities in Malaysia has decreased after a steady increase until 2016. Gross public expenditure on R&D has dropped from 1.4% of gross domestic product (GDP) in 2016 to 1.0% of GDP in 2018. This falls short of Malaysia’s envisaged goal of 2.0% of GDP and the Organisation for Economic Co-operation and Development (OECD) average of 2.6%. The World Bank also found that Malaysian firms are also less likely to spend on R&D compared to their regional peers. Its engagement with the government has provided opportunities to look at relevant policy areas to assist in charting a path forward. One aspect of this which it focussed on in its recent work relates to increasing small and medium enterprises’ (SMEs) contribution to Malaysia’s economic growth. Based on analysis undertaken in the ‘SME Program Review’, Malaysia could consider realigning its public support for SMEs to not only enable a private sector-led recovery from the pandemic but also support firm-level innovation. Another World Bank study titled ‘Assessment of the Malaysian Start-Up Financing Ecosystem’ revealed that Malaysia’s venture capital activities are relatively low compared to the region, in relation to its level of economic development. Thus funding activities are performing below potential, affecting investible deal flow down the line. As public support is concentrated on the more advanced stages of innovative activities, she called for a possible need to rebalance this to earlier and hence the riskier stages of the innovation cycle. Meanwhile, the assessments on the effectiveness of public research institutions found that while the linkages between academia and industry have increased over time, it broadly remains weak, hence affecting commercialisation of research outputs. It has been encouraging to see that in response to the report’s recommendations, the government established a Research Management Unit to reorient its technology transfer and commercialisation programmes to be more responsive to industry needs. Based on the reports, the World Bank recommended the government to enhance evidence-based policymaking for SME development by increasing monitoring and evaluation of government programmes and coordination among agencies, to recalibrate SME programmes to support needs on digitalisation and skills upgrading, and to rebalance the policy mix towards the ideation stage with programmes that crowd in private investments. 

SC registers two initial exchange offering operators 

The Securities Commission Malaysia (SC) has registered two initial exchange offering (IEO) operators to promote responsible innovation in the digital space. The two IEO operators are Kapital DX Sdn Bhd and Pitch Platforms Sdn Bhd. The registered IEO operators will provide an alternative avenue for eligible companies to raise funds via the issuance of digital tokens in Malaysia. An issuer may raise funds up to RM100 million from retail, sophisticated, as well as angel investors, subject to the investment limits provided in the SC’s Guidelines on Digital Assets. These new operators will be required to carry out the necessary assessments, among others, to verify the issuer’s digital value proposition, review the issuer’s proposal and disclosures in its whitepaper, and undertake a comprehensive due diligence on the issuer and its token offering, prior to hosting the issuer’s digital token on their platform. In addition, they will be given up to nine months to comply with all the regulatory requirements before commencing operations, and these include putting in place a robust and effective Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) process to mitigate Money Laundering and Terrorism Financing (ML/TF) risks. Furthermore, the SC reminded members of the public that they are not permitted to offer, issue or distribute any digital assets — which have been prescribed as securities in Malaysia — without obtaining a registration or authorisation from the SC. In this regard, a person convicted may be liable to a fine not exceeding RM10 million or imprisonment for a term not exceeding 10 years or both. Members of the public are also advised to be mindful of the risks related to investing in digital assets, including risks of investing on platforms not registered with the SC. 

Eye On The Markets 

This week, on Friday (25Mar), the Ringgit opened at 4.2225 against the USD from 4.1975 on Monday (21Mar). Meanwhile, the Ringgit was 3.1112 to the Sing Dollar on Friday (25Mar). On Monday (21Mar), the FBM KLCI opened at 1588.07. As at Friday (25Mar) 10:00am, the FBM KLCI is up 11.88 points for the week at 1599.95. Over in US, the overnight Dow Jones Industrial Average closed up 349.44 points (+1.02%) to 34,707.94 whilst the NASDAQ added 269.23 points (+1.93%) to 14,191.84.  

Resilient rental income & increase in footfall a boost to REITs performance – Maybank Research 

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According to Maybank Research, there are expectations of an eventual earnings recovery for retail and hospitality real estate investment trusts (REITs) in Malaysia this year. This will be driven by lower rental assistance and the soon re-opening of international border gates. It remains selectively positive on the REITs with industrial properties, prime malls and office with long-term tenants where earnings will be supported by resilient rental income and sustained occupancy rates. The recent Q42021 results showed the REITs were mostly performing above expectations. The average core net profit growth seen were to the tune of 31% year-on-year (y-o-y) and 99% quarter-on-quarter. Growth was mainly supported by the retail assets due to easing of movement restrictions and also long-term office tenants. However, there is limited rental growth potential over the short-to-medium term for retail malls and offices. Given the expectations, it has maintained its “neutral” call on the sector. Its selective buy calls are on Axis REIT, Sentral REIT, Pavilion REIT and KLCC REIT. The sector offers 2022 and forecast 2023 average net dividend per unit yields of 5.5% and 6.7% respectively. Their top buy pick is Axis REIT which offers a 5.6% forecast net yield for 2022. Sentral REIT, Pavilion REIT and KLCC REIT offers 7.6%, 5.2% and 4.9% forecast yields respectively. Also there was a recovery seen in the retail footfall levels with the easing of pandemic restrictions. The retail segment saw encouraging recovery in retail footfalls and retail sales, with prime malls recording almost pre-pandemic levels, boosted by the festive seasons. Core net profit for REITs with shopping malls saw a jump of up to 41% y-o-y quarterly earnings, mainly due to lower rental rebates. The research house expects a progressive recovery for the retail sub-segment this year from a reduction in rental assistance. However, outlook for rental reversion remains muted. Meanwhile, any overnight policy rate which may rise at the end of this year would marginally nudge lower selected REITs bottom lines by an average of 1%. As at end-2021, their coverage’s debt base was at a circa 47% comprised of floating rate debt, with average interest cost in 2021 having ranged between 2.8% to 4.3%. 

Listed companies’ market cap climbed to RM1.81 trillion – Bursa Research  

According to Bursa Malaysia Bhd’s research arm Bursa Digital Research, the total market capitalisation of companies listed on the bourse climbed 4.4% to RM1.81 trillion as at Feb 28, 2022 from a month earlier due to buying in the energy and plantation sectors as crude oil price topped US$100 per barrel while crude palm oil breached RM7,000 a tonne. In its latest trade performance and fund flow report, it states that in February 2022, average daily trading volume (ADV) across Bursa rose 36.8% to RM2.77 billion, with growth recorded across all investor segments. Foreign investors accelerated the buying with an inflow of RM2.84 billion (+RM2,843 million) compared with +RM332 million in January. 

MOF, BNM, SC to formulate framework on consumer credit regulation 

According to Deputy Finance Minister II Yamani Hafez Musa, the Ministry of Finance (MoF), Bank Negara Malaysia (BNM) and the Securities Commission (SC) are spearheading collaborations with relevant agencies to formulate a comprehensive legal framework to regulate all consumer credit activities, including the “Buy Now Pay Later” (BNPL) scheme. The framework would be set in place with the enactment of the Consumer Credit Act (CCA) this year. With the CCA, all credit and BNPL providers will be subject to relevant regulations that also encompass risk control and consumer protection as well as the appropriate Shariah-compliance rules in performing BNPL activities. The government expects to see more new innovations in line with the digital acceleration but these innovations would need to be well regulated. He said this during the Dewan Rakyat sitting in reply to a question from Lukanisman Awang Sauni (Sibuti-GPS) on the BNPL purchasing method on the online trading platforms, stressing that currently, BNPL activities are not being regulated by any agency. As such, consumers are advised to understand the BNPL’s terms and conditions, ensure that instalment payments are made in full and on time, and monitor their BNPL commitments to ensure that their personal debts remain manageable.  

Eye On The Markets 

This week, on Friday (18Mar), the Ringgit opened at 4.1955 against the USD from 4.1970 on Monday (14Mar). Meanwhile, the Ringgit was 3.0994 to the Sing Dollar on Friday (18Mar). On Monday (14Mar), the FBM KLCI opened at 1570.70. As at Friday (18Mar) 10:00am, the FBM KLCI is up 14.40 points for the week at 1585.10. Over in US, the overnight Dow Jones Industrial Average closed up 417.66 points (+1.23%) to 34,480.76 whilst the NASDAQ added 178.23 points (+1.33%) to 13,614.78. 

Malaysia’s foreign portfolio inflow hit six-month high in Feb – UOB

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According to UOB Global Economics and Market Research analysts Julia Goh and Loke Siew Ting, Malaysia’s foreign portfolio inflow, comprising the combined value of net foreign purchases in the country’s debt and equity markets, rose to its highest in six months at RM5.9 billion in February from RM3.8 billion the month prior. Both Malaysian debt and equity markets saw net foreign purchases of RM3.1 billion and RM2.8 billion respectively in February from RM3.5 billion and RM0.3 billion in January. Year to date, foreign portfolio inflows amounted to RM9.7 billion in the first two months of 2022, slightly higher than the RM9.2 billion inflows recorded in Jan-Feb 2021. It was driven by resilient demand for the debt securities (at +RM6.6 billion vs +RM10.9 billion in Jan-Feb 2021) and a return of buying interest in equities (at +RM3.1 billion vs -RM1.7 billion in Jan-Feb 2021). February’s foreign debt inflows were driven by all sub-debt instruments, led by government investment issues (GII). Non-resident holdings of Malaysian government bonds (MGS), jumped for the third straight month by RM2.2 billion to a new all-time high of RM240.4 billion as at end-Feb (end-Jan: +RM4.3 billion to RM238.2 billion). It is equivalent to 25.3% of total government bonds outstanding (end-Jan: 25.5%). Foreign holdings of MGS alone also marked a new all-time high of RM194.6 billion even though just RM500 million worth of MGS were snapped up in February. This brought overseas investors’ shareholding of MGS to 39.3% of total MGS outstanding (end-Jan: 39.6%). Similar to GII, foreign investors raised their holdings by RM1.7 billion to a new record high of RM45.8 billion (end-Jan: -RM0.3 billion to RM44.2 billion), which made up 10.5% of total GII outstanding (end-Jan: 10.4%). Risk-off sentiment and sky-rocketing commodity prices sparked by the Russia-Ukraine conflict and sanctions are initiating some asset reallocation into commodity producing countries, including Malaysia. However expectations of narrower interest rate differentials, domestic policy uncertainty, constrained fiscal policy space, and increasing downside risks to domestic growth prospects are wildcards for Malaysia’s foreign portfolio flows and currency outlook, should geopolitical risk escalate further. The US Federal Reserve is anticipated to start its rate hike cycle at next week’s Federal Open Market Committee (FOMC) meeting (March 15-16), while most regional central banks including Bank Negara Malaysia (BNM) are projected to begin their monetary normalisation at a more measured pace and later than the US Federal Reserve. This will likely lead to narrower interest rate differential between regional central banks including Malaysia and the US Federal Reserve. Key events to watch out for in March include the ongoing developments of the Russia-Ukraine conflict, March’s FOMC meeting outcome, Johor state election results, as well as BNM’s publication of its Annual Report 2021, Economic and Monetary Review 2021, and Financial Stability Review for 2HFY21 with its latest economic forecasts for gross domestic product and inflation. 

Malaysia attracted record approved investment of RM306.5b in 2021, driven by E&E boom 

According to Senior Minister and International Trade and Industry Minister Datuk Seri Mohamed Azmin Ali, Malaysia attracted a record amount of approved investments worth RM306.5 billion in the manufacturing, services and primary sectors in 2021, driven by higher foreign direct investment (FDI) and increased projects in the manufacturing and the electrical and electronics (E&E) sectors. Malaysia’s FDI of RM208.6 billion accounted for 68.1% of total approved investments, with the remaining 31.9% coming from domestic direct investment (DDI) at RM97.9 billion. Year-on-year, Malaysia’s FDI was significantly higher by 224.9% from RM64.2 billion in 2020, however, DDI declined marginally by 5.13% from RM103.2 billion the year before. The Netherlands (RM78 billion), Singapore (RM47.3 billion), the People’s Republic of China (RM31.3 billion), Austria (RM18.9 billion) and Japan (RM9.9 billion) accounted for 88.9% of total FDI approved in the manufacturing, services and primary sectors. Pulau Pinang (RM83.5 billion) recorded the highest investments approved last year, followed by Kedah (RM68.3 billion), Kuala Lumpur (RM37.7 billion), Selangor (RM28.8 billion) and Sarawak (RM25.7 billion). These five states contributed 79.6% of total approved investments in 2021. The record-breaking approved investments for the manufacturing, services and primary sectors were a 83.1% jump from 2020’s figure. Malaysia’s RM97.9 billion DDI in 2021 is a signal that local industry players had grown in terms of capabilities and business capacity to be competitive on the global stage. MIDA has already secured 352 projects in the pipeline with proposed investments of RM39.2 billion for the manufacturing and services sectors. These projects will create more than 19,000 new job opportunities for the rakyat. Meanwhile, the manufacturing sector led total investments approved in 2021 by recording RM195.1 billion, followed by the services sector and the primary sector at RM94.1 billion and RM17.3 billion respectively. The manufacturing sector reported a leap in approved investments by 113.7% from RM91.3 billion in 2020, while the services and primary sectors saw improvements of 34.4% and 183.6% from RM70 billion and RM6.1 billion respectively. Notably, the E&E industry contributed the bulk of the FDI as well as total approved investments within the manufacturing sector by recording RM148 billion for 94 approved projects.  Chief among the E&E industry’s RM148 billion in total approved investments included RM42.2 billion from Risen Solar for the design development and manufacturing of solar modules and solar cells, followed by Intel Electronics’ RM30 billion to produce wafer fabrication and stacked dies in Pulau Pinang, AT&S’ RM8.5 billion to establish design development and manufacturing of integrated circuit substrates in the Kulim Hi-Tech Park, and Infineon Technologies’ RM3.25 billion in Melaka. MIDA had secured 75 capital-intensive projects valued at RM100 million and above in 2021, which could spur the growth of new advanced manufacturing technologies and produce a highly skilled workforce. Meanwhile, the services sector’s 34.4% improvement in 2021 was driven by sub-sectors such as real estate (RM28.8 billion), global establishments (RM19.7 billion), financial services (RM12 billion), utilities (RM9.6 billion), and information and communications (RM8.2 billion). The bulk of the primary sector’s approved investments were led by the mining sub-sector’s RM17.1 billion or 98.7% amid higher crude oil and natural gas prices, while the plantation and commodities and agriculture sub-sectors brought in RM211.4 million and RM20.5 million respectively. 

Bursa: Malaysia sees increasing number of new women investors 

According to Bursa Malaysia Bhd chief executive officer Datuk Muhamad Umar Swift, Malaysia continued to see an increasing number of new women investors in the stock market, representing 36% of new Central Depository System (CDS) accounts opened year-to-date. In 2020, 32% of the CDS accounts were held by women, and the number rose to 34% last year. Female investors made up 30% of total trade value in 2021, and women’s total trade volume surged 194.1% between 2018 and 2021. Speaking at the annual Ring the Bell for #EqualityforEquity Campaign in conjunction with the International Women’s Day 2022 celebration on Tuesday (March 8), he said that women have become more actively involved in investing activities. Various studies conducted showed that portfolios managed by women tend to outperform those overseen by their male counterparts. In 2021, a study by Fidelity Investments showed women investors achieved positive returns and surpassed men by 0.4% on average in terms of annual performance between January and December. However there is still room to grow and much needs to be done to further encourage the participation of women investors. Hence, Bursa Malaysia launched the #MyFirstTrade campaign that runs from March 8 until March 31 exclusively for women investors who have a positive story to share. During the period, Bursa and participating brokers will wave respective portions of the opening fee for the first 4,000 CDS accounts opened by women. Bursa provides a fair and open platform where everyone, men or women, can participate in the capital market and corporate space. Bursa has implemented rules for more women representation on the board of directors and will continue with efforts to reduce the gender equality gap in the workplace. 

ICMR launches inaugural book on sustainable finance 

The Institute for Capital Market Research Malaysia (ICMR) launched its inaugural edited book, “Financing Sustainability: Critical Issues with East Asian Experiences.” Led by chief editor, Professor Dato’ Dr. Rajah Rasiah, the book is a compilation of thought pieces contributed by ICMR analysts and regional experts. Together, they offer valuable insights to address the financing of sustainable development to meet the UN’s Sustainable Development Goals (SDGs). In dissecting the experience of a high-income economy and that of some middle and low-income economies in East and Southeast Asia, the book breaks new ground by linking evidence with strategies and mechanisms in countries at different levels of development. The experiences of more developed economies are presented as learning opportunities for less developed ones. The book offers a refreshingly novel account of the different funding alternatives that are now pursued by various socio-economic agents to address sustainability issues worldwide. This goes beyond environmental issues alone to cover financial inclusion, sustainable trade, Islamic finance, as well as the role of corporate governance and pension institutions. Drawing on a careful review of the extant literature and the crafting of policy-relevant strategies, the book is therefore intended to contribute significantly to the literature on sustainable development. It will serve as an essential guide for policy makers and market actors in their quest to promote the financing of sustainability across the globe. The book is published by the University of Malaya Press and can be purchased at www.umpress.com.my. At the conclusion of the event, ICMR and Sunway University, represented by the Jeffrey Sachs Center for Sustainable Development, inked a Memorandum of Understanding to promote greater knowledge sharing on sustainable finance with the hope of working closer together on positive developments in this area. 

Eye On The Markets 

This week, on Friday (11Mar), the Ringgit opened at 4.1890 against the USD from 4.1795 on Monday (7Mar). Meanwhile, the Ringgit was 3.0814 to the Sing Dollar on Friday (11Mar). On Monday (7Mar), the FBM KLCI opened at 1606.27. As at Friday (11Mar) 10:00am, the FBM KLCI is down 44.03 points for the week at 1562.24. Over in US, the overnight Dow Jones Industrial Average closed down 112.18 points (-0.34%) to 33,174.07 whilst the NASDAQ shed 125.58 points (-0.95%) to 13,129.96.  

EPF allocates RM1bil for investment opportunities in pre-IPO space

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According to The Employees Provident Fund (EPF) CEO, Datuk Seri Amir Hamzah Azizan, the fund aims to venture into the private equity pre-IPO space in 2022. There is not enough stimulus going into Bursa Malaysia as there seems to be an “investment trap” – a funding gap between the time a company moves from the venture capital market and enters the pre-initial public offering (IPO) stage. This gap presents investment opportunities. Towards the later stage of the pre-IPO, EPF can play a role as it can manage the risk element and get fairly good returns for the members and in that process, it can also help generate the engine that feeds into Bursa. He was speaking at the fund’s FY2021 results media briefing. For this endeavour, EPF will be working with specific funds to promote and look into opportunities in that particular stage. The move will also stem the shifting of companies to outside Malaysian waters. Nonetheless EPF needs to deliver its core mandate and in that mandate, it will not take abnormal risks and the investments have to fit its risk investments tolerance levels. For 2021, EPF has declared a 6.10% dividend for conventional savings which translates into a total payout of RM50.45 billion and syariah savings receive a 5.65% dividend, amounting to RM6.27 billion. The latest dividends surpass the 5.2% and 4.9% payouts for conventional and syariah savings reported for 2020, as well as the 5.45% and 5.0% for the pre-pandemic year of 2019, respectively. The strong results were attributed to the continued market recovery in 2021, particularly in the developed markets, which contributed to its listed equity portfolios, providing opportunities for it to realise profits. Equities, particularly foreign-listed equities, which recorded a return on investment (ROI) of 10.44%, continued to be the driver of returns. For 2022, the fund will be increasing its investments in various domestic asset classes. The reopening of economies and businesses, as well as various initiatives under the National Economic Recovery Plan, would provide fertile ground for the EPF to increase its investment efficiencies and leverage on the opportunities that a recovery brings. Due to the complications from the Covid-19 pandemic, the fund received a mandate to allow early withdrawals for its members via i-Lestari, i-Sinar and i-Citra that collectively saw RM100.9 billion withdrawn from EPF between April 2020 and February 2022. EPF had to manage liquidity due to the withdrawals and the best way to manage this was by repatriating its investments in the international market as EPF has a diverse portfolio and won’t rattle the market. If there were no withdrawal schemes, there’s a likelihood the fund could have stayed a bit longer in the international market and had the potential to ride the market as it crested. Now that the schemes have ended the fund will continue to go back and invest both domestically and internationally, continue to design a portfolio that will give risk reward returns that its normal Strategic Asset Allocation will give. On projections for 2022, he said it is too early to tell, but assured contributors that the fund does not have any direct exposure to any interest in Ukraine or Russia, hence there is no material impact from the conflict. When the Ukraine-Russia situation occurred, the market gyrated a little bit and it has since recovered to where it was, save for oil prices. The key is to understand what the long-term ramification of that is and make sure we have the agility in our portfolio to address that. EPF can make money whether the market moves up or down, depending on its volatility play, as it has a long-term investment horizon. For example, when the market goes down, it can take the opportunity to buy good long-term assets at the favourable prevailing price. By asset class, EPF’s fixed income instruments account for 45% of investments, followed by equities at 44%, real estate & infrastructure is at 6% and money market instruments make up the remaining 5%. 

OPR kept unchanged at record low of 1.75% – BNM 

According to Bank Negara Malaysia (BNM), its Monetary Policy Committee (MPC) decided to maintain the overnight policy rate (OPR) at 1.75% as it evaluated various factors including the Russia-Ukraine conflict, which has emerged as a key risk to global economic growth, trade prospects, commodity prices and financial markets. It is also mindful of lingering concerns over the Covid-19 pandemic. For Malaysia, risks to the country’s economic growth outlook remain tilted to the downside due to external and domestic factors while Malaysia’s inflation in 2022 is projected to remain moderate. The MPC considers the current stance of monetary policy to be appropriate and accommodative. Fiscal and financial measures will continue to provide support to economic activity. Amid the prevailing uncertainties, the stance of monetary policy will continue to be determined by new data and their implications on the overall outlook for domestic inflation and growth. The OPR has been maintained at 1.75% since July 7, 2020, when BNM cut the rate from 2%. While the global economy continues to recover and the recent moderation in economic activity due to the Omicron variant-driven Covid-19 resurgence, the overall recovery trajectory remains on track. Inflation in many economies remain elevated, due to both demand and supply factors. Going forward, more countries will transition to endemic management of Covid-19, hence, supporting global growth prospects. The unfolding developments surrounding the military conflict in Ukraine, however, have emerged as a key risk to global growth and trade prospects, commodity prices and financial market conditions. The global growth outlook will also continue to be affected by developments surrounding Covid-19, risks of prolonged global supply disruptions, and heightened financial market volatility amid adjustments in monetary policy in major economies. Despite the challenging environment, the Malaysian economy expanded by 3.1% in 2021 from a year earlier. Looking ahead, Malaysia’s economic growth recovery will strengthen in 2022, driven by the expansion in global demand and higher private sector expenditure, amid improvements in the labour market and continued targeted policy support. The expected reopening of international borders would also provide further support to economic recovery. The economic impact from the recent increase in Covid-19 cases due to the Omicron variant is expected to be considerably less severe than previous waves in the absence of stringent restrictions. Risks to Malaysia’s economic growth outlook remain tilted to the downside due to external and domestic factors. These include a weaker-than-expected global growth, ongoing geopolitical conflicts, worsening supply chain disruptions, and developments surrounding Covid-19. Malaysia’s 2022 headline inflation, as measured by the consumer price index, is projected to remain moderate as the base effect from fuel inflation continues to dissipate. The country’s core inflation is expected to normalise to around its long-term average as economic activity continues to pick up amid the environment of high input costs. Nevertheless, core inflation is expected to be modest, with the upside risk partly contained by the continued slack in the economy and labour market. The inflation outlook continues to be subject to global commodity price developments amid risks from prolonged supply-related disruptions. 

Malaysia’s GDP to grow by 6pc in 2022 – MIDF Research 

According to MIDF Research, Malaysia’s gross domestic product (GDP) is expected to grow stronger at six per cent in 2022 from 3.1 per cent for 2021, mainly driven by further reopening of the economy such as lifting the ban on international travels which will support a better growth outlook this year. The research firm said that with high vaccination rate, there is less need for the government to tighten COVD-19 restrictions given the ability of the healthcare system to withstand the recent resurgence in Covid-19 infections. Therefore the momentum of growth will continue to strengthen this year, backed by growing domestic spending, improving labour market and increased business activities. In its Monthly Economic Review, it said sustained growth in external demand will also support Malaysia’s trade and production activities this year. Near-term growth outlook remains positive as growth momentum seen improving with the leading index (LI) increasing to 2.1 per cent year-on-year (y-o-y) in December 2021 compared to 1.6 per cent in November 2021, buoyed by the increment in the number of housing units approved, indicating increased business activities going forward. Although the Ukraine-Russia conflict will not have a direct significant impact to Malaysia’s trade, prolonged disruption in the global supply chain, rising commodity prices and higher import costs will be among downside risks to growth outlook. Meanwhile, Malaysia’s total trade in January 2022 stood at RM203 billion or 24.8 per cent y-o-y higher than January 2021, driven by sustained growth in both exports and imports. Exports rose at 23.5 per cent y-o-y in January 2022, sustaining double-digit growth for the sixth straight month. The pace of exports growth was, however, more moderate than December 2021 (29.2 per cent y-o-y), reflecting the moderation in manufacturing exports and similar trends observed in regional exports. Imports growth accelerated to 26.4 per cent y-o-y compared to December 2021 at 23.6 per cent y-o-y and maintained two-digit growth since February 2021, mainly due to the low base effect as imports previously weakened in January 2021 because of movement control order 2.0. On Malaysia’s headline inflation rate, January 2022 headline inflation recorded a four-month low, where it eased to 2.3 per cent y-o-y compared to 3.2 per cent y-o-y in December 2021, dragged by lower price growth of non-food. Core inflation remained on upward momentum, rose by 1.6 per cent y-o-y, the fastest pace in two-years. The continuous pick-up in core consumer price index indicates the revival effects of growing domestic demand on general prices amid moderate recovery in labour market and economic reopening. On sequential basis, overall inflation data rose at marginal pace. The softening pace seen in headline inflation is expected following dissipating low-base effects especially from transport inflation. 

Eye On The Markets 

This week, on Friday (4Mar), the Ringgit opened at 4.1900 against the USD from 4.2010 on Monday (28Feb). Meanwhile, the Ringgit was 3.0808 to the Sing Dollar on Friday (4Mar). On Monday (28Feb), the FBM KLCI opened at 1595.74. As at Friday (4Mar) 10:00am, the FBM KLCI is up 8.19 points for the week at 1603.93. Over in US, the overnight Dow Jones Industrial Average closed down 96.69 points (-0.29%) to 33,794.66 whilst the NASDAQ shed 214.07 points (-1.56%) to 13,537.94.  

Bursa Malaysia Derivatives completes first physical delivery of East Malaysia Crude Palm Oil Futures in Sabah

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According to Bursa Malaysia Derivatives chief executive officer Samuel Ho Hock Guan, Bursa Malaysia Derivatives Bhd has completed the first physical delivery of its East Malaysia Crude Palm Oil Futures Contract (Fepo) in Sabah on February 17, 2022. The delivery saw a total of eight contracts, representing 200 tonnes of crude palm oil (CPO) transacted between the seller, Green Edible Oil Sdn Bhd, and the buyer, Kunak Refinery Sdn Bhd at one of the approved Port Tank Installations in East Malaysia, namely in Sandakan, Sabah. The Port Tank Installation is operated by Sawit Bulkers Sdn Bhd, a wholly-owned subsidiary of Sawit Kinabalu Group, which is the premier investment arm of the Sabah state government in the oil palm industry. The successful and orderly completion of the first physical delivery for Fepo contracts demonstrates the demand from Sabah producers to sell their CPO through an alternative platform with greater price transparency. The Fepo contract benefits Sabah refiners and buyers by allowing them to source CPO at competitive pricing. It also enables them to manage price risk and hedge against unfavourable price movement in the physical market, especially during the low-supply season. Meanwhile, Sawit Kinabalu group managing director Datuk Bacho Jansie said the availability of Bursa Malaysia Derivatives’ Fepo contract provides East Malaysia market participants with an additional trading opportunity as well as an improved price discovery mechanism and more physical delivery options in Sabah and Sarawak. He added that as one of the designated delivery ports in Sabah, he hopes to attract more market participants to lease out their available tanks and further increase the visibility of the East Malaysia palm oil market. The Fepo contract, which went live on October 4, 2021, provides East Malaysia CPO market participants with a new avenue to engage in physical deliveries and hedge their positions in the physical CPO market. It also strengthens Bursa Malaysia Derivatives’ Palm Complex offerings and provides price transparency in the East Malaysia CPO market, further cementing Malaysia’s position as the global centre for palm oil price discovery. From its launch date to February 8, 2022, Bursa Malaysia Derivatives recorded a total trading volume of 3,250 contracts which is equivalent to 81,250 tonnes of CPO. Its highest daily trading volume was recorded on January 5, 2022, at 122 contracts representing 3,050 tonnes of CPO. 

Growth momentum expected to be hampered – Moody’s  

According to Moody’s Investors Service in the latest update to its Global Macro Outlook for 2022-23 report, declining fiscal support, tighter monetary policy and waning pent-up demand will weigh on growth momentum in most countries. Although it expects the rapid rise in inflation in recent months to subside, the steep and broad-based increase in prices is eroding household purchasing power and could weaken the recovery. The global economy is transitioning from a tentative recovery toward more stable growth, bolstered by improvement in the Covid-19 health situation. The current economic cycle is remarkable in the swiftness with which activity has been restored in most major economies. The Group of 20 (G20) economies is expected to collectively expand 4.3 per cent in 2022, down from 5.9 per cent in 2021 yet still above long-term trend growth. Global growth will further slow to 3.2 per cent in 2023 as pandemic-fuelled output losses have been largely recouped and labour markets in advanced economies approach a full recovery. The agency also predicted a challenging first half of 2022, with elevated commodity prices, demand-supply imbalances, inflation pressures, volatile financial markets and geopolitical tensions. However, demand-supply distortions is expected to resolve over 2022, with supply bottlenecks easing in the second half of the year. 

AmInvest launches Asia ex Japan Equity Fund 

According to AmBank group CEO Datuk Sulaiman Mohd Tahir, AmInvest has launched its Asia ex Japan Equity Fund, which offers investors potential long-term capital growth by investing in a diversified portfolio of stocks in the Asia region (excluding Japan). The fund will feed into the Baillie Gifford Worldwide Asia ex Japan Fund, which aims to provide above average returns over the long term by investing in the fastest growing stocks in the Asia region excluding Japan. The target fund invests in companies that are financially sustainable in the long run, and takes into consideration factors such as high quality growth businesses that enjoy competitive advantages in their marketplace, environmental, social and governance matters. According to AmInvest chief executive Goh Wee Peng, the fund is a beneficiary of structural drivers that will continue to support strong growth prospects in China and the broader Asia Pacific region. This is the second fund partnership with Baillie Gifford, the target fund’s investment manager, who also manages the target fund for the Sustainable Series – Positive Change Fund. Baillie Gifford have over 30 years of experience managing Asian region equities. Since its inception in February 2020 until to date, the target fund has returned 36.2% and beaten its benchmark by 23.4%. There should be material growth for the fund, as there are more than 3 billion consumers across Asia with a notably large consumer market within the rising Asian middle class. Pre-pandemic data from International Monetary Fund predicts that the per capital spending power of Chinese consumers will nearly double in US dollar terms over a five-year period from 2019 to 2024. Digital penetration and technological change continue to be the key themes for long-term growth opportunities in Asia. Rapid development of technology is creating a fundamental change in market behaviours, with digitalisation driving changes in economic and political systems, businesses, consumer habits and behaviours. The target fund actively seeks companies that may have underappreciated growth and those constantly reinvesting for the long-term, either in research or development of capital projects. The fund’s base currency is US dollar. It is being offered for subscription to sophisticated investors in US dollar, ringgit and in ringgit-hedged classes at the initial offer prices of US$1 and RM1 per unit respectively during the initial offer period until March 23, 2022. AmInvest is the brand name for the fund management business of AmFunds Management Bhd and AmIslamic Funds Management Sdn Bhd. 

Local institutions placed emphasis on importance of ESG-compliant investments — Bursa 

According to Bursa Malaysia, local institutions placed emphasis on the importance of environmental, social and corporate governance (ESG)-compliant investments. Malaysia’s key institutional investment managers and asset owners — such as the Employers Provident Fund (EPF), Khazanah Nasional Bhd and Retirement Fund (Incorporated) (KWAP) — had participated in and signed the United Nations Principles for Responsible Investment in 2019. These institutions have incorporated the ESG mandate into their funds. The EPF is also expected to announce a sector sustainability policy framework as guidance for its future investments that will comply with ESG practices. Citing IHS Markit’s filings up to Feb 7, 2022, the regulator said the local ESG-mandated funds had a total holding value of US$118 billion (about RM494.01 billion) in stocks with good ESG ratings. The filings also showed that the fund houses ranked the highest in terms of the total holding value of stocks with good ESG ratings and accounted for 92% of the total holding value of the stocks. With the change in investment fundamentals within the industry, large-scale investment banks are also pivoting their strategies in tandem with the rise of sustainability consciousness. For instance, in December last year, Maybank Investment Banking Group announced that it would prioritise ESG and help its clients to identify green opportunities. ESG investing is one of the fastest-growing trends in the investment community over the past few years. ESG is slowly becoming a key consideration for investors. Asset owners such as pension funds are increasingly demanding sustainable investing strategies from their asset managers. Bursa, in quoting IHS Markit’s fillings up to Feb 7, said there were 235 ESG-mandated funds globally that had invested in Bursa as an exchange with a total holding value of US$143.5 billion (about RM600.76 billion). 44% of the funds (excluding Malaysia) were from North America, followed by Europe at 27%, Asia at 26% and the Middle East at 3%. 

Eye On The Markets 

This week, on Friday (25Feb), the Ringgit opened at 4.1985 against the USD from 4.1880 on Monday (21Feb). Meanwhile, the Ringgit was 3.1004 to the Sing Dollar on Friday (25Feb). On Monday (21Feb), the FBM KLCI opened at 1601.66 As at Friday (25Feb) 10:00am, the FBM KLCI is down 11.62 points for the week at 1590.04. Over in US, the overnight Dow Jones Industrial Average closed up 92.07 points (+0.28%) to 33,223.83 whilst the NASDAQ added 436.10 points (+3.34%) to 13,473.58.  

Malaysia’s current account surplus to GDP ratio upgraded to 3.5% – MIDF Research 

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According to MIDF Research, the relative size of the current account balance is expected to increase 3.5% of GDP this year (2021: 3.5% of GDP) from their initial expectation of 3.1%. This is in view of the Dept of Statistics Malaysia (DOSM) stating that Malaysia’s current account balance recorded a surplus of RM15.2bil in the final quarter of 2021 despite prolonged nationwide restrictive measures. And a further reopening of economic activities and the continued expansion in export of goods will help drive a wider surplus of Malaysia’s current account balance. This is driven by the exceptionally high net exports of goods with a double-digit growth in prices of commodities. The research house maintains that the sustained surplus will be supported by continued expansion in exports of goods driven by manufactured goods and commodity-related products. As more domestic economic activities reopen, import growth is expected to record higher than export growth this year, at 5.1% versus 4.5%. On the services account, it foresees a smaller deficit in the trade of services for 2022, thanks to the proposed reopening of international borders. Meanwhile, demand for foreign services from the trade-oriented and construction sectors is likely to expand modestly. In the fourth quarter of 2021, the services account recorded a higher deficit of RM15.5bil compared to a deficit of RM15.2bil in the third quarter, dragged down mainly by the travel segment. Traditionally, the travel segment will record higher inflows than outflows. However, the pandemic has flipped the table. With the reopening of domestic economic activities and more leeway given to the fully vaccinated, outflows of travel segment increased to RM4bil in Q4 ‘21, the highest since Q2 ‘20, possibly due to Malaysians travelling to other countries. The travel segment is expected to record a smaller deficit in 2022, particularly with the gradual reopening of international borders. As for other services components, no significant changes is expected throughout the pandemic years. Notably, the National Recovery Council has recommended that the government fully reopen international borders on March 1. However, the borders would not be fully reopened in the first half of the year given that the Health Ministry has forecast daily infection cases to peak at 22,000 by end of March. Additionally, vaccine rollout for children aged five to 11 was only started in February and may take at least 1.5 months for the age group to be fully-vaccinated. Hence, June 1 is expected to be the earliest date for Malaysia to reopen its international borders amid the flattening curve of daily infection rate and higher two-dose vaccination rate as well as booster recipients. For 2022, MIDF Research forecasts services account deficit to GDP ratio to improve from minus 4% in 2021 to minus 3.6%. The travel segment should record a smaller deficit size of minus 0.8% this year (2021: minus 0.9%). 

Inflationary pressures, price hikes temporary – IDEAS 

According to the Institute for Democracy and Economic Affairs (IDEAS), the inflationary pressures and price hikes that Malaysia is facing is temporary and can be effectively controlled through proper monetary and fiscal policies. Even though the inflationary trend is disconcerting, inflation can be controlled efficiently in the short to medium term through the timely deployment of monetary policies. This is in relation to the Statistics Department finding that the country’s inflation rate (as measured by the Consumer Price Index) increased 3.2% year-on-year in December 2021, mainly due to the rise in food and fuel prices and the low base effect. IDEAS noted that the US Federal Reserve has signalled that it would increase its Overnight Policy Rate (OPR) multiple times this year to tame inflation. Malaysia will likely follow suit by increasing its OPR gradually in 2022 and 2023, whereby Bank Negara is expected to increase the OPR by about 50 basis points in the latter half of this year. Meanwhile, according to IDEAS director of economics and business unit and acting director of research Dr Juita Mohamad, the current rise in inflation is a global issue, stemming from stronger demand and higher energy prices, after two years of battling the pandemic through lockdowns. The pandemic and the lockdowns led to both demand and supply shocks at a global scale. As a small and open economy, Malaysia was not immune to the devastating aftermath posed by the pandemic. Inflationary pressure is further compounded by the recent flooding in the country, which puts a strain on the supply of selected essential goods produced locally. 

Malaysia set for a gradual recovery – impressive vaccine rollout, swift measures lauded – IMF 

According to the International Monetary Fund (IMF), Malaysia’s economy is set for a gradual recovery from the Covid-19 downturn, with real gross domestic product (GDP) growth at 3.1% in 2021 and projected to accelerate to 5.75% in 2022. This is in line with the preliminary findings of an IMF team led by its economist Lamin Leigh which says that growth will be supported by the authorities’ impressive vaccine rollout and swift implementation of economic policy support measures. A more severe downturn in 2021 was averted, thanks to the swift, substantial, and multi-pronged pandemic policy response targeted to support affected households and businesses. Growth in 2022 is projected at about 5.75%, driven by pent-up domestic demand and continued strong external demand. The pandemic is set to leave implications that could linger over the medium to long run and the recovery would likely be uneven. The team recommends additional near-term targeted fiscal support to the vulnerable and hard-hit segments of the economy. In the near term, fiscal policy should continue to be nimble and increasingly targeted, with a focus on further buttressing the recovery, minimising economic scarring, protecting the vulnerable segments of the population, and scaling-up productive investments, in line with the authorities’ spending priorities. A credible, specific, growth-friendly, and clearly communicated consolidation strategy should be implemented once the recovery is entrenched to rebuild fiscal buffers, preserve fiscal sustainability, and reduce fiscal risks, supported by robust fiscal governance practices. The findings also recommended accommodative monetary policy stance and the continuation of financial sector support measures. 

Foreign investors jump into M’sian equities – MIDF Research 

According to MIDF Research, foreign inflow into the Malaysian stock market rose to its highest in the year so far at RM749.34mil in the previous week amid optimism over the country’s recent release of its economic data. The research house, which tracks the Indonesia, Thailand, Philippines and Malaysia bourses in South-East Asia, noted that all these markets recorded foreign inflow for the week on positive sentiment over their stability. Foreign interest in Malaysian equities was spurred by positive developments in the country’s economy, including the December industrial production index growth of 5.8%, the December distributive trade sales growth of 3.5% and the fourth-quarter gross domestic product growth of 3.6%. The largest foreign inflow was recorded on Wednesday at RM279.64mil and the smallest inflow was on Monday at only RM21.82mil. International funds had been net buyers on the local stock exchange for four out of the past six weeks. In addition, foreign investors were net buyers for every day of the past week, which last occurred in the week ending January 14. Meanwhile, local institutions were active sellers with a sum of RM649.18mil net of local equities sold over the week. Retailers were net sellers on every day of the week except on Monday. By last Friday’s close, retailers had net sold RM100.17mil in Bursa Malaysia stock. Year-to-date, foreign investors have been net buyers of RM1.052bil in local equities. Net buying by retailers stands at a marginal RM980,000 while local institutions are net sellers of RM1.053bil of Malaysian stock. 

Apac’s investor demand good for sustainable bonds – Moody’s 

According to Moody’s Investors Service assistant vice-president and analyst Nishad Majmudar, Asia-Pacific’s (Apac) large financing needs post-pandemic, and the region’s focus on carbon transition and other environmental, social and governance (ESG) risks will propel issuance of sustainable bonds. There was also rising investor demand for instruments that catered to the sustainable market. Conditions were ripe for a rise in the issuance of sovereign sustainable bonds, which is expected to come initially from established issuers. Although the development of regulatory standards and taxonomies across the region is still at an early stage, it will gradually facilitate markets. Apac governments with track records of conventional issuance or have strong market access, such as Hong Kong (Aa3 stable), Indonesia (Baa2 stable), South Korea (Aa2 stable) and Malaysia (A3 stable), were driving sustainable bonds. The issuer base is likely to expand through multilateral support and as investors’ appetite for sustainable bonds catches up with vanilla bonds. The post-pandemic focus on investment to meet United Nations Sustainable Development Goals will drive issuance, particularly as major governments including China (A1 stable), Japan (A1 stable) and South Korea pursue net-zero emissions by 2050. 

Eye On The Markets 

This week, on Friday (18Feb), the Ringgit opened at 4.1863 against the USD from 4.1915 on Monday (14Feb). Meanwhile, the Ringgit was 3.1165 to the Sing Dollar on Friday (18Feb). On Monday (14Feb), the FBM KLCI opened at 1576.99. As at Friday (18Feb) 10:00am, the FBM KLCI is up 28.59 points for the week at 1605.58 Over in US, the overnight Dow Jones Industrial Average closed down 622.24 points (-1.78%) to 34,312.03 whilst the NASDAQ shed 407.38 points (-2.88%) to 13,716.72.  

Bursa inks MoU with HSBC Amanah to improve PLCs’ ESG adoption practices 

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According to Bursa Malaysia chief executive officer Datuk Muhamad Umar Swift, the exchange and HSBC Amanah Malaysia Bhd has entered into a memorandum of understanding (MoU) to collaborate on an initiative aimed at improving Malaysian PLCs’ environmental, social and governance (ESG) adoption practices. Under this MoU, both parties would collaborate in developing sustainability-linked Islamic financial products as well as ESG solutions aligned to the FTSE4Good ratings model and datasets for eligible PLCs. PLCs in the FTSE Bursa Malaysia EMAS index, which made up the FTSE4Good ESG assessment universe, would have the opportunity to tap into HSBC Amanah’s Shariah-compliant ESG offerings while enabling them to accelerate their ESG adoption. This would help improve their ESG ratings for inclusion into the FTSE4Good Bursa Malaysia Index, the Malaysian capital market’s leading ESG index. Additionally, it would be an opportunity for Shariah-compliant PLCs to be included into the FTSE4Good Bursa Malaysia Shariah Index, which was introduced in July 2021. Having PLCs that are able to successfully manage their ESG risks and opportunities via Shariah-compliant ESG solutions will certainly reinforce Malaysia’s role as a leader in Islamic finance. Meanwhile, according to HSBC Amanah CEO Raja Amir Raja Azwa, HSBC Amanah is pleased to join Bursa Malaysia in developing this important initiative towards enabling PLCs on their sustainability journey through the provision of advisory and Shariah-compliant financial solutions as a practitioner of value-based intermediation. This is very much aligned to the bank’s own journey in transforming HSBC Amanah into a leading sustainable bank in line with the triple-bottom line approach of prosperity for people and planet and in support of the Malaysian Government’s National Determined Contribution to the Paris Agreement. PLCs interested in learning more about the initiative or improving their general ESG practices may contact the exchange’s index and sustainable business unit via email at isb@bursamalaysia.com. 

Retail & Wholesale trade up 1.4% in Q4, 2.1% higher in 2021 – DOSM 

According to Department of Statistics Malaysia (DoSM) chief statistician Datuk Seri Dr Mohd Uzir Mahidin, Malaysia’s wholesale & retail trade rebounded 1.4% in the fourth quarter (Q4) of 2021 which translates to a 2.1% increase in the volume index for the full year. The increase for the year was attributed to the motor vehicles sub-sector which rose 3.7%, followed by retail trade with 2%. However, the figures indicated wholesale trade inched down marginally at 0.03% in the same period. For quarter-on-quarter (q-o-q) comparison, the volume index jumped 16.3%, supported by motor vehicles which surged 136.9%. Compared to the fourth quarter of 2019 which was before the Covid-19 pandemic, index volume of this sector expanded to record 2.1%. Looking at the performance across sub-sectors, the volume index of motor vehicles which expanded 3.7% year-on-year (y-o-y) was mainly contributed by sales of motor vehicle and sales, maintenance & repair of motorcycles which posted positive growth of 8.9% and 1.7%, respectively. Maintenance & repair of motor vehicles and sales of motor vehicle parts & accessories decreased -2.3%, and -1.5%, respectively. For the quarterly performance, the volume index of motor vehicles surged 136.9% as compared to the preceding quarter, spearheaded by sales, maintenance & repair of motorcycles with 258.2%. On the other hand, retail trade’s volume 2% gain was attributed to retail sale not in stores, stalls or market with 23.9%. This was followed by retail sale of food, beverages & tobacco 6.5%, retail sale in non-specialised stores 6.2%, retail sale via stalls & market 5.9%, retail sale of automotive fuels 4.6%, retail sale of cultural & recreation goods 0.3%, and retail sale of information & communication equipment 0.1%. Meanwhile, the volume index of retail trade climbed 10.8% compared to the previous quarter. Volume index of wholesale trade sub-sector edged down marginally 0.03% in Q4’21 from Q4’20 and the contraction was attributed to wholesale on a fee or contract basis which eased 7.5%. This was followed by other specialised wholesale which contracted 4%. However other groups in this sub-sector posted positive growth. For q-o-q comparison, volume index of wholesale trade went up 6.%. As for seasonally adjusted volume index, wholesale & retail trade soared 15.3% as against the third quarter of 2021. All sub-sectors recorded positive growth namely motor vehicles 137.1%, retail trade 8.5% and wholesale trade 6%. The volume index of wholesale & retail ended 2021 with 124.1 points, which went up 2.1% supported by wholesale trade and retail trade which grew 3.8% and 3.4%, respectively. As for pre-pandemic comparison, this sector remained below the 2019 figure with -4.2%, pulled down by the motor vehicles sub-sector which slipped -10.2%. 

Consumer spending to continue growing – Unemployment seen hovering below 4% in 2H2022 

According to MIDF Research, consumer spending in Malaysia is set to stay on an upward trajectory this year, underpinned by significantly high vaccination rate, improving labour market, fiscal incentives and stable inflationary pressure. Private consumption and the services sector is expected to contribute positively towards gross domestic product in Q42021. The three-month moving average of distributive trade sales was 5.1% higher year-on-year (Q3 2021: 9.1% drop year-on-year or y-o-y) for the final quarter of 2021. In December 2021, Malaysia’s distributive trade sales growth was 3.5% higher y-o-y, led by motor vehicles (1.5% higher y-o-y), wholesale (4.1% higher y-o-y) and retail (3.5% higher y-o-y). The unemployment rate is expected to hover below 4% in 2H2022 and average at 4% this year. In December 2021, the jobless rate had hit a new pandemic low of 4.2%, as the number of unemployed persons fell below 700,000 for two consecutive months since November 2021. Employment growth in December 2021 reached a seven-month high at 2.8% growth y-o-y, thanks to continuous expansion in both export-oriented and domestic-focused industries. Also, inflationary pressure is predicted to trend lower following receding low-base effects from fuel inflation, especially with retail fuel prices to remain status quo. Cost-induced pressures are set to ease off, given that leading indicators on supply constraints are showing moderating patterns. Steady employment growth and stable inflationary pressure are key fundamentals to benefit and support Malaysia’s consumer spending in the fourth quarter of 2021 as well as for 2022. The country’s retail trade is expected to expand by 5.5% and private consumption to expand by 6% this year with the relaxation of containment measures, economic re-opening and progressive improvements in macroeconomic data, setting the stage for strong consumer spending. With interstate travels allowed, the services sector is projected to benefit and increase by 7.1% this year. Meanwhile, should Malaysia’s international borders be re-opened on March 1, this will be an additional catalyst for the services sector via tourism activity. However, borders are not expected to reopen fully in the first half of this year as the Health Ministry had forecast daily infection cases to peak at 22,000 by the end of next month. Additionally, the vaccine rollout for children aged five to 11 years old had just started in February and they may take at least one-and-a-half months to be fully vaccinated. Meanwhile, retail spending patterns are expected to shift slightly from pre-pandemic years, especially on information and communications technology (ICT) and household items, thanks to remote working and learning arrangements. Spending on non-specialised stores for groceries’ shopping fell in terms of distributive trade sales share to 14.9% in 2021, from a peak point of 15.3% in 2020. As consumers adapted to the new normal, expenditure on ICT products rose to a record high at 4.2% of total distributive trade sales. This year, automotive fuel share is also expected to rebound to its pre-pandemic level at 3.4% (2021: 3.1%) with interstate movements allowed. 

Eye On The Markets 

This week, on Friday (11Feb), the Ringgit opened at 4.1890 against the USD from 4.1850 on Monday (7Feb). Meanwhile, the Ringgit was 3.1123 to the Sing Dollar on Friday (11Feb). On Monday (7Feb), the FBM KLCI opened at 1525.23. As at Friday (11Feb) 10:00am, the FBM KLCI is up 41.70 points for the week at 1566.93. Over in US, the overnight Dow Jones Industrial Average closed down 526.47 points (-1.47%) to 35,241.59 whilst the NASDAQ shed 304.73 points (-2.10%) to 14,185.64.  

Launch of cross-border QR payment linkage between Malaysia and Indonesia 

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Bank Negara Malaysia (BNM) and Bank Indonesia (BI) launched a cross-border QR payment linkage that will enable instant, secure, and efficient cross-border payments between Malaysia and Indonesia. Through this linkage, consumers in both countries will be able to make retail payments by scanning the DuitNow or QRIS (Quick Response Code Indonesian Standard) QR codes displayed by offline and online merchants. This marks the beginning of a pilot phase that will pave the way for a full commercial launch in the third quarter of 2022. This linkage will be expanded in the future to support cross-border remittance where users in both countries can make real-time fund transfers with convenience. According to BNM deputy governor Jessica Chew Cheng Lian, the cross-border QR payment linkage between Malaysia and Indonesia marks a key milestone in the long history of collaboration between both countries. Phase 2 of the QR payment linkage between Malaysia and Thailand has also gone live this week. Such developments will bring us closer towards realising the vision of creating an Asean network of fast and efficient retail payment systems. This in turn, will further accelerate digital transformation and financial integration for the benefit of individuals and businesses. According to Bank Indonesia deputy governor Doni P Joewono, this initiative links cross-border payments through the interconnection of national QR codes of the two countries and also represents another milestone of the Indonesian Payment System Blueprint 2025. Bank Indonesia recognises the significance of cross-border payment system linkages and has continuously pursued such initiatives. This will give more options for users in the cross-border payment space and serve as a key to improve transaction efficiency, support the digitalisation of trade and investment, and maintain macroeconomic stability by promoting a more extensive use of Local Currency Settlement (LCS) Framework. Through the use of direct quotation of local currency exchange rates provided by Appointed Cross Currency Dealer banks under the LCS Framework, it will improve the efficiency of transactions thus lowering the transaction cost. The payment connectivity will further strengthen the close economic ties between Malaysia and Indonesia, and support post-pandemic economic recovery. As international travel resumes, tourism will be a key sector that will greatly benefit from this service. The sizeable traveller flows between the two countries recorded an average of 5.6 million arrivals yearly before the pandemic. Both countries are also key remittance corridors for their nationals working abroad who will benefit from faster, cheaper, and more transparent cross-border remittances. This initiative is also aligned with the G20 Roadmap for Enhancing Cross-border Payments developed by the Financial Stability Board and other international bodies. This project is made possible with the collaboration of various stakeholders from both countries under the joint stewardship of BNM and BI. These include Payments Network Malaysia Sdn Bhd (PayNet), the Indonesian Payment System Association (ASPI) and RAJA (Rintis, Artajasa, Jalin, and Alto) as payment system operators. The settlement banks are CIMB Bank Bhd, Bank Mandiri and Bank Negara Indonesia. Other participants include various banks and non-bank payment service providers from both countries. 

Malaysia’s 2021 PPI records largest annual rise in a decade after Dec’s 10% gain – DOSM 

According to Department of Statistics Malaysia (DOSM) chief statistician Datuk Seri Dr Mohd Uzir Mahidin, Malaysia’s Producer Price Index (PPI) for local production increased by 10% year-on-year (y-o-y) in December 2021 as opposed to a decrease of 2.1% recorded in the corresponding month of the preceding year, mainly due to slower pace in primary commodities’ prices but inflationary pressures continued. For 2021, the country’s PPI increased 9.5% from a year earlier, the largest on-year annual rise in a decade. The increase in December 2021 was attributed to the mining index that rose 45.1% from a slump of 40% recorded in December 2020, driven by higher prices for crude oil (46.8%) and natural gas (37%). Agriculture, forestry and fishing also increased at a moderate rate of 10.9% compared to 23.5% in December 2020, largely due to the incline in the indices of fishing (12.4%), animal production (11.6%) and growing of perennial crops (11.2%). The manufacturing index increased 7.6% in December 2021, contributed by the indices for subsectors of manufacture of refined petroleum products (22.3%), manufacture of vegetable and animal oils and fats (18.1%) and manufacture of basic chemicals, fertilisers and nitrogen compounds, plastics and synthetic rubber in primary forms (15.6%). The indices for the subsectors of manufacture of plastics products, manufacture of rubber products and manufacture of basic iron and steel also moved higher, while the utilities index recorded a marginal increase of 0.9% and 0.7% for water supply and electricity and gas supply indices respectively. On a month-on-month comparison, the PPI local production recorded a decline for the first time after a consistent increase for 14 consecutive months — dropped 0.6% in December 2021, with the decline mainly contributed by mining index that registered a negative 4.2%. The index of agriculture, forestry and fishing also recorded a decline of 2.9%, driven mainly by the price of oil palm fresh fruit bunches which fell 4.9% from November 2021. Chicken price also showed a 0.8% decline. Meanwhile, the manufacturing index increased marginally 0.1%, supported by a modest increase of 0.7% for manufacture of refined petroleum products subsector besides rising prices for construction-related products. However, the marginal increase in manufacturing index was also offset by a drop of 0.8% for manufacture of electronic components and boards. Similarly, the indices of water supply and electricity and gas supply rose 0.5% and 0.1% respectively. For 2021, the PPI local production recorded the highest increase in a decade to 9.5%. It was the first time increase after registering a decline for three consecutive years. In 2021, world economies experienced insufficient supply problems which cannot meet rebounding demand after movement restrictions in most countries were being lifted, which had caused disruptions to the supply chain and exerted pressure on the prices of commodity and raw materials. In addition, the unusual prolonged cold weather conditions in certain countries also led to the surge of primary commodities prices, especially natural gas. For 2022, the world is facing the threat of Omicron variant spread, which also made a significant impact on the prices of primary commodities especially crude oil. 

Financial Sector Blueprint 2022-2026 to support Malaysia’s next stage of development — BNM governor  

According to Bank Negara Malaysia (BNM) Governor Tan Sri Nor Shamsiah Mohd Yunus, the central bank envisions that the newly-launched Financial Sector Blueprint 2022-2026 will drive the financial sector to be agile and resilient to support the country’s transition to its next stage of development. BNM had identified five priorities that would anchor its efforts to promote a financial system that would secure long-term growth, planetary health and shared prosperity. The priorities are funding Malaysia’s economic transformation, elevating the financial well-being of households and businesses, advancing digitalisation of the financial sector, positioning the financial system to facilitate and an orderly transition to a greener economy, and advancing value-based finance through thought leadership in Islamic finance. While producing the blueprint has been a lot of hard work, the greater task is to turn its vision into reality. This requires work and outside-the-box thinking as the nation enters a new stage of development. Speaking at the virtual MyFintech Week 2022, she said that it is our desire and belief that the financial sector will continue to serve Malaysia well in the years ahead, doing its part to improve the well-being of the people now and for the generations to come. The financial industry is well positioned to play a stronger role in leading transformation and changes at the industry level, thanks to its strong foundation following two decades of development. BNM is committed to fostering conditions for greater market dynamism to respond to changing needs of the economy and society, which call for more and diverse actors in the financial system, operating within well-defined parameters that encourage healthy competition and innovation, alongside prudent and responsible conduct. BNM’s approach behind the blueprint would be that financial services must help the people and businesses grow their wealth, engage in trade and commerce, and build resilience. It must help customers manage financial risks and adverse events, including climate and environment related risks to secure lasting prosperity. To this end, the blueprint seeks to align the financial sector with the national aspiration to not only become a high-value-added and high-income economy, but also lay a solid foundation for a more dynamic, inclusive and sustainable development path. The blueprint was launched by Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz. 

Eye On The Markets 

This week, on Friday (28Jan), the Ringgit opened at 4.1995 against the USD from 4.1865 on Monday (24Jan). Meanwhile, the Ringgit was 3.1037 to the Sing Dollar on Friday (28Jan). On Monday (24Jan), the FBM KLCI opened at 1521.720. As at Friday (28Jan) 10:00am, the FBM KLCI is down 0.27 points for the week at 1521.45. Over in US, the overnight Dow Jones Industrial Average closed down 7.31 points (-0.02%) to 34,160.78 whilst the NASDAQ shed 189.3 points (-1.40%) to 13,352.8.