Malaysia’s banking system remains well capitalised to support economic recovery – BNM

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According to Bank Negara Malaysia, Malaysia’s banking system remains well capitalised to support economic recovery. The capital ratios rose marginally in May 2022, driven by valuation gains on available-for-sale financial instruments as bond yields eased temporarily during the period. As at end-May 2022, the banking system recorded RM121.5 billion in excess capital buffers. The overall gross and net impaired loans ratios remained broadly stable at 1.6% and 1% respectively, reflecting the marginal increase in impairments from the business and household segments, following the tapering of repayment assistance measures since the first quarter of 2022. Total provisions remained at a prudent level, accounting for 1.8% of total banking system loans and 109.1% of impaired loans. As of end-May 2022, total provisions and regulatory reserves stood at RM40.7 billion (end-April: RM40.2 billion). On the domestic financial market, market adjustments remained orderly, following a decrease in the 10-year Malaysian Government Securities yield by 21 basis points (bps) during the month, supported by foreign portfolio inflows into the domestic bond market. By contrast, regional bond yields rose by 24.5bps on average. The local financial market was also driven by tighter global financial conditions due to expectations for faster and larger policy rate hikes by advanced economies, especially the US, amid higher and more prolonged inflationary pressures.  

Malaysia’s economic recovery remains in sight amid global uncertainty – DOSM 

According to the Department of Statistics Malaysia Chief statistician Datuk Seri Dr Mohd Uzir Mahidin, economic recovery remains in sight with a better trend as signalled by Malaysia’s macroeconomic performance in April 2022 amid global uncertainty. More than two years after an unprecedented global health crisis that profoundly altered the world’s socioeconomic landscape, nations had started the recovery process with extensive exit strategy activities to boost economic viability and public health. While the public had started to adjust to endemicity, a new threat comes in the form of supply chain disruptions due to the ongoing geopolitical tension between Russia and Ukraine; uncertain weather conditions; and escalating demand following the easing of health restrictions in most countries. Based on Malaysia’s macroeconomic performance in April 2022, the country is blessed with natural resources and commodities such as petroleum products and palm oil. As a net commodity exporter, Malaysia also benefits from higher commodity prices resulting in total trade chalking up a double-digit annual growth of 21.3 per cent to RM231.4 billion. Exports rose 20.7 per cent to RM127.5 billion while imports went up 22.0 per cent to RM103.9 billion. The trade balance rose 15.7 per cent and continued to remain in surplus at RM23.5 billion. Malaysia’s trade performance in May 2022 remained resilient, recording the fastest growth since November 2021, with total trade surpassing RM1 trillion. Going forward, Malaysia is expected to maintain a better economic recovery in the upcoming months. The Leading Index (LI) for April recorded 110.8 points with an improved negative growth of 0.5 per cent year-on-year compared to negative 1.4 per cent in March 2022. It is hoped that the economic recovery remains in sight with a better trend amid global uncertainty. In line with this, the S&P Global Ratings recently revised Malaysia’s long-term sovereign credit ratings outlook to ‘stable’ from ‘negative’ as it believes Malaysia is on a strong economic recovery path compared to other countries at similar income levels. 

EPF outsourced RM167.63b to fund managers as at Dec 31,2021 

According to the Employees Provident Fund (EPF) chairman Tan Sri Ahmad Badri Mohd Zahir, the fund outsourced RM167.63 billion to external fund managers as at Dec 31, 2021, representing an increase of 8%, compared with RM155.18 billion at end 2020. This allocation, invested across equity and fixed-income instruments, represented 16.66% of EPF’s total investment assets. EPF’s line of external fund managers fared well in 2021 and delivered commendable results that were within the fund’s objectives and expectations for the year. The fund managers have been instrumental in enhancing the performance of EPF’s assets and as the funds grow, EPF will continue with this diversification strategy and leverage on their insights and skillsets that complement EPF’s own internal fund management capabilities. In conjunction with the EPF External Fund Managers Awards, EPF announced 22 awards presented to the top external fund managers in recognition of their performance in managing EPF’s portfolios in 2021. For the financial year ended 2021, EPF delivered a dividend rate of 6.10% with a payout of RM50.45 billion for Simpanan Konvensional, and a rate of 5.65% with a payout of RM6.27 billion for Simpanan Shariah. Cumulatively, the total payout for 2021 was RM56.72 billion. 

Eye On The Markets 

This week, on Friday (1 July), the Ringgit opened at 4.4060 against the USD from 4.4010 on Monday (27June). Meanwhile, the Ringgit was 3.1684 to the Sing Dollar on Friday (1July). On Monday (27June), the FBM KLCI opened at 1438.82. As at Friday (1July) 10:00am, the FBM KLCI is up 9.95 points for the week at 1448.77. Over in US, the overnight Dow Jones Industrial Average closed down 253.88 points (+0.82%) to 30,775.43 whilst the NASDAQ shed 149.16 points (-1.33%) to 11,028.74. 

Leading Index (LI) signifies better economic recovery ahead for Malaysia – DOSM

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According to Malaysia’s Department of Statistics Malaysia (DoSM) chief statistician Datuk Seri Mohd Uzir Mahidin, economic recovery is in a better direction, as the performance of the Leading Index (LI) for April 2022 eased to a better negative of 0.5 per cent from a negative 1.4 per cent in March 2022. The LI is a predictive tool used to anticipate economic upturns and downturns in an average of four to six months ahead. The decrease in LI was influenced mainly by the drop in the number of housing units approved caused by the decline in applications from developers during the said month. Based on a month-on-month comparison, LI slipped to a negative 0.5 per cent, dragged by the number of housing units approved (-1.4 per cent), number of new companies registered (-0.5 per cent), and the Bursa Malaysia Industrial Index (-0.3 per cent). Despite the softening in LI for the reference month, the direction portrayed by the smoothed LI remained favourable by consistently above the long-term trend and registered better index points. This implies that the trend of Malaysia’s economic recovery is in a better direction. The issue of inflation and rising commodity prices need to be taken into account, considering the global situation. The Coincident Index (CI), which measures the overall current economic performance, is picking up since February 2022, reflecting an increase in economic activities with the economic and social activities operating at full capacity. The CI continued to climb by 5.3 per cent year-on-year to attain 120.3 points in April 2022. On monthly basis, the growth of CI increased to 2.0 per cent in the reference month compared to 1.4 per cent in the previous month. The growth was driven by a significant increase in volume index of retail trade (1.6 per cent). In relation to the reference period of the Malaysian business cycle, the CI detected a recession-induced by the Covid-19 pandemic beginning in February 2020 and ending in July 2021. 

SC to release SRI Taxonomy framework by the end of the year 

According to the Securities Commission Malaysia (SC) Executive chairman Datuk Dr Awang Adek Hussin, SC will be releasing the Sustainable and Responsible Investment (SRI) Taxonomy framework by the end of the year. The framework would act as the guiding principles to identify and classify economic activities that support environmental, social and sustainability objectives. The SC is finalising the SRI Taxonomy following a public consultation paper issued in December last year and will continue to pursue the SRI agenda for the next phase of the market development. Speaking at the SRI Virtual Conference 2022, titled ‘Preserving the Climate through Sustainable Business and Living’, he said this is clearly articulated in the Capital Market Master Plan 3 (CMP3). The SRI, along with the Islamic capital market (ICM), will play a key role in accelerating the transition to a sustainable and inclusive stakeholder economy. SC intends to expand the range of products and services for Islamic social finance and impact investing, in alignment with SRI principles. It will also be developing a framework for market-based instruments to enable transition finance in Malaysia which will increase funding options for companies at various stages of their sustainability journey. Malaysia’s sustainable investments journey started as early as 2014 when the SC’s SRI Sukuk Framework was introduced, which allowed for funds to be raised to finance a wide range of green, socially beneficial and sustainable projects. To date, a total RM8.3 billion of SRI Sukuk has been issued under this framework. Subsequently, the Guidelines on SRI Funds was rolled-out in 2017 to facilitate the growth of environmental, social and corporate governance (ESG) funds in Malaysia. As of 2021, 34 SRI funds have been launched, offering wholesale and retail investors the opportunity to invest in conventional and Shariah-compliant ESG-focused funds. Businesses today face rising expectations from stakeholders and the communities they serve. More than ever, they are being assessed on their sustainability commitments and handling of social issues, and our corporates are rising to the challenge. Recent research by PricewaterhouseCoopers (PwC) found that 94% of the top 50 Malaysian public-listed companies have ESG strategies in place. Sustainable and inclusive business practices benefit not just shareholders, but all stakeholders. Therefore, boards and management must take the lead and ensure that sustainability is at the heart of business strategy and operations. Crucially, investors must also play their role by shining a spotlight on the credibility of corporate commitments and shape the narrative ahead. Progress has certainly been made but there is still a long way to go. Moving forward, the key to managing the transition to a more sustainable and greener future is the availability of financing and impetus for change. Sustainable change requires investments in new technologies and innovative solutions. Market-based funding and risk management instruments are well-equipped to facilitate public and private efforts in climate mitigation and transition adding that Bloomberg Intelligence has estimated global ESG-related assets under management to grow to US$50 trillion (RM221 trillion) by 2025, primarily driven by fund inflows focused on climate change. 

Towards formalising stewardship policy for investee companies – EPF 

According to the Employees Provident Fund (EPF) chief strategy officer Nurhisham Hussein, the Fund is currently formalising a stewardship policy to address investee companies that fail to comply with the environmental, social and governance (ESG) standards. The stewardship policy addresses the level of engagement and action taken by the Fund in case somebody does not comply with the standards. The policy is expected to be issued sometime in the near future. At least the people will be able to understand the consequences and the channels that they can use to communicate with the EPF and other big investors on specific issues that need to be addressed. He was speaking at the Sustainable and Responsible Investment Virtual Conference 2022, titled “Preserving the Climate through Sustainable Business and Living”. In March this year, EPF had launched the Sustainable Investment Policies, Priority Issues Policies, and Priority Sector Policies to guide the EPF in making informed decisions by integrating ESG standards. These initiatives are aligned with EPF’s commitment to two overarching sustainable investment ambitions that will guide its overall pursuit of sustainability, namely, to achieve a fully ESG-compliant portfolio by 2030 and a climate-neutral portfolio by 2050, in line with the 12th Malaysia Plan’s aspirations for a carbon-neutral country.  

Eye On The Markets 

This week, on Friday (24June), the Ringgit opened at 4.4030 against the USD from 4.4025 on Monday (20June). Meanwhile, the Ringgit was 3.1665 to the Sing Dollar on Friday (24June). On Monday (20June), the FBM KLCI opened at 1454.40. As at Friday (24June) 10:00am, the FBM KLCI is down 20.80 points for the week at 1433.60. Over in US, the overnight Dow Jones Industrial Average closed up 194.23 points (+0.64%) to 30,677.36 whilst the NASDAQ added 179.11 points (+1.62%) to 11,232.19. 

EPF enhances i-Invest portal with new features for making informed decisions

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The Employees Provident Fund (EPF) has rolled out new features and tools on the i-Invest web portal to improve user experience. Various web features of i-Invest such as transactional functions, suitability assessment and useful information on approved unit trust funds, and the fund management institutions (FMIs) offering them, are now available on the i-Akaun mobile application, with additional features to be added in the coming months. In an effort to help members make more informed decisions, the EPF has introduced the Historical Investment Performance Dashboard to enable members to analyse investment performance returns across various time horizons. This new feature, which is the first of its kind in the domestic fund management industry, provides a display of investment returns based on three key categories to enable comparisons to be made at the fund level, FMI level and overall portfolio level. The EPF has also introduced an investment simulator as a tool to help members assess investment decisions based on five key parameters. Investment objectives can now be simulated based on a member’s choice of the initial investment amount, monthly investment amount, investment period, rate of return or ending investment value. The enhanced i-Invest portal has also incorporated Lipper-assigned benchmarks for members to compare against the unit trust funds’ performances. The i-Invest portal, which was launched in August 2019, offers a wide range of functions, flexibility and convenience for members to conduct investment decisions, as well as monitor their investments at any time and from anywhere. Through this facility, members can compare between unit trust funds offered by the FMIs and obtain a consolidated view of their investment holdings, information on investment costs, fund performance history, as well as statutory information related to the FMIs. The EPF said it will continue to ensure that the i-Invest portal is improved from time to time for the benefit of its members and invites feedback on the portal via the link at https://cms.kwsp.gov.my/survey/surveyfront/index?sid=54 

Recovery on the horizon for Malaysian economy, but challenges remain – Bursa Chairman 

According to Bursa Malaysia chairman Tan Sri Abdul Wahid Omar, Malaysia must be clear-eyed about the challenges on the horizon despite being fortified by sound economic fundamentals and the economy on its way to a recovery after turning the corner against the pandemic. Speaking at the Malaysian Economic Summit 2022 organised by the KSI Strategic Institute for Asia Pacific, he said there were a number of factors to be optimistic about the country’s growth outlook and most importantly, it was transitioning to the endemic phase with the relaxation of pandemic control measures and reopening of international borders. The endemic phase is likely to contribute to the revival of Malaysia’s tourism industry which supports 3.5 million jobs. The high vaccination rate with close to 80 per cent of the population being vaccinated with two doses is another important factor. This compares favourably against Asean’s rate of 60 per cent. A sound government policy has provided economic relief and support for the people and businesses, including employment incentives, cash transfers and subsidies, which resulted in a significant decline in the unemployment rate from a peak of 5.3 per cent in May 2020 to 4.1 per cent in May 2022. Being also chairman of Economic Club of Kuala Lumpur (ECKL) Advisory Council, he said that Bank Negara Malaysia has forecast that Malaysia’s economic growth to be between 5.3 per cent and 6.3 per cent in 2022 while the World Bank projected the economy to grow by 5.5 per cent. However, it is important to note that these forecasts have been downgraded, underscoring the uncertainties within and beyond the country. If there is upside, there will be downside and we must consider domestic and global challenges that will affect the Malaysian economy. Geopolitical risks threatened Malaysia’s recovery whereby the conflict in Ukraine and the economic sanctions on Russia have created uncertainties and they had exacerbated the supply shocks in commodities such as crude oil, natural gas, wheat and sunflower oil, hence, driven up the prices of food commodities. Malaysia also had to contend with these inflationary pressures where the annual Consumer Price Index went from -1.2 per cent in 2020 to 2.5 per cent in 2021. The inflation rate will continue to rise this year and has been driven by significant increases in transportation and food costs. Food prices have increased between 3.6 per cent and 4.0 per cent in the first quarter of this year. Fortunately, the government’s fuel subsidy has kept a lid on further increases on fuel cost. However, the fuel subsidy is a double-edged sword because while it keeps inflation down, the government’s fiscal space will shrink. Another major domestic issue is the political uncertainties that have afflicted the country since the last general election. The economic boost from the transition to the endemic phase may be neutralised by the adverse global developments such as the conflict in Ukraine, China’s Covid-19 lockdown and the inflationary pressures. Therefore, the short-term goal of economic stabilisation should focus on supporting domestic demand and addressing the impact of imported inflation from weaker exchange rates and higher fuel prices. He was cautiously optimistic that Malaysia will be able to overcome these challenges if Malaysians were to come together, be constructive and do what we can in our respective roles since the country has weathered similar crises in the past. Obviously, there were different factors that will require different sets of solutions which means we cannot rest our laurels and must be persistent and focused. 

Eye On The Markets 

This week, on Friday (17June), the Ringgit opened at 4.3975 against the USD from 4.4110 on Monday (13June). Meanwhile, the Ringgit was 3.1752 to the Sing Dollar on Friday (17June). On Monday (13June), the FBM KLCI opened at 1483.76. As at Friday (17June) 10:00am, the FBM KLCI is down 31.88 points for the week at 1451.88. Over in US, the overnight Dow Jones Industrial Average closed down 741.46 points (-2.42%) to 29,927.07 whilst the NASDAQ shed 453.06 points (-4.08%) to 10,646.10. 

Malaysia has RM3 bil IPO pipeline in 2H22 – Maybank IB

Market Sentiments | June 10, 2022

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According to Maybank Investment Bank (Maybank IB) chief executive officer Datuk Fad’l Mohamed, the Malaysian initial public offering (IPO) pipeline in 2H22 is valued at around RM3 billion. Across the wider equity capital market (ECM), the investment bank is also seeing some traction in the merger and acquisition (M&A) and private equity (PE) space. He was speaking at a press conference in conjunction with Maybank Invest Asean 2022 conference. There are still a lot of deal activities happening in the market. There is a strong ECM pipeline coming through, year to date with around nine IPOs. Going forward in 2H22, he is seeing a total deal value of about RM3 billion on ECM coming through in sectors like consumer, retail, general industrial, TMT (technology, media and telecommunications) and transport and logistics. On the M&A side, there is a lot of restructuring activities particularly among some of the GLCs and GLICs. There is also a lot of traction on the PE space, with buy-sell opportunities coming in, and also in-country consolidation. Meanwhile, the local debt capital market (DCM) has also remained stable with a full-year outlook of RM110 billion. This compares with RM114 billion recorded in 2021, according to Securities Commission Malaysia’s data. On DCM, he sees a potential of RM6.8 billion coming up in 2H22, and potential ESG-linked alone is over RM6 billion. The investment bank has completed 33 issuances totalling RM6.3 billion, of which sustainability issuance alone is RM2.1 billion. On sustainability-linked instruments, the investment bank is seeing opportunities for key projects that fall within the category, coupled with ample liquidity looking for such green assets. The other aspect is for some companies looking at transitioning, sustainability-tied instruments. Attractive proposition for a lot of clients to raise capital with clear targets in terms of the pathway of ESG. And on the demand side, a lot of investors are looking at this asset class, and continue to have a strong appetite to take up ESG-related papers, sustainability-tied instruments. With economic recovery, with refinancing of large maturities coming through this year and next, the environment is definitely conducive for capital raising. 

Malaysia 2H equities outlook hinges on global risk appetite – HSBC 

According to HSBC global private banking and wealth Southeast Asia chief investment officer James Cheo, the Malaysian equities market outlook in 2H22 is likely to depend heavily on global appetite for risk assets, with selective investment opportunities in beneficiaries of economic reopening and commodities sectors. The bank is currently neutral on Malaysia equities, which are really tied in to the general risk sentiment in the global economy, and at this stage the risk appetite in the world economy is still very fragile. Speaking at the HSBC 2H22 Investment Outlook briefing, he said the market may reassess the Malaysian market again when there is a more concrete kind of improvement in the global dynamics, particularly on how the recovery is in the picture of inflation. He acknowledged that Malaysia is on a “fairly solid” growth path given the Southeast Asian nation’s well-diversified export base from crude oil, palm oil as well as playing a prominent role in the global semiconductor supply chain. Malaysia’s economy grew 5% in the first quarter of this year thanks to improvements in labour market, domestic and external demand amid easing pandemic restrictions. This came after a 3.1% gross domestic product (GDP) growth last year. Malaysia’s GDP is expected to grow 5.5% this year thanks to tailwinds from improving manufacturing activities and favourable commodities prices. This has taken into account an expectation for another 50 basis points overnight policy rate hike this year, with Bank Negara Malaysia potentially ending 2022 with a benchmark interest rate of 2.5%. In terms of foreign exchange outlook, while the ringgit has endured high volatility in 1H22, the domestic currency will likely stabilise in 2H22 and trade around 4.2800 against the US dollar by end of this year. With the impact of pandemic restrictions receding and reopening of the economy, private consumption is going to bounce back, investments are likely to also be quite robust. Therefore, there are several selective investment opportunities, particularly in sectors associated with reopening, consumption, banking, commodities and semiconductor. Although the bank’s outlook is neutral on Malaysian equities, there are selective opportunities, because various parts of the economy are actually doing very well. 

Foreign funds purchase RM477.5mil net of local equities – MIDF 

According to MIDF research data, the foreign inflow turned positive on Bursa Malaysia for the week ended June 3, 2022 with net purchases of RM477.5mil. This was in line with the swing to a positive inflow in Asian markets after eight weeks of net outflow. This was owing to the US dollar index (DXY) losing appeal as forecasts of the US non-farm payrolls were trimmed vigorously. Based on the provisional aggregate data for the seven Asian exchanges that MIDF tracks, investors classified as “foreign” bought US$2.3bil last week. On the local bourse, net buying from foreign investors was recorded from Monday to Wednesday. The heaviest net inflow came on Tuesday with RM320.8mil net of local equities bought by foreigners. Meanwhile, local retailers remained net sellers with a net outflow of RM121.4mil. Local institutions were net sellers for a fourth consecutive week to the tune of RM356.1mil. In terms of participation, all investor classes except for local retailers showed an improvement for the week. Foreign investors and local institutions saw an increase in the average daily trade value (ADTV) by 110.3% and +24% respectively. Meanwhile, local retailers posted a decline of 2.5% in ADTV. 

Eye On The Markets 

This week, on Friday (10June), the Ringgit opened at 4.3990 against the USD from 4.3975 on Tuesday (7June). Meanwhile, the Ringgit was 3.1849 to the Sing Dollar on Friday (10June). On Tuesday (7June), the FBM KLCI opened at 1538.74. As at Friday (10June) 10:00am, the FBM KLCI is down 43.71 points for the week at 1495.03. Over in US, the overnight Dow Jones Industrial Average closed down 638.11 points (-1.94%) to 32,272.79 whilst the NASDAQ shed 322.05 points (-2.75%) to 11,754.23. 

No changes to FBM KLCI constituents after semi-annual review

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According to FTSE Russell and Bursa Malaysia Bhd, there are no changes to the constituents of the FTSE Bursa Malaysia KLCI, following the semi-annual review of the FTSE Bursa Malaysia Index Series. The index series is reviewed semi-annually in accordance with the index ground rules. The FTSE Bursa Malaysia KLCI reserve list, comprising the five highest-ranking non-constituents of the index by market capitalisation, will be Westports Holdings Bhd, QL Resources Bhd, AMMB Holdings Bhd, Malaysia Airports Holdings Bhd and Gamuda Bhd. The reserve list will be used if one or more constituents are deleted from the FTSE Bursa Malaysia KLCI in accordance with the index ground rules during the period up to the next semi-annual review. Meanwhile, eight new constituents would be added to the FTSE Bursa Malaysia Mid 70 Index, namely Aeon Co (M) Bhd, Boustead Plantations Bhd, Chin Hin Group Bhd, Farm Fresh Bhd, Hengyuan Refining Company Bhd, Hextar Global Bhd, Hibiscus Petroleum Bhd and Ta Ann Holdings Bhd. As a result, Allianz Malaysia Bhd, ATA IMS Bhd, Cahya Mata Sarawak Bhd, GDEX Bhd, Hong Leong Industries Bhd, Magnum Bhd, Sapura Energy Bhd and YTL Hospitality REIT will be deleted from the FTSE Bursa Malaysia Mid 70 Index. For the FTSE Bursa Malaysia Hijrah Shariah Index, two new constituents will be added – FGV Holdings Bhd and Sunway Bhd – while Inari Amertron Bhd and Press Metal Aluminium Holdings Bhd would be deleted from the index. All constituent changes take effect at the start of business on June 20. The next review will take place in December 2022. 

AmInvest launches New China Sectors Index Fund 

According to AmInvestment Bank chief executive officer Tracy Chen Wee Keng, AmInvest has introduced its New China Sectors Index Fund that will enable investors to ride on the potential growth of the flourishing consumer and consumer-related sectors in China. The fund, launched in view of China’s rising local purchasing power, will feed into the Industrial and Commercial Bank of China (ICBC) and CSOP Asset Management Limited (CSOP) S&P New China Sectors exchange traded fund (ETF) (target fund), which tracks the performance of S&P New China Sectors (A-shares Capped) Index. The fund is timely, as it is positioned to capture the potential new growth sectors of China whose economy has been transitioning from an investment-led to consumption-led growth model. While China’s traditional sectors such as energy, materials and industrials have shown signs of a slowdown in growth, new sectors such as consumer, communications, healthcare and technology are driven by the continued growth of consumer demand. Meanwhile, according to AmFunds Management Bhd chief executive Goh Wee Peng, demographics and consumer trends will continue to shape China’s consumer landscape for the next decade of growth. AmInvest is excited to again partner with CSOP, which is one of the largest and most active ETF issuers in Hong Kong. China’s annual growth rate of disposable income per capita, driven primarily by the rise of the middle class, has exceeded 8%. Singles’ Day, the world’s biggest online shopping event in November last year, garnered an outstanding total spending of 965.1 billion yuan (about RM629.4 billion) despite the slowdown in China. The shifting patterns of consumer spending in China’s ageing society have also supported demand-driven sectors such as insurance, medical care and fitness. The fund’s base currency is the Hong Kong dollar. It is being offered for subscription to sophisticated investors in Hong Kong dollar and ringgit and in ringgit-hedged classes at an initial offer price of HK$1 and RM1 per unit respectively, during the initial offer period which ends on June 20, 2022. 

Eye On The Markets 

This week, on Friday (3June), the Ringgit opened at 4.3815 against the USD from 4.3755 on Monday (30May). Meanwhile, the Ringgit was 3.1982 to the Sing Dollar on Friday (3June). On Monday (30May), the FBM KLCI opened at 1546.35. As at Friday (3June) 10:00am, the FBM KLCI is down 0.05 points for the week at 1546.30. Over in US, the overnight Dow Jones Industrial Average closed up 435.05 points (+1.33%) to 33,248.28 whilst the NASDAQ added 322.44 points (+2.69%) to 12,316.90. 

Businesses positive on 2Q prospects but remain cautious – DOSM

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According to the Department of Statistics Malaysia’s (DOSM) chief statistician Datuk Seri Dr Mohd Uzir Mahidin, businesses remain positive about their prospects for the second quarter of 2022 (2Q22) as well as for the six-month period to September 2022. Going into 2Q22, businesses are positive albeit at a slower pace, with a confidence indicator of +3.5% for the quarter against +7.6% in 1Q22. Despite the reopening of Malaysia’s international borders, which is anticipated to spur economic activities, businesses stay cautious about their prospects amid inflation pressure, supply chain and labour shortage issues. Except for construction, all sectors surveyed anticipated better business conditions in 2Q22. The wholesale and retail trade sector is the most optimistic on its business outlook. The sector’s confidence indicator has increased for three quarters in a row, with +15.5% in 2Q22 from +4% in the preceding quarter. Based on the quarterly business tendency survey, brighter sentiment in both the wholesale trade sub-sector as well as the retail trade sub-sector led to this improvement. Meanwhile, the services sector predicted the business situation to improve at a moderate rate, posting a confidence indicator of +5.6% compared with +11.1% in 1Q22. As for the industry sector, it expects its business performance to grow at a slower pace in 2Q22 with an indicator of +0.8% compared with +12.2% in the preceding quarter. The agriculture and mining sub-sectors, in particular, anticipated unfavourable business conditions in 2Q22. Meanwhile, the construction sector remained pessimistic but its confidence indicator improved to -23.2% compared with -40.4% in 1Q22. He added that 45.2% of the survey respondents predicted that their gross revenue would rise in 2Q22, while 19% expect a reduction, leading to a net balance of +26.2%. The rest of the respondents (35.8%) anticipated gross revenue to stagnate. For the same quarter, 72.2% of the businesses expect their manpower to stay the same despite showing a net balance of +10.8%. Of the businesses, 19.3% intend to hire more manpower in 2Q22, while 8.5% have planned a reduction. On expectations of business performance for the upcoming six months (April to September 2022), businesses also remained optimistic about their outlook with a net balance of +25%, up slightly from the +18.9% recorded previously. This was attributed to better sentiments in the wholesale and retail trade, industry and services sectors. 

Sub Title: Businesses need tech-enabled shopping experiences to woo Malaysian consumers, some of the most discerning in the world – ADYEN 

According to Priyanka Gargav, ADYEN’s Head of Commercial, Southeast Asia & Hong Kong, despite challenges posed by the pandemic, the Malaysian retail industry proved its resilience in 2021, with 71% of Malaysian businesses across the retail, food and beverage, and hospitality sectors growing their revenue by 20%. Malaysian companies that outperform competition are those reaping the benefits of investing in digital transformation – an opportunity now worth MYR 334 billion. The Adyen Malaysia Retail Report 2022, commissioned by Adyen and sponsored by KPMG, interviewed over 40,000 consumers across 26 markets, including 1,000 from Malaysia, to understand how they feel about the state of retail. It also surveyed 11,500 businesses across 23 countries, including 500 from Malaysia, to learn about their concerns, aspirations, strategies, and investments for 2022 and beyond. 

One key finding from the report was that over 1 in 4 businesses connected payment systems to other parts of the organization, such as inventory management and supply chain, to improve operations and break down silos in backend processes. As a result, 60% of businesses are now in a better position. This is 11% above the global average and the highest in APAC. Specifically, companies that connect payment systems with other sections of their business grow 18% more than those that do not. This shift has given Malaysian consumers a real taste for technology. 80% of consumers believe retailers used technology well to make their products available during the pandemic. The majority believe that retailers should deliver the same cross-channel flexibility they provided during the pandemic (77%) and use technology to improve loyalty/rewards schemes (90%). These figures are both 16% above the APAC average. Falling short of these expectations could spell trouble, as 81% of consumers will not shop with businesses that have a bad shopping experience, either online or in store, 11% above the global average. 

Businesses intend on continuing to ride the digital wave, with 97% planning to invest in business improvement over the next year. The acceleration of digital transformation will contribute an additional 5.6% to the total growth of Malaysia’s retail sector over the next five years. Malaysian businesses have proven their resilience and adaptability during the pandemic, and their future is bright. Malaysian consumers’ love for tech-enabled, seamless shopping experiences stands out on a global level and the time is ripe for retailers to capitalize on the MYR 334 billion opportunity in digital transformation. Many retail players have unlocked the promise of unified commerce as a strategic growth driver and its exciting to see the retail industry in Malaysia reach greater heights in 2022.  

Physical stores will stay — but the role of the store is changing  

More than any other market surveyed, Malaysian consumers believe online shopping is about convenience, but physical stores are for shopping for pleasure (76%). One way to meet their expectations is through melding online and offline realms to create new customer experiences. In fact, 87% of consumers are more likely to shop with retailers that use technology to enhance the customer experience, 32% above the global average. The report also uncovered an area for growth: 74% of consumers would be more loyal to retailers that enabled them to buy things online and return them in store, though only 30% offer this service. While Malaysia is ahead of the global and APAC averages in offering this functionality, there is room for improvement. 

The untapped potential in real time payments data 



In line with Malaysians’ preference for digitized shopping experiences, they are above the average in wanting more tailored and personalized interactions. 67% prefer retailers who remember preferences and previous shopping behaviors to create a more tailored shopping experience and 66% like personalized adverts or suggestions. This is 20% and 21% above the global average respectively. Fortunately, Malaysian businesses are among the best at using data to inform decision making and engage customers. Currently, 39% of businesses use payments data to build a better picture of their customers, 12% above the global average.  
When doing so, businesses must prioritize safeguards to protect customer data and address consumer concerns around privacy. Half of Malaysian consumers will only allow their data to be stored and used by retailers if there are assurances around security and privacy, while almost half of them (45%) believe retailers shouldn’t be able to use their data/purchase behaviour information unless they give permission. With more businesses looking to embrace digitalization and Malaysian consumers’ preference for technology to permeate the in-store experience, businesses in 2022 are optimistic about the future. The impressive resilience and adaptability of Malaysia’s retail industry will likely be key themes even beyond the pandemic 

Eye On The Markets 

This week, on Friday (27May), the Ringgit opened at 4.3925 against the USD from 4.3893 on Monday (23May). Meanwhile, the Ringgit was 3.1993 to the Sing Dollar on Friday (27May). On Monday (23May), the FBM KLCI opened at 1553.15. As at Friday (27May) 10:00am, the FBM KLCI is down 15.67 points for the week at 1537.48. Over in US, the overnight Dow Jones Industrial Average closed up 516.91 points (+1.61%) to 32,637.19 whilst the NASDAQ added 305.91 points (+2.68%) to 11,740.65. 

Foreigners bought RM56.9m on Bursa last week – MIDF Research

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According to MIDF Research, foreign investors turned net buyers again after a week of net selling the week before, with net inflows summed up to RM56.9 million last week. Local retailers remained net buyers for the fifth consecutive week at RM234.8 million while local institutions turned net sellers after a week of net buying with a net selling position of RM291.8 million last week. To date, international funds have been net buyers for 15 out of the 19 weeks of 2022, with a total net inflow of RM6.98 billion. They were net sellers on Wednesday and Thursday, at RM2.08 million and RM145.2 million, respectively. Local institutions were net sellers on all the trading days last week, except on Thursday where they were net buyers to the tune of RM41.38 million. The highest net selling was recorded on Tuesday at RM200.67million, and the smallest net selling on Wednesday at RM40.44 million. They have been net sellers for 16 out of 19 weeks this year. To date, they have sold RM8.1 billion of equities. Local retailers were net buyers on all trading days of the week with the highest net buying on Thursday at RM103.83 million, and smallest net buying on Tuesday, at RM21.34 million. In terms of participation, foreign investors saw a decrease in the average daily trade value by 24.76%. Local retailers saw a decline of 6.9% while local institutions saw an increase of 9.49%. 

OPR decision due to inflation pressures – Moody’s 

According to Moody’s Analytics, Bank Negara’s surprise decision to increase its overnight policy rate (OPR) by 25 basis points to 2% from 1.75% came on the back of rising inflation pressures. The Russian invasion of Ukraine, together with China’s zero-Covid policy, has caused supply-chain disruptions and an uptick in global commodity prices. Several central banks are expected to adjust monetary policy settings ‘at a faster pace’, hinting at concerns over capital outflows and the weakening ringgit. Given that the country’s borders had fully reopened on April 1, Bank Negara now expects the economy to strengthen. Domestic Covid-19 restrictions have also largely been lifted, allowing consumer and investor spending to pick up. Inflation remains relatively subdued, and this renders the central bank’s move largely pre-emptive. Higher food and fuel prices pushed the consumer price index to 2.2% year-on-year (y-o-y) in March. In comparison, consumer prices in neighbouring Singapore, Thailand and the Philippines rose between 4.5% and 5.5% in April. Being a net exporter of oil, Malaysia could afford to subsidise its domestic prices to ward off price increases due to the high oil price. Nonetheless, the country is subjected to rising food prices, which has been exacerbated by the Russian invasion of Ukraine. The price of food and non-alcoholic beverages had soared 4% y-o-y in March, on par with the rest of the Asia-Pacific region. Malaysia’s gross domestic product for the first quarter of 2022 came in stronger than expected at 5% compared to its previous quarter’s performance – the fourth quarter of 2021 – which was 3.6% y-o-y. Industrial production grew 5.1% y-o-y in March, compared with a 4% increase in February. 

Malaysia not at risk of recession – Finance Minister 

According to Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz, Malaysia is not at risk of recession and is on track to meet forecast economic growth targets of between 5.3% and 6.3% this year. The country’s economic growth would be supported by the government’s expansionary fiscal policy as well as accommodative monetary policy. The current talk of a global recession was premature and unwarranted, and Malaysia would see further growth momentum in the second quarter after recording a strong first-quarter gross domestic product growth of 5%. However, he remains wary of potential downside. There is a potential risk due to the war in Ukraine, high commodity prices and global monetary policy tightening. As a result, the government will need to ensure adequate fiscal flexibility in the future to manage such risks. This is why he intends to gradually reduce the fiscal deficit from 6.4% in 2021 to 6% in 2022 and also rationalise the subsidies to be more targeted. Failure to meet debt obligations was a major risk for countries in the event of a global recession but it was not a risk for Malaysia, as the risk was mitigated due to its low exposure to external debt, with less than 3% in foreign currencies. Malaysia had ample liquidity to finance the government and private sector borrowing needs. 

Eye On The Markets 

This week, on Friday (20May), the Ringgit opened at 4.3965 against the USD from 4.3950 on Tuesday (17May). Meanwhile, the Ringgit was 3.1839 to the Sing Dollar on Friday (20May). On Tuesday (17May), the FBM KLCI opened at 1555.68. As at Friday (20May) 10:00am, the FBM KLCI is up 0.85 points for the week at 1556.53. Over in US, the overnight Dow Jones Industrial Average closed down 236.94 points (-0.75%) to 31,253.13 whilst the NASDAQ shed 29.66 points (-0.26%) to 11,388.50. 

BETTER RISK-REWARD IN SMALL AND MID-CAPS – RHB RESEARCH

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According to RHB Research analyst Lee Meng Horng, it is time to be nimble in small and mid-caps on Bursa Malaysia given the better risk-reward ratio on current forward price to earnings (P/E). Both the FBM 70 and FBM SC are trading below their five-year means, and at about two times P/E discounts to that of the FBM KLCI — based on RHB’s stock coverage universe. In addition, the valuation of the MSCI Malaysia Small Cap Index is on par with the MSCI benchmark index, reversing the trend of the outperformance of small-cap indices in the past two years. This came as investors refocused on value-oriented big caps amid rising interest rates and greater market volatility. It is time to go long in this current sell-down with the expectation of a range-bound market amid a volatile backdrop and below-mean valuation. The investor’s strategy should be two-pronged — rotational play on sectors and bottom-up stock-picking — while continuing to look for ideas based on unique turnarounds, event-driven catalysts, exporters and politically linked thematic plays. The research house has a preference for the consumer discretionary, technology, logistics, oil and gas, and plantation sectors. The outperformance of the FBM SC (+5.3% year to date) continues in 2022, despite the market being range-bound overall in the absence of major positive catalysts, while uncertainties from external events linger. The FBM SC’s stronger performance has been underpinned by commodity-related stocks that benefited from the surge in various commodity prices. On the other hand, the FBM 70 (-5.8% year to date) has underperformed the FBM KLCI (-0.2% year to date) so far this year, as heavyweights that consist of mainly technology sector-related stocks took a beating amid high inflation and rising interest rates. The return of foreign fund inflows has supported the FBM KLCI so far, thanks to the Malaysian market’s defensive attributes, while the spike in commodity prices has been a boon. The market liquidity has declined, with the cautious tone from local institutions and a lack of participation from retail investors — further exacerbated by the risk-averse sentiment casting a further pall on the market. These factors were partially cushioned by the return of foreign fund inflows. Compounded by the resumption of intra-day short selling (IDSS), the market has witnessed a rather volatile market in the first quarter of 2022, especially for the small-mid cap space. In fact, year-to-date traded value for the FBM 70 and FBM SC declined by 32% and 61% respectively. Against the backdrop of a full-blown economic recovery in 2022, and supported by in-house gross domestic product (GDP) growth forecast of 5.5% year on year, certainly there are companies that are expected to perform well and record growth. However market volatility is expected to remain high for a large part of 2022, no thanks to the fluid situation and prevailing uncertainties. The upside is capped, as the expectation of a broad-based economic recovery seems priced in, while the downside continues to be supported by bottom-fishing activities. A ‘buy’ at the support level and ‘sell’ at the resistance level approach could thrive.  

BNM raises OPR to 2% from record low of 1.75% 

Bank Negara Malaysia’s (BNM) Monetary Policy Committee (MPC) on Wednesday (May 11) increased the overnight policy rate (OPR) by 25 basis points to 2% from a record low of 1.75% as global inflationary pressures have increased sharply and after taking into account that the sustained reopening of global economy and improvement in labour markets continue to support the recovery of economic activity from the impact of Covid-19-driven movement restrictions. The ceiling and floor rates of the OPR’s corridor are correspondingly increased to 2.25% and 1.75% respectively. Inflationary pressures have increased sharply due to a rise in commodity prices, strained supply chains and strong demand conditions, particularly in the US. For the Malaysian economy, latest indicators show that growth is on a firmer footing, driven by strengthening domestic demand amid sustained export growth. The OPR at 1.75% was the lowest dating back to 2004. The sustained reopening of the global economy and improvement in labour market conditions continue to support the recovery of economic activity. The global growth outlook will continue to be affected by the developments surrounding the conflict in Ukraine, Covid-19, global supply chain conditions, commodity price shocks, and financial market volatility. On the Malaysian economy, the latest indicators show that the country’s economic growth is on a firmer footing, driven by strengthening domestic demand amid sustained export growth. The labour market is further lifted by a lower unemployment rate, higher labour participation and better income prospects. The transition to endemicity on April 1, 2022 is expected to strengthen economic activity, in line with further easing of restrictions and the reopening of international borders. Investment activity and prospects have also improved, underpinned by the realisation of multi-year projects and positive growth outlook. However, risks to growth remain, which include a weaker-than-expected global growth, further escalation of geopolitical conflicts, worsening supply chain disruptions, and adverse developments surrounding Covid-19. Malaysia’s headline inflation, as measured by the consumer price index, is projected to average between 2.2% and 3.2% in 2022. Given the improvement in economic activity amid lingering cost pressures, the country’s underlying inflation, as measured by core inflation, is expected to trend higher to average between 2% and 3% in 2022. Nevertheless, upward pressure on prices would be partly contained by existing price controls and the continued spare capacity in the economy. The inflation outlook continues to be subject to global commodity price developments, arising mainly from the ongoing military conflict in Ukraine and prolonged supply-related disruptions, as well as domestic policy measures on administered prices. Looking back over the course of the Covid-19 crisis, the OPR was reduced by a cumulative 125 basis points to a historic low of 1.75% to provide support to the Malaysian economy. The unprecedented conditions that necessitated such monetary actions have since abated. With the domestic [economic] growth on a firmer footing, the MPC decided to begin reducing the degree of monetary accommodation. This will be done in a measured and gradual manner, ensuring that monetary policy remains accommodative to support a sustainable economic growth in an environment of price stability. 

Eye On The Markets 

This week, on Friday (13May), the Ringgit opened at 4.3930 against the USD from 4.3760 on Monday (9May). Meanwhile, the Ringgit was 3.1476 to the Sing Dollar on Friday (13May). On Monday (9May), the FBM KLCI opened at 1563.80. As at Friday (13May) 10:00am, the FBM KLCI is down 19.22 points for the week at 1544.58. Over in US, the overnight Dow Jones Industrial Average closed down 103.81 points (-0.33%) to 31,730.30 whilst the NASDAQ added 6.73 points (+0.06%) to 11,370.96. 

Immediate increase in minimum wage may reverse business recovery – FMM

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According to President of The Federation of Malaysian Manufacturers (FMM) Tan Sri Soh Thian Lai, FMM has raised concerns that the immediate jump to RM1,500 for minimum wage from May 1 may result in a steep cost increase and reverse the otherwise optimistic business recovery for 2022. The increase from the current RM1,200/RM1,100 to RM1,500 represents an immediate increase of 25-36% on the basic salary which will have a tremendous knock-on effect on the overall payroll cost and have a spiralling impact on business cost that could potentially derail the economic recovery. The industry has repeatedly affirmed that it is supportive of a review of the minimum wages but based on the current economic factors where the business environment continues to be fragile, a progressive adjustment with a RM150 increase in 2022 and a further increase of RM150 in 2023 to reach the RM1,500 minimum wage would be more manageable for the industry. The small and medium enterprises (SMEs), especially those in the suburban areas would be most impacted by this sharp rise in wage cost given that only the micro-enterprises will be exempted for a period of eight months until December 2022. The economy would also see an immediate monthly outflow of close to RM500 million with the repatriation of funds by foreign workers (based on 1.6 million legal foreign workers) with no direct positive impact on the local economy. As it is, the industry is facing an influx of cost increases as businesses continue to rebuild their performance to the pre-pandemic levels, including raw materials cost, logistics cost, and higher energy prices due to the rising commodity prices. Ultimately, the increase in minimum wages is going to further push cost of production and lead to greater inflationary pressures. 

Near-term economic growth momentum to ease based on February’s Leading Index – DOSM 

According to Department of Statistics Malaysia (DOSM) chief statistician Datuk Seri Dr Mohd Uzir Mahidin, Malaysia’s Leading Index (LI) recorded a healthier month-on-month (m-o-m) trend in February 2022, increasing to 110.8 points from 110.1 points in the preceding month. However, the annual LI showed a slower performance at negative 0.5%, signifying that near-term growth momentum would ease amid continued economic recovery. This was influenced by cautious investor sentiment in the stock market which was reflected by the downtrend in the Bursa Malaysia Industrial Index, backed by the healthcare and utilities indices during the month. On the m-o-m LI increase of 0.5% in the reference month, this was mainly contributed by growth in real imports of other basic precious and other non-ferrous metals (0.6%), real imports of semiconductors (0.4%) and Bursa Malaysia Industrial Index (0.2%). The LI is a predictive tool used to anticipate economic upturns and downturns in an average of four to six months ahead. The ongoing international crises have exerted further pressure on global economic growth through trade, inflation and financial markets, which in turn could disrupt the growth prospects of the Malaysian economy. Pertaining to current economic perspective, the Coincident Index sustained its growth by expanding 6.4% to 120.4 points in February 2022, from 113.2 points a year earlier. 

Bursa Q1 net profit falls 44% as revenue slides from pandemic high 

Bursa Malaysia Bhd’s net profit fell 44% to RM67.97 million in the first quarter ended March 31, 2022 from RM121.39 million reported in the same quarter of the previous year, attributed to a lower operating revenue due to a decline in securities trading revenue. Revenue for the quarter stood at RM165.3 million, a 29.4% drop from RM232.28 million reported previously. The securities market segment saw a 40.2% decline in profit to RM104.4 million in Q1’22 from RM174.6 million Q1’21 due to lower revenue, while its derivatives market segment posted a RM12.9 million profit for the quarter from RM11.6 million reported previously on the back of higher revenue. In addition, Bursa’s exchange holding company saw a lower loss of RM4.3 million for the quarter against RM5.1 million reported previously due to lower corporate social responsibility expenses and its others segment saw a 22% hike in profit of RM2.1 million from RM1.7 million. Its overhead rose by 12.3% to RM22.5 million from RM20 million in Q1’21 mainly due to higher depreciation and amortisation of assets. 

According to Bursa CEO Datuk Umar Swift on the results, he pointed out that the average daily trading value of securities continued to normalise to pre-pandemic levels which contributed to the decline in profit for the quarter. However, profit after tax is 4.6% higher than the fourth quarter ended Dec 31, 2021 of RM65million, mainly contributed by a 2.8% higher average daily trading value registered this quarter. However, with the reopening of the economy and international borders, Bank Negara Malaysia expects Malaysia’s growth forecast to be between 5.3% to 6.3%. As such, better economic growth can be expected as the nation moves towards the endemic phase, and we anticipate more trading opportunities for investors due to movements in CPO prices, interest rate policies and the FBM KLCI. To sustain the interest of global investors, the bourse will continue to enhance the attractiveness of listed issuers through initiatives such as the Public Listed Companies Transformation programme launched earlier this year. Further, and in line with the Sustainable and Responsible Investment and environmental social governance agendas, the exchange will continue to deliver new product and service offerings as well as the new voluntary carbon trading platform, which will enhance the breadth and depth of the ecosystem. 

Eye On The Markets 

This week, on Friday (29Apr), the Ringgit opened at 4.3630 against the USD from 4.3335 on Monday (25Apr). Meanwhile, the Ringgit was 3.1500 to the Sing Dollar on Friday (29Apr). On Monday (25Apr), the FBM KLCI opened at 1599.38. As at Friday (29Apr) 10:00am, the FBM KLCI is down 1.85 points for the week at 1597.53. Over in US, the overnight Dow Jones Industrial Average closed up 614.46 points (+1.85%) to 33,916.39 whilst the NASDAQ added 382.60 points (+3.06%) to 12,871.53. 

 

Capital market stakeholders should align focus, assess impact to best cater to needs – SC 

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According to Securities Commission Malaysia (SC) executive director (Islamic capital market development) Sharifatul Hanizah Said Ali, while the Malaysian capital market is set to benefit from the projected domestic economic recovery, it is essential for the stakeholders to align focus and assess the impact to deploy different approaches and initiatives that best cater to the market’s needs. The SC has produced the Capital Market Master Plan 3 (CMP3), a five-year strategic plan for the growth of Malaysia’s capital market. The strategic initiatives over the next five years will be guided by key development and regulatory priorities. These strategic thrusts focus on catalysing competitive growth, empowering investors for a better future, and shaping a stakeholder economy, whilst embedding shared accountability, prioritising efficiency, and outcomes, as well as embracing technology. She said this in her keynote address at the ninth Malaysian Financial Planning Council e-Conference. The SC aims to facilitate a conducive environment to support investor empowerment and elevate financial literacy in line with the CMP3. The Malaysian capital market has remained resilient with a 3.0 per cent growth to RM3.5 trillion in 2021 from RM3.4 trillion in 2020. Notwithstanding the various challenges brought by the fluctuating economic conditions, the capital market continued to play its critical roles in financing the economy with a notable increase in fundraising activities and encouraging the growth of the overall fund management industry. Total funds raised in the capital market remained robust, rising to RM130.9 billion in 2021 — above the five-year pre-pandemic average of RM121.4 billion. It is imperative to raise the bar on professional standards and conduct requirements to enhance professionalism in the financial planning industry. The SC issued Guidelines on Conduct for Capital Market Intermediaries on April 1, which also applies to licensed financial planners to foster good business conduct and a good corporate culture that is centred on the fair treatment of clients and to promote trust in all intermediaries. While regulation can play a role to promote the right culture, the industry must also continue to shape the right behaviours within their own organisations. To this end, it is commendable to see the industry’s harmonisation and elevation of the code of ethics and best practice standards by the relevant certification associations. 

Malaysia’s total trade soars to new high of RM236.6bln in March : DOSM 

According to the Department of Statistics Malaysia (DOSM) chief statistician Datuk Seri Dr Mohd Uzir Mahidin, Malaysia’s total trade recorded a double digit growth of 27.3 per cent year-on-year (y-o-y) in March 2022 to reach a new high of RM236.6 billion. Export and import values in March once again broke the record for all-time highs at RM131.6 billion and RM104.9 billion, respectively. Malaysia’s imports surpassed the RM100 billion mark for the first time ever, in line with the surge in intermediate goods, signifying a positive sign of domestic economic activity. Trade surplus widened by 10.3 per cent from RM24.2 billion in the preceding year to RM26.7 billion, marking 23 consecutive months of trade surplus since May 2020. Malaysia’s exports accelerated by 25.4 per cent from RM105.0 billion to RM131.6 billion, surpassing the RM100 billion mark for the seventh consecutive month since September 2021. Export value growth in March 2022 was supported by both domestic exports and re-exports. Domestic exports were valued at RM106.9 billion, contributing 81.2 per cent to total exports, picking up strongly by 22.8 per cent y-o-y. Meanwhile, re-exports amounted to RM24.7 billion, expanded by 38.0 per cent compared to March 2021. Along with the export performance, imports also registered a strong growth of 29.9 per cent from RM80.8 billion to RM104.9 billion. In comparison to February 2022, the performance of total trade, exports, imports and trade surplus showed the increases of 28.1 per cent, 28.7 per cent, 27.3 per cent, and 34.8 per cent, respectively. An outstanding annual growth in exports was portrayed in 166 out of 255 commodity groups, showing increases compared to the same month of the previous year, led by thermionic valves and tubes. As for imports, 186 of 259 groups posted a positive growth. The rise in exports was attributable mainly to higher exports to Singapore (+RM5.1 billion), followed by Japan (+RM2.1 billion), South Korea (+RM1.8 billion), the European Union (+RM1.8 billion), China (+RM1.7 billion), Taiwan (+RM1.4 billion), Thailand (+RM1.4 billion), Indonesia (+RM1.4 billion), and the United States (+RM1.3 billion). On top of that, China was a key contributor to the increase in imports, which increased by RM3.4 billion, followed by Saudi Arabia (+RM2.9 billion), Taiwan (+RM2.8 billion), Indonesia (+RM2.5 billion), Singapore (+RM2.3 billion), the United States (+RM1.4 billion), and Thailand (+RM1.2 billion). The expansion of export was driven by electrical and electronics products (+RM13.0 billion); petroleum products (+RM4.6 billion); palm oil and palm oil-based agriculture products (+RM3.1 billion); liquefied natural gas (+RM2.5 billion); crude petroleum (+RM1.6 billion); and palm oil-based manufactured products (+RM1.1 billion). Meanwhile, the rise in imports were noted for electrical and electronics products (+RM7.1 billion); crude petroleum (+RM6.1 billion); petroleum products (+RM3.0 billion); chemical and chemical products (+RM2.2 billion); machinery, equipment and parts (+RM1.6 billion); metalliferous ores and metal scrap (+RM1.2 billion); and coal (+RM1.2 billion). On the performance for the first quarter of 2022, the total trade, exports, imports, and trade surplus continued to record strong double-digit growth. The total trade went up by 23.6 per cent, supported by the expansion in exports (+22.2 per cent), as well as imports (+25.2 per cent). Consequently, trade surplus recorded a higher value of RM65.1 billion. 

Local bourse market cap down slightly in March as investors booked profit – Bursa 

According to Bursa Malaysia, the total market capitalisation of the local bourse slightly moderated to RM1.795 trillion in March this year compared with RM1.81 trillion reported in the previous corresponding month. The reduction was due to investors booking their profit in the plantation and energy sectors, subsequent to the record high commodity prices last month. Meanwhile, foreign inflows further accelerated to RM3.29 billion in March as foreign investors turned net buyers in financial services, industrial and plantation sectors. However, foreign investors emerged as net sellers in the technology, telecoms and utility sectors. In March, total average daily volume further escalated to RM2.96 billion, with strengthened trading activities among foreign and local institutional investors. In terms of stocks, counters that saw the biggest foreign inflows were Petronas Chemicals Group Bhd (RM1.1 billion), Public Bank Bhd (RM935 million), Malayan Banking Bhd (RM348 million), Kuala Lumpur Kepong Bhd (KLK) (RM345 million) and Hong Seng Consolidated Bhd (RM174 million). Foreign investors further increased their stakes in plantation stocks with a total of RM962 million inflow in March, despite the moderation in crude palm oil price after hitting its peak last month. Meanwhile, local institutions sold RM692 million worth of plantation stocks, while local retailers offloaded RM181 million in the same month. The stock exchange also highlighted selected plantation stocks, such as KLK, which saw a RM345 million inflow by foreign investors, while local institutions took profit, resulting in an outflow of RM342 million. 

Eye On The Markets 

This week, on Friday (22Apr), the Ringgit opened at 4.3060 against the USD from 4.2390 on Monday (18Apr). Meanwhile, the Ringgit was 3.1554 to the Sing Dollar on Friday (22Apr). On Monday (18Apr), the FBM KLCI opened at 1591.64. As at Friday (22Apr) 10:00am, the FBM KLCI is down 4.70 points for the week at 1596.34. Over in US, the overnight Dow Jones Industrial Average closed down 368.03 points (-1.05%) to 34,792.76 whilst the NASDAQ shed 278.41 points (-2.07%) to 13,174.65.  

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