After weeks of a directionless market, the FBM KLCI finally broke above the immediate resistance level of the sideways trend at 1,702 points and closed 1.9 per cent higher in a week at 1,721.42 points last Friday. Trading volume has increased as the Chinese New Year holiday season ends. Last Thursday, the index closed at […]
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KUALA LUMPUR: Inflation is estimated to be lower at -0.5% in January 2019, from +0.2% in December 2018, amid deflationary pressures from the transport fuel component, according to RAM Ratings.
The average price of RON95 petrol was markedly lower (-13.1% year-on-year) at RM1.98/litre in January, following the switch to the weekly fuel price mechanism based on the Automatic Price Mechanism (APM).
The new regime has led to a more direct and immediate transfer of actual global oil prices to end-consumers.
Looking ahead, headline inflation is projected to accelerate to 2.0% this year, mainly driven by expectation of continued spillover effects from the reintroduction of the Sales and Service Tax and low-base effects during the three-month window without the Goods and Services Tax (June-August 2018).
The impact is envisaged to be particularly pronounced for the food component, and will be the key driver of overall inflation in 2019.
The transport component is unlikely to repeat the impact it had last year, contributing to 1.7 percentage points of the overall 2.8 percentage point year-on-year decline in 2018’s headline inflation.
RAM head of research Kristina Fong (pix) said inflationary pressure from the transport component are still expected to be relatively muted this year against generally softer global oil prices.
“Even so, there may be some slight upward price pressure in 2H2019 following the switch to targeted fuel subsidies,“Fong said in a statement.
It expects Brent crude prices to average US$60-US$65 per barrel this year, compared to US$71 per barrel in 2018.
“Looking ahead, we anticipate Bank Negara Malaysia to maintain the overnight policy rate at 3.25% in 2019, given the need to balance between capital outflow pressures and growth support.”
She said although headline inflation is envisaged to accelerate this year, the pace of increase will still be rather nondescript as a trigger point, relative to the downside risks to growth from ongoing fiscal consolidation, volatile capital markets, US-China trade tensions and Brexit uncertainties.
KUALA LUMPUR: Steady crude oil prices, positive market sentiment in Malaysia and optimism over US-China trade talks pushed the ringgit to finish at its highest level in more than six months.
At 5pm, the local note surged 140 basis points, or 18%, to 4.0640/0700 against the US dollar from 4.0780/0830 on Tuesday, the highest level since Aug 1, 2018 when it touched 4.0640/0680.
A dealer said the steadier crude oil prices which saw benchmark Brent crude hover above US$66 per barrel today, continued to fuel investor optimism as firmer oil prices was a boon to the country’s oil and gas revenue.
“Meanwhile, news that Malaysia is in the last mile in its negotiations with China for a lower price tag for the US$20 billion East Coast Rail Link project also helped improve market sentiment in the country,“ he said.
Externally, the dealer said rising hopes for progress on the US-China trade talks that resumed this week had whipped up investor appetite for riskier emerging market currencies.
“This has lent support to the ringgit’s performance,“ he added.
At the close, the ringgit was, however, traded mostly lower against other major currencies, except against the Japanese yen.
It slid against the Singapore dollar to 3.0066/0115 from 3.0052/0093 on Tuesday, declined against the British pound to 5.2986/3081 from 5.2680/2761 and retreated versus the euro to 4.6106/6195 from 4.6085/6158.
Vis-a-vis the Japanese yen, the local unit appreciated to 3.6679/6743 from 3.6812/6867 previously. — Bernama
KUALA LUMPUR, Feb 20 — Steady crude oil prices, positive market sentiment in Malaysia and optimism over US-China trade talks pushed the ringgit to finish at its highest level in more than six months. At 5pm, the local note surged 140…
TOKYO, Feb 20 — Asian stocks advanced to 4.5-month highs today as investors bet that Chinese and US trade negotiators would be able to secure a deal to de-escalate their year-long tariff war. MSCI's broadest index of Asia-Pacific shares outside…
SINGAPORE: Oil prices were around 2019 highs on Wednesday, propped up by supply cuts led by producer club OPEC and by U.S. sanctions on Iran and Venezuela.
But soaring U.S. production and expectations of an economic slowdown look set to cap prices, analysts said.
U.S. West Texas Intermediate (WTI) crude oil futures hit 2019 highs of $56.39 per barrel shortly after 0300 GMT on Wednesday, up 30 cents, or 0.5 percent, from their last settlement.
International Brent crude futures were at $66.58 per barrel, up 13 cents, or 0.2 percent, from their last close and not far off their 2019 high of $66.83 per barrel from Monday.
Oil prices have been supported by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC).
OPEC-member and top crude exporter Saudi Arabia is expected to reduce shipments of light crude oil to Asia in March as part of the effort to tighten markets.
OPEC as well as some non-affiliated producers such as Russia agreed late last year to cut output by 1.2 million barrels per day (bpd) to prevent a large supply overhang from swelling.
“We have lowered Saudi crude oil output in line with announcements … (and) are now assuming that Saudi Arabia will produce in the first three quarters of 2019 less than the 10.31 million bpd target it agreed to at the Dec. 7 OPEC, non-OPEC meeting,” French bank BNP Paribas said in a note.
Because of the cuts, BNP said it expected oil prices “to rally through Q3 2019”, with Brent to average $73 per barrel by then and WTI to average $66.
Another key oil price driver has been U.S. sanctions on oil exporters Iran and Venezuela.
Despite the sanctions, Iran’s crude exports were higher than expected in January, averaging around 1.25 million bpd, according to Refinitiv ship tracking data. Many analysts had expected Iran oil exports to drop below 1 million bpd after the imposition of U.S. sanctions last November.
SHALE BOOM, WEAKER ECONOMY
Standing against the supply cuts and sanctions is U.S. crude output , which soared by more than 2 million bpd in 2018 to a record 11.9 million bpd, thanks to booming shale oil production, which the Energy Information Administration on Tuesday said was expected to keep rising.
BNP Paribas said surging U.S. output would feed into lower oil prices towards the end of the year, with Brent to dip to an average of $67 a barrel by the fourth quarter and WTI to average $61.
“U.S. oil production growth, driven by shale, will be increasingly exported in greater volumes to international markets while the global economy is expected to witness a synchronised slowdown in growth,” the bank said.