global growth


Indonesia: Year in Review 2017

Solid growth, supported by strong investment flows, should put Indonesia on a firm footing in 2018, despite a slight drop in expectations. In mid-November 2017 Bank Indonesia (BI) sharpened its forecast for year-end growth to 5.1 per cent, at the lower end of projections made earlier in 2017 of between 5 per cent and 5.4 […]

KL shares end morning session lower on continued profit-taking

KUALA LUMPUR, Jan 18 — Bursa Malaysia ended the morning session lower today on continued profit-taking in selected heavyweights, industrial product and consumer counters, despite firmer Asian markets, dealers said. At 12.30pm, the key FTSE…

GDP growth to moderate to 5.1% this year: SERC

KUALA LUMPUR: The Malaysian economy is expected to moderate to 5.1% this year due to the high base effect from 2017, the Socio-Economic Research Centre (SERC) projected, noting that the current pre-election sentiment on the local bourse is positive with the stronger ringgit boosting optimism.

SERC executive director Lee Heng Guie estimates that gross domestic product growth in 2017 will be between 5.8% and 6%, the strongest in two years.

He expects economic growth outlook for 2018 to be led by domestic demand, albeit at a slower pace. Lee said the strong double-digit export growth and export levels will normalise and grow at a slower pace (estimated 7.5% in 2018 compared with 19.8% projected in 2017) as the high base effect kicks in, and the waning effect of favourable exchange rate valuation due to the gradual strengthening of the ringgit.

“If there is no major pullback in consumer spending, we should be able to see a growth of 5.1%,” he told a media briefing on the quarterly economy tracker today, adding that there is upside potential to its forecast if export growth turns out to be stronger.

He also expects a 25bps rate hike by Bank Negara Malaysia (BNM) in its Monetary Policy Committee meeting next week.

“Our baseline call is 25bps for a start. The market must prepare for further rise in rates if (three) conditions are met throughout the year,” he said.

These conditions include global growth and domestic economy continuing to sustain at strong levels; the need to anchor inflation expectations should inflation continue to remain at elevated levels as oil prices remain a wild card; and balance yield gaps should the Fed hike rates aggressively.

Lee said Malaysia’s current economic condition is ready for a review of monetary policy and can absorb a small 25bps rate hike, which would bring it back to levels before the rate cut during Brexit.

“At the moment, export and consumer spending are growing, there’s no significant signs of pullback. A small step of 25bps will not discourage consumption and investments. If you keep rates at this level too long, eventually it will create risks, although we see an improvement in household debt,” said Lee.

On whether a rate hike may temper sentiments with the coming election, Lee said BNM will look at the total picture.

“I believe that the growth is strong, so they can go ahead (to raise rates). It’s a tough call, whether you want to take into account these sentiments or political (election), the central bank will know how best to move.”

At the moment, he said, foreigners are coming back to the local bourse in a big way in anticipation of the imminent election, specifically those who invest in stocks with an election-play, thanks to the stronger ringgit and a better economic outlook.

“At the moment, the sentiment is still positive. With the oil price firming up, it creates optimism. When Parliament dissolves, investors will turn sidelines and closer to election, they will be more careful to see the outcome,” said Lee.

Meanwhile, the impending general election could provide the ringgit with headwinds in the first half of the year, but good economic and financial fundamentals are expected to be supportive of the ringgit, which is fundamentally undervalued. Lee expects the ringgit to trade between RM3.80 and RM3.90 against the US dollar by end-2018.

Asian shares dip as commodities ease, bitcoin licks wounds

TOKYO, Jan 17 — Asian stocks stepped back from a record high yesterday as the region’s resource shares were dented by falling oil and commodity prices while digital currencies tumbled on worries about tighter regulations. MSCI’s broadest index…

Investors raise bets on surging commodities as oil tops US$70

NEW YORK, Jan 12 — Investors are betting there’s more to come from commodities after a surge in industrial metals and oil prices. Assets invested in commodity-linked securities climbed to a four-year high of US$311 billion (RM1.24 trillion)…

US import prices barely rise, wholesale inventories rebound

WASHINGTON, Jan 11 — US import prices recorded their smallest increase in five months in December and underlying imported price pressures were muted amid declining costs for food and consumer goods. The slowdown in import price growth came…

Emerging markets set to drive 2018 global growth — World Bank

WASHINGTON: The global economy is set to expand by 3.1 per cent in 2018, slightly up from 3 per cent last year and marking the first year since the 2008 Great Recession that it will near or achieve full growth potential, the World Bank said. In an update of its twice-yearly economic report, the World […]

Moody’s: Impact of US rate hike on Malaysia minimal

KUALA LUMPUR, January 10 — Malaysia’s exposure to the global economic vulnerability following the steep rise in US interest rates will be mitigated as the majority of the government and economy’s debt is financed domestically through stable…

Asian markets build on blistering start to year

HONG KONG: Asian markets mostly rose yesterday, with Hong Kong marking 11 straight wins and Tokyo at a 26-year high, as investors press on with a global rally that has the region enjoy its best start since 2006. Wall Street provided yet another record lead as eyes turn to the beginning of the corporate earnings […]

Bursa Malaysia’s bull run to continue

KUALA LUMPUR: Bursa Malaysia’s bull run is expected to continue underpinned by the favourable outlook for global growth coupled with positive domestic catalysts. Inter-Pacific Securities Sdn Bhd Research head, Pong Teng Siew, said the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) would extend the upward trajectory, to reach the 1,826-level or even higher to 1,840- […]