Euro-area growth unexpectedly gathers pace as risks persist

LONDON, June 22 — Economic momentum in the euro area unexpectedly picked up in June, suggesting the 19-nation bloc is starting to recover from a temporary soft patch just as risks to the outlook increase. Private-sector growth also gathered pace…

FBM KLCI slides below 1,700 points to 16-month low

PETALING JAYA: The local stock market's benchmark index slipped below the 1,700-point phychological level today as investors were spooked by continued uncertainy in the trade spat between the US and China.

The FBM KLCI sank as much as 27.86 points or 1.63% to 1,681.89 points, its lowest level since January 2017. At the close of trading, it was down by 17.43 points or 1.02% to 1,692.32 points. A total of 2.13 billion shares were traded valued at RM2.68 billion. Market breadth was negative with losers outpacing gainers by 748 to 199.

The broader market was mainly dragged down by banking and telco stocks. Among the top losers were Hong Leong Bank, Telekom Malaysia, Hong Leong Financial Group and Public Bank, which fell 56 sen, 49 sen, 42 sen and 16 sen to RM17.90, RM3.14, RM17.90 and RM22.62, respectively.

Elsewhere in the region, the China and Hong Kong markets continued to see heavy selling pressure. Hong Kong's Hang Seng Index fell 1.35% and the Shanghai composite index lost 1.37%.

In currencies, the ringgit was also weaker today, depreciating as much as 0.3% to 4.0162 against the US dollar. As at 5pm, it was trading at 4.0150.

Maybank Kim Eng, the investment arm of Maybank Group, said at its Invest Asia UK conference yesterday that Asia's underlying fundamentals remain solid with resilient growth prospects despite headwinds from US-China trade friction and rising US interest rates.

Its CEO Datuk John Chong said investors should look beyond the short-term noise and focus on the region's long-term growth prospects. “While there have been substantial capital outflows as a result of the stronger US dollar, higher interest rates and US-China trade friction, Asia is now better positioned to weather the volatility.”

Chong noted that countries in the region have largely strengthened their current account balances, increased their foreign reserves and kept inflation in check over the past five years.

“Stronger private and infrastructure investments as well as a rising middle class are significant growth thrusts going forward. We believe investors will see real value emerging in Asian corporates after the recent market tantrums and should capitalise on the opportunity.”

For Malaysia, Chong said the government's commitment to adopt fiscal reforms and narrow the fiscal deficit bodes well for the country's economy.

Following the recent market correction, he said the FBM KLCI is now priced attractively at 15.4 times on 12 months forward earnings as of June 19.”This puts it at the lower end of its trading range of 15.4x to 17.3x over the past three years.”

Dollar hits fresh 11-month peak as rate divergence bets weigh on euro

LONDON, June 21 —The dollar rose to a fresh 11-month high and the euro sagged towards its 2018 lows on Thursday as investors increased their bets on a prolonged period of monetary policy divergence between the US and European central banks….

BOJ’s Funo urges continued easing as inflation still weak

SENDAI, June 21 — Bank of Japan board member Yukitoshi Funo said today that the central bank needs to patiently continue its strong monetary easing under the current policy, as slowing inflation keeps the BOJ’s 2 per cent price target a distant…

Asian currencies hit by stronger US dollar, Indonesian rupiah slumps

SINGAPORE, June 21 — All emerging Asian currencies weakened against a firming US dollar today, as comments by the US Federal Reserve chairman on the pace of rate hikes and a pick-up in US yields fuelled the greenback. Treasury yields rose…

South-east Asia stocks: Philippines slumps 2pc, move further into bear territory

SINGAPORE, June 21 — Philippine shares slumped 2 per cent on today and moved further into bear territory on persistent foreign investor selling, largely sparked by a weak peso which hit a 12-year low earlier this week. The Philippine Stock…

Malaysia’s inflation rate in May rises at fastest pace in four months

PETALING JAYA: Malaysia's consumer price index (CPI) increased 1.8% in May 2018 – the fastest pace in four months – to 121.1 compared with 119.0 in the corresponding month of the preceding year due to a strong recovery in transport prices.

According to the Department of Statistics, among the major groups which recorded increases were transport (+3.8%); food & non-alcoholic beverages (+2.2%); housing, water, electricity, gas & other fuels (+2.1%); restaurants and hotels (+2.1%); health (+1.9%); and furnishings, household equipment & routine household maintenance (+1.5%).

MIDF Research expects inflation to moderate in the upcoming months amid zero-rated GST, tax holiday period until the implementation of the Sales and Services Tax in September and stable retail fuel prices, which will reduce business costs.

“At this juncture, we expect 2018’s fuel-related inflation to moderate amid higher base effects, re-subsidisation of domestic fuel price and high likelihood of a downward adjustment of global commodity prices in 2H18 from the current temporary factors, which pushed the prices up,” said MIDF Research.

It expects headline inflation to average at 2.6% this year compared with 3.8% in 2017 amid higher base effects, supported by inflation rate for 1Q18 which stood at 1.8% compared with 4.2% in the same period last year.

“As inflationary pressure remains steady, we anticipate Bank Negara Malaysia to maintain its current monetary policy with no more hikes in the overnight policy rate for the rest of 2018 barring any pleasant upward surprises in domestic economic growth,” it said.

The research firm said that food inflation in Malaysia continued to fall from 2.6% year on year (yoy) in April 2018 to 2.2% yoy last month. Prices for fresh food products such as meat and seafood continued expanding however at a moderate pace of 1.6% yoy and 5.9% yoy respectively.

In contrast, fruits inflation increased to 1.5% yoy while vegetables decreased further by 3.7% yoy. There is a potential for food inflation to rise in June due to higher demand for Ramadan and Hari Raya.

On a monthly basis, the May CPI was up 0.2% compared with April 2018.

Core inflation meanwhile, rose 1.5% in May 2018 compared with the same month of the previous year. Core inflation excludes most volatile items of fresh food as well as administered prices of goods and services.

For the first five months of the year, the CPI registered an increase of 1.7% against the same period last year.

In the overall CPI for May, inflation in three regions surpassed the national rate of 1.8%, namely Kuala Lumpur (+2.2%), Selangor & Putrajaya (+2.1%) and Johor (+2%).
According to MIDF Research, the inflation rate increased in May across all states except Penang.

Philippine raises rates for second time in six weeks

MANILA, June 20 — The Philippine central bank raised its benchmark interest rate today, for the second time in six weeks, and said it was ready to take further action to tame inflation and the volatility in the peso. The policy-making Monetary…

Thailand bucks South-east Asia trend by keeping rates on hold

BANGKOK, June 20 — Thailand’s central bank left its benchmark interest rate unchanged near a record low, bucking a regional trend as more central banks tighten policy amid a global emerging-market rout. Five of the six monetary policy committee…

Most Asian currencies firm as investors re-assess trade war risks, Philippine peso falls

SINGAPORE, June 20 — Many emerging Asian currencies firmed against a steady US dollar today, a partial recovery from the previous session's losses on fears of knock-on effects from a China-US trade war. Today's trade may reflect market…