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Trump says he's inclined to extend China trade deadline and meet Xi soon

WASHINGTON, Feb 23 ― President Donald Trump said yesterday there was “a very good chance” the United States would strike a deal with China to end their trade war and that he was inclined to extend his March 1 tariff deadline and meet soon with…


US-China trade hopes lift stocks, oil hits three-month high

NEW YORK, Feb 23 ― Stocks rose in major markets across the world yesterday on bets of progress in trade talks between China and the United States, while crude futures hit their highest level in more than three months supported by ongoing supply…


Fitch affirms Malaysia’s rating at ‘A-’, outlook stable

KUALA LUMPUR: Fitch Ratings has affirmed Malaysia’s long-term foreign-currency issuer default rating (IDR) at ‘A-’ with a stable outlook. The ‘A-’ rating reflects higher growth rates than the peer median and a net external creditor position which is supported by steady current account surpluses and large external assets. However, the rating is constrained by high […]


Fitch affirms Malaysia’s ‘A-’ rating, with stable outlook

PETALING JAYA: Fitch Ratings has affirmed Malaysia’s long-term foreign-currency issuer default rating (IDR) at ‘A-’ with a stable outlook.

The rating agency said the ‘A-’ rating reflects higher growth rates than the peer median and a net external creditor position which is supported by steady current account surpluses and large external assets.

However, it said the rating is constrained by high government debt, low per capita income levels and weak standards of governance relative to rating peers.

Meanwhile, Fitch sees downside risks to the government’s 2019 deficit target, which is based on an optimistic oil price assumption of US$70 per barrel and above Fitch’s forecast of US$65 per barrel.

The 2019 budget targets a deficit of 3.4% of gross domestic product (GDP) in 2019 and 3% of GDP in 2020.

However, Fitch assumes that expenditure cutbacks will offset any revenue shortfall, and forecasts a general government deficit of 3.4% of GDP in 2019 (current ‘A’ median -1.7%), in line with the authorities’ target.

Nevertheless, Fitch said substantial non-oil revenue measures would be required for the government to meet its medium-term deficit targets unless oil prices recover, posing a risk to the fiscal outlook in Fitch’s opinion.

It forecasts general government debt-GDP to stabilise at around 62% in 2019 and 2020, above the current peer median of 49%.

“Our debt numbers include officially reported committed government guarantees. Beyond the fiscal risks outlined above, there are risks to debt containment from contingent liabilities related to public-private partnerships which may migrate to the sovereign balance sheet as the government continues to improve the transparency of public finances,” it said.

Fitch expects growth to slow to around 4.5% in 2019 and 2020 from 4.7% in 2018, on weaker export performance and slowing investment activity, but to remain above peers.

Meanwhile, Fitch said outlook for exports is uncertain because of trade tensions between the US and China and its expectations for low oil prices.

However, it said private consumption is likely to remain supportive of growth due to favourable labour market conditions and the government’s plans to disburse income tax and GST refunds of around RM37 billion during the year.

The growth outlook is subject to downside risk, as elsewhere in the region, from the slowdown in China and a further escalation of trade tensions with the US, it added.

Additionally, Fitch expects the current account surplus to narrow further in 2019 as demand for some key exports such as electronics, oil and liquefied natural gas is likely to stay weak.

The current account surplus declined to 2.3% of GDP in 2018 from 3% in 2017 on weaker exports of electronics and commodities.

Foreign-currency reserves fell in 2018 to US$101.4 billion (4.8 months of current external payments; current peer median 4.3 months) as Bank Negara Malaysia intervened during the year to dampen depreciation pressures.

However, Fitch said reserves have picked up subsequently as pressures on emerging markets subsided.

Meanwhile, it forecasts the banking sector’s performance to remain broadly stable despite some softening in growth and pockets of asset-quality risk in some sectors.

“Profitability among Fitch-rated banks should hold up well, and bank balance sheets to remain generally sound – which should help the sector weather unexpected shocks.

“The sector’s common equity Tier 1 ratio and liquidity coverage ratio of 13.1% and 143%, respectively, at end-2018 indicated healthy capital and liquidity positions in aggregate,” it added.


UOB maintains inflation forecast at 2.0pc in 2019

KUALA LUMPUR, Feb 22 — United Overseas Bank (Malaysia) Bhd has maintained its inflation forecast of 2.0 per cent for 2019 on the back of a sustained recovery in oil prices, stable broadband prices, potential weather disruptions, and resilient…


Fitch affirms Malaysia's rating of 'A-' with stable outlook

KUALA LUMPUR, Feb 22 — Fitch Ratings has affirmed Malaysia's long-term foreign-currency issuer default rating (IDR) at “A-” with a stable outlook. The “A-” rating reflects higher growth rates than the peer median and a net external…


Petron’s FY18 net profit falls to RM224.5m

KUALA LUMPUR, Feb 21 — Petron Malaysia Refining & Marketing Bhd’s (Petron) net profit fell to RM224.5 million in the financial year ended Dec 31, 2018 (FY18) from RM405.18 million in the previous year. Revenue, however, increased by 16 per…


Ringgit closes 120 bps lower against US dollar

KUALA LUMPUR, Feb 21 — The ringgit gave up its recent gains to close lower against the US dollar today, as investors shifted their interest to the greenback after the release of the US Federal Reserve (Fed) meeting minutes on Thursday morning. At…


RAM Ratings: Deflation seen in Jan amid low fuel prices

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.


Ringgit opens marginally lower on profit taking

KUALA LUMPUR: The ringgit opened marginally lower versus the US dollar this morning on profit-taking after it closed at the highest level in more than six months, which was last seen on Aug 1, 2018 yesterday.

At 9 am, the ringgit was quoted at 4.0650/0700 compared to Wednesday’s close of 4.0640/0700.

A dealer, however, said, with the ringgit’s position was still relatively positive with the prospect of higher oil prices may have capped the local note’s decline.

He also said the US dollar investors also remain cautious as tensions flare up between US president Donald Trump’s administration and the Democrat-controlled Congress.

“This came as 16 states filed a lawsuit against the Trump’s administration following its declaration of a national emergency over controversial Mexican border security wall,” he said.

Meanwhile, the ringgit was traded mostly lower against other major currencies.

It fell against the Singapore dollar to 3.0080/0121 from 3.0066/0115 yesterday, weakened against the British pound to 5.3012/3097 from 5.2986/3081, and slipped versus the Japanese yen to 3.6724/6779 from 3.6679/6743 .

The local note, however, appreciated vis-a-vis to the euro to 4.6105/6182 from 4.6106/6195 previously. — Bernama