Gradual steps to control shadow banking problem
Ringgit volatility rises before U.S. CPI report
KUALA LUMPUR: A gauge of anticipated ringgit volatility rises for a second day before a U.S. inflation report on Friday that may provide guidance about when the Fed will resume raising interest rates.
* 1-month implied volatility for US/MYR climbs 1bp to 5.72%
* USD/MYR little changed at 4.2847 after rising 0.2% Monday
** Support 4.2760, 4.2663, 4.2505; resistance 4.3022, 4.3055, 4.3217
** Traders have reduced short US dollar positions after last week’s NFP report and this may continue if there’s a strong print in U.S. inflation data this Friday
Still, emerging markets remain attractive in the face of rising interest rates in the developed world as growth is holding up and inflation remains contained
Ringgit is among EM FX that Morgan Stanley favours, according to a report released Monday
Co. suggests using Europ to fund purchases of EM currencies as EM remains fundamentally in good shape and valuations look cheap against EUR
Malaysia’s 10-year goverment bond yield little changed at 4%
Foreign ownership of Malaysian sovereign and corporate debt securities fell 1.2% to RM192bil in July from previous month: central bank data showed late MondayThe souece
Although there’ll be sizable bond redemptions from August to October, there are unlikely to be significant maturity-driven outflows as foreign ownership of Islamic securities is low and holdings of other notes have been reduced, Winson Phoon, a fixed-income analyst at Maybank Investment Bank, wrote in note Monday
Second half will be challenging as external risks such as a change in market pricing on the pace of further Fed hikes may shift broad EM flow sentiment
Global funds bought net RM151.2mil of Malaysian stocks last week, a 4th week of purchases: MIDF Amanah Investment - Bloomberg
Source: The Star
Bank Negara international reserves rise to US$99.1bil
KUALA LUMPUR: Bank Negara international reserves rose US$300mil to US$99.4bil as at July 31, 2017 from US$99.1bil on July 14, 2017.
The central bank said on Monday its reserves, in ringgit terms, rose to RM427bil from RM425.4bil as at July 14.
It said the reserves position was sufficient to finance 7.9 months of retained imports and was 1.1 times the short-term external debt.
The main components of the reserves are foreign currency reserves (US$93bil), International Monetary Fund reserves position US$800mil, Special Drawing Rights or SDRs (US$1.1bil), gold (US$1.5bil) and other reserve assets (US$3bil).
Source: The Star
Asia stocks inch up
TOKYO: Asian stocks edged up early on Wednesday after Wall Street indexes notched record highs, while the dollar was steady as investors awaited the Federal Reserve's policy decision later in the day for more clues on its tightening plans.
The Fed concludes a two-day meeting later on Wednesday, and is widely expected to keep interest rates unchanged.
With a rate hike not in the picture this time, the focus will be on the Fed's statement, with markets looking for signs of when the central bank will begin paring its massive bond holdings and next raise rates. A statement is expected at 1800 GMT.
"The stock markets are generally of a view that the Fed is not in too much of a hurry to normalize monetary policy. So equities would be able to take this Fed meeting in stride if the Fed's statement is in line with such views," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.
A more assertive policy message by the Fed, on the other hand, was expected to lift U.S. yields and boost the dollar.
MSCI's broadest index of Asia-Pacific shares outside Japan, rose 0.1 percent, drawing support after the S&P 500 climbed to an all-time high overnight on well-received results from McDonald's and Caterpillar in addition to bank share gains.
Caterpillar's results smashed expectations and the company raised its full-year forecast for the second time, underscoring strength across its businesses and a steady recovery in demand from China.
South Korea's KOSPI stood little changed and Australian stocks rose 0.9 percent as investors awaited inflation data. Price pressures are expected to remain mild, which would add to views that rates will remain at record lows for some time to come.
Japan's Nikkei added 0.8 percent after the dollar extended an overnight rally against the yen to pull away from seven-week lows.
The U.S. currency was last traded at 111.980 yen for a gain of 0.1 percent.
The greenback was lifted as investors gained some hope that President Donald Trump could push through his expansionary fiscal agenda, after the Senate passed a motion to proceed on a repeal of Obamacare, which Trump and Republicans have vowed to undo.
The dollar also received support from a rise in U.S. Treasury yields. Long-dated Treasury yields jumped by the most in almost five months on Tuesday as Wall Street hit new highs and on reduced demand for safe-haven bonds. [US/]
The euro was 0.1 percent lower at $1.1638, pulling back from a two-year high of $1.1712 hit on Tuesday on a stronger-than-expected German Ifo business survey.
Expectations that the European Central Bank would begin phasing out its easy monetary policy sooner rather than later have supported the common currency this month.
The dollar index against a basket of major currencies was 0.1 percent higher at 94.144 , managing to put some distance between a 13-month low of 93.638 plumbed on Tuesday.
U.S. political uncertainty has recently hurt the dollar, with the Trump administration dogged by investigations into alleged Russian meddling in the U.S. election.
In commodities, crude oil extended its surge after jumping overnight on data showing a sharp fall in U.S. crude stocks last week.
U.S. crude rose 1 percent to $48.36 a barrel and Brent added 0.7 percent to $50.56 a barrel.
Gold struggled as improved investor risk appetite in the broader markets curbed the precious metal's appeal. Spot gold was 0.1 percent lower at $1,247.25 an ounce following its ascent to a one-month peak of $1,258.79 on Monday.
Source: The Star
Exports boost for economy
Stronger ringgit to drive auto stocks
Mohd Irwan: Malaysia's 2017 GDP growth can hit 5%
CYBERJAYA: Malaysia's economy can grow 5% or more this year, based on the country's first-half performance, said Treasury Secretary-General Tan Sri Dr Mohd Irwan Serigar Abdullah.
"The country's economy is performing well, and I personally think we can achieve 5% or more in GDP growth, backed by the strengthening economic environment, the increase in exports and investments, and job creation.
"We also see the oil price stabilising at between US$47 and US$50 per barrel, and I think the ringgit will be getting better," he said, commenting on a recent Bloomberg report, "The Ringgit Is Easily Asia'ss Strongest Currency", which said the ringgit was the most stable major Asian currency during the first quarter of this year.
Malaysia's economy recorded 5.6% in the first quarter of this year, boosted by strong domestic demand and private expenditure.
Mohd Irwan, who is also chairman of the Malaysian Global Innovation and Creativity Centre (MaGIC), was speaking to reporters after launching MaGIC's Global Accelerator Programme in Cyberjaya on Tuesday.
He said Malaysia's economy was never "in doom and gloom", and that the economic slowdown was due to the volatility in oil price and global market sentiment.
Asked if Malaysia would revise the GDP projection, Mohd Irwan said, the Government was meeting with the Economic Planning Unit (EPU) and Bank Negara to see whether there was a need to revise it in Budget 2018, scheduled to be tabled on Oct 27.
Yesterday, Prime Minister Datuk Seri Najib Tun Razak said in his blog posting that Malaysia was able to record achievements that it could be proud of despite challenges such asthe global market uncertainty and falling oil prices.
He said that overall, the country's economic performance for the first quarter of 2017 remained stable and strong, expanding by 5.6%, with foreign direct investment rising to RM17 billion.
Source - Bernama
Ringgit higher versus US dollar on Monday
KUALA LUMPUR: The ringgit opened higher on Monday following the bearish sentiment in the market for the US dollar after the release of its first-quarter gross domestic product (GDP) data last week, a dealer said.
At 9am, the ringgit traded at 4.2900/2970 against the greenback from 4.2920/2950 on Friday.
The dealer said at the beginning of this year, the Donald Trump-fuelled US dollar rally left the currency vulnerable to heavy losses and after six months, the greenback still lacked strong and fresh catalysts.
The US released its better-than-expected GDP data last week which showed that the US economy advanced 1.4%. Corporate profits, however, declined despite the upbeat data.
Overall, investors remained focus on central banks' intentions to tighten monetary policies.
Against a basket of major currencies, the ringgit traded mixed.
It rose against the Singapore dollar to 3.1155/1210 from 3.1181/1220 on Friday and strengthened against the yen to 3.8194/8267 from 3.8328/8365.
The local note fell against the British pound to 5.5787/5904 from 5.5757/5801 and eased slightly against the euro to 4.8970/9055 from 4.8963/8015 on Friday.
Ringgit is Asia's strongest currency
KUALA LUMPUR: Malaysian assets are back in favour as investors focus on encouraging signs of an economic turnaround instead of a scandal that has touched the top of government and as far as Hollywood.
The stark shift means that Prime Minister Datuk Seri Najib Tun Razak, who has weathered political attacks and protests going back to 2015 over allegations involving state-owned 1Malaysia Development Bhd., may call an early election to cement his hold on power.
The ringgit is easily the strongest major Asian currency this quarter, climbing more than twice as much as the next best, the Chinese yuan. Global funds have bought the most Malaysian stocks year-to-date since the same period in 2013, and net inflows to the bond market surged in April and May.
Malaysia has been rocked by far-reaching investigations into investment fund 1MDB, yet double-digit acceleration in the country’s exports has lifted the economy, which grew 5.6% on-year in the first quarter, the most since early 2015.
“As long as we see improvement on the macro data with the support of global conditions and stable energy prices, we will keep our cautiously positive stance for Malaysia,” London-based Aksoy said.
Overseas investors have purchased US$2.48bil of Malaysian equities this year, the biggest stock inflow in Southeast Asia. The FTSE Bursa Malaysia index hit its highest in two years on June 16 as technology, banks and construction shares soared.
Samsung Asset Management is buying Malaysian banking, property and construction stocks on bets the government will pump prime ahead of the election, according to Hong Kong-based fund manager Alan Richardson. Meanwhile, it’s paring technology and commodity-related holdings.
“Domestic cyclicals will outperform while global cyclicals will underperform,” Richardson said. This is due to “a combination of global monetary stimulus and domestic early election stimulus.”
The stock market’s gains came as the ringgit rebounded from a 19-year low. After missing out on an earlier rally in regional currencies, it strengthened as growth quickened and concerns eased over an earlier move by the central bank to deter currency speculators.
Bond investors have also returned. Malaysian debt securities drew more than RM16bil (US$3.7bil) in April and May after recording the longest stretch of outflows in two years. The yield on 10-year notes has fallen 56 basis points to 3.9% since reaching an eight-year high in November.
Still, not everyone is convinced. Nomura Holdings Inc. is underweight on Malaysian stocks, citing expensive valuations and doubts that the growth momentum can be sustained.
“I find it difficult to justify buying Malaysia’s genuine story while ignoring the risks on valuations and also the existing risk that the Malaysian market comes with,” said Mixo Das, Nomura’s Southeast Asian equity strategist in Singapore. “The market probably goes up a bit more till the election, but what happens after it?”
A general election isn’t due until mid-2018, but there’s growing speculationthat Najib will call for polls this year with growth holding up and the opposition parties racked by infighting. The premier said earlier this month that preparations for the election were going well.
The economic outlook has helped to counter headlines involving 1MDB, which is at the center of money-laundering allegations and probes in several countries. The U.S. Justice Department is seeking to recover US$1.8bil in assets it says were bought with funds misappropriated from 1MDB.
Complaints filed in a U.S. court alleged that from 2009 through 2015 more than US$4.5bil belonging to 1MDB was diverted by officials of the fund and their associates. Najib, who until last year was the chairman of 1MDB’s advisory board, has denied wrongdoing and was cleared by Malaysia’s attorney general.
For Schroder Investment Management Ltd., economic factors trump politics when investing in Malaysian bonds. It also favors the ringgit due to the nation’s positive outlook.
“Key considerations are improving fiscal dynamics, dynamics around central bank policy, attractive economic policies, sensitivity to developed market and China developments,” said Manu George, a Singapore-based fixed-income director at the firm. - Bloomberg
Source: The Star