Posts tagged as:

Malaysia Macro View/Weekly

Malaysia: Signposts for Early Policy Normalization

1 March 2010

Market shifting towards view of early policy rates normalization: (i) 4Q GDP points to subsiding growth concerns, catch-up with region; (ii) Gov Zeti consistently vocal about the need for rate normalization; and (iii) Robust Household credit growth a concern for BNM. n OPR hike could also be accompanied by a 50bp hike in the SRR, followed by another 25bp OPR hike in May, with further hikes dependent on incoming data (we expect a pause in July presently). The hikes would be calibrated to send a signal to those who assume that rates would stay low indefinitely, yet not enough to cause significant real impact.

Malaysia: Setting the Stage for Early Exit

22 February 2010

2009 probably ended on a strong note, with 4Q09 GDP probably turning in an above-consensus 4.2% yoy (consensus: 3.4%, previous: -1.2%). Exports resumed healthy sequential gains in Dec, led by exports to China, which likely continued in Jan, while a tightening labor market continues to support consumption. This momentum seems likely to continue into 1H10 and we adjust up our 2010 GDP forecast to 5.5%, from 5.2%.

Malaysia Weekly: Upside Surprise in December Exports Reinforces Odds of Early Rate Normalization

8 February 2010

December exports surprise on the upside, beating consensus expectations, but in-line with our own expectation. Exports led by double digit YoY jumps in 7 out of the 10 major export categories. Sharp jump in Asia-bound exports, especially to China. Imports also outperformed expectations; trade surplus widened. December exports reaffirm BNM’s confidence on growth outlook; reinforcing likelihood of rate normalization in 1H10

Malaysia: Upside Surprise in Dec Exports Reinforces Odds of Early Rate Normalization

5 February 2010

December exports surprise on the upside, beating consensus expectations, but in-line with our own expectation. Imports also outperformed expectations; trade surplus widens. December exports reaffirm BNM’s confidence on growth outlook; reinforcing likelihood of rate normalization in 1H10

Malaysia Weekly: Shifting Policy Considerations

1 February 2010

Expected timing of rate hikes brought forward after MPC statement — Clues in the policy statement include first, acknowledgement that a prolonged period of low interest rates could result in financial imbalances, and second, the absence of the sentence that had appeared in past statements

Malaysia Weekly: End of Deflation Doesn’t Mean Rates Are About to Rise Soon

24 January 2010

The end of technical deflation and start of policy exit in China doesn’t mean that Bank Negara will be in any hurry to hike rates soon
Large OPR hikes alone not seen to be effective with supply side inflation risks with a stronger MYR NEER likely more effective
Monetary accommodation to compensate for modest fiscal tightening
“Small adjustments” possible, but OPR to remain “below neutral” till investments pick up decisively

Malaysia: Much Ado About Capital Outflows

18 January 2010

Though attracting much attention lately, the capital outflows story is not new. Except for 2004, the financial account has been persistently in deficit over the past decade, though the magnitude of net outflows increased sharply in 2008. Net capital outflows in 2008-1H09 partly attributed to portfolio outflows, which have since reversed to inflows. Persistent net FDI outflows since 2006, reflect not just lackluster foreign investments but also large increase in outward FDI by residents. Large outflows in “Other Investments” category of the BoP is also of interest, though the lack of granularity in the data leaves more questions than answers.

Malaysia Macro Outlook 2010: Cyclical Catch-Up and Structural Crossroads

11 January 2010

Near-term export-led cyclical catch-up is underway (albeit not in a straight path). Yoy GDP growth will probably peak at 7-8% in 1Q10, before moderating as base effects and earlier policy stimulus are gradually withdrawn. While 3Q09 saw a net portfolio inflow after 5 straight quarters of outflows, inflows and FX reserve accumulation remain small. Supply-side inflation pressures on subsidy reforms, with rates remaining below neutral until investment picks up decisively. Fiscal consolidation underway with reduced MGS/GII gross issuance, but calendar bias towards long end. Medium-term growth rebalancing requires tackling structural deficiencies.

Malaysia Macro: Detailing the Human Capital Deficit (Citi Group, 09 Nov 2009)

10 November 2009

Malaysia’s inadequacies in the area of human capital are a major obstacle to the private investment revival and industrial upgrading
Measures to upgrade indigenous stock of human capital have proven ineffective, thus increasing the urgency in reversing the ‘Brain Drain’ and importing foreign talent.
Lastly, there is the problem of a shortage in, and dependence of the Manufacturing, Construction and Services sectors on, low skilled, low cost foreign labor

Download Malaysia Macro Weekly: 09 Nov 2009

Malaysia Macro Weekly: Thoughts on Monetary Policy Exit Strategy (Citi Group, 02 Nov 2009)

2 November 2009

With the start of fiscal exit strategy, monetary policy will have to stay accommodative for the time being to support growth
Trough in inflation, weak MYR keeps monetary conditions accommodative for now
Levels, and not just growth rate of output matter more for demand side inflation pressure and OPR decisions, with policy unlikely to react to supply side inflation risks
Keep an eye on credit growth

Download

← Previous Entries