This article first appeared in The Edge Malaysia Weekly on December 19, 2022 - December 25, 2022

The stability of Prime Minister Datuk Seri Anwar Ibrahim’s administration will be put to the test this week at the first meeting of the first session of the 15th parliament that starts on Monday. The two-day meeting will see the appointment of the Dewan Rakyat Speaker, the taking of the oath to uphold the constitution by the elected members of parliament (MPs) and a motion of confidence in the new prime minister, among others.

The motion of confidence will reveal whether the MPs who had pledged their support to Anwar will continue to do so. Perikatan Nasional chairman Tan Sri Muhyiddin Yassin has maintained that he has the support of 115 MPs.

Anwar is expected to secure the confidence of the majority on Dec 19, following the signing of a memorandum of understanding on Dec 16 by the leaders of the coalitions that make up the unity government. All the leaders of the coalitions — Pakatan Harapan chairman Anwar, Barisan Nasional chairman Datuk Seri Ahmad Zahid Hamidi, Gabungan Parti Sarawak chairman Tan Sri Abang Johari Tun Openg and Gabungan Rakyat Sabah chairman Datuk Seri Hajiji Noor — as well as Parti Warisan Sabah president Datuk Seri Shafie Apdal signed the pact.

The economic calendar will be quite busy this week, with the Department of Statistics Malaysia set to release the country’s inflation data for November on Dec 23. The Consumer Price Index moderated to 4% year on year in October, from 4.5% y-o-y in September and 4.7% y-o-y in August.

Despite the moderating headline inflation, the food and non-alcoholic beverages segment recorded an increase of 7.1% y-o-y, compared with 6.8% y-o-y in September. The subsegment of milk, cheese and eggs showed the highest increase at 8.8% y-o-y in October.

This was followed by the subsegments of rice, bread and other cereals and meat at 7.3% y-o-y each. Fruit and vegetables increased 5.5% and 4.8% y-o-y respectively, according to DOSM.

In China, a review of the country’s economy in 2022 will be conducted by the Central Economic Work Conference, which started on Dec 15. It will also set key objectives for the economy and financial sector in 2023. These targets will be announced at the National People’s Congress in March next year.

The People’s Bank of China (PBoC) will release its 1-year and 5-year loan prime rates (LPR) on Dec 20. Economists surveyed by Bloomberg expect no change to the rates, which are currently at 3.65% and 4.3% respectively.

Alvin Liew, senior vice-president of UOB Global Economics and Markets Research, said while the bank’s expectations for the rates are in line with the consensus forecasts for December, it believes the PBoC is likely not done with its monetary policy easing yet.

“We are in line with the consensus forecasts for December but believe that the PBoC is likely not done with its monetary policy easing yet, as we see the possibility of another cut to the RRR (reserve requirement ratio) and/or the interest rate in 1Q2023. We now expect the 1-year LPR to fall to 3.55% by end-1Q2023 from the current 3.65% and the 5-year LPR to 4.2% from the current 4.3%,” he said in a weekly outlook report released on Dec 9.

Bank Indonesia will release its final monetary policy decision for the year on Dec 22. UOB has revised its rate forecast to a hike of 25 basis points to 5.5% by end-2022 and revised upward the projected terminal rate to 6%, from 5.75% previously, which is likely to be reached by February 2023.

The Bank of Japan will release its monetary policy decision on Dec 20. The central bank is expected to maintain its monetary policy, at least until governor Haruhiko Kuroda’s tenure ends on April 8, 2023.

The US will release a slew of economic data this week, including housing starts and building permits on Dec 20, initial jobless claims on Dec 22, and new home sales, as well as personal consumption expenditure for November 2022, on Dec 23.

On the local corporate front, quarterly financial results announcements will continue this week. On Dec 23, MyNews Holdings Bhd is expected to announce its financial results for the quarter ended Oct 31, while Aeon Credit Service (M) Bhd is anticipated to release its financial results for the quarter ended Nov 30.

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