This article first appeared in The Edge Malaysia Weekly on September 4, 2023 - September 10, 2023
It may be a dry week for local economic data releases, but still a significant one with market watchers on the lookout for Bank Negara Malaysia’s comments on inflation and the economic outlook in its monetary policy statement this Thursday, given that economists anticipate the overnight policy rate (OPR) will be kept unchanged at 3.0%.
“Both the latest inflation reading and slower-than-expected real GDP (gross domestic product) growth for 2Q2023 reinforce our view for the OPR to be kept unchanged at 3.0% for the rest of the year. Increasing uncertainties from the external front alongside a persistent labour market slack and year-ago high base effects have posed more challenges to Malaysia to sustain its growth momentum in the coming quarters, limiting room for Bank Negara to further tighten its monetary policy,” said Alvin Liew of UOB Global Economics and Markets Research in a note last Thursday.
This year, inflation has softened from the peak of 3.7% in January and February to 2.0% in July.
According to the latest Bloomberg poll, all the 12 banks it surveyed expect Bank Negara to keep the OPR unchanged at 3.0%.
The Monetary Policy Committee meeting on Wednesday and Thursday will be the central bank’s fourth and second last for the year. This year, Bank Negara raised the OPR by 25 basis points to 3% in May in a surprise move as most economists had expected the hike to come in in the second half of the year.
Also on Thursday, the central bank will be releasing data on its international reserves as at Aug 30.
Over in Kuching, Bursa Malaysia’s East Malaysia Palm & Lauric Oils Price Outlook Conference & Exhibition 2023 starts on Monday, and features Oil World’s Thomas Mielke, who is expected to present his price forecast for crude palm oil on Tuesday.
Across the Causeway, the important data releases include the S&P Global Singapore PMI (Purchasing Managers’ Index) survey for August which will be released on Sept 5, July retail sales (Sept 5), a mid-week Certificate of Entitlement premium auction (Sept 6) and August official foreign reserves (Sept 7).
In Asia-Pacific, aside from Bank Negara, the Reserve Bank of Australia is also due to release a policy decision on Tuesday. UOB’s Liew writes that while RBA is expected to keep its policy rate unchanged on Tuesday, the bank believes there is a possibility that RBA would make a hike for the last time this year, taking the cash rate target to a peak of 4.35%.
“In terms of timing, this is likely to occur at the Nov 7 meeting, following the release of the 3Q2023 CPI (Consumer Price Index) on Oct 25,” he adds.
It is a data-heavy week in China with releases for the month of August for Caixin services PMI survey on Tuesday, trade numbers on Thursday, followed by inflation on Saturday. For the month of July, China’s CPI contracted for the first time in two years by 0.3% year on year, giving rise to concerns that the country could slip into a deflationary spiral like Japan in the 1990s as the former battles with problems in the property sector, weak consumer spending, rising youth unemployment and a prolonged trade spat with the US.
In the US, markets will be closed on Monday for Labor Day. Key releases on tap this week include the Fed’s Beige Book for the July-early August period; construction spending, Personal Consumption Expenditures and trade balance for July; and vehicle sales, ISM manufacturing and the Bureau of Labor Statistics’ report for August. Apart from these, various senior Fed officials will be speaking ahead of its blackout period.
Similarly, several European Central Bank (ECB) Governing Council members will be speaking this week while key economic data from the region includes the final 2Q GDP print for the eurozone, Germany’s factory orders and industrial production.
Over at the courts, Deputy Prime Minister Datuk Seri Ahmad Zahid Hamidi’s criminal breach of trust, graft and money laundering trial continues at the Kuala Lumpur High Court while former attorney-general Tan Sri Mohamed Apandi Ali’s appeal over the dismissal of his RM10 million defamation suit against former DAP chairman Tan Sri Lim Kit Siang in the Court of Appeal (CoA) will be heard on Monday.
The CoA will also hear the prosecution’s appeal against the acquittal of Samirah Muzaffar and her two sons on the charge of murdering her husband — Cradle Fund’s former CEO, Nazrin Hussin — on Monday and Tuesday.
Meanwhile, as the annual general meeting season continues for public-listed companies, those holding AGMs this week include Tasco Bhd, RCE Capital Bhd, Hartalega Holdings Bhd, Symphony Life Bhd and XOX Technology Bhd.
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