This article first appeared in The Edge Malaysia Weekly on July 8, 2024 - July 14, 2024

Lawmakers will debate the latest Auditor-General’s (AG) Report 2/2024 when parliament resumes session this week following a one-day break for Awal Muharram on Monday.

The Dewan Rakyat is expected to witness heated debates between members of parliament on both sides of the political divide after the AG’s Report released last week found wastage, leakages and governance issues, including the mismanagement of Human Resource Development Corp funds, targets not met for the River of Life projects, as well as massive losses in public companies such as Mass Rapid Transit Corp Sdn Bhd and Mara Inc Sdn Bhd.

On the economic front, all eyes will be on Bank Negara Malaysia’s decision at the monetary policy committee meeting on Thursday. Economists, including UOB Global Economics and Markets Research, are expecting the central bank to maintain the key interest rate at 3%.

“We continue to expect the overnight policy rate to be left unchanged at 3% for the rest of the year, given the risks and lingering challenges to domestic growth prospects. Moreover, the unchanged forward guidance in the May monetary policy statement did not signal any potential changes in the monetary policy settings,” UOB said in its weekly report last Friday.

Malaysia will also report its May manufacturing sales value and industrial production data on Friday. The sales value of the manufacturing sector rose by 5.7% year on year (y-o-y), reaching a value of RM153.2 billion in April, according to the Department of Statistics Malaysia. It marked the highest growth in 13 months due to a lower value base effect. The country’s industrial production index — which measures output from factories, mines and power plants — rose 6.1% y-o-y in April.

Closer to home, Singapore will release its advance gross domestic product (GDP) estimate for the second quarter of 2024 on Friday. UOB has projected a modest uptick of 2.6% y-o-y in 2Q GDP from 2.7% y-o-y in 1Q. “Recovery in the manufacturing sector to date has been somewhat challenging reflecting headwinds to external demand amid an elevated global interest rate environment, while weakness in electronics industrial production could be due to some form of inventory digestion,” it said.

Apart from Malaysia, there are two other major Asia-Pacific central bank policy decisions this week — both projected to keep their policy rate unchanged.

According to a Bloomberg survey, all nine economists polled unanimously expect the Reserve Bank of New Zealand (RBNZ) to keep its official cash rate (OCR) unchanged at 5.5% when it meets on Wednesday.

“The overall take from the RBNZ is that the risk of further rate hikes has lessened, which reinforces our view that the OCR has peaked in this current cycle. However, rate cuts will also probably not occur as quickly as previously expected. Future data on non-tradable inflation, the labour market and housing market will continue to be closely watched. We look for the first rate cut to occur in 4Q,” says UOB.

The Bank of Korea’s monetary policy meeting will be held on Thursday, where economists are expecting another pause at 3.5%.

Elsewhere in Asia-Pacific, key data releases include China’s June Consumer Price Index (CPI) and Producer Price Index (PPI) figures on Wednesday. According to a Bloomberg poll, China’s inflation may inch higher to 0.4% y-o-y in June from 0.3% y-o-y in May, while the contraction of PPI may narrow to -0.8% y-o-y from -1.4% y-o-y in May.

China is also set to announce its June trade data on Friday. Bloomberg estimates exports will increase 8% y-o-y, compared with 7.6% y-o-y in May. Imports for June are likely to grow 2.9% y-o-y from 1.8% y-o-y in May. Other notable data include June monetary data and M2 money supply.

Over in the developed economies, the US will release its June Bureau of Labor Statistics’ labour market report this week, where the unemployment rate is expected to stay at 4% — the same as in May — while its wage growth may rise by 3.9% y-o-y in June from 4.1% y-o-y in May, Bloomberg estimates show.

Focus will also be on its May consumer credit (Tuesday), June CPI figures and initial jobless claims data for the week ending July 6 (both on Thursday) and June PPI final demand on Friday. Market focus will shift to the corporate earnings season with nine S&P 500 companies among 396 US companies reporting this week, said UOB.

On the local corporate front, Johor Plantations Group Bhd will make its Main Market debut on Bursa Malaysia on Tuesday. The plantation group is expected to raise
RM735 million in an initial public offering and the share sale is set to be the country’s largest since Farm Fresh Bhd’s (KL:FFB) RM1 billion offering on March 22, 2022.

Bursa Malaysia-listed companies scheduled to hold an extraordinary general meeting this week include Rex Industry Bhd (KL:REX) on Wednesday, Innature Bhd (KL:INNATURE) on Thursday and XOX Bhd (KL:XOX) on Friday.

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