KUALA LUMPUR (March 14): Backed by firm domestic private sector activities, the Malaysian economy is anticipated to remain on a steady growth path against the backdrop of a more challenging and uncertain global environment.
Growth would be supported by sustained manufacturing activities and resilient services sector expansion, especially in wholesale and retail trade sub-sectors, the Securities Commission (SC) said in its 2018 annual report.
“On the demand side, steady wage and employment growth will continue to drive private consumption expansion, while new and ongoing projects in the services and manufacturing sectors will remain supportive of private investment growth.
“The government’s effort to promote the adoption of digital technology and automation will also be an important catalyst for future investment activities,” it said.
The SC said the domestic capital market would continue to play an important role in supporting economic growth through the financing of business expansion and infrastructure while total capital raising through primary and secondary issuances was expected to remain robust, especially in the bond market.
Meanwhile, it said, trading activities in the secondary market would continue to be driven by external developments, mainly movements in portfolio flow arising from the shift in global liquidity and the general increase in global financial market volatility.
“Notably, the developments observed in the aftermath of the global financial crisis (GFC) indicate that the underlying trend movement in non-resident portfolio flows was, to a large extent, determined by major central banks’ monetary policy directions, especially the US Federal Reserve.
“Beyond the trend movement, episodes of financial market volatility post-GFC could be attributed to specific negative events ranging from the European debt crisis, taper tantrum, China’s surprise yuan devaluation, the collapse in oil prices, the US presidential election and more recently, the (US-China) trade tension,” it added.
On the outlook for the domestic capital market in 2019, the SC said it would continue to be influenced by key global developments, mainly the direction and pace of global monetary policy with volatility driven by continued uncertainty surrounding major risks, especially in relation to the ongoing trade tension and concerns over global growth. — Bernama