This article first appeared in The Edge Malaysia Weekly on June 25, 2018 - July 1, 2018
THE ringgit, which last week breached the psychological RM4 mark against the US dollar for the first time in five months, is in the spotlight again. At the time of writing last Friday (June 22), the ringgit fetched 4.0022 against the greenback. The ringgit’s fair value should be 3.80, Prime Minister Tun Dr Mahathir Mohamad told Bloomberg in a June 22 interview. “We would like to strengthen our ringgit, but it should be done naturally,” he said.
The impact of mounting trade tensions on economic growth, the greenback’s renewed strength and leading central bankers’ view on interest rate normalisation and oil prices will likely be among the considerations of Bank Negara Malaysia’s Monetary Policy Committee (MPC), which is set to meet again on July 11 — just five days after the first tranche of US-China tariffs (slapped on imports from both sides) is scheduled to kick in on July 6, unless a trade war is averted by then. Last Thursday (June 21), India joined the European Union and China in retaliating against the US’ tariff hikes on steel and aluminium by raising import duties on a variety of goods, including almonds, apples and some metal products.
The confirmation of the appointment of Datuk Nor Shamsiah Mohd Yunus as Bank Negara Malaysia governor last Friday (June 22) removes one uncertainty in the market. The former deputy governor, who left in November 2016, fills the seat vacated by Tan Sri Muhammad Ibrahim on June 6.
Corporate Malaysia will also be looking for clarity on unconfirmed news reports that Tan Sri Abdul Wahid Omar, 54, is negotiating exit terms and is expected to resign as Permodalan Nasional Bhd (PNB) chairman as early as July. The former CEO of UEM Group Bhd, Telekom Malaysia Bhd and Malayan Banking Bhd was minister in the Prime Minister’s Department as well as head of the Economic Planning Unit from June 5, 2013, to June 4, 2016.
The ninth child among 11 in a low-income family, Abdul Wahid became an accountant after winning a Mara scholarship. He had a short stint as an Uber driver to raise funds for charity and promote the then new Proton Perdana before joining PNB on Aug 1, 2016, where he oversaw the restructuring at PNB’s strategic companies, including Sime Darby Bhd, UMW Holdings Bhd, Chemical Company of Malaysia Bhd and S P Setia Bhd.
Confirmation of the full Cabinet line-up was also pending at the time of writing. On June 6, Mahathir told reporters that the full line-up would be out “next week”. The 14th parliament session’s first seating will convene on July 16.
The new head of the Opposition could be determined by the outcome of the Umno party elections this Saturday (June 30). Veteran Umno leader and former finance minister Tengku Razaleigh Hamzah and outgoing Umno Youth chief Khairy Jamaluddin will have a televised debate, set to be aired on Astro Awani at 9.30pm on June 29. Both are among those contesting against acting president Datuk Seri Ahmad Zahid Hamidi, who has assumed the role of party president since Datuk Seri Najib Razak relinquished the post following Barisan Nasional’s defeat in the May 9 general election.
The earlier part of the week will see stock markets closely following the developments on the US-China tit-for-tat tariff war, with US President Donald Trump also expected to announce more restrictions on Chinese acquisition of strategic technology. Markets will also be reacting to the outcome of the Organization of the Petroleum Exporting Countries (Opec) meeting in Vienna on June 22 and 23. Details of an expected output boost agreement, despite protests from Iran, were still pending at press time.
For Malaysian consumers, RON95 and diesel prices at the pump will remain unchanged until year-end, Finance Minister Lim Guan Eng said last Thursday (June 21).
Bank Negara is scheduled to have its monthly statistical release this Friday (June 29), the same day Malaysia’s Producer Price Index for May is slated for release.
The Reserve Bank of New Zealand has a target rate announcement on June 27 while Bank Indonesia’s is slated on June 28.
Other key regional data releases this week include Singapore’s Consumer Price Index on June 25 and the latest industrial production data on June 26. South Korea and Japan are both slated to release industrial production data on June 28 while Thailand will release its latest export and trade balance data on June 29.
Over at the eurozone, the Business Climate Index, Consumer Sentiment Index, Economic Confidence Index and Industrial Sentiment Index are slated for release on June 28, followed by inflation indicator Harmonised Indices of Consumer Prices (HICP) on June 29. The UK will release the GfK Consumer Confidence Index on June 28 and Total Business Investment on June 29.
Meanwhile, scheduled data releases in the US include the Consumer Confidence Index on June 26, Advance Goods Trade Balance on June 27, GDP update on June 28 and PCE (personal consumption expenditure) Price Index on June 29.
On the Malaysian corporate front, at least 60 companies are having their annual general meetings (AGM) this week. They include Malaysia Building Society Bhd and Three-A Resources Bhd on June 25, MSM Malaysia Holdings Bhd, Muhibbah Engineering (M) Bhd, Jaks Resources Bhd, Suria Capital Holdings Bhd, Favelle Favco Bhd and I-Bhd on June 26, Sarawak Oil Palms Bhd, TA Global Bhd, TA Enterprise Bhd and KNM Group Bhd on June 27, Felda Global Ventures Holdings Bhd, Mah Sing Group Bhd and Muda Holdings Bhd on June 28 as well as Power Root Bhd and YNH Property Bhd on June 29.
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