This week, Malaysian businesses will get back into full swing following the Chinese New Year holidays. However, the coronavirus (2019-nCoV) outbreak is expected to cast a shadow over their plans. Key economic data will rev up the start of the week. These include January manufacturing Purchasing Managers’ Index (PMI) from Malaysia, Singapore, Thailand, Taiwan, South Korea and India on Monday. Economists say the impact of the 2019-nCoV outbreak is unlikely to be reflected in the January PMI surveys.
On Tuesday, the focus shifts to Malaysia’s trade performance for December and full-year 2019. South Korea and China will also be releasing their trade figures for January this year on Saturday (Feb 1) and Friday (Feb 7) respectively.
On Friday, Malaysia will announce its December 2019 Industrial Production Index (IPI) and January foreign reserves data. IPI soared 2% year on year in November 2019, versus 0.3% y-o-y in October 2019, boosted by improved production with all of its sub-sectors.
In a Jan 13 note to investors, JF Apex Securities says it expects IPI to grow at a slower pace of 2.5% y-o-y in 2019 (3% y-o-y in 2018) in view of smaller growth in most sub-sectors and in tandem with slowing global economic growth.
“We believe manufacturing production remains the main contributor to IPI, albeit at a slower pace. For this year, we expect IPI to grow slightly higher to 2.8% y-o-y, underpinned by steady growth in manufacturing production as well as recovery in mining production,” it says. However, the local brokerage warns that the prolonged trade war between the US and China could derail global trade, thus affecting IPI performance.
Elsewhere, ING notes that central banks in Australia, India, the Philippines and Thailand will hold their policy meetings this week. The first to announce its policy decision is the Reserve Bank of Australia on Tuesday. “Apart from devastating bush fires, the imminent threat to growth from the coronavirus has put the consensus view solidly behind a 25-basis-point rate cut. Australia is highly dependent on Chinese demand,” says ING in a Jan 30 report.
It also points to Thailand as one of the frontline economies to face the brunt of the virus through a significant dent to its tourism industry. ING does not rule out a 25bps rate cut at Thailand’s forthcoming monetary policy committee meeting on Wednesday. Just as in Thailand, tourism will be an added drag on the
Philippines’ economy, not just from the virus but also from a volcanic eruption earlier this month, says ING. “Our house forecast includes two 25bps rate cuts by the Bangko Sentral ng Pilipinas in the first and second quarters. We expect it to cut on Thursday.”
The week will also see the Reserve Bank of India setting monetary policy on Thursday. After total rate cuts amounting to 135bps last year, ING expects the RBI to remain on hold on Thursday and for the rest of the year.
Data watchers will be looking out for Indonesia’s fourth-quarter and full-year 2019 gross domestic product data, slated for release on Thursday. Stock market-wise, Chinese markets will reopen this week and undoubtedly play catch-up with global markets, which have sold off on concerns about the economic impact of the coronavirus, says ING.
At the Kuala Lumpur High Court, the SRC International Sdn Bhd trial of former prime minister Datuk Seri Najib Razak will continue on Monday. The High Court will also hear allegations of corruption committed by the former premier’s wife Datin Seri Rosmah Mansor in relation to the RM1.25 billion Sarawak solar hybrid system project.
One of the key things to watch out for in developed economies in the week ending Feb 7 is the implications of the UK leaving the European Union last Friday, ending its 47-year membership of the world’s biggest trading bloc. It will enter into a transition period until Dec 31 this year.
According to UOB Global Economics & Markets Research, attention will also be on the US Federal Reserve’s release of the Semi-Annual Monetary Policy Report to the US Congress on Friday. This comes ahead of Fed chair Jerome Powell’s testimony to the US House Panel on monetary policy and the economy on Feb 11.
All eyes will be on US President Donald Trump’s impeachment trial, with some speculation that it could end with Trump’s acquittal as early as Jan 31, ahead of his State of the Union Address on Feb 4.
On the Malaysian corporate front, Bloomberg data show that companies announcing their full-year 2019 earnings results this week include LPI Capital Bhd, Westports Holdings Bhd, UOA Real Estate Investment Trust, Dolphin International Bhd and Multi Sports Holdings Ltd.
Extraordinary general meetings to look out for include those of Techbond Group Bhd and Amtel Holdings Bhd (Wednesday), Goodway Integrated Industries Bhd and FSBM Holdings Bhd (Thursday), followed by 7-Eleven Malaysia Holdings Bhd and OCR Group Bhd on Friday.
Companies holding annual general meetings are BSL Corp Bhd and AHB Holdings Bhd.