The Week Ahead: Inflation, trade data for January and corporate earnings in focus

This article first appeared in The Edge Malaysia Weekly, on February 22, 2021 - February 28, 2021.
The Week Ahead: Inflation, trade data for January and corporate earnings in focus
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This week will see Malaysia joining Hong Kong and Singapore in releasing its inflation numbers for January. Malaysia is scheduled to announce the Consumer Price Index (CPI) data on Wednesday. The CPI fell 1.4% year on year in December 2020.

According to ING senior economist for Asia Prakash Sakpal, inflation in Hong Kong, Malaysia and Singapore likely remained in negative territory. “Of note here would be data from Malaysia where tighter Covid-19 movement restrictions (in January) possibly intensified the downward price trend, supporting our call of a 25-basis-point Bank Negara Malaysia policy rate cut in March,” he says in a Feb 18 report.

Economists tracked by Bloomberg see headline CPI averaging at -0.8% in January.

This week will also see Malaysia releasing its trade statistics for January on Friday. Malaysia’s exports came in stronger than expected, growing 10.8% y-o-y in December 2020, with the export value rising to RM95.7 billion, the highest level since October 2018. Imports, meanwhile, turned around to increase for the first time in 10 months by 1.6% y-o-y in December 2020.

According to a Bloomberg poll, exports growth is expected at 7.6% in January while imports expansion is forecast at 1.8%.

UOB Global Economics and Markets Research expects Malaysia’s trade momentum to gain traction this year as the global economic recovery gathers pace with countries rolling out vaccination programmes to contain the pandemic.

On Monday, Bank Negara Malaysia is set to release the international reserves data as at Feb 15. Foreign reserves amounted to US$108.6 billion as at Jan 29.

Elsewhere, key Asia-Pacific data will include India’s 4Q2020 gross domestic product data, which will be released on Friday.

“There has been no end to the negative growth trend just yet, though we estimate a moderate contraction of 4.7% y-o-y compared with -7.5% in 3Q2020. This stems from firmer manufacturing growth complementing the seasonal agriculture strength in 4Q2020, though domestic demand remained under pressure from the virus,” says ING’s Prakash.

On Wednesday, Hong Kong’s 2021 growth outlook will be the focus, along with its Budget 2021/22 announcement. Meanwhile, Thailand will report its trade figures for January on Monday, followed by Hong Kong (Thursday) and New Zealand (Friday).

The People’s Bank of China, the Bank of Korea and the Reserve Bank of New Zealand are set to review their monetary policy this week. ING is expecting all three central banks to leave their interest rates on hold.

Holiday-wise, UOB notes that the Philippines will celebrate Edsa People Power Revolution Day on Thursday, while Thailand celebrates Makha Bucha Day on Friday. Taiwan celebrates Peace Day on Sunday (Feb 28) with an adjusted holiday on Monday (March 1).

Over at the Malaysian courts, the 1Malaysia Development Bhd (1MDB) audit tampering trial involving former prime minister Datuk Seri Najib Razak and former 1MDB president and CEO Arul Kanda Kandasamy will resume on Monday.

Najib is charged with using his position to order amendments to the 1MDB final audit report that had already been “finalised” by the auditor-general, before it was “finalised again” and presented before the Public Accounts Committee to avoid any action against him. Arul Kanda is charged with abetting Najib in making amendments to the report to protect the Pekan MP from being subject to disciplinary, civil or criminal action in connection with 1MDB.

On Friday, the Federal Court will determine if former finance minister Lim Guan Eng can sue Malay rights group Perkasa and its president Ibrahim Ali, which had labelled him as a “Singapore agent” while he was chief minister of Penang.

One initial public offering is scheduled to take place on the ACE Market of Bursa Malaysia on Tuesday. Mobilia Holdings Bhd, which is involved in the design and manufacturing of home furniture, aims to raise RM13.8 million from the exercise.

The earnings season continues this week with Telekom Malaysia Bhd, Inari Amertron Bhd, AirAsia Group Bhd, Sime Darby Bhd, Axiata Group Bhd, Unisem (M) Bhd, Genting Bhd and Genting Malaysia Bhd due to report their financial results for 4Q2020.

Earnings results from major financial institutions will also dominate the week ahead, with banks including Malayan Banking Bhd, Public Bank Bhd and RHB Bank Bhd set to report results. CIMB Group Holdings Bhd, Hong Leong Bank Bhd, Tenaga Nasional Bhd, Malaysian Pacific Industries Bhd and Maxis Bhd will deliver their results on Friday.

Still, the Securities Commission Malaysia and Bursa have recently granted a one-month extension for listed companies to submit their quarterly and annual reports, which are due on Feb 28, March 31 or April 30.

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