This article first appeared in The Edge Malaysia Weekly on January 6, 2020 - January 12, 2020
Global markets will be closely watching events in the run-up to the Jan 15 signing of the “very large and comprehensive” US-China phase one trade deal, for which details remained sketchy as The Edge went to print.
Apart from the superlatives from the tweet on New Year’s Eve on the planned signing in the White House, US President Donald Trump let on that he will fly to Beijing “at a later date” to start talks towards closing phase two of the trade agreement, which is hoped to significantly de-escalate the protracted US-China trade war.
There is no indication of a date for the next summit between Trump and Chinese President Xi Jinping, who is not expected to be present at the signing next week. Chinese vice-president Liu He, the country’s top trade negotiator, is leading the delegation to Washington on Jan 4, the South China Morning Post reported on Dec 30, citing unnamed sources. China will be buying more US agricultural products while Washington agreed to cancel and/or reduce some tariffs that were to have kicked in last month.
Gold and oil prices may also be influenced by geopolitical developments. Brent crude oil jumped more than US$3 to reach nearly US$70 a barrel last Friday on concerns over escalating tensions in the Middle East, following news of a key Iranian military leader being killed in a US airstrike on Baghdad. Gold prices also gained as tensions flared up, rising to US$1,551 per ounce at the time of writing last Friday, while key stock indices in Europe and Asia took a breather.
Back home, politics is also expected to take centre stage following the resignation of Maszlee Malik as education minister on Jan 2, the first Pakatan Harapan minister to step down. Prime Minister Tun Dr Mahathir Mohamad, who thanked Maszlee for his service, said he will name a new education minister soon.
Investors and highway users will also be interested to see if the government has decided on the various highway takeover proposals. Finance Minister Lim Guan Eng reportedly said on Dec 30 that the Cabinet’s decision on the proposed takeover of PLUS Malaysia and four other highways in the Klang Valley linked to Gamuda Bhd will “most likely” be known this week, noting that the government needs to “reach a decision quickly” or face “mounting” compensation to toll concessionaires for freezing toll hikes.
Prior to the appearance of competing private bids for PLUS — which is 51% owned by Khazanah Nasional Bhd and 49% by the Employees Provident Fund — the government had said its proposed acquisition of tolled highways would save commuters some RM180 million a year and the government RM5.3 billion in compensation through the end of the respective concession periods. Congestion charges are expected to cover both the debt for the takeover as well as maintenance costs, Lim said last February. The four highways are Lebuhraya Damansara-Puchong (LDP), Sistem Penyuraian Trafik KL Barat (SPRINT), Lebuhraya Shah Alam (Kesas) and the SMART Tunnel.
Over at the Kuala Lumpur High Courts, the cross-examination of former prime minister Datuk Seri Najib Razak for alleged power abuse and graft charges involving the misappropriation of RM42 million from SRC International Sdn Bhd is slated to continue on Monday before judge Mohd Nazlan Mohd Ghazali.
Also on Jan 6, High Court judge Datuk Rozana Ali Yusof is seeing parties for case management on Najib’s application to stay proceedings for a suit against him — for misfeasance in public office over the 1Malaysia Development Bhd scandal — filed by Damansara member of parliament Tony Pua.
There are no key central bank decisions this week. Bank Negara Malaysia will report its foreign reserves standing as at end-2019 on Wednesday. The central bank’s foreign reserves stood at US$103.3 billion as at Dec 13, 2019, sufficient to finance 7.8 months of retained imports and was 1.1 times the short-term external debt — a shade above US$103.2 billion as at end-November.
On Friday, the Department of Statistics Malaysia will release the Industrial Production Index (IPI) and manufacturing data for November. The IPI rose 0.3% year on year in October 2019, the slowest since October 2015, owing to contraction in the mining sector. Manufacturing output, meanwhile, rose 2.2% in the same month after growing 2.5% in September.
Notable economic and data releases in the region include China’s December foreign reserves on Tuesday and India’s industrial production figures on Friday.
On the local corporate front, investors will be looking out for further details on the ideal “consortium formed by multiple licensees” that the Malaysian Communications and Multimedia Commission wants to see participating in its upcoming tender for the 700Mhz and 3.5GHz spectrum band that has been identified for the deployment of 5G network in Malaysia. The beauty contest is expected to take place within the first quarter of this year for commercial deployment by the third quarter.
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