This article first appeared in The Edge Malaysia Weekly on January 11, 2021 - January 17, 2021
With Covid-19 cases rising and rumours of another lockdown imminent, all eyes will be on Prime Minister Tan Sri Muhyiddin Yassin’s special announcement on Monday (Jan 11).
Senior Minister Datuk Seri Ismail Sabri Yaacob said last Friday the premier would be making an announcement on the action to be taken by the government to deal with the spike in cases.
“This includes considering tighter standard operating procedures, especially those involving the social sector, to reduce people’s movement and, at the same time, reduce the number of Covid-19 infections,” he told a press conference.
However, such news will have an impact on the stock market. Last Friday, the benchmark index FBM KLCI finished 30.24 points or 1.89% higher at 1,633.19 points as buying in glove stocks lifted the market amid growing fears of another Movement Control Order. Across Bursa Malaysia, the market breadth was negative, with 1,040 counters closing lower versus just 353 gainers and 283 counters that were unchanged.
Last Friday, the country recorded its highest number of Covid-19-related deaths in a single day, at 16. The tally of deaths so far is 537.
Last Thursday, the number of newly infected individuals topped the 3,000 mark for the first time, at 3,027. This came down to 2,643 the next day, bringing the total number of cases in Malaysia to 131,108 so far.
Meanwhile, the hearing of the RM100 million suit filed by the family of murdered Mongolian Altantuya Shaariibuu against Azilah Hadri, Sirul Azhar Umar, Abdul Razak Baginda and the Malaysian government, continues this week at the Shah Alam High Court.
The Department of Statistics Malaysia will release last November’s industrial production as well as labour force data on Monday, followed by retail sales data the next day. On Friday, it will put out the latest monthly rubber statistics.
Regionally, the Bank of Korea (BoK) is the only major Asian central bank with a monetary policy decision this week, on Friday. Economists expect the central bank to stand pat on the policy rate.
“We expect the BoK to keep its policy rate unchanged at 0.5% as the low policy rate is still needed to support economic recovery,” UOB Global Economics and Markets Research said in a report last Friday.
“The low interest rate will need to be normalised at some point when the economy recovers but given the still-high level of economic uncertainties, this is unlikely to happen through 2021,” it added.
There is a slew of macroeconomic data coming out of China this week, starting with December inflation and producer price index data on Monday. This will be followed by December trade data on Thursday, as well as that of foreign direct investment, vehicle sales, new local-currency loans and outstanding loan growth. On Friday, the country will put out information on new home prices for December.
Japan’s markets will close on Monday for the Coming of Age holiday.
Over in the US, it will also be a busy week of data releases ahead of the long weekend. Markets will be closed for Martin Luther King Day on Jan 18.
The country will release the December inflation rate on Jan 13, followed by trade data and initial jobless claims numbers the next day. There will also be December advanced retail sales, industrial production and manufacturing data on Jan 15.
On Jan 13, the US Federal Reserve will release its latest Beige Book on economic conditions across the 12 Fed districts, which will offer some insights into how the world’s largest economy is doing.
The US corporate earnings reporting season is also expected to pick up pace this week, with the focus on major banks and financial institutions. This follows a tumultuous week in the country. Last Thursday, Congress confirmed President-elect Joe Biden’s win in the US presidential election, hours after thousands of President Donald Trump’s supporters stormed the Capitol and rioted through the assembly in a bid to overturn the results. Five people died in the shocking attack.
“Now that the dust is settling on the 2020 US election cycle, investors are raising their expectations that the incoming Biden administration, along with the Democrat-controlled Congress, will roll out more fiscal stimulus for the US economy. Such a narrative is forming the basis for many investment decisions over the medium term, which is expected to translate into more upside for global stocks and more US dollar weakness,” says market analyst Han Tan of FXTM.
Tan expects the US dollar-ringgit to make another attempt at breaking below the psychologically important 4.00 level this week, provided the risk-on sentiment remains intact. “However, should the dollar extend its rebound or if domestic political risks are ramped up, then the US dollar-ringgit may mark a return to the 4.05 resistance level once more,” he says. As at 6pm last Friday, the ringgit stood at 4.03 versus the greenback.
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