Malaysia: Stimulus Pullback?

Bloomberg tweeted this news report today.

Let us read this tweet.

"Malaysia may be the next Asian country to pull back monetary stimulus as its recovery strengthens, moving to raise borrowing costs or reduce excess cash in the economy ahead of neighboring Indonesia.

Eighteen out of 29 economists surveyed by Bloomberg News expect Bank Negara Malaysia to raise its benchmark interest rate to 2.25 per cent from 2 per cent or ask lenders to set aside more money as reserves at its March 4 meeting. None of the 22 economists surveyed expect Bank Indonesia to increase its reference rate from a record-low 6.5 per cent tomorrow.

Asia is leading a global recovery from the worst slowdown since World War II, prompting the region’s central banks to start removing some emergency steps taken to counter the slump. Malaysia’s economy expanded 4.5 per cent last quarter, rebounding from nine months of contraction, while Indonesia, which has avoided a recession, is trying to boost lending.

“Indonesia’s economy has been doing very well but it has not surprised on the upside to the extent that it has in Malaysia,” said Kevin Grice, an economist at Capital Economics Ltd in London. “Central banks don’t want to surprise, and there have been comments by policy makers in Indonesia that rates are appropriate compared to Malaysia, where the governor has been hawkish.”

Malaysia’s one-year interest-rate swap reached a one-year high of 2.675 per cent on Feb 24 after a report showed the nation exited its recession last quarter. The three-month rate due in one year stood at 3.42 per cent, suggesting the market has priced in about 1.42 percentage points’ increase in the policy rate in a year’s time, according to Bloomberg data.

Exports Revival

Prime Minister Datuk Seri Najib Razak expects Malaysia’s US$195 billion economy to expand 6 per cent in 2010, faster than the 2 per cent- to-3 per cent pace the government forecast in October, a newspaper reported this week. His trade minister said yesterday exports may climb this year at twice the pace predicted earlier as the global recovery revives overseas sales of Sime Darby Bhd’s palm oil and Intel Corp’s computer chips.

Policy makers in Australia, China, India and Vietnam have started tightening monetary policy to stave off inflation and asset bubbles. Australia’s central bank yesterday resumed raising interest rates after a one-meeting pause amid a booming jobs market, rising home prices and a rebound in confidence.

‘Hawkish’ Comments

Malaysia’s central bank Governor Tan Sri Dr Zeti Akhtar Aziz has been making “hawkish comments” since the last interest-rate meeting in January, economists including HSBC Holdings Plc’s Robert Prior-Wandesforde said. Bank Negara has kept the benchmark overnight policy rate at a record-low 2 per cent for seven straight meetings.

The central bank lowered rates under emergency conditions and the economy is no longer in such an extraordinary situation, Market News International reported Zeti as saying in Frankfurt on March 1. Any interest-rate adjustment would be “a measured one,” she was cited as saying.

Thirteen of the 29 economists surveyed expect the central bank to raise the benchmark rate. Still, Bank Negara may prefer to raise the reserve requirement for banks rather than increase its overnight policy rate, according to at least six analysts, including economists at Capital Economics and Royal Bank of Scotland Group Plc. A 0.5 percentage-point increase may be announced tomorrow to help drain funds from the financial system, they predicted.

Indonesian Inflation

The reserve ratio, which determines the amount of funds lenders must hold as zero-interest-bearing reserves at the central bank, was cut to 1 per cent in March 2009, a quarter of the November 2008 level.

In Indonesia, where inflation has accelerated to the fastest pace in nine months, economists are unanimous that the policy makers will judge it too soon to raise interest rates. The consumer price index rose 3.81 percent in February from a year earlier.

Consumer price gains will remain within the central bank’s target range of 4 per cent to 6 per cent, and Bank Indonesia can wait until the third quarter before raising rates, said Wellian Wiranto, an economist at HSBC.

Bank Indonesia, which forecasts the nation’s 121 commercial lenders will accelerate credit growth to as much as 20 per cent this year, may wait until there are more signs of banks extending loans before raising interest rates, economists say.

“Indonesia’s central bank is now encouraging commercial banks to reduce their lending rate so if they raise rates, it’s contrary” to that goal, said Gundy Cahyadi, an economist at IDEAglobal in Singapore. He expects a rate increase at the beginning of the third quarter.

Indonesia’s decision is due after 11 am in Jakarta tomorrow. Malaysia will release its decision at 6 pm.

UK: Consumer Confidence Surge

 

These days the UK is brimming with consumer confidence.

The Nationwide Building Society’s survey on consumer confidence reports that it hits the highest in February 2010 and will be good for another 6 months.

Consumer confidence index rose 6 points to 80 in February, almost double what it was a year ago and the highest since January 2008.

Another index gauging people’s confidence about the present rose to its best since December 2008 at 27.

Confidence about the coming six months was its highest since the survey started in May 2004, with an index reading of 115.

Nationwide chief economist Martin Gahbauer said the surge in confidence may have been a reaction to news that Britain had emerged from its deepest recession since modern records began.

However, the survey was conducted before official data showed the economy grew by 0.3 per cent in the final three months of 2009, better than the 0.1 per cent growth first estimated in January.

Despite their increased optimism about the economy, jobs and income, Britons became more reluctant to splash out on household goods or major purchases, with the spending index falling 4 points on the month to 93 points.

“It would seem consumers are perhaps feeling the pinch in their spending power,” Gahbauer said. “We may now be seeing the effects of the withdrawal of government-driven incentives, such as the stamp duty holiday and lower VAT.”

The survey was conducted between Jan 18 and Feb 15 and was based on responses from 1,000 people.

Global: Potential Property Deals to Go Up 30%

 

Reuters has this glowing report on the potential of real estate globally in 2010. Let us read on........

Property consultants Cushman & Wakefield has predicted that the volume of global commercial real estate deals is forecast to will  rebound 30 per cent to total $478 billion (318 billion pounds) this year, led by surging investments in China and a revival in the United States. They said this in a report on Wednesday (3 March 2010).

After the steep downturn in 2009 when global volumes fell 23 per cent to $365 billion, the lowest since 2003, but are still well below the 2007 peak of more than $1 trillion, investment sales are now on the rise.

The United States is forecast to post the biggest per centage rise in sales in 2010 as it, being the world’s largest commercial property market, pulls out of recession, boosting volumes in North America by 48 per cent to $64 billion, Cushman said.

“With many (US) investors sitting on a lot of cash after the recapitalisations, equity raises and inward investment flows of last year, a strong turnaround in activity looks likely ... if the economy stays on track, it wouldn’t be surprising to see our forecast beaten,” Janice Stanton, Cushman’s senior managing director of capital markets in the US, said.

In China, volumes more than doubled to $156 billion in 2009, making it the world’s most active real estate investment market by far. It is expected to continue growing this year, despite government measures to cool the sector down, Cushman said.

Sales growth in China and Japan is expected to boost volumes in the Asia-Pacific region to $258.3 billion in 2010, up 20 per cent from last year, making it the most active region for real estate investments.

The EMEA region is also forecast to see a strong rise this year, with volumes rising 43 per cent to $151.9 billion, led by the continuing recovery in the UK, which is spreading westwards to other core markets such as France and Germany, Cushman said.

The 58th Milestone

Today makes me 58 officially.

It is also my sister's birthday which makes her 60.

We also celebrate the same birthday with another ex-USM graduate, Lena Khaw.

Many thanks to Man Lin for her birthday greetings all the way from Auckland.

Ramunia: Technical Defaulting to PN17 Status

The 25 February 2010 announcement to the Bursar caused a tsunami sell out of the stock, losing at one time more than 21 sen,which is beyond 50% of its net worth the day before.

Immediately on 1st March, the ompany came out with an assurance to stem the tide of selling panic.

It draw attention to the technical reason that Ramunia was classified under PN17. The PN17 criteria was triggered resulting from Ramunia's auditors expressing a modified opinion with emphasis on Ramunia's going concern in the Company's latest audited consolidated financial statements for the financial year ended 31 October 2009 and Ramunia's shareholders’ equity on a consolidated basis is less than 50% of the issued and paid-up share capital of Ramunia. However, the group’s NTA remain positive.

In the notification, not withstanding Ramunia’s current PN 17 status, the disposal of the Teluk Ramunia Fabrication Yard is ongoing and is expected to be completed by April 2010.

Upon completion of their disposal, the group’s NTA is expected to remain positive and improve to a net cash position. The group has started exploring and considering options to revive and reorganize its core businesses and as part of its regularization plan to address its PN 17 status.

Well, hopefully this announcement will douse the fires of panic selling yesterday. It recovered 3 sen to 23.5 sen today. Unless ,there are still more weak-kneed sellers in the woodwork,hopefully it can recover at least another 10 sen before the week is out.

US: Improving Consumer Spending

A March 1 Reuters Report indicated that the  US consumer spending increased slightly faster than expected in January as consumers dipped into their savings amid a small rise in incomes, which could help sustain the economic recovery.

The Commerce Department said on Monday spending rose 0.5 per cent, increasing for a fourth straight month, after advancing by an upwardly revised 0.3 per cent in December. Consumer spending in December was previously reported to have increased 0.2 per cent.

Analysts polled by Reuters had expected consumer spending, which normally accounts for over two-thirds of US economic activity, to increase 0.4 per cent in January.

“The message is continuing progress for the economy, if not as fast as hoped, said Pierre Ellis, a senior economist at Decision Economics in New York.

US stock index futures held their gains on the report, while government bond prices were flat. The US dollar maintained its gains.
Consumer spending has been held back by stubbornly high unemployment and analysts worry the economy’s recovery from the most painful downturn since the 1930s could stumble in the second half of the year if spending remains lacklustre.

Analysts said it would be difficult for consumers to spend more unless income growth improved.
“You can talk about confidence all day, but if the consumers don’t have money they won’t be able to spend it,” said Scott Brown, chief economist at Raymond James & Associates in St Petersburg, Florida.

The economy expanded strongly in the second half of 2009, driven by a sharp slowdown in the rate at which business liquidated inventories. Analysts expect stock rebuilding and continued improvement in business spending to support growth into the first half of 2010.

Consumer spending rose at a modest 1.7 per cent annual rate in the fourth quarter from 2.8 per cent in the prior period.

Spending adjusted for inflation rose 0.3 per cent in January, picking up from a 0.1 per cent gain the prior month. Personal income edged up 0.1 per cent, a month after increasing 0.3 per cent in December, the Commerce Department said. That was well below market expectations for a 0.4 per cent increase.

Real disposable income fell 0.6 per cent in January, the largest decline in seven months, after increasing 0.2 per cent the prior month.

The drop in income pulled the savings rate down to an annual rate of $367.2 billion, the lowest level since February 2009.

The savings rate fell to 3.3 per cent, the lowest since October 2008, from 4.2 per cent in December.
Commerce Department data also showed the personal consumption expenditures price index, excluding food and energy, rising 1.4 per cent from a year ago in January. The index, which is a key inflation gauge watched by the US Federal Reserve, increased 1.5 per cent in December.

Malaysia: Painting a Rosy Economic Picture

A Blooberg report encapsulates the positivism of the political masters of Malaysia on growth potential for 2010.

The International trade minister said in an interview today (27 February 2010) that Malaysian export data for January, due out on March 5, could exceed expectations after the country emerged from its first recession in a decade.

“The preliminary figures are quite bullish as far as I am concerned,” he said,adding that,  “the January numbers, are beyond his personal expectations.”

Malaysia emerged from recession in Q4,2009 with gross domestic product rising 4.5 per cent from a year earlier. Asian economies are paving the way for a recovery from the worst global recession since the Great Depression, prompting central banks around the region to start removing some of the emergency steps they took to counter the slowdown.

Full-year exports will probably outperform the official government forecast of 3 per cent growth, said the  minister.  He also said a rosy growth of 5 per cent to 8 per cent is potentially achievable in 2010.

“From my interaction with the business community in electronics in the last quarter, there has been a very sharp revival,” he said. “Going forward, it appears 3 per cent is well within reach. Of course, we are talking about a low base.” [At least he knows this!]

Manufacturing Swells

Malaysia’s manufacturing industry grew 5.3 per cent in the fourth quarter from a year earlier and exports of goods and services gained 7.3 per cent, according to a central bank report on Feb. 24. Private consumption increased 1.7 per cent, it said.

Economic growth is likely to be “higher” than the government’s official forecast of between 2 per cent and 3 per cent this year, the trade minister , without giving a target.

Thailand also emerged from recession last quarter, while Singapore has raised its growth estimate for this year as the global recovery strengthens.

Looks like all is going to go 'great guns' this year, don't you notice the tone?