Bank Negara expected to hold policy rate
Bank Negara Malaysia (BNM) is expected to leave monetary policy unchanged today, as the Brexit vote has not had a significant short-term impact on the country’s economy. The benchmark rate has been held steady since July 2014, when it was raised by 25 basis points to 3.25%. Economists say September might bring a cut, as by then the Brexit impact on global and domestic economies and markets should be clearer. Any shift in policy towards a rate cut would only happen if global growth prospects “darken considerably” (if growth goes below 4%), and if exports and domestic consumption take a plunge. (The Sun Daily)
Consumer spending continue to drive economic growth
Consumer spending or private consumption is seen as the key driver to Malaysia’s economic growth, but economists have mixed views on whether an overdependence is healthy. CIMB Investment Bank chief economist Maslynnawati Ahmad believes that consumer spending will continue to be the main driver, as it accounts for the biggest share of domestic demand. Consumer spending will slow down to 4% of the country’s GDP, but it will still contribute to growth for 2016. BIMB Securities economist Imran Nurginias Ibrahim, however, opined that the Malaysian economy cannot rely on consumer spending alone even though it is part of domestic demand and one of the factors that drive GDP growth. The country needs to rely on other factors like exports, public spending/investment and other activities from other sectors, as the population is not big enough and spending is capped by the income of Malaysian consumers. Heavy reliance on private consumption as a source of growth is a cause for concern, especially with rising household debt as a percentage of GDP. (The Sun Daily)
Malaysia’s UK property buys intact
The Malaysian government funds’ investments in UK properties are still intact despite the sharp depreciation in the pound sterling and decline in property market. An industry export said that these funds could consider disposing some of these assets, considering that most of the investments were made five years ago when the exchange rate was still favourable, about RM5 to £1, compared to today’s RM5.2 to the £1. Those who bought into UK properties after 2013, when the pound was valued over RM5, are more likely to suffer a currency loss. Retirement Fund Inc or KWAP said it is not exiting the UK market due to any concerns over Brexit. The sentiment is echoed by the Eployees Provident Fund (EPF) and Felda Investment Corp, which own properties in the UK as well. (The Star Online)
Tycoon’s son to take bigger role in property ventures
Quek Kon Sean, youngest son of tycoon Tan Sri Quek Leng Chan, could be taking on a bigger role in Hong Leong group’s property ventures, sources say. Last Friday, he resigned from directorship positions in Hong Leong Financial Group Bhd (HLFG) and Hong Leong Capital Bhd to assume “a new position within the Hong Leong group”, but the announcements did not reveal anything more. It is said that Quek is making a big foray into real estate, and Kon Sean could be heading the venture. There has been speculation that Leng Chan would be investing in Eco World International Bhd (EWI) and the Bandar Malaysia project. Quek’s Singapore-listed GuocoLand Ltd property development activities are mainly concentrated in Singapore, Malaysia, China and Vietnam. (The Star Online)
Ireka cancels deal to buy RM22mil Senawang land
Ireka Corp Bhd has called off its proposed acquisition of 21.25 acres of freehold land in Pekan Senawang, Negri Sembilan for RM21.88 million. The sale and purchase agreement with a private individual was aborted due to unfulfilled conditions precedent to the agreement that Ireka had separately signed with Aeon Co (M) Bhd. The agreement with Aeon was signed on the same date to dispose of the land for RM53.66mil to facilitate the construction and operation of a shopping centre. Ireka had agreed to purchase the land on a “as in where is” basis, and on the same date entered into a deal with Aeon to construct the shopping centre with a car park on the land. The company said striking off the deal would not have any impact on its earnings or net assets. (The Star Online)
