No News Is Bad News
PM Anwar moves to stabilise Ringgit
KUALA LUMPUR, June 20,, 2023: Prime Minister (PM) Anwar Ibrahim’s announcement of measures to boost the capital market shows how Malaysia’s financial and economy are struggling.
It is not just the depreciating Ringgit that is of national concern but also the more than RM1.5 trillion national debt, no thanks to previous prime ministers and governments.
When Anwar was appointed PM in November (2022), he immediately told Malaysians that the national debt was most worrying and needed immediate attention to heal the economy.
No News Is Bad News noted that the ailing economy was reflected by the Ringgit’s “free fall” in the Forex.
One does not need to look far to see Malaysia’s financial and economic woes.
Look at our neighbour Singapore and its Singapore Dollar (SGD). The Ringgit’s slide started in 1990 with SGD1=RM1.45 to SGD1=RM3.42 this year.
An unstable and erratic Ringgit is a damper to investors, both domestic and foreign, and businessmen.
No News Is Bad News reproduces below several related news reports:
Move it from talk to walk, say economists
Tuesday, 20 Jun 2023
KUALA LUMPUR: Despite being a good recipe to boost the capital market, the measures announced by the Prime Minister need to be translated into action, says Universiti Keusahawanan Koperasi Malaysia Assoc Prof Abu Sofian Yaacob.
“One factor that has a direct influence on the capital market is the stability of the government of the day.
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“Investors would like to see a stable and receptive government.
“Another factor is a stable foreign exchange rate compared to the major currencies. It would give an indication as to the profitability translation with the home country’s currency,” he said.
Abu Sofian said the government should also encourage and facilitate local investors and enterprises to invest more, especially in new and innovative economies.
UOB Kay Hian Securities (M) Sdn Bhd head of wealth research and advisory Mohd Sedek Jantan said the immediate impact of the lower stamp duty is encouraging greater participation of local investors in the capital market.
He said potential effects may be wide-ranging.
“Although (market) volatility may rise with the increased transactions, the situation may only be temporary.
“The impact of the lower stamp duty on volatility is unclear, and in some cases may be positive.
“This is due to the market being occupied by a sufficient number of rational, fundamental traders whose trading could stabilise the market by moving prices closer to the true underlying value,” he said.
Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid said the move to reduce the stamp duty for shares traded is aimed at lowering the cost of securities transaction for investors.
“(It will) encourage investors to come in and invest in Bursa Malaysia, be it institutional or retail investors.
“When there are more players in Bursa Malaysia, it will improve the liquidity of the stock market and help promote a better price discovery mechanism for the listed share prices,” he told Bernama.
The Prime Minister yesterday announced that the stamp duty rate for shares traded on Bursa Malaysia will be reduced from the current 0.15% to 0.1% of the contract value from July onwards, subject to a maximum cap of RM1,000 per contract.
Mohd Afzanizam said the Prime Minister remains committed to pursuing structural reforms to attract high quality investments.
This, he said, could be seen following the announcement to implement reforms this year to make it easier and faster to list on the exchange by expediting the initial public offering process and reducing time-to-market.
“In a nutshell, it’s a medium to long-term reform which, if executed well, would improve the potential growth for Malaysia. Investment is always a key component for the economy as it will encourage innovation and better productivity gains,” he said.
During the launch of InvestEd (the new name of the Capital Market Graduate Programme) yesterday, Anwar, who is also the Finance Minister, announced several measures to beef up the capital market and create more wealth for the people.
Earlier, Anwar, who is also the Finance Minister, said three key strategies have been identified for a higher level of market vibrancy while improving the attractiveness of the local capital market.
The first key step, he said, is to widen investment and wealth creation opportunities for the people, including attracting a larger pool of investors to support small and medium enterprises (SMEs) as well as new economies.
In tandem with this, he said market and structural reforms must also be implemented to restore confidence in the country’s dynamism and competitiveness.
Three strategies to boost market
Tuesday, 20 Jun 2023
Business world: Anwar (centre) launching InvestEd at the Securities Commission in Kuala Lumpur. — FAIHAN GHANI/The Star
KUALA LUMPUR: The ringgit is likely to strengthen following measures taken to boost the local capital market, says Prime Minister Datuk Seri Anwar Ibrahim.
Although the announcement of these measures and the ringgit are unrelated, he said he is hopeful of improvements in the Malaysian currency.
“They are not directly related, but hopefully, we can ... What is most important is that our (economic) fundamentals are strong,” he told reporters after the launch of InvestEd (the new name of the Capital Market Graduate Programme) at the Securities Commission (SC) yesterday.
The Prime Minister was asked whether the announcement would help strengthen the local currency.
For the immediate term, he said this involves widening affordable investment choices for the rakyat while deepening investor interest in the local market.
“I am pleased to announce that the stamp duty rate for shares traded on Bursa Malaysia Securities will be reduced from the current 0.15% to 0.1% of the contract value, subject to a maximum cap of RM1,000 per contract.
“This will take effect in July,” he said.
Anwar said the change will directly reduce the cost of securities transactions and make the local stock market more competitive.
The increase in market liquidity, he said, will attract more domestic and foreign funds to the local stock market and encourage SMEs to pursue initial public offerings (IPOs).
He said the move will also facilitate public-listed companies’ attempts to raise funds to expand their business and create more jobs.
Anwar also announced that the definition of “sophisticated investors” will be widened to include angel investors.
Angel investors are high-networth individuals who provide capital for start-ups.
Meanwhile, he said reforms will be implemented by the SC and Bursa Malaysia by this year to facilitate listings on the exchange, including expediting the IPO process and shortening the time to market.
“I have given instructions that the ease and pace of approval must be faster from the present six months to a shorter period to allow for more vibrant activity in the market,” he added.
He said priority will continue to be given to boosting domestic direct investments (DDIs) and attracting foreign direct investments through the promotion of sustainable investment practices.
“The future of investments in the country appears exceedingly promising with abundant opportunities for both foreign and domestic investors,” he said.
Anwar said the government is also actively working towards improving the ease of conducting business and attracting high-value investments while cultivating a highly competitive workforce.
“These efforts are aligned with the objectives of the upcoming New Investment Policy and will be elaborated further in the upcoming New Industrial Master Plan (NIMP2030) to be launched in August,” he said.
He said the Finance Ministry and SC will also look at policies to facilitate and attract the setting up of “Family Offices” to drive greater DDIs and capital ventures.
“For example, enabling tax losses from corporate venturing to be utilised by the parent company to set off other sustainable investments in the group,” he added.
(A family office is a privately held company that handles investment and wealth management for a wealthy family.)
To further promote domestic growth, Anwar said the Cabinet will accelerate the implementation of government projects and approvals for businesses, including applications for skilled expatriates.
Ringgit will not hit 5.0 against US dollar, says BNM assistant governor
Thursday, 08 Jun 2023
8:55 PM MYT
KUALA LUMPUR: The ringgit would not hit the 5.0 level against the US dollar because Malaysia is not experiencing any form of crisis.
Bank Negara Malaysia (BNM) assistant governor (AG) Adnan Mohamad Zahid said the central bank does not see any concerning trends or speculative pressure; thus, the 5.0 level will certainly not happen and is unrealistic.
"When we went through levels from 2.5 to 3.0, then 4.0, we were in a crisis. But now, we are not in a crisis.
"So there is not a reason to be hung up over the dollar-ringgit level,” he said in a panel discussion titled ‘Navigating Ringgit Exchange Rate Dynamics’.
The event was held in conjunction with today’s one-day BNM Sasana Symposium 2023 themed Structural Reforms, For A Stronger Malaysia.
Adnan said that although the central did see some residents wanting to invest abroad, exporters just holding back from conversion, or importers at the margin looking to buy forward a little faster, these would be managed well within BNM’s capabilities in managing the reserves.
"Of course, we will continue to see fluctuations in the ringgit-dollar, but we do not see the ringgit heading anywhere in that (5.0 level) direction.
"Maybe we will hit 4.0 if we could turn around quickly. We can go there,” he said.
Meanwhile, looking at the overall ringgit in a nominal effective exchange rate (NEER), Adnan said the ringgit is relatively stable despite the banking and debt ceiling crises in the United States (US) and the weakness in the Chinese economy, given the high correlation between Malaysia and China, with exports to China accounting for 13.6 per cent Malaysia’s total exports.
He said the local financial market remains on a solid footing because large parts of the country’s investors are confined within the official institutions, pension funds, insurance companies and asset management companies.
"Most of them are managing their portfolios against global bond indices. Therefore it is important for the country to continue some policymaking and carry out some necessary reforms so that our bonds remain attractive to foreign investors,” he said.
Meanwhile, Standard Chartered Bank Malaysia head of Financial Markets, Sylvia Wong, said from the commercial and private sector’s perspective, Malaysia is generally still considered a good destination for investment for foreign investors given the current account surplus, ample trade -- RM1.6 trillion in exports in 2022 --, flexible liquidity in capital markets and ease of doing business, among others.
"However, from money managers’ view, the approach is usually more short term rather than from a medium and long-term perspective, where firstly, they tend to look at risk-on or risk-off, and that is a macro condition.
"For example, the US banking crisis is risk-off. Secondly, they examine emerging markets (EM) versus developed markets (DM) and whether they can get better yields and returns from EM or DM.
"Thirdly, they will see the fixed income or equity. So, generally, money managers tend to go around these three main themes and the differences between one to the other, depending on the timing and what drives the flows,” she said.
Wong said the private sector hopes for stability and wants the real economy to grow while able to help other industries to expand as well. - Bernama
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