The Week Ahead: November exports, Bank Negara forex reserves in the spotlight

TheEdge Mon, Jan 08, 2018 03:00pm - 6 years View Original


MARKET observers will be kicking off the New Year with an eye on the upcoming November export numbers and Bank Negara Malaysia’s foreign exchange reserves data, to be released in the first week of the year.

The Department of Statistics Malaysia will release the November trade data, along with the trade balance numbers, on Jan 5.

Economists’ median forecast for November export growth is 15%, according to Bloomberg’s database.

Malaysia sustained its double-digit export growth momentum in October with an 18.9% year on year rise to RM82.4 billion, after posting growth of 14.8% and 21.5% in September and August respectively.

October growth was supported by higher exports to China, Hong Kong, Singapore, Thailand and Japan.

The trade surplus grew 23% to RM10.6 billion for the month, from RM8.6 billion in the previous year. Year to date 2017, the trade surplus adds up to RM80.15 billion.

On Jan 5, Bank Negara is releasing foreign reserves data for end-December. In mid-December, reserves grew 0.3% to US$102.2 billion from US$101.9 billion as at Nov 30, the highest level since US$105.5 billion in June 2015.

The central bank said the reserves position was sufficient to finance 7.5 months of retained imports and is 1.1 times the short-term external debt.

IHS Markit will release the Nikkei Malaysia Manufacturing Purchasing Managers’ Index (PMI) on Jan 2, which gives an indication of conditions in the local manufacturing sector.

In November, the index breached the 50 threshold for the first time in three months at 52, the strongest improvement since April 2014. The index was at a three-month low of 48.6 in the preceding month. The improvement reflected faster growth in output and new orders, amid improved domestic and overseas demand, said Nikkei, which expects growth momentum to be sustained until end-2017.

The US will see the release of its Markit Manufacturing PMI on Jan 2 as well as the ADP employment report on the following day, which represents data from major private industrial sectors.

Non-farm payrolls and unemployment data will be released by the US Bureau of Labor Statistics on Jan 5. The US unemployment rate was at a 17-year low of 4.1% in October, while non-farm payrolls rose by 228,000 jobs in November.

Coupled with the 3.2% increase in gross domestic product for the third quarter of 2017 — the fastest pace in two years — the US could see further hikes in interest rates going forward.

Interest rates were raised by 25 basis points during the last Federal Open Market Committee meeting in mid-December to a range of 1.25% to 1.50% — the third rate hike in 2017 — amid labour market tightness and a strengthening US economy. The US central bank has forecast three rate hikes in 2018.

In Asia, South Korea will release its external trade and foreign reserves numbers on Jan 1 and 2 respectively, while India, Hong Kong and Taiwan will release their foreign reserves data on Jan 5.

On the corporate side, Malaysian listed companies that will be holding general meetings include Scomi Group Bhd, Scomi Energy Services Bhd, Scomi Engineering Bhd, VS Industry Bhd, Hil Industries Bhd and K-Star Sports Ltd.

Scomi Group and Scomi Energy are holding extraordinary general meetings on Jan 4 to get their respective shareholders’ approval for the proposed three-way merger between the two companies and Scomi Engineering Bhd, which will have its own EGM on the following day.

The merger plan was announced in August, and will be undertaken via a share swap and issuance of warrants. The group said the proposal will allow it to strengthen its balance sheet amid the challenging business environment and facilitate business expansion.

It also expects to see lower administrative and operational expenses following the merger.

Hil Industries’s EGM on Jan 3 is to seek approval for the proposed acquisition of 99% equity interest in A&M Concrete Products Sdn Bhd and Show Piece Sdn Bhd, as the group intends to diversify its business and rely less on its manufacturing operations.

The two acquisition targets have approved property development projects with a combined gross development value of RM375.2 million.

Show Piece’s wholly-owned subsidiary, Innocentral Sdn Bhd, owns 858,083 sq ft in Sungai Jati, Klang, with 73% of the freehold land approved for the development of 184 double-storey terraced houses and eight double-story semi-detached houses with a GDV of RM196.6 million.

A&M Concrete has received approval for the development of 280 apartments and nine stratified three-storey shops in Bukit Kemuning, Shah Alam, with a GDV of RM178.64 million.

K-Star’s EGM on Jan 5 seeks shareholders’ approval for the appointment of Messrs Foo Kon Tan LLP as its auditors, while VS Industry Bhd is holding its 35th annual general meeting on Jan 5 to re-elect the board of directors and to obtain approval for a final dividend payment of one sen per share for the financial year ended July 31, 2017.

 

 

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