The Week Ahead: Sabah state election, regional monetary policy in focus

TheEdge Mon, Sep 21, 2020 02:00pm - 5 months ago


All eyes will be on the Sabah state election’s polling day on Sept 26, which could set the stage for the 15th General Election (GE15).

“At the national level, we haven’t decided when the general election should be called … but if we win the state election in Sabah … we should quickly hold the general election,” said Prime Minister Tan Sri Muhyiddin Yassin last Friday.

The election results will serve as an indicator of support for the Perikatan Nasional government.

A total of 447 nomination papers were received from candidates vying for 73 state seats in the Sabah state election.

On the economic front, the Department of Statistics Malaysia will release the August Consumer Price Index (CPI) data on Wednesday. Inflation declined 1.3% in July — the fifth consecutive month of contraction — from a year earlier, led by the decrease in the transport component.

The Leading, Coincident & Lagging Indices will also be announced on the same day.

On Wednesday, Bank Negara Malaysia will release the country’s latest international reserves as at Sept 15. International reserves amounted to US$104.4 billion as at Aug 28, marginally higher than the US$104.3 billion recorded as at Aug 14.

In Asia-Pacific, the monetary policy of China, New Zealand and Thailand will be closely watched. China will announce its September one-year and five-year loan prime rate (LPR) fixings on Monday (Sept 21). UOB Research maintains its forecast for the one-year LPR at 3.75% by year-end, which assumes the country will cut the rate by merely another 10bps for the rest of the year, in addition to the 30bps cut in 1HFY2020.

In New Zealand, a negative official cash rate (OCR) and foreign asset purchases prevail. Currently, there are no foreseen cuts to the OCR for September and the rest of the year. On quantitative easing, a New Zealand government bond-centric programme is seen to remain as the main monetary policy tool. However, the Reserve Bank of New Zealand may consider expanding the programme to include other assets.

Also, the Bank of Thailand is not expected to see a change in its 0.5% policy rate, according to UOB and a Bloomberg poll of four analysts. Policy space has become increasingly limited, with rates approaching the zero mark.

Singapore will be releasing its August industrial production data on Friday, following a better-than-expected August non-domestic exports performance. The manufacturing sector is estimated to have contracted 7% month on month in August, from a m-o-m increase of 1.6% in April. The contraction translates into a year-on-year drop of 6.7%, from a y-o-y decline of 8.4% in July. The country will also release its August CPI on Wednesday.

Australia will release its preliminary manufacturing and services Purchasing Managers’ Index surveys for September on Tuesday.

Other key Asian data includes South Korea’s first 20-day September trade data, Taiwan’s August export orders and Hong Kong’s CPI on Sept 21; New Zealand’s August trade data on Sept 24; and South Korea’s September consumer confidence on Sept 25.

Vietnam is likely to be the first economy to release the 3Q2020 GDP. UOB Research has forecast a 5.5% expansion for the quarter from 0.4% in 2Q.

Over in the US, initial jobless claims are expected to top 850,000 print from the 860,000 claims reported last Thursday, while continuing claims could hover around 12.5 million from 12.63 million last week.

It will be a busy week for Federal Open Market Committee chair Jerome Powell, with three Congressional hearings. He is scheduled to testify to the House Financial Services Committee on the Federal Reserve’s Pandemic Response on Tuesday, and subsequently to the House Select Subcommittee on the Coronavirus (Covid-19) on Wednesday. His last testimony will be a joint one with US Treasury Secretary Steven T Mnuchin to the Senate Banking, Housing and Urban Affairs Committee Hearing on “The Quarterly CARES Act Report to Congress” on Thursday.

Japan’s market is closed on Monday and Tuesday for the Respect for the Aged Day and Autumnal Equinox Day celebrations respectively.

Meanwhile, court sessions will resume on Monday with the hearing of former deputy prime minister Datuk Seri Ahmad Zahid Hamidi’s graft and money laundering trial taking place at the High Court.

On Tuesday, the Federal Court will hear the appeal of former finance minister Lim Guan Eng in a defamation suit against Perkasa, while the Court of Appeal will see a case management of former premier Datuk Seri Najib Razak’s SRC International Sdn Bhd appeal.

On the corporate front, listed companies that will be holding their annual general meeting this week include Lay Hong Bhd (Monday), IJM Corp Bhd (Tuesday), Amcorp Properties Bhd and TA Enterprise Bhd (Wednesday), and Kossan Rubber Industries Bhd and SKP Resources Bhd (Friday).






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