The Week Ahead: Relatively quiet week ahead, with coronavirus and additional stimulus measures in focus

TheEdge Mon, Apr 06, 2020 01:00pm - 2 years View Original

This week will be relatively quiet on the local corporate and economic fronts as the Movement Control 

Order (MCO) enters its fourth week. All court proceedings for the week ending April 10 have been postponed until after April 14. Listed companies such as Apex Equity Holdings Bhd, UOA Real Estate Investment Trust and Baba Eco Group Bhd have also postponed their annual general meetings until later, in line with the MCO.

Meanwhile, Malaysians will continue to keep a watchful eye on the daily number of Covid-19  cases in the country as the end of the MCO period draws nearer. 

Hopes are high that business and social activities will resume soon, after Health Ministry director-general Datuk Dr Noor Hisham Abdullah was reported last week as saying that the infection curve appeared to be flattening.

He was also reported to have said that the government would decide on April 10 whether to end the MCO or have it extended again.

Nevertheless, Malaysia is preparing for the worst and expects a surge in cases in mid-April. The nation is already taking precautionary steps, including quarantining Malaysians returning from overseas in designated locations and hotels. More hotels are expected to sign their acceptance letters with the government this week to become quarantine facilities. As at last Friday, selected hotels with over 5,000 rooms have signed up.

Last week, a special Cabinet committee was formed to draw up strategic measures to safeguard Malaysia’s economy and labour market. It aims to strike a balance between the nation’s economic priorities and the effective enforcement of the MCO.

The committee, chaired by International Trade and Industry Minister Datuk Seri Mohamed Azmin Ali and Defence Minister Datuk Seri Ismail Sabri Yaakob, will report its recommendations to the prime minister during the Economic Action Council meeting on Monday (April 6).

Small and medium enterprises are expecting an announcement this week on further refinements to the Prihatin Rakyat economic stimulus package, with provision to tide them over during this challenging period. Many businesses are lamenting that they do not have enough cash to even meet their payroll after the month-long MCO period.

Last Friday, Singapore announced that most workplaces and all schools will be closed from Tuesday (April 7) as the city-state puts in place a “circuit breaker” to pre-empt escalating Covid-19 infections.

Markets in China and Thailand will be closed on Monday while the Philippine market will be closed on Thursday and Friday for Day of Valor and Good Friday respectively. Other countries observing Good Friday as a public/market holiday are Australia, New Zealand, Singapore, India and Indonesia.

China will be releasing its March Consumer Price Index (CPI) on Tuesday, followed by its Producer Price Index (PPI) for March on Friday. In a report last Friday, UOB Global Economics & Market Research said it expects China’s reserves to edge lower but still stay close to US$3.1 trillion. Quoting a Bloomberg poll, UOB says China’s March CPI may ease to 4.9% year on year from 5.2% in February while its PPI may decline to -1.1% y-o-y from -0.4% y-o-y in February.

Down under, the Reserve Bank of Australia will announce its April monetary policy decision on Tuesday. “We think the RBA will not be changing the official cash rate for at least some time. In terms of quantitative easing, RBA governor Philip Lowe has emphasised that the board did not take the latest decisions lightly. We believe this is probably the start, not the end, of measures the RBA will eventually have to undertake to cushion the impact from Covid-19,” UOB says.

On Thursday, Bank of Korea is expected to announce its policy decision. With South Korea’s benchmark interest rate already at record low of 0.75%, UOB expects at most a cut of another 25 basis points in the second quarter of 2020 as Bank of Korea weighs other options to support the country’s economy.

“The central bank followed through with its earlier comment on bond purchases by committing to ‘unlimited’ supply of liquidity for three months starting April, to help stabilise financial markets. Auctions will be held every Tuesday between April and June with the first auction on April 2,” says UOB.

Over in the US, UOB expects to see “very sharp jump in Covid-19 confirmed cases and deaths in the US” this week. US President Donald Trump had last Thursday warned Americans of a potential surge in Covid-19 cases while a White House health official projected that even with efforts by communities to mitigate the virus, the number of deaths could reach as high as 240,000. With 245,175 confirmed Covid-19 cases as at last Friday, the US has the highest number of cases globally.

The US will also be releasing its March CPI data on Friday. Citing a Bloomberg poll, UOB says the country’s headline inflation may ease markedly to 1.6% y-o-y from 2.3% y-o-y in February, most likely due to the plunge in oil prices and the pandemic. “Core inflation is expected to ease only slightly to 2.3% y-o-y from 2.4% in February.”

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