Malaysia’s financial market remains resilient in face of Covid-19, says association

KUALA LUMPUR: The Malaysian financial market remains resilient and continues to function efficiently despite a challenging global economic environment from the Covid-19 pandemic, said the Financial Markets Association Malaysia (FMAM).

The association said in the second quarter, Malaysia’s growth slowed to a pace of -17.1% year on year (yoy), in line with other regional peers following measures introduced to contain the spread of the pandemic.

Similar growth contractions were seen across Asian economies including Singapore, the Philippines and Indonesia, which recorded negative growth prints in the second quarter of -13.2%, -16.5% and -5.3% yoy respectively, it added.

The association said despite the negative growth print registered in the second quarter this year, domestic growth is expected to improve in the second half of 2020 with the gradual reopening of economic activities.

The recent rebound in exports seen in June at 8.8% yoy versus a contraction of -25.5% in May can be attributed to further easing in movement controls, which are expected to provide renewed positive catalysts to support growth recovery in the last six months of 2020.

“We have observed limited economic activity for the period between April and June due to strict enforcement.

“However, by late June we have witnessed a pick up in major economic activities, primarily in the manufacturing, agriculture and construction sectors given that most sectors were reopened and movement control orders were relaxed.

“It is likely that going forward there is a very strong possibility of a sharp recovery taking hold of the economy,” the association said in a statement today.

It noted that Malaysia has injected almost RM45 billion in fiscal support directly, which amounts to about 3.0% of its gross domestic product and this is part of a planned RM295 billion total injection into the economy.

In the ringgit bond market space, trading activities were healthy, recording a robust daily transacted volume of RM5 billion for ringgit government bonds and sukuk year to date, higher than the daily average traded volume of RM4.2 billion observed during the same period in 2019.

Meanwhile, the monthly average traded government bond and sukuk volume in 2020 remained robust with RM102 billion transacted, higher than the monthly average of RM85 billion recorded in 2019.

It noted that issuance momentum has grown considerably in recent weeks following the pre-emptive Overnight Policy Rate (OPR) cut of 25 basis points by Bank Negara Malaysia in July, which brings the current OPR level to a record low of 1.75%.

Total foreign ownership of ringgit government bonds currently stands at 22.7% in July, an increase from 22.2% recorded in June. – Bernama

Bank Negara Malaysia’s Overnight Policy Rate stands at a record low of 1.75%.

source https://www.thesundaily.my/business/malaysia-s-financial-market-remains-resilient-in-face-of-covid-19-says-association-DK3783656