Economics & Strategy

All ears on three major official announcements by DPM, Bank Negara and NEAC


Previous Reports

This weekly report is

contributed by

Capitalcorp logo

contact capitalcorp

(for the week of 23-27 March 1998)

All ears on three major official announcements by DPM, Bank Negara and NEAC

In Parliament tomorrow, DPM Anwar Ibrahim will table his second post-Budget stimuli to boost sluggish economic recovery. The first announced in Dec 5 last year, prescribed austerity measures to rein in expenses, the second is expected to be less restrictive in nature. While current GDP growth projection of 4-5% looks untenable under the present scenario, a revised target of 2-3% will not come as news to the market. What may surprise, however, are cards that are still held close to his chest. Some concessions within the financial sector (insurance and securities industry) are expected. The market generally is still kept guessing, but the underlying tone is one of optimism.

Last week, Anwar softened the government stance on big-scale infrastructure developments, by allowing the staggered construction of the RM3b East Coast Expressway. Is this a departure from the norm of deferring big-ticket developments? We think this a subtle change of official policy, rather than an ad-hoc announcement aimed at uplifting the controversies surrounding two of the partners in the expressway consortium. The project was awarded to a tripartite venture comprising United Engineers, Malaysian Mining Corporation and MTD Capital in 1996. It may be ironic that the former two were the focus of recent unforgiving public scrutiny, but we still expect the market to respond positively to these stocks.

Anwar's announcement is also expected to accommodate "suggestions" by Daim Zainuddin, the executive director of National Economic Advisory Council. Among others, Anwar can be expected to review that state of corporate finance activities since the harsh measures of Dec 5 last year that froze corporate restructurings by public-listed companies. That move is now being viewed with disdain by the NEAC as bordering regulatory impotency. Among others, we expect the government to relax conditions on corporate exercises, including allowing cash calls on shareholders (now that it is harder to access funds from banks).

Bank Negara Annual Report 1997: The banking sector's health has been of much interest recently and questions will be answered in many ways when Bank Negara releases its Annual Report 1997 on Wednesday. There will be a press briefing scheduled on Tuesday pre-conditioned on 24-hour publication embargo. How the market reacts on Tuesday will provide good inklings on the governor's address on monetary policy of the day. The central bank's balance sheet will be scrutinised, as the consequences of failed attempts to prop the ringgit last year shows up. But the market would be looking for a whiff of any sign of an aggressive expansionary moves. This comes in the light of rumoured relaxation on liquid assets maintenance (as a percentage of eligible liabilities). Also, expects a briefing on industry consolidation, particularly among finance companies and banking mergers.

The Unlucky 13? The New Sunday Times alluded to the existence of a list of major loan defaulters that include prominent businessmen in the country. The "casualties" are said to be facing civil suits purported brought against them by Singaporean banks. The significance of this news is that Malaysian banks will have no option but to jump onto the same bandwagon and sue, but this cannot be further than the truth. Our information points to no more than a mischievious poison letter.

Download Full ReportPDF

Get Acrobat Reader
To view these reports in their original
form, please ensure that you have the
Adobe Acrobat Reader plug-in.

<< back

back to left brain

Another malaysian resource site hosted by Malaysian Internet Resources

* Opinions expressed by Capitalcorp do not represent that of MIR Communications

These reports are prepared by Capitalcorp on the basis of publicly available information and other sources believed to reliable. It is provided for information purposes only and cannot be considered as an offer to sell, or a solicitation of any offer to buy. While reasonable care has been exercised to ensure the content is accurate and opinions given are fair and reasonable, Capitalcorp makes no representation as to its accuracy and completeness. Under no circumstances should this report be relied upon as such.

From time to time, Capitalcorp or its affiliates or officers or employees may have a position or interest in the shares, options, rights and/or warrants of the said subject of this report, to the extent permitted by law. These reports are provided solely for the the clients of Capitalcorp, who are expected to seek advice from their stockbrokers or investment advisors without reliance on this report. Neither the company nor any director, officer or employee shall accept any liability whatsoever for any direct or consequential loss arising from investment decisions based on these reports. These reports may not be reproduced, distributed or published by any recipient in any manner for any purpose without the expressed consent from Capitalcorp.

Reproduction and/or circulation of these reports in other countries may be prohibited under certain securities laws. We advise readers to seek Capitalcorp's advice on this matter. The company or the analysts hereby disclaim any liabilities that may arise from such unauthorised acts.