Credit ratings agency Fitch Ratings Ltd surprised analysts by upgrading Malaysia’s sovereign outlook to “stable” from “negative,” boosting the nation’s currency yesterday and providing welcome relief to the nation’s controversy-plagued government.
In a statement just before midnight on Tuesday, Fitch affirmed the nation’s credit rating at “A-,” the fourth-lowest investment rating, and said Malaysia’s fiscal finances had improved since last month, citing progress on a newly-introduced consumption tax and fuel subsidy reforms.
“Malaysia’s rating remains supported by reasonably strong real GDP growth rates and low inflation volatility,” said Fitch, which had downgraded Malaysia’s sovereign outlook to “negative” in 2013.
The positive news helped bolster the local currency yesterday, with the ringgit at 3.73 against the US dollar, up from 3.77 on Tuesday. Malaysian stocks also rallied by the most since 2013, with the FTSE Bursa Malaysia KLCI jumping 1.6 percent.
“It [the outlook revision] is a nice surprise,” said Nicholas Teo, an analyst at CMC Markets in Singapore. “We are seeing a big bounce on the ringgit now, presumably on the back of this.”
IG Markets strategist Bernard Aw characterized the news as a “180° turn,” adding that “the market had been bearish toward the outlook, with sentiment being driven by fears the rating would be downgraded.”
“The underlying fundamentals of Malaysia’s economy are still stable,” he added.
Rising government debt, mounting stress on the ringgit and weakening oil prices have been denting Malaysia’s economy this year.
The Fitch statement is likely to be welcomed by Malaysian Prime Minister Najib Razak, who is facing pressure to get Malaysia’s financial house in order.
Along with having to deal with public anger over a newly introduced consumption tax, Najib, who is also the nation’s finance minister, has been struggling to fend off a persistent campaign for his ouster by influential former Malaysian prime minister Mahathir Mohamad.
Najib was weakened by 2013 polls in which Malaysia’s long-ruling coalition nearly lost power, and his reputation has been hammered this year by a drip-feed of damaging allegations of fraud at a debt-ridden state investment company he oversees.
Razak has skirted demands that he explain how hundreds of millions of US dollars have allegedly gone missing from deals involving 1Malaysia Development Berhad (1MDB). He has denied wrongdoing and ordered government auditors to examine 1MDB’s books.
The Malaysian Ministry of Finance yesterday called Fitch’s statement “fair and balanced.”
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
RSS