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.”
‘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
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
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday told lawmakers that she “would not speculate,” but a “response plan” has been prepared in case Taiwan is targeted by US President Donald Trump’s reciprocal tariffs, which are to be announced on Wednesday next week. The Trump administration, including US Secretary of the Treasury Scott Bessent, has said that much of the proposed reciprocal tariffs would focus on the 15 countries that have the highest trade surpluses with the US. Bessent has referred to those countries as the “dirty 15,” but has not named them. Last year, Taiwan’s US$73.9 billion trade surplus with the US
RSS