Malaysia: Budget 2019 Wish List

Budget 2019, which will be tabled in Parliament on November 2, will be important for a number of reasons. For a start, it will be the first budget presented by the new Pakatan Harapan (PH) government. Next, this budget will be a challenging one as the new PH government will need to fix huge fiscal finances and at the same time address the well-being of the rakyat.

We believe this budget is unlikely to contain short-term populist measures such as providing subsidies, grants and easy government-led financing, but should provide strong and clear policies that will help the economy ride out the current challenging time in the near future. With lower GDP growth envisaged in 2019, projected at 4.5% from 5.0% estimated for 2018, added with higher fiscal deficit/GDP after taking into account of the RM35bil refund for GST and income tax plus slower revenue growth and 5% - 10% cut in expenditure, the fiscal deficit/GDP could jump between -3.7% and -4.6% in 2019. We view this as a “one-off” scenario.

Others:

Banking Sector: Observation period for NSFR extended Overweight

QUICK TAKE

Automobile Sector: Electric feel Neutral

NEWS HIGHLIGHTS

Automobile Sector: Dyson to open first electric car plant in Singapore

Eita Resources: Bags RM56.36m contract from TNB

IPO: ACE Market-bound Securemetric eyes RM17m

M&A: Johnson & Johnson makes US$2.1bill offer to buy out Japan cosmetics firm Ci:z

Source: AmInvest Research - 24 Oct 2018