-  Malaysia’s broad money (M3) grew by 5.9% YoY to RM1.474tril in March (February: +5.9%). Mainly, the growth in M3 was driven by the extension of credit by the financial system to the private sector.

-  Note that total loan’s growth surged by a moderated 10.2% YoY to RM1.247tril in March owing to the slowdown for both retail and corporate loans (February: +10.7% YoY).

-  Leading indicators for the banking sector also point to a softer outlook ahead. Although loans application had picked up pace, approvals slowed down due to stringent lending practices.

-  In March, loans approved grew at a moderated pace of 4.0% YoY in March 2014 (February: +9.5% YoY). Meanwhile, loans applications advanced by 9.5% YoY (February: +8.5% YoY) -  Aside from that, foreign holdings of MGS declined to 44.1% in March (February: 44.7%). The decline in foreign shareholding was mainly due to a faster expansion in total outstanding MGS.

-  Total outstanding MGS surged by RM8.0bil (or +2.6% MoM) to RM319.6bil in March. On the other hand, foreign holdings of MGS grew by RM1.4bil (or +1.0% MoM) to RM140.8bil.

-  Elsewhere, the Ringgit appreciated by 0.3% YTD to close at 3.2655 on 30 April. Based on end-April’s close, the 10-year MGS yield stood at 4.069%.

-  However, the 10-year bond yield has been sliding downwards during the start of May to close at 4.031% yesterday.

-  Separately, we gather that the Ringgit was unchanged vis-à-vis the greenback in April but had depreciated against most major currencies during the month of April.

-  The Ringgit slipped against GBP (-1.0% MoM), AUD (-0.7% MoM), JPY (-0.6% MoM), PHP (-0.4% MoM), SGD (-0.4% MoM), EUR (-0.3% MoM), and THB (-0.2% MoM).

-  All in all, the Leading Index suggests that the Malaysian economy will likely succumb to downward pressure on the back of softer domestic demand. Domestic growth slowed in 1Q14 amid ongoing challenges. 

Source: AmeSecurities