-  Broad money (M3) grew by 6.0% YoY to RM1.484tril in April (March: +5.9%). Mainly, the growth in M3 was driven by the extension of credit by the financial system to the private sector.

-  Nonetheless, total loans grew at a marginally softer pace of 10.0% YoY to RM1.252tril in April owing to the slowdown for both retail and corporate loans (March: +10.2% YoY).

-  Leading indicators for the banking sector also point to a softer outlook ahead. Loan applications and approvals slowed down in April. Overall loan demand moderated with lower loan applications from the business sector.

-  In April, loans approved fell by 2.3% (March: +4.0% YoY). Meanwhile, loans applications contracted by 5.6% YoY (March: +4.6% YoY)

-  In terms of foreign holdings of MGS, it was unchanged at 44.1% in April as total outstanding MGS and foreign holdings fell from a month ago (March: 44.1%).

-  Total outstanding MGS fell by RM12.0bil (or -3.8% MoM) to RM307.5bil in April. On the other hand, foreign holdings of MGS narrowed by RM5.3bil (or -3.7% MoM) to RM135.5bil.

-  Based on end-May’s close, the 10-year MGS yield slipped on a MoM basis to 4.073% (April: 4.109%). Note that the 10-year bond yield reached a high of 4.30% at the close of 28 January before sliding downwards.

-  Separately, we gather that the Ringgit had strengthened vis-à-vis most major currencies except the PHP during the month of May.

-  On a YTD basis, the Ringgit had appreciated by 1.9% YTD to close at 3.213 on 30 May. During the month of May alone, Ringgit gained 1.6% MoM.

-  As such, we continue to expect a healthy reserves level at BNM amid the anticipation of a stronger Ringgit going forward. At mid-May, forex reserves stood at USD131.1bil (or RM427.6bil).

-  All in all, the Leading Index suggests that the Malaysian economy will likely succumb to downward pressure due to ongoing challenges in the domestic front. 

Source: AmeSecurities