Last week’s highlights

• Ministry of Finance Malaysia (MOF) had released its 55th LAKSANA report last week.

• Producer Price Index (PPI) local production surged higher by 10.6% in April 2021

• Malaysian government unveiled an additional stimulus (PEMERKASA+) worth RM40bn

• The FBM KLCI dropped by 1.0% or 15.99 points for the week to settle at 1,578.45 points

• US unemployment rate edged down to 5.8% in May

• Euro area unemployment rate lowered to 8.0% in April 2021

• Australis’s gross domestic product (GDP) rose 1.8% in 1Q21

• Singapore's retail sales surged 54% yoy in April 2021

• Central banks of Australia and India kept the interest rates unchanged.

MALAYSIA ECONOMY

• According to the Ministry of Finance Malaysia (MOF) 55th LAKSANA report, under PENJANA SMEs Financing, a total of RM1.403bn was approved to 7,497 applicants. For the technical and digitalization initiatives, RM66.2m has been distributed to 13,866 applicants under the fund. As of reporting date, a total of RM722.97m had been channeled based on 2,028,639 claims to the front liners as allowance. The disbursed amount of wage subsidy 1.0 and 2.0 schemes stood at RM12.889bn and RM1.193bn, respectively.

• The Producer Price Index (PPI) local production surged higher by 10.6% in April 2021, accelerated from 6.7% growth in the previous month. The increase was the highest since February 2017 (10.8%). The sharp rise was mainly due to a low base effect and continued rise in commodity and raw material prices due to the recovery in global demand and various supply constraints. The growth was driven by the increase in all sub-indexes excluded the electrical & gas supply index: the mining index (92.4%); agriculture, forestry & fishing index (49.8%); manufacturing index (3.5%); water supply (1.2%). Meanwhile, PPI by stage processing, the index of crude materials for further processing surged from 31.8% to 55.8% in April 2021. The index of Intermediate materials, supplies & components also increased by 4.8%. However, the finished goods deflation deepened to -0.7% from -0.2 in March.

• On 31 May 2021, the Malaysian government unveiled an additional stimulus (PEMERKASA+) worth RM40bn with RM5bn as direct fiscal injection. This stimulus was introduced to support the economy during the second lockdown in June 2021. The stimulus unveiled three main objectives: improving public healthcare capacity, continuing the rakyat welfare agenda, and supporting business continuity.

• Moody’s Investors Service kept Malaysia’s A3 stable credit profile supported by its diversified, competitive and moderately large economy, ample natural resources and strong medium-term growth prospects. Malaysia’s credit profile also reflects “a1” for economic strength, “a2” for institutions and governance strength, “ba2” for fiscal strength and “baa” for susceptibility to event risk.

Source: BIMB Securities Research - 8 Jun 2021