Malaysia

Malaysia's GDP Forecast Remains Intact. Malaysia's forecast of achieving between 4.5 percent and 5.5 percent Gross Domestic Product (GDP) growth remains intact despite facing some challenges, said International Trade and Industry Minister Datuk Seri Mustapa Mohamed. "Yes, we have some challenges, but what is more important is that we recorded a good trade balance although exports and imports are coming down. "We are still positive with our growth and we will continue to be quite robust," he told a press conference on the third day of the 47th ASEAN Economic Ministers (AEM) Meeting and Related Meetings here today. Mustapa added that for the moment, Malaysia's economy appeared to still being good shape with growth being driven mainly by domestic demand in the last six months. (Bernama)

Malaysia Will Remain an Open Economy. Malaysia will remain an open economy with its liberal investment policies providing the impetus for it to emerge as a developed economy within the next five years, said Minister of International Trade and Industry Datuk Seri Mustapa Mohamed. The services sector would be pivotal in generating growth for the economy which was poised to be major investment destination in East Asia. He said that Investors want to see a liberal environment in policies, and they want to know where Malaysia is going and where ASEAN is going. (Bernama)

Malaysia's Housing Market 'Seriously Unaffordable'. Khazanah Research Institute (KRI) indicated that Malaysia's housing market is deemed "seriously unaffordable", where the median house price is 4.4 times median annual household income. KRI managing director Datuk Charon Mokhzani said on Monday that an affordable market is one where median house price is three times median annual household income. He said that policy initiatives in Malaysia have been through transferring resources to low-income households. Middle-income households are neither eligible for social housing nor able to afford houses. He added policy should be more responsive to the needs of all sections of the population. (The Edge)

Survey Finds GST Adversely Affects Companies’ Cash Flow. The implementation of the GST has adversely impacted companies’ cash flow, a survey by the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) showed. 85% of Malaysian businesses have been forced to request for longer credit terms of above six months from their suppliers post-GST, as input tax refunds from the Customs Department are often delayed, said ACCCIM national council member Koong Lin Loong. The imposition of GST has resulted in additional resources being allocated to business operations to ensure compliance. (The Edge)

RCEP Negotiation Hits "Historical Breakthrough". ASEAN members and its six dialogue partners, who are currently in talks for the formation of the regional comprehensive economic partnership (RCEP) agreement, have achieved a "historical breakthrough" as they unanimously agreed on modalities in goods. "We faced a lot of uncertainties before this, but in today's meeting, we have made a lot of progress and some were considered to be historic, "International Trade and Industry Minister Datuk Seri Mustapa Mohamed said. The 16 countries involved in the negotiation, including Malaysia, had agreed on the modalities in their aspiration to the elimination of tariff of up to 80per cent in 10 years from 65 per cent agreed when the RCEP comes into force, he told reporters after the 3rd RCEP ministerial meeting here today. (Bernama)

Leading Index Up 0.3% in June. The Leading Index (LI) which monitors the economic performance in advance, showed an increase of 0.3% in June to 117.6 points. The components that contribute to the increase were real imports of other basic precious and other non-ferrous metal (0.8%), number of new companies registered (0.3%), real money supply, M1 (0.2%) and real imports of semi conductors (0.2%). The annual change of LI leaped to 0.8% from negative 0.2% in the previous month, said the Statistics Department. The Coincident Index (CI) which measures the current economic activity, grew by 0.5% in the reference month. This indicated that the Malaysian economy would continue to expand at a slower rate in the near-term, it added. (Bernama)

Asia

Acceptable for BOJ to Miss Price Goal. Prime Minister Shinzo Abe said it was acceptable for the Bank of Japan to miss its self-imposed deadline for meeting its inflation target, suggesting that the government was in no mood to pressure the central bank to expand monetary stimulus. Consumer inflation has ground to a halt, keeping the BOJ under pressure to meet its pledge made in April 2013 - to accelerate inflation to 2% in roughly two years. Abe said that with oil prices continuing to fall, the BOJ missing the two-year deadline could not be helped. Abe also said the government won't meddle in specific monetary policy decisions. (Reuters)

Singapore CPI Falls to 0.4%. Singapore CPI fell to 0.4% in July compared with 0.3% in June. The Ministry of Trade and Industry and the Monetary Authority of Singapore said private road transport cost fell by 0.1% after rising by 1.2% in June. Accommodation cost declined by 2.8% following the 2.6% drop in the previous month, reflecting the continued softening of the housing rental market. The MAS core inflation came in at 0.4% in July, up from 0.2% in June. For 2015 as a whole, MAS core inflation and CPI-All Items inflation are projected to come in at the lower half of the forecast range of 0.5% to 1.5% and -0.5% to 0.5% respectively. (Bernama)

Indonesia Extends Tax Incentives. Indonesia has extended its tax incentives for "pioneering" industries such as oil refinery and infrastructure to help attract more investment into the country. Indonesia is now offering a tax reduction of between 10 and 100% for up to 15 years to firms investing a minimum of 1 trillion rupiah ($71.5 million) in certain industries, the finance ministry said on Monday. Previously, the tax break was up to 10 years and if companies qualified, they could obtain 100% relief. The "pioneering" industries include maritime transport, telecommunications, downstream metal production and agricultural processing. The new incentives went into effect on Aug. 16. (Reuters)

Taiwan Jobless Rate Falls Unexpectedly in July. Taiwan's unemployment rate decreased unexpectedly in July, figures from the Directorate General of Budget and Statistics, or DGBAS, showed Monday. The seasonally adjusted unemployment rate declined to 3.74% in July from 3.76% in June. Economists had expected the jobless rate to rise to 3.77%. A year earlier, the unemployment rate was 3.95%. However, the number of unemployed people climbed to 445,000 in July from 431,000 in the previous month. The number of individuals employed rose to 11.211 million from 11.185 million in the preceding month. (RTT News)

New Thai Finance Minister Says to Introduce Economic Measures in a Month. Thailand's military-government plans to introduce economic measures in a month to help boost the economy in the short term, the country's new finance minister said on Monday, as the junta is struggling to spur economic growth. The measures will include additional funds for the grassroots, Apisak Tantivorawong, appointed last week in a reshuffled cabinet, told reporters. (Reuters)

Europe

Osborne Says U.K. Economy Vulnerable to Chinese Market Fallout. Chancellor of the Exchequer George Osborne said the U.K. economy is vulnerable to international shocks as concerns about a slowdown in China caused stock markets across the world to tumble. Osborne’s comments underline a growing unease among investors and policy makers as a sell-off in China’s stock market spreads globally, sparking concern about the potential impact on the world economy. Osborne said that Britain is a very open economy, and Britain is affected by problems in the euro zone and Asian financial markets.(Bloomberg)

French PM Pledges More Reforms, Tax Cuts despite Party Dissent. French Prime Minister Manuel Valls promised to press ahead with reforms and cut taxes, brushing aside calls from some in his own Socialist party to water down a corporate tax credits scheme. Days ahead of an annual end-of-summer party meeting, Valls wrote in an opinion piece for business daily Les Echos that cutting France's tax burden was the government's third highest priority after reviving growth and jobs. (Reuters)

Currencies

Dollar Takes a Beating. The euro and yen climbed to seventh-month highs against the dollar on Monday as investors, worried about the slowdown in China, reversed bets on so-called carry trades and bought back the low-interest rate currencies used to fund those assets. The dollar index fell to 92.621, its lowest in seven months as investors reduced expectations of an interest rate increase by the Federal Reserve in September. The euro last stood at $1.1598, up 1.8%. The dollar dropped as low as 116.47 yen, its lowest in seven months, and last changed hands at 118.44, down 2.9%. (Reuters)

Russian Ruble Collapses to 7-Month Low on Weak Oil Prices. The Russian ruble plunged 2.3% on Monday to hit a seven-month low amid a further drop in oil prices, the country's key export. The ruble traded at 70.7 to the dollar in early trading in Moscow, its lowest level since Jan. 30. Oil is the backbone of the Russian economy and the fall of the ruble follows a sharp decline in the price of crude. Economic Development Minister Alexei Ulyukayev said on Monday he did not expect the price of oil to stay below $40 a barrel in the long term. (AP)

Commodities

Oil Tumbles up to 6% to New Lows. Oil prices tumbled as much as 6% to fresh 6.5-year lows as a renewed dive in the Chinese equities market sent global financial markets into a tailspin. Oil's biggest one-day drop in nearly two months suggested that worst-case fears over the economic outlook in China have eclipsed persistent oversupply as the main motivator. Brent crude fell $2.77, or 6.1%, to settle at $42.69 a barrel but fell to a contract low of $42.23 in post-settlement trading, the lowest front-month price since March 2009. U.S. crude fell $2.21 or 5.5% to settle at $38.24, the lowest since February 2009. (Reuters)

Gold Falls as Dollar Pares Losses. Gold turned lower on Monday, as the dollar pared losses while the white precious metals fell on concerns about the Chinese economy. Spot gold was down 0.7% at $1,152.45 an ounce, after rising to $1,167.50 an ounce. U.S. December gold futures settled down 0.5% at $1,153.60 an ounce. Platinum dropped as much as 4.5%, palladium hit a three-year low at $563.72 an ounce and silver fell 4.8% to the lowest since Aug. 6 at $14.57 an ounce. Gold has now rebounded 7% from a 5.5-year low of $1,077 reached in late July. (Reuters)