Malaysia

Ringgit to Recover Once 1MDB Issues Resolved. The ringgit will start to stabilise and recover when a combination of external and domestic issues are resolved. Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz said a US rate hike, recovery in commodity prices and stronger Chinese growth together with the resolution of domestic political issues will help to stabilise the ringgit. "We don't need any scandals, when we resolve all the scandals revolving around 1MDB, then we'll see the ringgit start to recover and stabilise," she said on Monday. (The Star)

External Pressures Could Affect Malaysia's Ratings. External pressures and not public debt are one of the issues that may cause rating agencies to rethink their ratings on Malaysia at present, said Fitch Ratings managing director and global head of sovereign and supranational group, James McCormack. McCormack said there is no "magic number" for the reserves level to be at and added that rating agencies would look more at whether the trend continues to deteriorate or not. (The Sun Daily)

Malaysia Faces Structural Issues. Malaysia is facing several long-term structural issues in its economy that needs to quickly adjust in accordance with the new realities of the global economy. This was the conclusion of a panel discussion by representatives of three leading rating agencies – Standard & Poor’s Ratings Services (S&P), Moody’s Investors Service and Fitch Ratings – during Malaysia’s Economic Update 2015 forum. S&P’s Phua Yee Farn said that one of the issues that needed to be quickly addressed was the state of education in the country. Meanwhile, Fitch Ratings’ James McCormack said that being stuck in the “middle-income trap” was something that should be of concern to Malaysia. (The Star)

Foreign Investors Turn Net Buyers on Bursa Malaysia. The last three trading days last week could be a turning point for Bursa Malaysia as foreign investors turned net buyers of equities listed on the local exchange. Some RM685 million was mopped up on a net basis, still a small amount compared with the RM17.1 billion yanked out from the market in the year until September 2015. Zulkifli said investors were cautious last week in advance of the US Federal Reserve meeting. (The Sun Daily)

Asia

India Needs Lower Interest Rates - Finance Chief Jaitley. India needs lower interest rates, and the central bank must decide how much to cut, Finance Minister Arun Jaitley said. He added that indian inflation is under control, contrasting recent numbers with double-digit figures just a few years ago. Central bank Governor Raghuram Rajan Central bank Governor Raghuram Rajan last month resisted pressure from the Finance Ministry to ease policy. He left borrowing costs unchanged at 7.25% at an Aug. 4 meeting to meet his inflation target of 6% by January. The next meeting is on Sept. 29. (Bloomberg)

Taiwan Export Orders Fall for 5th Month on Global Slowdown. Taiwan's export orders contracted for a fifth month in August as demand from China and key markets continued to deteriorate. Annual export orders in August declined 8.3%, Taiwan's Ministry of Economic Affairs said, worse than the 4.6% slide forecast in a poll. The ministry said that the 8.3% contraction in overall export orders was the worst since August 2009 when ruling out distortions from the Lunar New Year. The drag from exports on economic growth has raised the possibility the central bank may cut its policy interest rate on Thursday. (Reuters)

Chinese Firms Show Resilience in Q3. Profit margins at Chinese firms improved in the third quarter while loan demand remained weak, a private survey showed , with the overall results suggesting the stock market crash would have minimal impact on the broader economy. The quarterly survey of over 2,100 businesses by China Beige Book International (CBB) showed continued robust growth in the service sector but persistent weakness in manufacturing. Revenue rose at 59% of service sector firms surveyed in the third quarter, up 6% on the quarter. Across all firms, profit margins were up at 47% of the companies surveyed, 2% higher than the second quarter. (Reuters)

South Korea's Parliamentary Budget Office Cuts 2016 Growth Outlook. South Korea's National Assembly Budget Office (NABO) cut its 2016 economic growth forecast to 3.0% from 3.3%, noting it might fare better than this year, but could be curbed by offshore developments. The parliamentary budget office said Monday's estimate was revised down from the forecast of 3.3% for next year it made in May. It also revised this year's growth forecast to 2.6% from 3.0%. (Reuters)

Infrastructure Spending in Indonesia Picking Up but Could Miss Target. Infrastructure spending in Indonesia is beginning to pick up after lengthy delays, a welcome relief for President Joko Widodo's plan to jump start Indonesia’s economy by building new roads, ports and bridges. In the past few weeks, the government has sped up capital spending, leading to a surge in cement sales and imported capital goods and raw materials. The government had spent only 14% of its 276 trillion rupiah ($542.80 million) capital budget for the full-year by the end of July. That has risen to 25% in August. (Reuters)

Thailand Says Boosting Rural Economy Will Do More Than Rate Cut to Spur Growth. Boosting rural incomes is an urgent priority for the new economic team of Thailand's military government and will do more to revive a flagging economy than a rate cut, the deputy prime minister said on Monday. Farmers are feeling the pinch a year and a half after the military government took power and ended generous agricultural subsidy schemes. Cutting interest rates would do little to stimulate the overall economy, he said. Somkid has announced two programmes to channel funds to rural communities, through soft loans provided by village funds and investment in small projects by local authorities. (Reuters)

USA

US Home Sales Slide in August After 3 Months of Solid Gains. U.S. home sales slid in August by the most since January as tight supplies and rising prices discouraged potential buyers. The National Association of Realtors said Monday that sales of existing homes fell 4.8% from the previous month to a seasonally adjusted annual rate of 5.31 million, the lowest level since April. That's down from 5.58 million in July, which was the highest in more than eight years. Sales will likely remain flat for much of the rest of the year, according to the Realtors' group and some private economists. (AP)

Europe

ECB Revises down Lending Data to Reflect Offloaded Loans. The European Central Bank (ECB) revised down the pace of Eurozone lending growth for the past year on Monday, after changing the way the data is calculated to better reflect loans that banks have offloaded. The data now takes into account stocks and repayments of loans that are no longer recorded on banks' balance sheets. For the twelves months to July 2015, the growth rate of loans to the Euro area private sector, households and non-financial corporations were revised downwards, on average, by 54 basis points, 77 basis points and 41 basis points, respectively, the ECB said. (Reuters)

Currencies

Dollar Strengthens on Diverging Fed, ECB Monetary Policy. The U.S. dollar strengthened against a basket of major currencies on Monday on the view that the Federal Reserve was still on track to hike U.S. interest rates this year while the European Central Bank may ease monetary policy further. The euro was last down 0.95% against the dollar at $1.11925. The greenback was up 0.49% against the Japanese yen at 120.560 yen. The dollar was up 0.26% against the Swiss franc at 0.97130 franc. The dollar index, which measures the greenback against a basket of six major currencies, was last up 1.08% at 95.882. (Reuters)

Commodities

U.S. Crude up 4% on Lower Stockpile Bets; Brent Spread Narrows. Oil prices rallied on Monday, with U.S crude surging more than 4% on signs of declining stockpiles, less drilling that could reduce future output and a jump in gasoline futures that boosted the overall petroleum complex. Brent gained 3%. Its premium over U.S. crude narrowed to below the key psychological mark of $2 a barrel as U.S. crude's fundamentals improved relative to Brent. U.S. crude settled up $2, or 4.5%, at $46.68 a barrel. Brent finished up $1.45, or 3.1%, at $48.92. (Reuters)

Gold Retreats From 3-Week High as Dollar, Equities Rise. Gold retreated from the previous session's near three-week high on Monday as strength in stocks and the dollar dampened a rally fueled by the Federal Reserve's decision last week to keep U.S. interest rates on hold. Spot gold was down 0.5% at $1,132.80 an ounce at 1906 GMT, while U.S. gold futures for December delivery settled down 0.4% at $1,132.80 per ounce. Silver rose 0.1% at $15.17 an ounce, while platinum was down 1.3% at $966.25 an ounce and palladium was up 1.3% at $610.75 an ounce. (Reuters)