Malaysia

RM61.7 Billion Investments Approved in Services Sector in H1 2015. Investments amounting to RM61.7 billion in 2,071 projects were approved in the services sector in the first half of the year. Malaysian Investment Development Authority (MIDA) Deputy Chief Executive Officer Datuk N. Rajendren said domestic investment accounted for RM54.3 billion while foreign investments made up the remainder. "These approved projects are expected to create more than 60,000 employment opportunities and add a new dimension to the economy," he said on Tuesday. (Bernama)

Malaysia Economy to Record Strong Growth in Q3 - Abdul Wahid. Malaysia's economy in the third quarter is expected to be strong based on the growth of the Industrial Production Index (IPP) and the trade data for August, said Minister in the Prime Minister's Department, Datuk Seri Abdul Wahid Omar. Abdul Wahid said the trade surplus would benefit from the currency movements where the weak ringgit has helped to make exports become more competitive and reduce imports. He added that the country's current economic growth was driven by private investment and consumption. (Bernama)

TPP Gives Access to New Markets – Mustapa. The Trans-Pacific Partnership (TPP) agreement will provide Malaysia access to four trading partners with which the country has no free trade agreement (FTA) namely the United States (US), Canada, Mexico and Peru, says Datuk Seri Mustapa Mohamed. The International Trade and Industry Minister said most of the import duties will be eliminated once the TPPA comes into force. "We hope the TPP will spur investments in states which rely heavily on foreign investments such as Penang, Johor and Selangor," he added. (Bernama)

MITI to Ensure Immediate Implementation of Budget 2016 Programmes. The Ministry of International Trade and Industry (MITI) and its agencies must ensure that the implementation of development programmes and new incentives to be announced in Budget 2016 are undertaken immediately. Its Minister Datuk Seri Mustapa Mohamed said the government should always be sensitive and must play a key role as a business partner to the business community to ensure trade sector contribution could further stimulate the nation's economy. Mustapa said MITI and its agencies must formulate plans for a more effective utilisation of resources particularly amid the country's challenging financial position. (Bernama)

Incentives and Bonus Payments to 1MDB Executives Is Confidential - Najib. The incentives and bonuses paid to 1MDB top executives is private and confidential. Prime Minister Datuk Seri Najib Tun Razak said 1MDB was a company governed by the Companies Act 1965, whereby, any agreement entered into by the company is private and confidential. Dr Ko Chung Sen had forwarded a question on the payment of annual incentives and bonuses to the chairman, CEO and 1MDB board members since its establishment in 2009. In the written reply, Najib, who is also the Finance Minister said the detailed annual income, expenditure and profit and loss statement as well as 1MDB's cash flow was stated in the company's audited Financial Statements since 2009. (Bernama)

Asia-Pacific

Reserve Bank of Australia Isn't Eager to Cut Rates. Australia's central bank doesn't look eager to cut interest rates, saying in minutes of its October 6 policy meeting that risks to the economy from an overheated property market remain significant, while a lower Australian dollar is helping to rebalance the economy. The Reserve Bank of Australia left interest rates unchanged at a record low 2.0% at the meeting. Rates haven't changed since May. A slowdown in economic growth in the second quarter, which prompted talk of growing recession risks in Australia, appeared due to temporary reasons, the RBA said. (Dow Jones)

Sri Lanka Holds Rates as Mahendran Eyes Next Fiscal Budget. Sri Lanka’s central bank kept interest rates unchanged for a sixth straight month and Governor Arjuna Mahendran said the government will focus on boosting revenue in its budget due November. The Central Bank of Sri Lanka left its standing lending facility rate at 7.5% and standing deposit facility rate at 6%, Mahendran said in an interview on Tuesday. All four economists in a survey had predicted no change. “Inflation is expected to remain comfortably in low single digit levels by end 2015 despite the impact of the depreciation of the Sri Lankan rupee against major currencies,” the central bank said in its statement. (Bloomberg)

China's Financial Sector Grows Stronger. China's financial sector output jumped 16.1% YoY to 1.41 trillion yuan in the third quarter, well above the national GDP growth of 6.9%, the state-run media reported. The overall tertiary industry, including financial and other service sectors, expanded 8.6% in the third quarter from a year earlier, Xinhua News Agency quoted data from the National Bureau of Statistics. China has put more emphasis on promoting growth in services and domestic consumption in the process of deepening structural reforms, it added. In the first three quarters, the value added of the tertiary industry accounted for 51.4% of GDP, up 2.3 percentage points, from the same period last year. (Bernama)

USA

Fed's Powell Says Investors See Less Bond Market Liquidity. The Federal Reserve is aware that many bond market investors are concerned about a perceived drop in bond market liquidity, a Fed policymaker said on Tuesday, adding that some potential reforms could improve the situation. Fed governor Jerome Powell said the actual depth of any reduction in liquidity remains unclear, but it is important for regulators like the Fed to be sure that bond markets function well for the sake of a world financial system that relies on U.S. Treasury securities as an important safe investment. (Reuters)

Demand for Rental Apartments Boosts U.S. Housing Starts. U.S. housing starts rose solidly in September on soaring demand for rental apartments, a sign that the housing market continues to steadily improve even as economic growth has slowed. The Commerce Department said on Tuesday groundbreaking increased 6.5% to a seasonally adjusted annual pace of 1.21 million units. It was the sixth straight month that starts were above 1 million units, pointing to a sustainable housing recovery. Economists polled had forecast groundbreaking on new homes rising to a 1.15 million-unit pace last month. (Reuters)

Europe

ECB Says Credit Standards Improve as QE Program Supports Lending. The European Central Bank said lending conditions largely continued to improve in the third quarter, spurred by its asset-purchase program and tighter competition among banks. Credit standards on loans to companies eased for the sixth consecutive quarter, the ECB’s Bank Lending Survey showed on Tuesday. Terms for mortgages tightened, with banks citing national regulation as the primary cause. A small majority of lenders reported an increase in profitability over the past six months as a result of the central bank’s quantitative-easing program, though a deterioration is seen over the next two quarters. (Bloomberg)

European Bonds Decline After ECB Survey Signals QE Effectiveness. European government bonds fell after the European Central Bank said its quantitative-easing program was helping improve lending conditions among banks in the region, damping speculation the institution will signal more stimulus at a meeting this week. Italian securities led declines before the ECB announces its latest policy decision on October 22. The yield on Italian 10-year bonds rose three basis points, or 0.03 percentage point, to 1.63% at 11:03 a.m. London time. The yield on Germany’s 10-year bund, the euro region’s benchmark government security, climbed three basis points to 0.59%. (Bloomberg)

Bank of England's McCafferty Sees Risks from Delaying Rate Rise. Bank of England policy maker Ian McCafferty said his colleagues on the Monetary Policy Committee must be mindful that delaying the first interest-rate increase may jeopardize their ambition to keep the path gradual. “We need to avoid getting ‘behind the curve’,” and must ensure borrowing costs can rise without disruption to companies and households, he said on Tuesday. “That provides an additional justification not to leave the start date for lift-off too late.” McCafferty has voted to increase the key rate from a record low for the past three months. His vote for an increase reflects the balance of risks around inflation by 2017, he said. (Bloomberg)

Currencies

Ringgit Extends Downtrend to 2-Week Low. The ringgit extended its slide, falling to its lowest in almost two weeks on Tuesday, as weak commodity prices amid slower growth in China dampened investor sentiment. The ringgit lost 1.4% against the US dollar to settle at 4.2675, the lowest since October 7. “Commodity currencies such as the ringgit have come under renewed downward pressure, as sentiment is being weighed down by slower growth in China, the world’s biggest consumer of raw materials,” a dealer said. The ringgit also declined against other major currencies yesterday, losing 1.34% against the Singapore dollar to close at 3.0717; 1.53% versus the pound to settle at 6.6049; and 1.65% against the euro to end at 4.8475. (The Star)

Euro Gains Vs Dollar on Euro Zone Data, ECB Comments. The euro rose against the dollar on Tuesday after falling for three straight sessions, bolstered by solid regional economic data and comments from European Central Bank officials suggesting further monetary easing may not be imminent. Separately, current account data from the euro zone showed portfolio inflows continued at a brisk pace, a factor that has been supporting the euro in recent months. In late New York trading, the euro was up 0.1% at $1.1341, rebounding from a 10-day low hit on Monday. That slightly put pressure on the dollar index, which was down 0.1% at 94.880. The U.S. dollar last traded down 0.3% at Canadian dollar 1.2978. (Reuters)

Commodities

Oil Nearly Unchanged on Minor Technical Correction. Oil prices were little changed in quiet technical trade on Tuesday as declining U.S. production and a "rebalancing" momentum in the market offset expectations of Iranian barrels adding to the already persistent supply glut. Brent futures for December delivery fell $0.17 to $48.44 a barrel, a 0.4% loss, by 11:49 a.m. EDT. U.S. crude, due to expire later on Tuesday, was down $0.21, or 0.5%, at $45.68 per barrel. On a weekly basis, U.S. crude oil production has remained about 9.1 million bpd since the start of September, according to U.S. Energy Information Administration data, well below the 9.6 million bpd peak seen in April. (Reuters)

Gold Up after 3-Day Drop; Dollar Slips before ECB Meet. Gold rose on Tuesday for the first time in four sessions as the dollar slipped after solid European lending data boosted the euro ahead of a central bank meeting that could add to the European single currency's appeal. Gold was also supported on Tuesday by expectations that the Federal Reserve will push the first U.S. interest rate rise in nearly a decade back to next year. Spot gold was up 0.5% at $1,176.41 an ounce at 2113 GMT. The front-month contract in U.S. gold futures, December, settled up $4.70 an ounce at $1,177.50. Silver was up 0.4% at $15.89 an ounce. Platinum was up 0.6% at $1,015.24 an ounce and palladium was up 1.3% at $691.50. (Reuters)