PETALING JAYA: The Malaysian financial market remains resilient and continues to function effectively despite a difficult global economic environment due to the Covid-19 pandemic, the Financial Markets Association of Malaysia said.
The association said that in the second quarter, Malaysia’s growth slowed to -17.1% year-over-year (year-over-year), in line with other regional peers at following measures introduced to contain the spread of the pandemic.
Similar growth contractions were seen in Asian economies including Singapore, the Philippines and Indonesia, which experienced negative second quarter growth of -13.2%, -16.5% and -5.3% year-on-year respectively, he added.
The association said that despite the impression of negative growth recorded in the second quarter of this year, domestic growth is expected to improve in the second half of 2020 with the gradual reopening of economic activities.
The recent rebound in exports seen in June to 8.8% yoy from a contraction of -25.5% in May can be attributed to a further easing of movement controls, which should provide new positive catalysts to support the recovery of the market. growth in the last six months of 2020..
“We observed limited economic activity for the period between April and June due to strict enforcement.
“However, at the end of June we saw a resumption of main economic activities, mainly in the manufacturing, agriculture and construction sectors, as most sectors were reopened and that movement control orders have been relaxed.
“It is likely that in the future there is a very strong possibility of a strong economic recovery,” the association said in a statement yesterday.
He noted that Malaysia had directly injected nearly RM 45 billion in budget support, which is about 3% of its gross domestic product and this is part of a planned total injection of RM 295 billion into the economy.
Trading activity in the ringgit bond market has been healthy, recording a robust daily trading volume of RM 5 billion for ringgit government bonds and sukuk since the start of the year, higher than the RM 4.2 billion daily average traded volume observed over the same period in 2019..
Meanwhile, the average monthly volume of government bonds and sukuk traded in 2020 remained robust with transactions of RM 102 billion, higher than the monthly average of RM 85 billion recorded in 2019.
The association said the robust trading volumes reflected Bank Negara’s efforts to improve liquidity, including increasing the availability of non-outstanding bonds to borrow via repurchase agreements for market making activities.
The 2020 auction schedule continues to feature more reopening bids to increase the depth and liquidity of existing benchmarks, with the size of the exceptional 10-year benchmark currently reaching over RM20 billion.
“Although the combined issuance of new primary corporate bonds in the first half of 2020 was below RM 38.8 billion compared to RM 74.9 billion raised in the first half of 2019, we expect momentum to pick up in the second. semester of 2020.
“This is because companies are forced to lock in on a lower cost of borrowing with emissions skewed towards longer term spaces,” he said.
He noted that issuance momentum has increased dramatically in recent weeks following the 25 basis point cut in the overnight policy rate (OPR) by Bank Negara in July, bringing the current level of the OPR at a record level of 1.75%, ”declared the association.
On another note, foreign ownership of ringgit-denominated bonds has gained traction in recent months, with positive bond inflows for the months of May, June and July of RM1.5 billion, 11.6 billion. of RM and 7.1 billion RM respectively.
Total foreign ownership of ringgit government bonds stood at 22.7% in July, up from 22.2% in June. – Bernama
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