Malaysia Economic Outlook 2009:
Domestic demand critical to growth
January 2, 2009
Malaysia central bank sees room to cut rates
December 23, 2008
Malaysia: Job losses seen rising in next 3 months
December 7, 2008
Malaysia: Fiscal boost to fend off recession
November 22, 2008
Cheaper oil eases
November 18, 2008
Malaysia slashes fuel
costs by 7%
November 16, 2008
Malaysia faces no
recession, currency to rise – central bank
November 15, 2008
Coping with Global
Malaysia to scrap import duties
November 13, 2008
Malaysia’s $870m highway
plan shelved over funding woes
November 4, 2008
Malaysia to announce new
measures to boost economy
Malaysia’s shock rate cut seen hitting banks
Malaysian shares are poised to drop sharply on Thursday after a larger-than-expected rate cut from the central bank showed the Southeast Asian nation was increasingly vulnerable to the global recession, reported Reuters.
Dealers said banking stocks, led by top lenders Maybank and CIMB, would suffer from a sell-off as lower rates will bite into margins although Public Bank with its strong dividend policy might be spared for the time being.
"Many fund mangers held emergency meetings after yesterday's big rate cut and the keyword is sell," said a dealer with an investment bank.
"All this while, Malaysian shares were trading sideways with the perception that the country was relatively insulated from the global slowdown but now the rate cut changes that, foreign shareholdings in the bourse are going to fall."
Malaysia's central bank on Wednesday slashed its key policy rate by a surprise 75 basis points to its lowest level in over 10 years, and is expected to cut rates further in a bid to stave off recession.
Malaysia is playing catch-up with central banks across Asia and globally. Earlier this month South Korea's central bank cut interest rates by 50 basis points to 2.50 percent and Thailand last week cut rates by 75 basis points to 2.0 percent, a four year low.
Bank Negara cut rates at its last meeting in November by a modest 25 basis points and was earlier criticised by many economists for not hiking during an oil-induced price spike that pushed consumer price inflation to near 27-year highs of 8.5 percent last summer.
Malaysia's growth is expected to be pressured by the weakness in exports, which fell in both October and November and are seen falling further. Exports form more than 100 percent of Malaysia's gross domestic product.
The bulk of exports are electronics, and demand has waned due to the economic crisis. Palm and crude oil are the other key exports which have been hit by falling commodities prices.
Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below