The Monetary Policy Committee (MPC) of Bank Negara Malaysia (BNM) decided to maintain the overnight policy rate (OPR) at 3.00% for the third time in 2023, a move that has been seen as supportive to the nation's economy. This decision aligns with the country's inflation and growth projections, and is expected to stimulate economic improvement in Q3.
Following this decision by Bank Negara, Bursa Malaysia closed on a higher note. The FBM KLCI rose by 4.44 points to 1,439.77, showing an overall positive market trend with 575 stocks rising and 300 falling. Market liquidity also improved, with a turnover of 3.38 billion valued at RM1.93 billion.
Notable gainers included Malaysian Pacific Industries, Hextar Technologies, F&N, and SMTrack while PPB, BLD Plantation, Transocean (NYSE:RIG), and Lysaght Galvanized experienced declines. Major banks Maybank and CIMB remained unchanged, whereas AmBank saw slight gains and Hong Leong Bank fell marginally. Public Bank and RHB Bank also witnessed minor increases in their shares.
In the broader Asian market context, Japan's Nikkei 225 and South Korea's Kospi ended higher while China's Shanghai Composite Index fell. Hong Kong's Hang Seng Index also closed positively.
Growth in domestic expenditure is expected to drive economic improvement in 2024, bolstered by job and wage increases, recovery in electrical and electronics exports, and increased tourist arrivals. Investment activities are projected to be sustained by multi-year infrastructure projects and initiatives under national masterplans, including those outlined in Budget 2024.
Q3 inflation has been tempered due to reduced cost pressures, with future inflation expected to remain modest but subject to changes following the review of price controls and subsidies in 2024. Despite the strong US dollar affecting the ringgit, BNM maintains that it won't hinder Malaysia's growth trajectory.
The OPR began 2023 at 2.75% after a series of hikes from a historical low of 1.75% in 2020, with the only increase this year occurring in May.
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