The Week Ahead: A busy week for data, Parliament in the limelight

This week, the one-day Parliament sitting on Monday will be closely watched by Malaysians. This will be the Perikatan Nasional coalition’s first, albeit brief, Parliament sitting since Tan Sri Muhyiddin Yassin became prime minister and unveiled his new Cabinet in March.

While the agenda only entails a speech by the King, many cannot help but wonder if former premier Tun Dr Mahathir Mohamad’s no-confidence motion against Muhyiddin will see the light of day. It is worth noting that this is the first time such a motion has been proposed against a sitting prime minister in Malaysia’s history.

Following a long break since the Movement Control Order (MCO) was enforced on March 18, the ongoing trial of former prime minister Datuk Seri Najib Razak — who is facing charges for corruption and money laundering involving RM2.3 billion in 1Malaysia Development Bhd funds — will resume on Tuesday after being adjourned for one day to allow him, as a member of Parliament for Pekan, to attend the one-day Parliament sitting.

On the economic front, Malaysia will be releasing the Consumer Price Index for April on Wednesday. The country slipped into a deflation in March, with the CPI decreasing 0.2% year on year to 120.9 points, mainly due to lower transport costs amid the MCO. Bank Negara Malaysia governor Datuk Nor Shamsiah Mohd Yunus recently said that the risk of deflation is limited and for deflation to happen, the country would have to experience a prolonged and broad-based decline in prices, coupled with a collapse in demand.

The labour productivity data and the leading, coincident and lagging indices will be released on Thursday and Friday respectively.

On Friday, the central bank is slated to announce the international reserves data as at May 15. The international reserves rose 0.49% to US$102.5 billion as at April 30, from US$102 billion as at April 15.

Affin Hwang Capital says it sees some downside risks to the country’s level of reserves, which may be due to capital flows as well as possibly a narrower trade surplus. “Malaysia’s trade surplus remained sizeable at RM37 billion in 1Q2020 compared with RM36.9 billion in 1Q2019, but in the coming months, we believe weak global growth and prolonged global supply chain disruptions amid containment measures in major countries may lead to weaker external demand for Malaysia’s exports.”

Elsewhere, Singapore will announce its non-oil exports for April on Monday and the final 1Q2020 gross domestic product (GDP) data may be released on Friday.

Japan will be releasing its 1Q GDP. A Reuters poll shows that Japan’s economy is likely to shrink for a second straight quarter by 4.6%, meeting the technical definition of a recession as the Covid-19 pandemic wiped out consumption and business activity. In 4Q2019, its GDP contracted 7.1%. It will also release its industrial production and exports data on Thursday.

Thailand will also be announcing its 1Q2020 economic growth performance on Monday. It is forecast to post a contraction of 4% due to the Covid-19 fallout. On Wednesday, the monetary policy committee of the Bank of Thailand will meet to decide whether a further rate cut is warranted after the release of the GDP performance. Its key interest rate now stands at a record low of 0.75% after a 0.25 percentage point (ppt) cut in March.

Bank Indonesia will announce its May policy decision on Tuesday. It maintained its benchmark rate at 4.5% in April. The market will close for Ascension Day on Thursday and then for the Hari Raya Aidilfitri holidays on Friday until May 25.

Likewise, the Philippines will make a monetary policy decision on Thursday. The country’s benchmark interest rate was trimmed by 0.5ppt to 3.25% in March to reduce the impact on the economy from the effects of the coronavirus outbreak. Its economy shrank 0.2% in 1Q, the first contraction in more than two decades.

Over in the developed economies, the preliminary Markit manufacturing and services Purchasing Managers’ Index for the UK will be released on Thursday, followed by that for the eurozone on Friday.

According to UOB Global Economics and Markets Research, US Federal Reserve chairman Jerome Powell and US Treasury Secretary Steven Mnuchin will testify before the Senate Banking Committee for the first quarterly hearing required under the Coronavirus Aid, Relief, and Economic Security Act on Tuesday.

It adds that another key Fed event to watch will be the April 28/29 Federal Open Market Committee minutes on Thursday, while the European Central Bank will release its April ECB account of meeting minutes on Friday. “US corporate earnings calendar is ending soon but we still have several major US retailers reporting.”

On the local corporate front, companies holding annual general meetings this week include Eco World Development Group Bhd and Eco World International Bhd (May 19), Perak Transit Bhd (May 20) and Techfast Holdings Bhd and NetX Holdings Bhd (May 22).

Revenue Group Bhd will hold its extraordinary general meeting on Friday for the proposed special issue of up to 45.02 million new shares to bumiputera investors. On the same day, Malaysia Pacific Corp Bhd will be seeking shareholders’ approval for the proposed disposal of its land in Johor to Amanahraya Development Sdn Bhd for RM115 million as a settlement of debt.