LY REPORTth JULY Research Report 16th sep. 2014 7 th july 2014
MARKET UPDATES & STOCK RECOMMENDATION
The International Monetary Fund (IMF) has given the thumbs up to Malaysia's ongoing fiscal reform by broadening the tax base with the implementation the Goods and Services Tax (GST) starting April 1, 2015. Fiscal Affairs Department Adviser, Kiyoshi Nakayama, said this shift of revenue source, from natural resource and corporate income to also include the GST, was a crucial policy direction to maintain Malaysia's long-term fiscal sustainability. In his presentation at the International Seminar on GST 2014, he said, the growth-friendly tax was less distortive for economic growth compared with income tax. He also commended Malaysia's preparation towards implementing GST, saying that the Finance Ministry and the Royal Malaysian Customs Department's communication strategies of engaging the social media were innovative. Bursa Malaysia ended lower Monday with the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) closing 6.4 points or 0.34 per cent easier at 1,849.24, dampened by losses in index-linked heavyweights. Selling spree, as predicted by analysts based on spiking geopolitical risk and China growth worries, extended after Chinese factory and retails sales data released today indicated its economy was slowing British American Tobacco led the benchmark index lower with its RM2.18 loss to RM71.18, Tenaga Nasional dipped eight sen to RM12.40 while KL Kepong declined 42 sen to RM21.50. Malaysian rubber prices closed mixed today as investors took cue from the price movement on the Tokyo Commodity Exchange and Shanghai Futures Exchange, dealers said. The regional rubber markets tumbled following news on the sale of rubber from Thailand's stockpile as well as worries over China's economy. However, the weakening ringgit against the US dollar helped spur some demand from foreign buyers and this managed to limit losses, a dealer said The Malaysian Rubber Board's official physical price for tyregrade SMR 20 was unchanged at 479.5 sen a kg at noon while latex-in-bulk slipped 0.5 sen to 389 sen a kg. Malaysia’s ringgit tumbled the most in a year, leading a slide in Asian currencies, as an improving US economy fuels expectations the Federal Reserve will start raising interest rates. The Federal Open Market Committee will start a two-day meeting tomorrow, after a September 12 report showed the nation’s August retail sales increased at the fastest pace in four months. Investors may be underestimating how quickly the monetary authority can increase borrowing costs, according to a September 8 note by the San Francisco Fed. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major currencies, climbed to a 14-month high today after the yield on 10-year US Treasuries jumped last week by the most since August 2013.
YOUR MINTVISORY
Page 3