KUALA LUMPUR, June 5 (Bernama) -- Bursa Malaysia closed higher, with the benchmark index rising 0.60 per cent as bargain-hunting persisted following the recent sell-off, despite weaker performances across regional markets. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) gained 10.17 points to 1,693.43 from Thursday's close of 1,683.26. The benchmark index opened 3.19 points higher at 1,686.45 and traded between 1,684.36 and 1,698.53 during the trading session. However, broader market sentiment remained negative, with losers outnumbering gainers 666 to 477. A total of 574 counters were unchanged, 958 untraded and 12 suspended. Turnover fell to 3.41 billion units worth RM3.04 billion from 3.47 billion units worth RM3.58 billion on Thursday.
Bank of Japan (BOJ) Governor Kazuo Ueda is set to outline a plan for quantitative tightening (QT) on Wednesday, potentially coupled with an interest rate hike, keeping investors on high alert.
Key Highlights:
Quantitative Tightening Plan:
- The BOJ will present its first plan to reduce bond buying after over a decade of massive monetary easing, aiming to cut monthly bond purchases to ¥5 trillion (RM150.96 billion) from ¥6 trillion starting next month.
Rate Hike Speculations:
- While only 30% of BOJ watchers predict a rate hike as their base case, almost no one rules out the possibility.
- Swaps markets suggest a 50% likelihood of a 15 basis points rate hike by July 31.
Market Reactions:
- The uncertainty has caused significant volatility in the yen and Japanese stocks.
- The yen’s recent gains and suspected currency interventions have reduced pressure on the BOJ to correct its weakness.
BOJ Officials' Views:
- Some officials support a rate hike this month, while others prefer to wait for more data, particularly on consumer spending.
- Governor Ueda's decision will have significant global market implications, with the US Federal Reserve meeting just hours after the BOJ.
Political and Economic Context:
- Calls from political figures like Toshimitsu Motegi and Taro Kono for tighter policy to support the yen and control inflation are increasing.
- Inflation has been at or above the BOJ’s 2% target for 27 months, with lagging wage growth and declining consumer spending.
Potential Implications:
- A rate hike could signal a strong desire to normalize policy without being driven by foreign exchange considerations.
- The BOJ aims to avoid surprising markets with bond-buying cuts, understanding the consensus view and likely adjusting their plans accordingly.
Economic Performance:
- Japan’s economy showed little growth in the three quarters through March, complicating the decision on tightening policies.
- The yen's performance is a crucial factor, with its recent appreciation reducing the need for immediate corrective actions by the BOJ.
The upcoming BOJ meeting is set to be highly impactful, with potential decisions on bond buying reductions and rate hikes influencing both domestic and global markets.
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