KUALA LUMPUR, Dec 5 (Bernama) -- Bursa Malaysia closed lower on Friday amid mixed regional market performance as investors turned cautious over a possible rate hike by the Bank of Japan (BOJ) and upcoming US economic data that may influence the Federal Reserve’s (Fed) interest rate decision next week. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) pared most earlier losses to settle 4.55 points easier, or 0.28 per cent, to 1,616.52 from Thursday’s close of 1,621.07. The benchmark index, which opened 0.37 of-a-point lower at 1,620.70, moved between 1,609.67 and 1,621.25 throughout the day. The broader market was negative, with decliners outpacing advancers 604 to 439. A total of 550 counters were unchanged, 1,151 untraded, and 18 suspended. Turnover declined to 3.17 billion units worth RM2.24 billion from 4.48 billion units worth RM2.75 billion yesterday. Rakuten Trade Sdn Bhd vice-presiden...
Malaysia’s GEAR-uP Programme Boosts Capital Spending Without Straining Government Finances, Says Moody’s
Malaysia's RM120 billion GEAR-uP initiative, led by government-linked investment companies (GLICs), is set to enhance corporate capital spending and infrastructure development, according to Moody's Ratings. The programme, which accounts for approximately 6.5% of Malaysia's GDP in 2023, aims to supplement public spending without adding financial pressure to the government's ongoing fiscal consolidation efforts.
Key Takeaways:
Strategic Investment Without Fiscal Strain: The GEAR-uP initiative, involving six major GLICs—Khazanah Nasional Bhd, Employees Provident Fund (EPF), Retirement Fund (Incorporated), Permodalan Nasional Bhd, Lembaga Tabung Haji, and the Armed Forces Fund Board—will see RM120 billion invested over the next five years in high-growth, high-value sectors such as energy transition and advanced manufacturing. Moody's highlighted that these investments represent fresh capital that was not previously allocated to government budgetary spending, thus avoiding additional fiscal strain.
Positive Impact on Corporate and Infrastructure Sectors: Moody's noted that direct investments from the GLICs will be credit positive for corporate and infrastructure companies, as these funds will support capital spending and reduce the need for debt to finance growth. The initiative is expected to drive socioeconomic development and advance Malaysia's policy objectives, benefiting various sectors of the economy.
Limited Impact on Government Financing and Banking System: Moody's emphasized that the GEAR-uP programme is unlikely to significantly impact broader financing conditions for the government, even though some of the funds might have otherwise been invested in government bonds. Additionally, the total pledged investment represents only about 3% of the combined outstanding bank loans and domestic bonds, suggesting that Malaysia's banking system has sufficient liquidity to support the initiative if necessary. The credit impact on GLICs, such as Khazanah, will depend on the amount and funding method of the investments, with a potential increase in geographic concentration risk for Khazanah's portfolio.
In conclusion, Malaysia's GEAR-uP programme is poised to bolster capital spending and infrastructure development, providing a significant boost to the economy without adding fiscal strain. This strategic deployment of GLIC resources aligns with the government's efforts to stimulate growth while maintaining fiscal responsibility.
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