KUALA LUMPUR, Dec 4 (Bernama) -- Bursa Malaysia rallied to close broadly higher on Wednesday amid strong buying interests mainly in utility and technology stocks, with the benchmark index gaining 0.44 per cent. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 7.13 points to 1,614.09 from Tuesday’s close of 1,606.96. The index opened marginally higher at 1,606.97 and moved between 1,606.53 and 1,616.03 throughout the day. Advancers thumped decliners 727 to 381 on the broader market, with 522 counters unchanged, 781 untraded and 10 suspended. Turnover advanced to 3.60 billion units valued at RM3.30 billion versus 3.32 billion units valued at RM3.30 billion on Tuesday.
The world’s debt surged by over $12 trillion in the first three quarters of 2024, reaching a record $323 trillion, according to a report by the Institute of International Finance (IIF). The rise reflects increased borrowing fueled by falling borrowing costs and renewed investor risk appetite.
Key Insights
Debt Drivers and Projections
- Sovereign debt is expected to grow by one-third by 2028, reaching nearly $130 trillion, driven by large government budget deficits.
- Emerging markets debt is nearing $105 trillion, or 245% of GDP, signaling elevated repayment risks.
Debt-to-GDP Trends
- Global debt-to-GDP ratio stands at 326%, down from its pandemic peak but still historically high.
- Developed markets face the fastest rising debt service costs, exacerbating fiscal pressures.
Environmental Costs
- Meeting global emission reduction targets could add an extra $38 trillion to global debt by 2028.
Risks and Challenges
Mini Boom-Bust Cycles:
- Rising trade tensions and supply-chain disruptions could lead to economic instability, with inflationary pressures resurfacing.
- This may trigger debt market volatility, complicating debt management for sovereigns and corporates.
Debt Service Costs:
- Higher interest costs could strain public finances, particularly in emerging markets with significant amortizations due in 2025 and 2026.
- Sovereigns may face liquidity crises due to sudden shifts in investor sentiment.
Trump’s Influence
- Anticipated trade tariffs under Donald Trump’s administration have already prompted some countries and corporations to issue debt ahead of his inauguration in January.
- His policies are expected to create market volatility, adding further uncertainty to debt markets.
Historical Context
- The third-quarter debt increase was the third-largest quarterly rise on record, surpassed only by borrowing surges during the Covid-19 pandemic in 2020.
Outlook
The IIF warns that the combination of rising global debt, tightening public finances, and geopolitical uncertainties could create greater fiscal strain worldwide, highlighting the need for prudent debt management and stable fiscal policies to mitigate risks.
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