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...
Key Concerns & Credit Downgrade
- Municipal Market Analytics (MMA) downgraded its state-sector outlook from positive to neutral, citing “rapid and chaotic activity” from the Trump administration.
- Executive orders and policy shifts are threatening federal funding, which accounts for about one-third of state budgets.
- States may have to tap into reserves, cut or pause projects, and reduce aid to local governments, colleges, and hospitals.
Financial Implications
- Uncertainty in federal funding could impact essential services, particularly in education and healthcare.
- State housing finance agencies face higher risks, with possible negative actions on US government bond ratings.
- Potential elimination or reduction of the municipal bond tax-exemption poses a significant threat to state finances.
Rising Costs & Legal Challenges
- States are incurring higher costs due to policy disruptions, including:
- Increased expenses for advisors and consultants to evaluate alternatives.
- Higher litigation costs related to challenging federal government decisions.
- Despite “exceptional” reserve levels, states may face financial strain as they adjust to shifting federal policies.
Summary
- MMA downgraded its state-sector outlook to neutral from positive.
- Trump’s executive orders and funding uncertainties are destabilising state budgets.
- States may cut projects, tap reserves, and reduce local aid.
- Housing finance agencies and municipal bonds face higher risks.
- States are spending more on legal and advisory costs to navigate policy shifts.
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