KUALA LUMPUR, Jan 7 (Bernama) -- Bursa Malaysia’s benchmark index rebounded from earlier losses to close at its intraday high on Wednesday, gaining 0.27 per cent in late trading as buying interest returned to selected heavyweights. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) advanced 4.48 points to 1,676.83 from Tuesday’s close of 1,672.35. The benchmark index opened 0.88 of-a-point lower at 1,671.47 and subsequently hit a low of 1,665.94 during the mid-morning session before gaining momentum toward closing. On the broader market, losers led gainers by 565 to 512, while some 526 counters were unchanged, 1,046 untraded, and 10 suspended. Turnover improved to 2.73 billion units worth RM2.76 billion versus Tuesday’s 2.66 billion units worth RM2.76 billion. Dealers said that investors were cautious following geopolitical developments in Asia.
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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