KUALA LUMPUR, Nov 29 — In October, investors’ risk-appetite in global financial markets improved following signs of optimism in global trade negotiations between the US and China, as well as the Brexit deal, said Bank Negara Malaysia (BNM).
As a result, the ringgit appreciated by 0.2 per cent against the US dollar in October, in line with all regional currencies, the central bank said in its Monthly Highlights – October 2019 statement, today.
“The FBM KLCI also recovered and recorded a 0.9 per cent increase for the month amid strong domestic buying.
“The improved sentiments also led to a rebalancing of poRtfolio from lower-yielding financial assets, such as sovereign bonds, towards riskier asset classes,” BNM said.
As such, it said, the increase in 10-year Malaysian Government Securities yield was in line with trends seen in most regional bond markets.
BNM said headline inflation was stable at 1.1 per cent in October.
“Across categories, the decline in food and non-alcoholic beverages inflation (October: 1.8 per cent; September: 2.2 per cent) was offset by the increase in communication inflation (October: 1.5 per cent; September: -0.1 per cent),” the central bank said adding that core inflation was steady at 1.4 per cent.”
Exports declined in September by 6.8 per cent (August: -0.8 per cent) due to declines in both manufactured and commodities exports.
“Going forward, exports will continue to be affected by slower global demand. Nonetheless, this will be partly mitigated by Malaysia’s well-diversified export base,” BNM said.
On the other hand, there was continued expansion in net financing at a pace of 4.9 per cent in October (September: 5.2 per cent), amid lower growth in outstanding corporate bonds (October: 8.1 per cent, September: 9.0 per cent).
Outstanding loans grew by 3.7 per cent (September: 3.8 per cent), mainly due to lower growth in business loans.
Total loans disbursed by the banking system remained higher than the historical monthly average (October: RM99.7 billion, September: RM99.5 billion).
Meanwhile, BNM said banks maintained sufficient liquidity to support intermediation and meet exigent needs.
“Banking system liquidity coverage ratio stood high at 150.5 per cent in Oct (Sep-19: 143.6 per cent).
“Funding profile of the banks remained stable. The loan to fund ratio and the loan to fund and equity ratio stood at 82.6 per cent and 72.4 per cent, respectively,” it said.