By P PREM KUMAR, ALIFAH ZAINUDDIN & DASHVEENJIT KAUR / Pic By MUHD AMIN NAHARUL
INVESTORS should not perceive their interests and ventures in Malaysia to be at risk by just hinging their evaluation on face value of the current environment, as the country possesses unique features in terms of its economy and financial system.
Bank Negara Malaysia (BNM) governor Datuk Nor Shamsiah Mohd Yunus (picture) said investors should look beyond the headline numbers when evaluating Malaysia’s economic viability.
“Malaysia’s policy stability and deep financial markets allow the country to withstand external shocks and ensure growth.
“We have the policy tools to ensure that liquidity in the financial system is adequate to support intermediation activities,” Nor Shamsiah said.
Addressing a 2,000-strong crowd at the government-initiated Malaysia: A New Dawn Investors’ Conference in Kuala Lumpur yesterday, she highlighted that non-resident holdings in the domestic financial market have also moderated.
She said the majority of foreign holders of government bonds are long-term stable investors, stable foreign holder profile and Malaysia’s string financial and banking system had reduced the risks of non-resident outflows.
“For the asset management of non-resident investors, holdings in government bonds as at June 2018 was at 40.8%, while the central bank was at 33.5%.
“The external reserves held by banks and corporations can be drawn upon to meet external debt obligations at 17% banks, 25% for international reserves and 58% corporations,” she said.
In terms of potential nonresident outflows, Nor Shamsiah said Malaysia’s deep financial market participation among domestic institutional investors, as well as a highly capitalised and liquid banking system would mitigate it.
She said the country’s international reserves have remained adequate and are not the only means to meet external obligations.
“International reserves have thus far provided sufficient buffers against external shocks and capital outflows,” she added.
She said the ongoing trade tension, that is expected to disrupt global trade growth and might impact Malaysia’s economy, would be mitigated by the healthy level of financial intermediation.
“Malaysia’s policy stability and deep financial markets allowed the country to withstand external shocks and ensure growth,” she said, adding that the economic outlook would remain positive.
The governor said the ringgit has been relatively resilient compared to other emerging market and regional currencies.
On the overall domestic growth, she said BNM anticipates a steady climb throughout the rest of 2018 and into 2019, supported by the robust private sector and moderate inflation environment.
She added that private investment is also projected to continue to expand moderately supported by elevated capacity utilisation with continued support from ongoing large investment projects.