S&P KEEPS MALAYSIA’S ‘A-’ RATING
Investment sentiment to rebound following slowdown period after GE14, says agency
STANDARD & Poor’s Global Ratings has maintained the “A-” rating for Malaysia amid the strong economic outlook and government’s focus to strengthen fiscal position.
Its credit analyst Tan Kim Eng said there were significant changes in the country’s political landscape following the unexpected outcome of the 14th General Election (GE14).
“Since GE14, we believe there are concerns over political stability and there are some issues that have taken place as a result of the change in leadership, which is also a concern for investors.
“However, we see that the current policy environment is not very different from that under the previous government and it is seen as not interfering with the market and investor sentiments,” he said at the Asean Credit Spotlight briefing, here, yesterday.
Kim said investment sentiment was expected to rebound after a slowdown period, in which investors took a wait-and-see approach towards the political situation.
“We believe the government’s focus now is to maintain prudent spending, even though we expect there will be a lot of spending to be made following the election promises made previously.
“But I do not believe that the fiscal position will decline,” he said.
According to Tan, the previous government did not play a leader role.
“Hence, with the change, people do not know what the government is going to do at this point, on whether it will continue with the previous government’s policies that investors were used to over the years or pursue new policies,” he said.
Meanwhile, it has revised up its Brent crude oil price forecast for next year to US$70 (RM289.90) a barrel from US$65 a barrel initially.
S&P Asia Pacific corporate ratings director Bertrand Jabouley said while supply concerns had been pushing Brent crude to above US$80 a barrel now, prices were unlikely to hold firm at that level.
“At current prices, oil producers will start to pump up their production capacity and flood the market with the commodity. We will revise and review (our forecast from time to time),” he said.
“Our expectations are US$65 per barrel in early 2019. For 2020, we expect Brent to reach US$60 a barrel,” he said.
Brent crude oil futures hovered around US$83 a barrel yesterday.