‘ Not enough to ex­cite mar­ket’

> Bud­get not seen as break­ing new ground: Econ­o­mists

The Sun (Malaysia) - - NEWS WITHOUT BORDERS - BY LEE WENG KHUEN

PETALING JAYA: The slew of good­ies an­nounced in Bud­get 2017 may not be enough to ex­cite the mar­ket, ac­cord­ing to econ­o­mists.

“Noth­ing has come in as a sur­prise to us. These are not very im­pact­ful mea­sures,” Hong Leong In­vest­ment Bank Re­search econ­o­mist Sia Ket Ee told theSun.

MIDF Re­search con­curred, say­ing that there are no ma­te­rial sur­prises that may spur sig­nif­i­cant buy­ing in­ter­est in the equity mar­ket.

“There­fore, we do not ex­pect Bud­get 2017 to di­rectly pro­vide an up­ward im­pe­tus to the FBM KLCI in the coming week,” it said in a re­search note.

OCBC Bank econ­o­mist Wel­lian Wi­ranto (pix) said over­all, it is un­likely to be seen as a bud­get that breaks new ground, given that the ma­jor re­forms such as goods and ser­vices tax (GST) and sub­sidy ra­tio­nal­i­sa­tion have been pur­sued.

“It is more likely to be re­garded as a con­tin­u­a­tion of pre­vi­ous years’ moves in fis­cal con­sol­i­da­tion given oil price con­straints, even as the key seg­ments of the pop­u­la­tion would no­tice re­ceiv­ing that much more at­ten­tion,” he said.

While it is a neu­tral bud­get, Sia said it could ben­e­fit sec­tors like au­to­mo­tive and con­struc­tion.

“Auto play­ers, es­pe­cially in the lower end seg­ment like Pro­ton and Pero­dua will ben­e­fit from the tax mea­sure of driv­ers own­ing their own ve­hi­cles.

“Con­struc­tion play­ers will ben­e­fit from the higher devel­op­ment ex­pen­di­ture. One big an­nounce­ment is the RM55 bil­lion East Coast Rail Line. This may ex­cite the mar­ket again,” he said.

How­ever, Telekom Malaysia Bhd is likely to see the neg­a­tive im­pact from the gov­ern­ment’s com­mit­ment to bring down the broad­band fees with higher speed.

For the prop­erty sec­tor, as the fo­cus is on af­ford­able hous­ing, he does not fore­see a ma­jor im­pact on listed prop­erty devel­op­ers.

How­ever, he is pos­i­tive on the gov­ern­ment’s move to give va­cant land to gov­ern­ment-linked com­pa­nies to build af­ford­able homes and it could ben­e­fit com­pa­nies like Sime Darby Bhd and SP Setia Bhd.

On the econ­omy, econ­o­mists are of the view that Malaysia will be able to achieve its fis­cal deficit tar­get of 3% of gross do­mes­tic prod­uct (GDP) in 2017 de­spite mar­ket con­cerns over the short­fall in gov­ern­ment rev­enue.

“It is a re­al­is­tic num­ber, pro­vided that oil prices av­er­age at US$45 per bar­rel and global growth should be higher in 2017. If all these come through, I don’t see any dif­fi­culty for the gov­ern­ment to achieve the fis­cal tar­get,” Sia said.

Econ­o­mists an­tic­i­pate GDP will be on the lower end of the pro­jec­tion of 4% to 5% in 2017 due to un­cer­tainty in the ex­ter­nal en­vi­ron­ment.

With pri­vate con­sump­tion re­cov­er­ing from the ad­just­ment of GST, cou­pled with ro­bust pri­vate in­vest­ment driven by on­go­ing projects, Sia be­lieves it will en­sure the sus­tain­abil­ity of do­mes­tic de­mand.

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