Posted on 23 May 2013
Malaysia’s gross domestic product (GDP) is unlikely to surpass 5% in 2013, given the weaker 4.1% growth achieved in the first quarter of the year, according to UBS Investment Bank.
“GDP grew 4.1% in the first quarter. You need a pretty strong bounce-back to reach 5% in 2013,” said UBS senior Asean economist Edward Teather via a tele-conference call yesterday.
“We do expect trade growth to improve somewhat, but not tremendously. But we don’t see GDP reaching 5% this year due to the weakness in the first quarter,” he said.
GDP growth in the first quarter of the year was affected by weaker exports due to poorer external demand. Growth was, however, supported by steady private consumption and investments.
Bank Negara has maintained a GDP growth of 5% to 6% for the year.
Teather said he expected GDP to grow about 4.5% in the second quarter of this year, buoyed mainly by post-general election (GE) spending.
He added that inflation in 2013 would likely hit 2.7%, depending on whether there would be fuel adjustments made by the Government.
Inflation ticked up to 1.5% in the first quarter of this year compared with 1.3% in the previous quarter due to price increases in the food and non-alcoholic beverages category of the consumer price index.
Separately, UOB KayHian in its report yesterday said that European institutional funds were still largely upbeat on Malaysia.
“We recently presented our post-GE views in Europe. Overall, institutional investors are keen on Malaysian equities following the GE outcome.”
The research house noted that foreign investors were aggressive buyers of Malaysian equities in the week following the GE, chalking up a net buy position of RM3.1bil from May 6 to May 10.
“Foreign shareholding of Malaysian equities also inched up to 24.3% as at March 13. However, we noticed that foreign buying momentum eased last week.”
UOB KayHian said European institutional funds were most attracted to the Economic Transformation Programme and were “particularly piqued” by Iskandar Malaysia, and post-GE, the Sarawak Corridor of Renewable Energy and capital management beneficiaries.
“The focus is centred on the construction, oil and gas, property, banking and power sectors. There has also been considerable interest in the small mid-cap beneficiaries within these investment themes.
“Meanwhile, there was only sporadic interest in our ‘buy’ calls in the gaming and telecommunications sectors.”
