KUALA LUMPUR (Sept 24): Malaysia's Budget 2017 and Bank Negara Malaysia's recent interest rate cut are expected to support the economy and catalyse the stock market, according to Pacific Mutual Fund Bhd CEO and executive director Teh Chi-Cheun.

The Edge Malaysia business and investment weekly (Edge Weekly), in its latest September 26 - October 2 issue, quoted him as saying a global low interest rate backdrop also offered ample liquidity, which augured well for equities.

Budget 2017, which will be announced this October 21, is widely seen as an election budget on speculation the nation will have an earlier general election ahead of the August 2018 deadline. 

Teh said Budget 2017 was expected to include measures to support the Malaysian economy, the growth of which, had slowed.

“Broadly speaking, the low interest rate environment and quantitative easing in certain countries has resulted in ample liquidity and this liquidity needs to be deployed. Hence, the stock market will be well sustained.

“There are a few factors that should drive the FBM KLCI’s recovery. First, there has been the OPR (overnight policy rate) cut by 0.25% to 3% by Bank Negara Malaysia in July. Second, there is the minimum wage and civil servants’ pay increase in July as well, which will result in more consumer spending. I believe the upcoming Budget 2017 will have measures to stimulate the economy,” Teh said.

Yesterday, the KLCI rose 1.33 points to close at 1,670.99 points for a year-to-date drop of 1.27%.

According to Bank Negara, the country's second quarter gross domestic product grew 4% from a year earlier compared to the first quarter's 4.2% expansion.
 

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