Malaysia‟s public finances are weak relative to those of its „A‟ range peers and the country is now on par with more heavily indebted „A‟ range sovereigns such as Italy, said Fitch Ratings yesterday. Fitch said that despite strong GDP growth, the deterioration in public debt ratios is affecting Malaysia‟s credit profile and a lack of progress on fiscal reforms could lead to a ratings downgrade. Fitch said that the rise in the federal government debt-to-GDP ratio and the limited broadening of the fiscal revenue base have pushed Malaysia‟s debt-to-revenue ratio to 246% in 2011, which is well above the „A‟ and „BBB‟ range medians of 137% and 119% respectively and is now on par with more heavily indebted „A‟ range sovereigns such as Italy at 261% and Israel at 180%. Other factors putting pressure on the country‟s credit profile are low and energy-dependent revenues as well as structural weaknesses such as low average incomes. “Fiscal slippage or a lack of progress on fiscal reforms to reverse the deterioration in public debt ratios, following the impending election, could prompt negative rating action,” said Fitch. (Malaysian Insider)
The federal government has agreed to extend the East Coast Rail Route (ECRR) project to Bukit Besi, Dungun. Menteri Besar Datuk Seri Ahmad Said said first phase of ECRR project was originally meant to link Kuantan to Kertih, involving only 109km. "I appealed to federal government to extend it by 35km to Bukit Besi, Dungun. It was agreed at the ECERDC meeting on Tuesday,” he said. (Bernama)
The Federal Reserve downgraded its assessment of the US economy on Wednesday, saying growth had slowed, but shied away from launching a fresh round of economic stimulus. "Economic activity decelerated somewhat over the first half of this year," the Fed said following its two-day FOMC meeting. (AFP)
The US Republican-controlled House of Representatives on Wednesday passed a largely symbolic plan to extend all expiring individual income tax cuts, leaving a deep rift over tax policy unresolved until after November's elections. This comes in contrast to a rival Democratic bill passed by the Senate that would raise some tax rates on the wealthiest. (Reuters)
The US Treasury Department said it is developing a floating-rate note program that could be operational in a year or more, while it is preparing for possible negative-rate bidding. (Bloomberg)
The US MBA purchase applications index fell 2.0% wow in the 27 Jul week (-3.0% in the earlier week), whilst the refinance index gained 0.8% (2.0% in the previous week). (Bloomberg)
US domestic vehicle sales hit an annualised pace of 11.0m in Jul (10.8m in Jun), matching consensus, whilst total vehicle sales registered at an annualised 14.1m, matching Jun‟s pace and is higher than consensus of 14.0m. (Bloomberg)
US construction spending gained 0.4% mom in Jun (a revised 1.6% in May), undershooting consensus of 0.5%, whilst on a yoy basis, the measure gained 7.0%, lower than the revised 8.1% pace in May. (Bloomberg)
US ISM manufacturing unexpectedly fell to 49.8 last month (49.7 in Jun). This comes below market consensus for reading of 50.2. (Bloomberg)
US ADP employment report said that private-sector employment rose by 163,000 in Jul, slowing from a downwardly revised June gain of 172,000. The July jobs increase beat most predictions, as the average analyst estimate was that 125,000 jobs added. Gains were seen across all sizes of businesses and in both the goods-producing and service-providing sectors in July. (AFP)
The Eurozone manufacturing PMI fell to 44.0 in Jul, a three-year low, from 45.1 in Jun, with the rates of manufacturing decline in Germany, France and Spain “either at or close to the steepest since mid-2009,” according to Markit. (AFP)
The HSBC manufacturing PMI for China improved to 49.3 in Jul (48.2 in Jun). (Bloomberg)
The average price of housing in 100 major Chinese cities rose in Jul for the second straight month, suggesting that property prices have bottomed out. The survey showed the average price of housing in 100 major Chinese cities rose 0.33% mom (0.05% in Jun). (AWSJ)
China‟s manufacturing sector deteriorated slightly in Jul, as the official purchasing mangers’ index, inched down to 50.1 in Jul from 50.2 in Jun, just above the 50 line which separates expansion from contraction. (FT)
Japan must do more to shrink its massive public debt, the IMF said, but added that the nation's disaster-hit economy was recovering well despite turmoil overseas. (AFP)
The HSBC PMI for India slid to 52.9 in Jul from 55.0 the previous month, the softest reading since last November, on the back of weakening orders. (AFP)
India overturned its ban on foreign investment from Pakistan in a move designed to build goodwill amid a renewed push for a peace settlement between the nuclear-armed neighbours. (AFP)
Indonesia’s Danareksa consumer confidence index dropped 1 pt to 91.4 in Jul from 92.4 in Jun. (Bloomberg)
Indonesia’s exports in Jun slid 16.44% yoy, more than twice as bad as expected and versus an 8.55% fall in May, as shipments by value to China dropped 15.4%. Imports rose 10.7% (14.9% in May). The trade deficit widened to a record US$1.32bn. (Bloomberg, Reuters)
Indonesia’s consumer price index (CPI) rose to 4.56% yoy last month, up from 4.53% in Jun, but lower than expectations of 4.59%. (AFP)
HSBC's manufacturing purchasing managers' index for Indonesia rose to 51.4 in Jul from 50.2 in Jun. (Dow Jones)
Thailand’s Jul inflation showed a growth rate of 2.73% yoy (2.56% in Jun), up by 0.35% mom (0.16% in Jun), attributed the increase to higher food and fuel prices. (The Nation)
The HSBC manufacturing PMI for Vietnam fell to 43.6 in Jul (46.6 in Jun). (Bloomberg)
Vietnam‟s Prime Minister Nguyen Tan Dung ordered a public list of weak banks and details of lenders’ non-performing loans as the government seeks to tackle bad debt that‟s undermining the banking system and hurting businesses. (Bloomberg)
Total outstanding loans in Vietnam dong by end-July had inched up 0.93% compared with late 2011, but for the Government, this is a very low credit growth rate as it targeted credit growth of 8-10% in the banking system this year. (The Saigon Times)
Vietnam’s Ministry of Planning and Investment has written to ministries, agencies and local authorities requesting capital advances after the Government has approved to set aside VND30tr in FY13 to speed up the progress of public investment projects. (The Saigon Times)
Vietnam’s public debts are believed to have far exceeded the safety level of 60% of the country‟s gross domestic product (GDP), according to the National Assembly Economic Committee. (The Saigon Times)
The World Bank will provide a restructuring loan to help Myanmar clear US$397m in arrears by Jan, said Pamela Cox, the World Bank's vice-president for East Asia and the Pacific, who added that this needed to be done together with the Asian Development Bank. (Reuters)
Singapore’s Purchasing Managers' Index posted a reading of 49.8 last month, a drop of 0.6 points from Jun. Economists had expected an expansion to 50.4. Lower new orders at home and abroad has led to a 1.2-pt decline in electronics PMI, which posted a reading of 49.2 in Jul. (AFP)
Indonesia's foreign tourist arrivals in Jun rose 3.13% yoy, a slower pace of growth than 8.45% in May. (Reuters)
Korean exports fell 8.8% yoy in Jul, much weaker than a forecast 3.9% drop. (WSJ)
Conditions for South Korea’s manufacturers worsened for a second month in a row, according to HSBC's PMI gauge, which was at 47.2 in Jul from 49.4 in the previous month. (WSJ)
Taiwan and China are expected to forge a much-anticipated investment protection agreement in the next round of high-level talks in Aug. (AFP)
The Philippine government’s outstanding debt was expected to approach the PP5.78tr-PP5.91tr mark by the end of 2013 after breaching PP5tr recently. PP5.91tr would account for 49.5% of GDP in 2013, a lower ratio than the expected 50% this year and 50.9% in 2011. (Philippine Daily Inquirer)
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