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2023 WealthVantage September Market Outlook & Review

Malaysia and global market summary for September 2023.

World Updates

  • The European Central Bank (ECB) officials raised the bank’s deposit rate by 25 basis points to a record high of 4%

  • This is their tenth consecutive hike, as the central bank seeks to tame the bloc’s worst inflation surge in decades

  • ECB staff indicate that headline inflation is expected to reach 3.2% in 2024 and 2.1% in 2025.

  • The economy gives a declining outlook with the growth forecast for this year declining from 0.9% to 0.7%, but it could potentially come down further in 2025.

Malaysia Economy Update

  • Bank Negara Malaysia (BNM) decided to maintain the overnight policy rate (OPR) at 3%, this decision was in line with market anticipations

  • According to BNM, the economy will continue to grow; inflation will slowly come down, subjected to domestic policy on subsidies and price controls

  • FBMKLCI experienced a negative YTD performance by -2.9% losses as investors shifted their attention back to the growth-oriented counters after experiencing big losses last year

  • As the political narrative shifts, the potential bolstering of investors’ confidence could play a pivotal role in driving economic momentum and attracting further investment into the nation’s market

US Update

  • Inflation in the US bumped modestly higher in the August reading of CPI to a rate of change of 3.7% (forecast: 3.6%), up from 3.3% in the previous month

  • The US service sector activity rose to a six-month high in August 2023, boosted by a pickup in new orders and hiring, which increased almost 2 points to 54.5

  • Stabilising monetary policy and clearer direction in fiscal stance is providing more certainties for investors

China Update

  • China’s policy easing continues to be supportive for both China H & A-shares

  • China’s one-year loan prime rate was left unchanged at 3.45%, after a cut in August, the second in three months

  • New home prices fell at the fastest pace in 10 months in August, down 0.3% month-on-month after a 0.2% decline in July

  • Against the backdrop of weak economic data, further stimulus is expected to step up while the recent gradual rollout of supportive measures, such as multiple rate cuts and the latest RRR cut, is taking time to revive economic growth

2023 September Market Outlook Update

Sticky inflation will remain an ongoing concern for the global markets. But inflation is likely to have peaked due to the tightening stance of global central banks alongside the lag effects of monetary policy on the economy. We opine inflation numbers are likely to continue trending downwards, albeit remaining at higher-than-average levels. As such, we prefer to be more selective in the global markets rather than taking a broad-based approach to asset allocation.

Information for educational purposes only.

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