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WealthVantage October 2023 Market Outlook & Review

Malaysia and global market summary for September 2023.

World Updates

  • The Israel-Palestine conflict has injected a fresh dose of volatility into the global financial markets

  • Fear of a broader conflict disrupting oil supply from the Middle East increased, prompting higher demand for safe-haven assets like gold

  • Brent oil has shot up over 5%, the biggest weekly jump since April while European gas prices have seen close to a 40% surge

  • Aid convoys started to arrive in the Gaza Strip over the weekend as Arab leaders attended a summit in Cairo but were unable to reach an agreement to contain the violence

  • European shares were steady, edged up by 1.0% after falling over 3% in the previous week

Malaysia Economy Updates

  • The US Dollar strengthened against the MYR in September by 1.2% to MYR 4.6935 as of 29 September

  • The announcement of Budget 2024 covers RM393.8 billion, made up of operating expenditure of RM303.8 billion and development expenditure of RM90 billion

  • The budget focuses on 3 aspects, best governance for service agility, economic restructuring & improving people’s living standard

  • Malaysia is expected to see a recovery in exports, focusing more on infrastructure & utility projects

  • Stay vigilant about inflation as blanket subsidies are replaced with targeted subsidies, the SST increases from 6% to 8%, and the ceiling prices for eggs and chicken are removed

US Updates

  • The Senate & the U.S. House of Representatives passed a funding bill to avoid a shutdown. The bill will fund government operations through November 17

  • The Speaker of the House has not been elected since October 3 freezing legislative business including work on legislation to fund the government and avoid a shutdown

  • US imposed a sanction on owners of tankers carrying Russian oil to close loopholes in the mechanism designed to punish Russia for its invasion of Ukraine

  • The Federal Reserve decided to maintain its key policy rate, from 5.25% to 5.5%

China Update

  • China’s Central Bank cut the reserve requirement ratio for all banks, by 0.25% to 10.50% & 8.50% for major and small banks respectively

  • This may release more than USD 68.71 billion to support medium to long-term liquidity in China’s financial market

  • The CSI 300 index of large & liquid Shanghai & Shenzhen listed stocks fell 1.3% to about 3,463

  • Further stimulus is expected to increase while the recent gradual rollout like RRR (Required Rate of Return) cuts will take time to revive the economic growth

Alternatives Update

  • Bitcoin prices have risen crossing USD35,000 mark due to bullish sentiment from the possibility of the first spot Bitcoin ETF being approved by US regulators

  • Oil prices increased about 2% buoyed by worries about conflict in the Middle East

  • Gold prices held above the key $2,000 level on Monday, buoyed by safe-haven demand from an escalating Middle East conflict

  • The recent underperformance of global equity markets is mainly due to spiking US Treasury yields as global investors are concerned US might keep rates higher for longer

2023 October Market Outlook Update

Sticky inflation is still an overhang for 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. Inflation numbers are likely to continue trending downwards, although will remain at higher-than-average levels. Short-term volatility is likely to prevail. A diversified approach to investing while having exposure to segments within the global economy is recommended.

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