Malaysia: The Malaysian financial markets performed strongly in December last year, with non-resident inflows into the bond and equity markets totalling RM4.1 billion and RM0.9 billion respectively, Bank Negara Malaysia (BNM) said.
The central bank said the increased demand for ringgit financial assets during the month was supported by improved investor sentiments amid an upward revision in Malaysia’s growth outlook by the International Monetary Fund and World Bank.
It said the ringgit was also supported by the subdued US dollar sentiments following uncertainties over the sustainability of the tax reform’s impact on the US’ longer-term economic growth.
“The ringgit appreciated by 0.6 per cent against the US dollar in December. For the year as a whole, the ringgit appreciated by 10.4 per cent to end the year at 4.0620 against the US dollar,” BNM said in its Monthly Highlight December 2017 released today.
It said net financing growth, excluding development financial institutions and corporate bonds, increased to 6.9 per cent in December as compared to 6.1 per cent in November while outstanding loan growth of the banking system increased to 4.1 per cent from 3.9 per cent in the previous month.
However, it said loan growth moderated, driven by stronger growth in business repayments mainly due to scheduled repayments and higher corporate earnings.
BNM said asset quality of the banking system remained sound as the level of impaired loans declined to 1.1 per cent of total loans, net of individual impairment provisions, from 1.2 per cent in November.
“The lower level of impaired loans is attributed to write-offs and recoveries,” it said.
It said banks maintained sufficient buffers for potential credit losses with loan loss coverage ratio standing at 82.9 per cent from 84 per cent in the previous month.
BNM said headline inflation increased slightly to 3.5 per cent in December mainly due to higher transport inflation.
“Although RON95 petrol averaged lower at RM2.27 per litre in December compared to RM2.30 per litre in November, the lower base of RON95 price in December 2016 (RM1.90 per litre) compared to November 2016 (RM1.95 per litre) resulted in higher inflation in the transport category,” it said.
It said food inflation also increased to 4.1 per cent in December from four per cent in the previous month on account of higher inflation in the food away from home sub-category.
Meanwhile, BNM said the overall industrial production index (IPI) recorded a higher growth of five per cent in November as compared to 3.4 per cent in October driven by higher expansion across the manufacturing sector, despite a moderation in both mining and electricity production.
“The manufacturing sector registered a higher growth of 6.7 per cent in November from 4.2 per cent in October driven mainly by export-oriented industries,” it added.
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