The week ahead - earnings, GDP releases; monetary policy,

CORPORATE earnings are expected from dozens of firms, from Petronas-linked companies to construction and property outfits.

Earnings to dominate

CORPORATE earnings are expected from dozens of firms, from Petronas-linked companies to construction and property outfits.

Petronas Dagangan Bhd and Petronas Chemicals Group Bhd are expected to release their third quarter (Q3) financial results on Wednesday. MISC Bhd is expected to announce its Q3 earnings on Tuesday.

Other companies expected to announce their results this week include IOI Corp Bhd, Dialog Group Bhd and Malaysia Airports Holdings Bhd.

On Friday, Bank Negara is expected to release its foreign exchange reserves data as at Nov 13. Bank Negara’s international reserves fell US$600mil to US$104.6bil as at Oct 30,2020, from US$105.2bil two weeks earlier.

The central bank said the reserves position is sufficient to finance 8.4 months of retained imports and is one time total short-term external debt.

Eyes on China

ALL eyes are on China’s central bank for any signal of potential monetary easing, as a US$900bil funding shortage raises concerns over tighter liquidity.

According to Bloomberg, the first clue may come today, when the People’s Bank of China is expected to at least offset most of the 600 billion yuan of policy loans coming due this month.

The funds – offered by the authorities a year ago via the medium-term lending facility – are just about 10% of the total amount local banks need to repay debt and buy government bonds by end-2020.

China is among the first countries in the world to consider reversing emergency stimulus measures deployed to support markets in the wake of the coronavirus outbreak.

Meanwhile, China is expected to release its fixed-asset investment, industrial output, retail sales, unemployment and house prices data this week.

Third quarter GDP releases

SINGAPORE, Japan and Thailand are expected to report their third-quarter (Q3) gross domestic product (GDP) data this week.

Singapore is expected to release its final print for Q3 2020 GDP on Friday while Thailand and Japan on Monday.

ING economist Prakash Sakpal said a big quarter-on-quarter GDP bounce seemed to be in order everywhere after a record Q2 crash induced by Covid-19 lockdowns.

However, that still won’t be sufficient to pull year-on-year GDP growth back into positive territory in any of these economies.

He noted that Thailand continued to be an Asian underperformer in terms of GDP growth in Q3 as tourism, the main driver of that economy, was still missing in action.

Singapore was an outperformer, with the second print of Q3 GDP likely to get a further upward boost from strong manufacturing growth in September.

Japan is somewhere in the middle, with weak investment spending holding back the recovery.

UOB Global Economics and Markets Research expects Singapore’s Q3 GDP contraction to be revised to -5.6% year-on-year (from the preliminary estimate of -7% year-on-year).

According to a Bloomberg poll, Thailand’s growth is expected to increase +3.5% quarter-on-quarter in Q3 (from -9.7% quarter-on-quarter in Q2) but on a year-on-year basis, it still translates to a contraction of 9.1%. UOB estimates a contraction of 11.9% year-on-year for Q3.

Monetary policy decisions

NO changes to monetary policy are expected in central bank meetings in China, Thailand, the Philippines and Indonesia this week.

Thailand and the Philippines are already holding policy rates at a record low of 0.5% and 2.25%, respectively, while Indonesia remains concerned about the impact of low interest rates on the rupiah.

The People’s Bank of China last changed its key lending rates in April when it cut the one-year prime lending rate (PLR) by 20 basis points (bps) to 3.85% and five-year PLR by 10bps to 4.65%.

ING opined that it will view these levels as accommodative enough for economic recovery, going forward.

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