Malaysia

Yin
It is possible that the much hoped-for multiplier effect from the stimulus spending may be muted. This is because the construction sector employs a substantial number of foreign workers and remittances made by them to their home countries constitute a leakage from the domestic economy.

Despite falling interest rates, the cost of funding for corporates is still high. In fact, the credit spread between corporate papers and government bonds is expected to widen further on the back of rising credit risk amidst weaker company earnings. Since early last October, five-year MGS yields have fallen by between 100bps and 120bps to about 2.8% currently, while AA-graded five-year corporate bond yields eased by about 40bps.

Panasonic Electronic Devices Malaysia Sdn Bhd will close down one of its three electronic component factories as it discontinues production of film capacitors due to falling demand for cathode ray tube (CRT) television


Yang
November 2008, Malaysia announced a RM7bil economic stimulus package to avoid a possible recession in 2009. Malaysia’s RM7bil stimulus package has also been criticised as being too small. The amount works out to about 1% of Malaysia’s gross domestic product (GDP).

The construction sector is, thus, the most likely to benefit from the stimulus package