KUCHING: The Monetary Policy Statement (MPS) is still ‘dovish’ despite assessments showing a slowdown in global economic growth affecting the regional and domestic economy through exports.
MAINTAIN GROWTH: MPC considers the current level of OPR as appropriate and consistent with the latest assessment of the economic growth and inflation prospects — Photo from flickr.com
“Domestic demand is expected to support growth factors such as favourable employment conditions, firm commodity prices, accommodative financing environment and increased capital spending in the domestic-oriented sectors,” said Maybank Investment Bank Bhd (Ma y b ank Investment) chief economist Suhaimi Ilias.
As widely expected, Bank Negara Malaysia (BNM) maintained the overnight policy rate (OPR) at 2.75 per cent last Friday.
“This was the second ‘pause’ decision by the Monetary Policy Committee (MPC) after the first such call on September 2 following three consecutive increases of 25 basis points (bps) each on March 4, May 13 and July 8,” said Suhaimi.
“We expect the OPR to remain at 2.75 per cent until the middle of next year before BNM resumes the interest rate normalisation, subject to evidence that domestic economic growth is on a sustainable path and stabilising in the external conditions,” he added.
At the end of October, the BNM governor was quoted as saying while the movement of the ringgit was marketdriven, BNM stood ready to intervene in the foreign exchange (forex) market in the event of excessive or sudden movements amid expectations of greater volatility.
Meanwhile, at the sidelines of the World Congress of Accountants in Kuala Lumpur last Wednesday, the governor said an orderly forex market was very important for a tradedependent country like Malaysia.
“These comments, taken together with the decision to hit the pause button on the OPR, signals that BNM is unlikely to tolerate further sharp ringgit appreciation after the 10 per cent to 11 per cent gain year-to-date,” Suhaimi opined.
The chief economist further pointed out that by looking at the ringgit/US dollar exchange rate, after the 11 per cent advance from end-2009 to RM3.0905 on September 22, the local unit had been somewhat ‘fl attish’, trading in a RM3.08 to RM3.12 range.
“Therefore, we maintain our ringgi t/US dol lar year-end targets of RM3.10 to RM3.15 this year and RM3.00 to RM3.05 next year. Moreover, we believe the central bank is wary of unintended tightening in the overall domestic monetary condition from the combination of interest rate hikes and OPR hikes currency appreciation,” he said.
“At present, we have a landbank of 212 acres in Penang, with an option to purchase additional 100 acres. The total landbank has an estimated total gross development value (GDV) of over RM1 billion and we seek to increase our landbank after the listing,” he added.
The group recently purchased 109 acres of land in Seberang Perai at a cost of RM61.5 million, and had the option to purchase another 100 acres of land within the same vicinity.
Since its inception in 1994, Tambun Indah had carved its niche in introducing innovative concept and highquality homes for residents primarily in mainland Penang.
To date, Tambun Indah had sold more than 2,800 units of residential property mostly in mainland Penang, with a GDV of more than RM800 million. Teh attributed the group’s success to its lifestyle-enriching concepts, high quality product offerings, and strong financial position.
“We have built a secure financial foundation by keeping a lean balance sheet, which has enabled us to complete our projects quickly, even during the financial crises of 1997 and 2000. Furthermore, our strong cash position renders us sufficient funds to acquire additional land bank as and when the opportunities arise,” Teh concluded.
Tambun Indah’s IPO exercise entails a total issue of 54.10 million shares of RM0.50 par, comprising 32.00 million new ordinary shares, and 22.10 million vendor shares.
Of the public issue of 32.00 million new ordinary shares, 9.90 million new ordinary shares are allocated for private placement to selected investors, 11.05 million new shares for eligible directors, employees and business associates, and the balance 11.05 million new ordinary shares for the Malaysian public.
At an offer price of RM0.70 per share, Tambun Indah’s IPO was expected to raise RM22.4 million in proceeds for the group.