Implementation, execution phase of NIMP2030 crucial to attract more companies in the high-impact sector, says Manokaran

WEEKLY MARKET ANALYSIS BY MANOKARAN MOTTAIN

Prime Minister Datuk Seri Anwar Ibrahim unveiled the New Industrial Master Plan 2030 (NIMP 2030) which aims to increase the manufacturing’s value-added by 6.5% to RM587.5 billion by 2030.

The high-impact sectors under NIMP 2030 include electrical and electronics (E&E), chemical, electric vehicle, aerospace and pharmaceutical which will increase employment growth by 2.3% from 2023 with the creation of high-skilled jobs as the country advances towards higher value-added activities and improvement in automation and technological advancements. The government will allocate RM8.2 billion to fund NIMP 2030.

The NIMP 2030 basically provides a framework and direction for the growth and expansion of the country’s manufacturing industry.

However, as it is a long-term plan, the implementation and execution phase would be crucial to attract and develop more companies in the identified high-impact sectors as NIMP2030 it is targeting an estimated RM95 billion in investments with the bulk of it from the private sector. 

We also witnessed a major spike in trading value as foreign and institutional funds increased their trading activity ahead of the unveiling of the New Industrial Master Plan 2030 on Friday.

Nevertheless, as the market still remained in consolidation mode despite the surge in buying activity, I am maintaining my view that the KLCI Index will continue to remain within the 1,430-1,475 points range for the coming week.  

KLCI

The KLCI Index continues to move locked within my expected range of between 1,430-1,475 points as the corporate results for 2Q2023 continues to be mixed.

In the previous week, companies in the banking sector reported solid earnings but companies in the consumer and manufacturing reported weaker earnings.

In addition, Petroliam Nasional Berhad (Petronas) reported a 13.4% (y-o-y) drop in its revenue in 2Q2023 to RM79.9 billion due to lower average realized prices for all of its products but mitigated by high sales volumes and forex gains. This resulted in a 28.7% y-o-y decline in its profit after tax but Petronas remains on track to pay RM40 billion in dividends to the federal government this year.

MSG Bond

The 10-year MGS bond yields continues to be supported by strong demand from local institutional investors as they continue to deploy monies into both the bond and equity markets in anticipation of improved market conditions toward the end of the year.

I am maintaining my expectations for yields to remain close to the 4.00% level in the short to medium term given the yield gap and the fact that the US Federal Reserve is only looking to cut interest rates in the first half of 2024.  

Ringgit

The Ringgit performed according to my expectations last week and will continue to remain in consolidation mode as well over the coming weeks until in mid-September 2023.

The immediate catalysts for major movements in the Ringgit would be the interest rates movement rather than portfolio flows.

In light of this, I am adjusting my expected trading band for the local currency against the USD to between RM4.60 – RM4.70.  - DagangNews.com