KUALA LUMPUR: The market is waiting for the government’s announcement of fiscal measures this week, following Prime Minister Datuk Seri Anwar Ibrahim’s remarks describing the upcoming initiatives as an “extraordinary appreciation” to ease cost-of-living pressures, said CIMB Investment Bank Bhd.
The investment bank said the increase in civil servant salaries, flagged in advance in 2024, by RM10 billion this year and RM8 billion in 2026, as well as higher cash handouts of RM23 billion in 2026 under Sumbangan Tunai Rahmah (STR), are geared towards expenditure outlays in 2026.
“We think those outlays can be partly offset by additional revenue collection from e-invoicing, carbon tax and Sales and Service Tax (SST) expansion, in addition to operational expenditure rationalisation (fuel and electricity subsidies),” it said in its Treasury and Markets Research.
On bonds, CIMB Investment Bank said that Malaysia’s sovereign bond yield movements last week broadly tracked core rates, with a weakening bias through mid-week, as markets expect the US Federal Reserve (Fed) to maintain a wait-and-see approach following signs of tariff pass-through to consumer prices in June.
However, it said lower internal revenue service (IRS) subsequently spurred a rally in local govvies, while Friday’s advance second quarter of 25 gross domestic product (GDP) release surprised to the upside with the economy growing at a slightly faster pace of 4.5 per cent year-on-year, supported by services, in tandem with seasonal festive celebrations.
On the new 30-year Malaysian Government Securities (MGS) 07/55 issuance, the investment bank noted that demand was softer than expected, describing it as lukewarm for the RM3 billion public tender, which was accompanied by an additional RM2 billion through private placement.
“The 10-year Government Investment Issues (GII) 04/35 auction scheduled for July 21, 2025, will offer RM5 billion for auction, in line with our expectation, bringing the outstanding amount to RM10 billion for the vintage, which just became a 10-year GII benchmark in April,” it said. – BERNAMA
