Markets: Neutral reactions from Budget 2021 approval

People watch Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz speaking during the winding-up debate on the Supply Bill 2021 in the Dewan Rakyat, November 26, 2020. ― Bernama pic
People watch Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz speaking during the winding-up debate on the Supply Bill 2021 in the Dewan Rakyat, November 26, 2020. ― Bernama pic

KUALA LUMPUR, Nov 28 — The approval by Parliament of the Supply Bill 2021 (Budget 2021) worth RM322.5 billion at the policy stage on Thursday seems to see neutral reactions from markets, says an analyst.

Affin Hwang Asset Management Bhd managing director Teng Chee Wai said markets will continue monitoring revenue projection pending parliament’s passing of the proposed budget.

“The government probably will find other ways to collect enough revenue to sustain the budget while, companies are struggling to catch up amidst economic slowdown.

“However, as we all know, what Budget 2021 does is spending towards the Rakyat segment which needed help,” he said in ’The Trend | 2020 Market Review & Outlook’ webinar, today.

According to the Economic Outlook 2021 report, government revenue is expected to reach RM236.9 billion, or 15.1 per cent of the country’s gross domestic product (GDP), next year.

The higher projection is based on the expected increase in tax revenue collection to RM174.4 billion and non-tax revenue of RM62.5 billion.

Teng said failure to pass the budget may engulf markets in a cloud of risk aversion.

He said the budget approval was vital for investors in ensuring growth of the economy which is seen to be recovering.

“The approval of the budget will provide more room for investors to invest more,” he said, hoping as a market player that the government would develop a more strategic agenda to help economic recovery from the Covid-19 pandemic and sustain Malaysia as a country of choice for investors.

On Thursday, markets reacted positively to the Budget 2021 approval with the ringgit ending higher in almost 11 months against the US dollar, while Bursa Malaysia ended with a bang after the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) closed 14.53 points higher at 1,612.11 compared with Wednesday’s close of 1,597.58. — Bernama

Related Articles