PETALING JAYA – The slew of goodies announced in Budget 2017 may not be enough to excite the market, according to economists.
“Nothing has come in as a surprise to us. These are not very impactful measures,” Hong Leong Investment Bank Research economist Sia Ket Ee told theSun.
MIDF Research concurred, saying that there are no material surprises that may spur significant buying interest in the equity market.
“Therefore, we do not expect Budget 2017 to directly provide an upward impetus to the FBM KLCI in the coming week,” it said in a research note.
OCBC Bank economist Wellian Wiranto said overall, it is unlikely to be seen as a budget that breaks new ground, given that the major reforms such as goods and services tax (GST) and subsidy rationalisation have been pursued.
“It is more likely to be regarded as a continuation of previous years’ moves in fiscal consolidation given oil price constraints, even as the key segments of the population would notice receiving that much more attention,” he said.
While it is a neutral budget, Sia said it could benefit sectors like automotive and construction.
“Auto players, especially in the lower end segment like Proton and Perodua will benefit from the tax measure of drivers owning their own vehicles.
“Construction players will benefit from the higher development expenditure. One big announcement is the RM55 billion East Coast Rail Line. This may excite the market again,” he said.
However, Telekom Malaysia Bhd is likely to see the negative impact from the government’s commitment to bring down the broadband fees with higher speed.
For the property sector, as the focus is on affordable housing, he does not foresee a major impact on listed property developers.
However, he is positive on the government’s move to give vacant land to government-linked companies to build affordable homes and it could benefit companies like Sime Darby Bhd and SP Setia Bhd.
On the economy, economists are of the view that Malaysia will be able to achieve its fiscal deficit target of 3% of gross domestic product (GDP) in 2017 despite market concerns over the shortfall in government revenue.
“It is a realistic number, provided that oil prices average at US$45 (RM188.32) per barrel and global growth should be higher in 2017. If all these come through, I don’t see any difficulty for the government to achieve the fiscal target,” Sia said.
Economists anticipate GDP will be on the lower end of the projection of 4% to 5% in 2017 due to uncertainty in the external environment.
With private consumption recovering from the adjustment of GST, coupled with robust private investment driven by ongoing projects, Sia believes it will ensure the sustainability of domestic demand.