This article first appeared in The Edge Malaysia Weekly on October 1, 2018 - October 7, 2018

Monday marks the start of the fourth quarter and the week starts with the Nikkei Manufacturing Purchasing Managers’ Index (PMI) data for the month of September, out the same day.

The index has been gaining strength since May. It reached 51.2 in August, which points to a modest improvement in manufacturing conditions in the country and brings to an end six months of deterioration, according to IHS Markit, which releases the data.

A reading above 50 signals expansion in the manufacturing sector and below 50, a contraction. August’s reading was the first at above 50 since January.

“I expect the PMI levels to remain stable in tandem with global PMIs but the threat of protectionism lingers,” says UOB Malaysia senior economist Julia Goh.

She expects to see more caution among Malaysian businesses following recent announcements of minimum wages and foreign worker levies.

“The Sales and Services Tax (SST) was introduced in September, so the coming PMI may shed light on manufacturer sentiment following the transition to SST,” she adds.

Apart from the PMI, the Department of Statistics Malaysia will release trade data for August on Friday. Earlier, in July, exports rose 9.4% year on year compared with 7.9% in June, exceeding consensus expectations of 4.7%. Meanwhile, imports growth moderated to 10.3% y-o-y from 15.9% in June.

“We’re expecting export growth of 8.0% y-o-y in August. Regional export numbers indicate that demand for manufacturing exports held up in August, suggesting that trade activity remains resilient. However, the data predates the second tranche of US tariffs on imports from China announced in September, which covers a broader range of manufactured goods than the first phase of tariffs totalling US$50 billion, and therefore could have a greater disruptive effect on the manufacturing supply chain,” says Michelle Chia, head of economics research at CIMB Investment Bank.

Meanwhile, economists polled by Bloomberg expect exports to grow at a median value of 7%, while imports are seen growing at 6.7%.

Across the Causeway, Singapore will this week see the release of the preliminary Urban Redevelopment Authority Private Home Price Index for the third quarter of this year, the September official PMI and the Nikkei Singapore PMI.

It is worth noting that in a surprise move, Singapore implemented cooling measures for the property sector in July. In the second quarter, private home prices rose 3.4%, indicating an even momentum in the price increase, according to media reports.

Meanwhile, there will be no economic data releases from China, which will start its National Day Golden Week on Monday. Hong Kong markets will also take a break on Monday for the National Day.

Major monetary decisions this week will be from Australia and India.

“The RBA (Reserve Bank of Australia) is widely expected to keep its policy rate unchanged at a record low of 1.5%, but the RBI (Reserve Bank of India) is expected to raise the repo rate and reverse repo rate by 25bps to 6.75% and 6.5% respectively while keeping its cash reserve ratio unchanged at 4%,” UOB Global Economics and Markets Research says in a note last Friday.

In the US, investors will be paying attention to the slew of public appearances by several members of the Federal Open Market Committee, starting with its chair Jerome Powell speaking in Boston on Tuesday and Washington on Wednesday.

Others due to speak in public are Fed Board of Governors Randall K Quarles, Atlanta Fed President Raphael W Bostic, Richmond Fed President Thomas I Barkin, Board of Governors Lael Brainard and Cleveland Fed President Loretta J Mester.

Economic data out this week for the US include the ISM surveys for manufacturing and non-manufacturing for September, August factory orders, trade and also the widely followed labour market report for September.

“The first week of October also marks the start of the US earnings reporting season but it will be a quiet start with just a handful of companies, including a major US food and beverage company this week,” notes UOB.

The movement in crude oil prices will also be on investors’ radar screen as the commodity continued to trade higher, with Brent touching US$82.25 per barrel at the time of writing last Friday.

In corporate Malaysia, water treatment services provider Taliworks Corp Bhd will be holding an extraordinary shareholders meeting on Monday to decide on its proposed two-for-three bonus issue. Other companies having shareholders meetings include Berjaya Food Bhd, Bermaz Auto Bhd and Analabs Resources Bhd.

Aeon Credit Service (M) Bhd is expected to release its financials for the second quarter ended Aug 31, 2018.

Meanwhile, on the political front, campaigning for the Port Dickson by-election is expected to go into full swing following nominations last Saturday (Sept 29). Candidates who have thrown their hat into the ring at the time of writing last Friday include PKR president-elect Datuk Seri Anwar Ibrahim, and independents Stevie Chan and Tan Sri Mohd Isa Abdul Samad, who is an Umno strongman and former menteri besar of Negeri Sembilan.

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