On Friday, 27th Mar 2020, the Prime Minster announced the PRIHATIN Rakyat Economic Stimulus Package amounting to RM250 billion for Malaysia. This package is equivalent to 17% of Gross Domestic Product (GDP) compared to the 8% of GDP (or RM67 billion) package introduced during the 2008 Global Financial Crisis. Policymakers project for the stimulus package to add 1.5% to GDP in 2020. Here’s how the package will be spent:
| Public: 55% (RM126 billion) Cash handouts and loan moratorium provides assistance to low to middle income households who are hurt due to curtailed economic activities during the period under Movement Control Order (MCO). |
| Small and medium sale enterprises: 44% (RM101 billion) These enterprises will also receive various assistance such as loan moratorium, wage subsidy and SME financing. |
| Malaysian Economy: 1% (RM3 billion) Efforts will be aimed at strengthening our investment and external trade until consumer and business confidence is regained. |
Source: Prime Minister Office, Mar 2020. See Appendix for further details.
What is our investment strategy?
Fixed Income Domestic bond market is supported by expectations of lower interest rates and ample liquidity in the system.
| Equity We believe the stimulus package is neutral on the Malaysian equity market as large corporates are not the main beneficiaries.
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What should investors do?
Invest across diversified asset classes | Dividend Platform | Long-term focus
For conservative clients: Recommend funds in mixed assets with a combination of growth and income either globally or locally diversified.
For clients with higher risk tolerance: Recommend them to focus on growth-oriented funds that offer exposure to growth areas in Asia, China and Global REITs.
Appendix: Breakdown of RM250 billion stimulus package
B40, 66 Billion
- KWSP Account 2 RM25 billion
- Bantuan Prihatin National RM8.8 billion
- Wage Subsidy RM4.7billion
- Loan moratorium RM24 billion
- Civil Servant RM1.2 billion
- Electric Bill Discount RM100 million
SMEs, 54 billion
- Loan moratorium RM 35 billion
- KWSP and Human Resources Development Fund RM10.4 billion
- Government Guarantee Scheme RM5 billion
- BNM Special Relief Facility RM3 billion
- Income Tax deferment
Economic Activity, 53 billion
- Small projects RM 2 billion
- Bailout funding RM50 billion
- Food funding 1 billion
M40, 30 billion
- Loan moratorium RM 13 billion
- KWSP Account 2 RM10 billion
- Bantuan Prihatin National RM1 billion
- Civil servant RM500 million
- Electricity RM20 million
Others, 27 billion
- T20 KWSP RM5 billion
- PRS RM700 million
- T20 loan moratorium RM21 billion
- T20 electricity RM 200 million
Source Prime Minister Office, Mar 2020.
Disclaimer:
We have based this document on information obtained from sources we believe to be reliable, but we do not make any representation or warranty nor accept any responsibility or liability as to its accuracy, completeness or correctness. Expressions of opinion contained herein are those of Principal Asset Management Berhad (formerly known as CIMB-Principal Asset Management Berhad) only and are subject to change without notice. This document should not be construed as an offer or a solicitation of an offer to purchase or subscribe or sell Principal Asset Management Berhad’s investment products.
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