10.05 - shocking win of Malaysian opposition
The main piece of news this trading day is the win of Malaysian opposition in the national Malaysian elections with the new Prime Minister now occupying the seat. The win brought positive changes to Asian market driving attention from failing European markets. Dollar has its first retreat in a week with oil breaching new heights.
Market spectators and investors can’t wait to see what the recent event in Malaysia will do to the markets. This Asian country held elections for the post of prime minister and it will now be occupied by Mahathir Mohamad who has already been a prime minister for Malaysia but had to leave the post 15 years ago. What is really startling is that Mahathir, now 92 years old will be ruling the country that has the best performing currency in the region, fats growing economy and almost defeated inflation and will be doing that being from the opposition of the country. And members of the opposition haven’t won the elections in over 60 years.
During his election campaign Mahathir Mohamad promised to lower a 6 percent tax which was the promise that won an election for the politician. Moreover he claimed that this will be done during his first 100 days in the office. The importance of the tax removal is obvious for everyone – it is highly blamed for the falling level of life in the country. There were also promises concerning gasoline subsidies, petroleum tariffs for importing countries and minimum wage level.
For now it is difficult to predict what will happen of the economy of the country further. Trade tensions may come on the way of the fulfillment of Central Malaysian Bank of country’s economic growth to be between 5.5-6 percent this year, extending last year’s 5.9 percent growth as the growth was mostly due to the global trading demand rising. All the export from the country is accounted for about 2/3 of the GDP of Malaysia.
There are fears that economic success of the country may start to rely heavily on the oil income which would not be good for the people of the country. Although for mow the situation looks good as the Central Bank was already ordered to develop a strategy on bringing ringgit (Malaysian national currency) to the fullest of its potential and was given only three years to do so.
It is hard to say that the investors were thrilled to see Walmart’s new deal. Now, the biggest retailer in the world, Walmart wants to go through with the biggest deal for the company ever – buy about 77 percent of the Indian Flipkart Group which will cost Walmart about $16 billion. Other 23 percent of the Flipkart will be at hands of the founder of the company and its main investors.
In total Indian Flipkart has about $21 billion in value which is getting closer to the biggest online store Amazon. With the purchase Walmart will gain the access to Indian e-commerce market which is expected to grow about 3 times in the next ten years – that’s a good investment, but the experts don’t seem to think so. The main reason for doubt is tome which the market if going to need to go profitable.
One of the analysts from Moody sad “As Flipkart is expected to generate meaningful losses for at least the next few years, this is clearly an investment for the future,”. After the intention for the deal was announced Walmart shares fell 4.2 percent to $82.12 per stock – that is the worst point for it since October 2017 with the stock generally losing about 15 percent of the value with the first quarter of 2018.
It is predicted that after the deal Flipkart’s shares will start losing too from 25-30 cents this years to doubling of that the next year. With such prediction it is said that there is only one chance out of three that the deal will bring Walmart down in the next two years. Walmart international CEO says that “We’ve been looking at this business for some time. India needs no introduction; it’s a fantastically growing market. And it fits right in with our strategy,”
Donald Trump has talked to the reporters in the White House and one of the main topics, as always was Trump’s meeting with Kin Jong Un. Some of the details about the meetings were confirmed and some were not by the American President. Like that the reporters were informed that it is no longer on the table that the two leaders should meet at the demilitarized zone between two Koreas.
Although Trump admits that the move would be symbolic. Just a week ago Trump stated "There's something that I like about it because you're there, you’re actually there, where if things work out, there's a great celebration to be had on the site, not in a third-party country,". But for now the source, close to CNN reports that it is possible that the meeting be held in Singapore. It is reported that this variant will be the best for Trump as Singapore located quite far away from Pyongyang.
In the meantime Whiter House spokeswoman Sarah Sanders reported that the date and the place for the meeting were already selected and will be officially releases in three days.
The relations between the USA and North Korea have been the warmest in decades with the latter country even releasing three American prisoners in the past couple of days. They were already greeted by the Trump family in America.
If the meeting comes through Trump will be the first American President to meet with North Korean leader since the war between North and South Koreas broke out.
The greenback did not extend the gains for the first time in days at the trading on Thursday resumed. European stocks and indices are not performing well and Asian are rising on the contrary to the expectations. Oil saves the high spot and is still traded at the highest point since 2014. Tensions between Israel and Iran are growing as the whole regions is stunned by Trump’s decision to withdraw form nuclear agreement pact.
Stoxx Europe 600 fell 0.1 percent.
FTSE from the US has gone up by 0.1 percent and now is at the highest in 14 weeks.
German Dax increased 0.4 percent.
S&P 500 Futures extend the gain with 0.2 percent advance and reach the highest point in almost 4 weeks.
MSCI Emerging Market Index added 0.8 percent.
MSCI Asia Pacific also gaining - +0.5 percent.
Dollar fell 0.3 percent against the basket of six major currencies – the first decline in a week.
European currency on the other hand has added for the first time in a week - $1.187.
Pound is also up - $1.3562.
Yen fell 0.1 percent – 109.90 yen per dollar.
WTI gained 0.8 percent - $71.68 per barrel – the most expensive in nearly four years.
Gold fell 0.05 percent - $1.312.63 per ounce.
- by Anna K.