Zafrul: No 'knee-jerk' market reaction to Fitch downgrade

 

PARLIAMENT | There has been no knee-jerk reaction from the market following the downgrade of Malaysia's sovereign credit ratings by Fitch Ratings, according to Finance Minister Tengku Zafrul Abdul Aziz.

Instead, Zafrul told Lim Guan Eng (Harapan-Bagan) the market and ringgit remained stable since the rating agency downgraded the country's long-term foreign-currency issuer default rating from A- to BBB+ earlier this month.

"We also recorded high demand (bid to cover ratio) of 2.6 times more than the offer value for the government's 10-years MGII bond issued last week," he said during Minister’s Question Time in the Dewan Rakyat today.

"Yesterday, I announced that eight venture capital managers from the US, Korea, China, Indonesia and Singapore have agreed to invest up to RM1.57 billion in Malaysian start-up companies.

"In simple terms, long-term investors' confidence in the country's capital market remains strong," he said.

Lim, a former finance minister, had asked Zafrul to state measures taken to address the impact of Fitch Ratings' downgrade.

Lim Guan Eng

Zafrul added that a majority of global rating agencies had issued more than 220 negative ratings since the beginning of the Covid-19 pandemic in March, including to downgrade over 100 countries.

While Malaysia's downgrade is in line with the global rating trend, Zafrul stressed the government had stated the decision did not sufficiently take into account success of various economic stimulus packages.

In terms of good governance, he said any board of director appointments, including among politicians, were done based on suitability of qualification, experience and expertise.

The process will also take into account inclusion and diversity policy under the Malaysian Code of Corporate Governance 2017.

"I would like to stress the government is committed to ensuring the best governance practice is upheld," he added.

Opposition leader Anwar Ibrahim previously claimed that Zafrul failed to address the root cause behind the downgrade, namely political instability and governance.

Both Anwar and Lim had cited the move to pressure Prime Minister Muhyiddin Yassin into allowing a no-confidence motion against him in this Dewan Rakyat session ending tomorrow. - Mkini