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HLIB Research expects higher BR1M payment with fuel subsidy cut

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HLIB Research expects higher BR1M payment with fuel subsidy cut Empty HLIB Research expects higher BR1M payment with fuel subsidy cut

Post by Cals Fri 03 Oct 2014, 02:09

HLIB Research expects higher BR1M payment with fuel subsidy cut
Business & Markets 2014
Written by theedgemalaysia.com   
Thursday, 02 October 2014 08:43

KUALA LUMPUR (Oct 2): Hong Leong IB Research (HLIB) expects expect part of the savings from the fuel subsidy cut (about RM3.3 billion) to be spent in the form of higher BR1M payment of about RM150 for 2015 (additional cost of about RM1.2 billion).
In a note Thursday, HLIB said the government’s decision of a fuel price hike effective Oct 2 came in as a surprise as teh research house had earlier expected the government to announce the multi-tiered subsidy scheme in the Budget a week later.
“We believe that complexity of multi-tiered subsidy scheme has prompted the government to introduce a plain 20 sen hike in the interim period.
“We expect the CPI growth to average 2.9% year-on-year (y-o-y) in 4Q14, resuming its downward trend since its peak in 1Q14 at 3.5% y-o-y.
“The fuel price hike will not result in a jump in the CPI growth as the index was already higher a year ago due to a similar 20 sen hike which took effect on 3 Sep 2013. We maintain our full-year 2014 CPI growth forecast at 3.2%,” it said.
HLIB said that on economic growth, the 20 sen fuel price hike was expected to be slightly negative on consumer spending and business activity.
“We maintain our view that GDP growth would moderate to 5.6% in 2H14 from 6.3% in 1H14 (full year forecast at 6.0%).
“We expect the OPR to be held steady at 3.25% in the upcoming MPC meeting on 6 Nov 2014,” it said.
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