*This newsletter has been released 3 days early for patrons.

This Week at a Glance…

i) Ringgit rallies to an 8-year high against the Japanese yen.

The Bank of Japan has pledged that it will maintain ultra-low interest rates for the foreseeable future as part of the government’s efforts to stimulate growth.

ii) US dollar retraces upward after Fed Chairman J. Powell’s comments on future rate hikes.

Powell stated that despite the Federal Reserve’s second consecutive pause on rate hikes, the central bank is not entirely convinced that the rate hike cycle is over.

iii) What stocks does EPF invest in?

The retirement fund has a 13.42% stake in Maybank and 15.68% stake in Public Bank, the largest and two most valuable companies in Malaysia.

Scroll down to read the details.

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Extended: Maybank’s e-Islamic Fixed Deposit Promotion.

In case you missed it, Maybank has extended its FD promo till the end of November.

• Yield: 3.85% pa

• Tenure: 6 months

• Minimum Deposit: RM1,000

To apply, login to your Maybank account online and select “APPLY NOW,” then choose “FIXED DEPOSIT.”

Click on the link here for more info and explore the best FD rates for November.

Time to Visit Japan?

The Japanese yen slumped to an 8-year low against the ringgit last Wednesday, as the Bank of Japan reinforced its stance on maintaining ultra-low interest rates.

Since January 2022, it has depreciated by over 14% versus the local note.

The yen’s weakness is not only evident to MYR, but all currencies in general.

In the past two years, it fell 31.87% against the US dollar, and 23.87% versus the British pound, making it the worst performing currency in Asia.

What’s behind the yen’s freefall?

During the height of the Covid pandemic, global central banks rushed to raise interest rates to curb price spikes and inflation.

The US cranked rates up from 0.25% to 5.25% in less than 2 years, while the Bank of England hiked 5.25% from 0.10%.

Bank Negara Malaysia has also followed the global trend, raising the Overnight Policy Rate from 1.75% to 3.0%.

Japan was the only country that did not raise rates.

The Bank of Japan maintained interest rates at the pre-pandemic level and said that it was in no rush to hike them.

Why do low rates lead to a weaker currency?

Imagine a scenario between two banks.

Bank A gives you 0.01-0.13% pa for your fixed deposits while Bank B gives 5.25-5.50% pa.

Assuming that both banks are well-capitalized, where would you place your money?

Why is Japan keeping interest rates low?

The GDP growth of Japan has been stagnant for almost 30 years, and the pandemic only made matters worse.

Policymakers argued that for such a fragile economy with a weak demand to begin with, hiking rates would only make borrowing more expensive and endanger the nation’s economic growth.

US dollar recovers slightly after Fed’s comments.

After a sharp downturn due to the Federal Reserve’s 2nd consecutive pause on rate hikes and a lower than expected jobs report, the US dollar has halted its downtrend and retraced slightly.

During a speech at the International Monetary Fund event on Thursday, Fed Chairman J. Powell said that he’s “not confident” that the Fed has done enough to curb inflation.

He stressed the central bank’s efforts to bring inflation back down to 2% and suggested that more rate hikes may be necessary.

However, probabilities from CME Group show that the majority (85.9%) of investors believe that the Fed will not raise rates during its final meeting in December.

Nevertheless, Powell’s comments were reflected in the dollar’s temporary recovery this week.

What Assets does EPF invest in?

Though the retirement fund doesn’t actually specify what stock it buys in its annual report, we can see how much stake it has in local stocks by looking into their movements on the KLSE app.

EPF’s Stake in the Top 20 Largest and Most Valuable Companies in Malaysia:

20. PPB GROUP BERHAD (PPB)

• Market Cap: RM22.021 billion

• Share Price: RM14.42

• EPF Stake: 9.967%

• EPF Valuation: RM2.045 billion

19. PETRONAS DAGANGAN BERHAD (PETDAG)

• Market Cap: RM22.551 billion

• Share Price: RM22.70

• EPF Stake: 12.163%

• EPF Valuation: RM2.743 billion

18. AXIATA GROUP BERHAD (AXIATA)

• Market Cap: RM23.030 billion

• Share Price: RM2.40

• EPF Stake: 17.644%

• EPF Valuation: RM3.887 billion

17. KLK BERHAD (KLK)

• Market Cap: RM23.436 billion

• Share Price: RM21.68

• EPF Stake: 10.994%

• EPF Valuation: RM2.570 billion

16. RHB BANK BERHAD (RHB)

• Market Cap: RM24.175 billion

• Share Price: RM5.64

• EPF Stake: 40.988%

• EPF Valuation: RM9.91 billion

15. IOI CORPORATION BERHAD (IOICORP)

• Market Cap: RM24.764 billion

• Share Price: RM3.94

• EPF Stake: 11.251%

• EPF Valuation: RM2.75 billion

14. SIME DARBY PLANTATION BERHAD (SIMEPLT)

• Market Cap: RM29.945 billion

• Share Price: RM4.33

• EPF Stake: 13.32%

• EPF Valuation: RM3.99 billion

13. NESTLE (M) BERHAD (NESTLE)

• Market Cap: RM28.539 billion

• Share Price: RM121.70

• EPF Stake: 9.527%

• EPF Valuation: RM2.72 billion

12. MAXIS BERHAD (MAXIS)

• Market Cap: RM31.563 billion

• Share Price: RM4.03

• EPF Stake: 10.746%

• EPF Valuation: RM3.39 billion

11. MISC BERHAD (MISC)

• Market Cap: RM32.139 billion

• Share Price: RM7.20

• EPF Stake: 12.481%

• EPF Valuation: RM4.01 billion

10. PETRONAS GAS BERHAD (PETGAS)

• Market Cap: RM33.480 billion

• Share Price: RM16.92

• EPF Stake: 13.529%

• EPF Valuation: RM4.53 billion

9. PRESS METAL ALUMINIUM HOLDINGS BERHAD (PMETAL)

• Market Cap: RM39.880 billion

• Share Price: RM4.84

• EPF Stake: 5.04%

• EPF Valuation: RM2.01 billion

8. HONG LEONG BANK BERHAD (HLBANK)

• Market Cap: RM41.360 billion

• Share Price: RM19.08

• EPF Stake: 9.827%

• EPF Valuation: RM3.91 billion

7. CELCOMDIGI BERHAD (CDB)

• Market Cap: RM49.859 billion

• Share Price: RM4.25

• EPF Stake: 9.568%

• EPF Valuation: RM4.77 billion

6. IHH HEALTHCARE BERHAD (IHH)

• Market Cap: RM51.873 billion

• Share Price: RM5.89

• EPF Stake: 10.725%

• EPF Valuation: RM5.56 billion

5. PETRONAS CHEMICALS GROUP BERHAD (PCHEM)

• Market Cap: RM57.520 billion

• Share Price: RM7.19

• EPF Stake: 11.659%

• EPF Valuation: RM6.71 billion

4. TENAGA NASIONAL BERHAD (TENAGA)

• Market Cap: RM57.410 billion

• Share Price: RM9.92

• EPF Stake: 16.54%

• EPF Valuation: RM9.49 billion

3. CIMB GROUP HOLDINGS BERHAD (CIMB)

• Market Cap: RM59.191 billion

• Share Price: RM5.74

• EPF Stake: 15.08%

• EPF Valuation: RM9.23 billion

2. PUBLIC BANK BERHAD (PBBANK)

• Market Cap: RM80.748 billion

• Share Price: RM4.16

• EPF Stake: 15.68%

• EPF Valuation: RM12.66 billion

1. MALAYAN BANKING BERHAD (MAYBANK)

• Market Cap: RM109.507 billion

• Share Price: RM9.08

• EPF Stake: 13.422%

• EPF Valuation: RM14.70 billion

Here’s a chart to help you visualize everything better:

That’s all for this week’s newsletter!

DISCLAIMER: The information contained in this newsletter is for informational and educational purposes only. Nothing herein shall be construed to be financial, legal, or tax advice.

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