SECTORAL EFFECTS OF RINGGIT DEPRECIATION SHOCKS

The paper seeks to address two important questions-namely, is exchange rate depreciation expansionary or contractionary and are there distributional consequences of exchange rate shocks for the case of Malaysia? In the paper, we consider the relations between aggregate output as well as eight sectoral outputs and real effective exchange rate in multivariate setting. Applying multivariate cointegration test, we find evidence for cointegration among the variables for all sectors. More importantly, both real output (aggregate output as well as all sectoral output) and real exchange rate contribute significantly to the cointegration space, affirming the presence of long run relations between the two focused variables. In most cases, the estimated cointegrating vectors suggest expansionary currency depreciation. Our simulated dynamics using generalized impulse responses further substantiate this finding especially over longer horizons. Over shorter horizons, however, exchange rate depreciation can be contractionary for certain sectors particularly for the construction sector. Lastly, we also find evidence indicative of the differential effects of the currency shocks. Comparatively, the manufacturing sector, transport, storage and communication sector, and finance, insurance, real estates and business services sector seem to be affected more by exchange rate fluctuations.Exchange Rate Shocks, Sectoral Output, Cointegration, Generalized Impulse Responses

An Empirical Analysis of Real Activity and Stock Returns in an Emerging Market

The present paper analyzes the role of stock market returns as a predictor of real output for a fast-growing emerging market, Malaysia. In the analysis, forecasting equations for 1-, 2-, 4-, and 8-quarter forecasting horizons based on autoregressive distributed lags framework are adopted. From the estimation, we find evidence that stock market returns do contain predictive ability at short-forecasting horizons, especially at less than 4-quarter horizons. Estimating the forecasting models recursively, we note reduction of out-of-sample forecasting evaluation statistics, namely the mean absolute errors (MAE) and the mean squared forecast errors (MSFE), from those obtained from the simple autoregressive (AR) model. More importantly, the null hypothesis of equal predictive accuracy between the model with stock returns as a predictor and the AR model is rejected for the 1-quarter and 2-quarter forecasting horizons by the McCraken’s (2007) out-of-sample-F statistics.Stock Return, Real GDP Growth, Out-of-Sample Forecasts, Malaysia

Oil price risk in selected ASEAN markets

This paper analyzes the oil price risk in four ASEAN markets using a two-factor "market and oil" model and EGARCH(1, 1) variance specification. In the analysis, three alternative non-linear measures of oil prices are used and robustness check of basic results is also performed. The results suggest a direct relation between oil price changes and stock market returns and indicate no evidence for asymmetric oil price risk for Indonesia. Meanwhile, the asymmetric oil price risk seems apparent for the markets of Malaysia, Singapore and Thailand. For an oil exporting Malaysia, the oil price decline tends to compromise its market performance while the oil price increase does not seem to be beneficial. In contrast, for oil-importing Singapore and Thailand, the oil price shocks tend to adversely affect their market returns. The contrasting experiences of these markets in the face of oil price fluctuations are attributed to the degree of oil dependency, level of financial development, and trade openness

EXCHANGE RATE FLEXIBILITY, CAPITAL MOBILITY AND INFLATION TRANSMISSION IN MALAYSIA

The paper assesses the international transmission of inflation for a small economy, Malaysia, over three sample periods marked by different degrees of exchange rate flexibility. Contradicting to conventional wisdom of less pronounced foreign nominal influences under the flexible exchange rate regime, this research finds evidence that the inflation transmission from the US to Malaysia is strongest during the period marked by increasing exchange rate flexibility (i.e. 1993-1998). This research also observes significant inflation effects of exchange rate depreciation during the same period. While this research observe less pronounced impacts of the US during the limited exchange rate flexibility period (i.e. 1988-1999), the US influences are virtually absent during the recent fixed regime (i.e. 1998-2005). This research believes that the intensity of capital flows across the three periods might have explained the results

Comparative study of stress-strain characteristic of peat soil

This paper shows the stress-strain behavior of peat from the perspective of geotechnical engineering based on laboratory test. Stress happens when a load applied to a certain specimen and deformed the specimen while strain is the response from applied stress on a specimen. Peat is known as an ultimate soft soil in engineering terms because it has low shear strength and compressibility. This research is concerned about the stress-strain behavior of hemic peat. The undisturbed samples were collected at Parit Sulong and Parit Nipah, Batu Pahat, Johore, Malaysia. Normal stresses are 12.5kPa, 25kPa, 50kPa and 100kPa. The shear rate to determine the stress-strain on peat is 0.1mm/min. It is a drained condition test. Both results from each method that obtained were compared based on the relationships of stress-strain. Parit Sulong has higher stress-strain than Parit Nipah. If shear stress increased, shear strain also increased. The result shows that, direct simple shear test of stress-strain that tested on hemic is more relevant than a direct shear box because DSS shear the entire specimen of peat while DSB only shear at the center of the specimen. Geotechnical engineers can use the direct simple shear method to understand efficiently about the stress-strain behaviour of pea

A dynamic analysis of output, energy consumption, and CO2 emissions in Malaysia

Present paper analyzes the interrelations between output, energy consumption, and carbon emissions in light of Malaysia’s development experience from a commodity-based economy to an industrial-based economy by means of a vector autoregression (VAR) framework. The results suggest substantial interactions among the three variables. Moreover, manufacturing output tends to exert persistent influences on carbon emissions, energy consumption, and non-manufacturing output. Meanwhile, the significant causal relations from non-manufacturing output to energy variables are found for first few years. These results are robust to the inclusion of additional variables – namely, trade openness, investment, and population – in the system

Bank lending, macroeconomic conditions and financial uncertainty: Evidence from Malaysia

AbstractIn this paper, we examine the interrelations between bank lending, macroeconomic conditions and financial uncertainty for an emerging economy, Malaysia. Adopting time series techniques of cointegration, causality and vector autoregressions (VARs), we arrive at the following main results. We note long run positive relations between real output and both real bank credits and real stock prices. However, with slow adjustment of real output in responses to credit expansion or stock price increase and weak exogeneity of the latter two variables, both credits and stock prices can be persistently higher than their fundamental values. The phenomenon can be detrimental since it heightens market uncertainty. Our results suggest that heightened market uncertainty is negatively related to output in the long run and, on the basis of dynamics analysis, it is likely to depress real output, real credit and real stock prices. At the same time, we note significant dynamic impacts of interest rate shocks on other variables. Taken together, these results have important implications for macroeconomic performance and stability for the case of Malaysia

The Influence of Green Marketing Mix on Consumer Purchase Intention Towards Green Products

Today, the whole world is experiencing environmental problems such as climate changes, global warming and ozone depletion. All the problems have eventually led to disruption and losses for businesses. To ensure smooth operations, businesses are starting to shift their business model favouring towards producing environmentally friendly products. The right marketing strategy will persuade customers to purchase the product offered. Therefore, green marketing is recommended to be used as part of the strategy to guarantee green product purchases among customers. However, the use of green marketing can influence customers are still widely in need of exploration and research. Hence, this paper aims to look into and explore the acceptances of green marketing mix that influence consumer purchase intention towards green products. The study examined green marketing elements towards purchase intention. A total number of 150 responses are analysed to find the acceptances of green marketing mix by using regression analysis. The result indicates that the green marketing mix has positive impact towards customer purchase intention

International Financial Integration through Depositary Receipts (DRs)

The issue of liquidity and underdevelopment of the Organisation of Islamic Cooperation (OIC) stock markets has caused problems to companies in those countries that seek higher equity capital. One way out of this problem is to employ international markets more intensively by seeking cheaper cost of capital through Depositary Receipts (DRs). Many studies on DRs focused on emerging and developed countries, leaving many OIC countries behind. Thus, this study investigates the financial implication by examining the integration of returns of local and foreign stock markets via American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs) of OIC countries. Techniques employed in this study are cointegration and the speed of adjustments to examine the existence of integration between the local and foreign stock markets. The study covers a sample of 146 firms from 17 OIC countries that are cross-listed as ADRs or GDRs from 1992 to 2011. The findings show mixed results when some markets provide evidence of integration while others show evidence of segmentation. The study on the integration between DR and home equity markets has practical implications for both the international as well as domestic investors especially on portfolio selection, asset pricing and risk managemen