As expected by us that budget 2016 will need a big areas to cover as all rounder. However it is not really a stimulus but emphasise on lower budget deficit to stable RM.
Reducing GST for some necessities is crucial. Taxing the rich to increase budget revenue. Using GST to cover oil price budgeted in 2015. CAPEX to kick start numerous infrastructure projects. Mildly reduce taxes for middle class and promote necessary industries via tax rebates.
GDP expected to be lowed around 4% is reasonable. Minimum wages increased also can assist mildly to the lower income group.
There are many details but we believe is an all rounder budget that specifically aim to stable RM. I believe a little budget increase in deficit is a better option to boost economy. Boosting tourism market is the right move but again always is the delivery. We need to catch up in this segment.
As we expected the new budget will clear the concern of income from oil per barrel based on USD 100. We expect RM will slowly recover with even more intervention from both fiscal and monetary policies ahead.
We look forward KLCI to retest 1800 before year end.