Malaysia: Better signs or better understanding?

If you have followed for a while, you would note that I do not share the ‘about to go bankrupt‘ sentiment by many people about Malaysia. I think they are influenced too much by knowing too little. In fact over half of the callers to a radio show just a few weeks ago said that they believe Malaysia will be the next Greece. Let me be very direct. KINDLY look at Greece’s overall economic fundamentals before you put Malaysia at the same level, especially if you are a Malaysian. Anyway, for the past few weeks, the whole situation seems to be show some better numbers. The ringgit has snapped its continuous falling, at least for a while.
According to some recent reports in media, even the bonds are now showing some signs of stability. Bonds are important indicator because this is how the foreign investors see us. The minute they think we are going to bw downgraded, the bonds would have to be sold as they also exit the stock market quickly. According to Bloomberg, the cost of insuring the nation’s sovereign debt has fallen the most in four years in October, while the ringgit has rallied 3.2% after a decline of 20% in the first nine months. The economy is slower than usual but is still expanding and even the non performing loans remain low at just around 1.17 percent. Also, after months of surplus, in August, the surplus turned double digits in US$ to close with a surplus of US$10.2 billion (RM44 billion).
In the same report, some analysts were making comparisons between Malaysia versus Thailand and Indonesia. Some say they are more attractive and one said that Indonesia is better because the political risks are lower. I suggest these analysts to stay in all three countries longer to understand better. Truth is, all three are still growing even if I am worried at the directionless Thailand under the current army government and the huge decisions that the Indonesian President has to make because it will be many more unpopular but necessary decisions for the country. However, currencies of all three countries continue to drop when compared to some economy which is having negative trade surplus, low savings rate and even a still weak  employment market. Funny right?
I think it is really essential for the Bank Negara to continue to be brave in many decisions and directions, as long as it is for the benefit of the Malaysian economy. Slower and resilient growth is better than unhealthy growth; non performing loans growth being one of them. Keep telling the story and ensure all these faraway analysts understand some of the fundamental issues instead of being clouded by just negative political news or the negative publicity by one company which hopefully should cease to be problematic by beginning of next year. Yes, I have not moved a single cent overseas thus far and have no intention to do so, not even to use any foreign currency to hedge against that potential losses from Ringgit. Happy reading!
written on 27 Oct 2015
next suggested article: Summary Q2 2015: Malaysian economy, Ringgit and Zeti


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