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The Malaysian economy worsens as the GDP contracted 6.2 percent for the first quarter and this prompt PM Najib to provide a new GDP forecast for 2009. the government had earlier estimated the forecast to grow or contract 1 per cent. Now the forecast for year 2009 is 4 to five per cent. See more report from The Star online below.
Do you still believe that Malaysia will not go into recession? Investlobby already mentioned about recession in Malaysia last year.
The negative report does not seem to bother stock investors. The KLCI is 9.6 points at 1,038.08 points as at 4:00 pm.
****
N.I.N.E.
From the Star Online:
PUTRAJAYA: Malaysia's gross domestic product (GDP) has been revised to a contraction of between 4% and 5% this year on the back of worsening global economic outlook, says Prime Minister Datuk Seri Najib Tun Razak.
"The revision is due to very weak external demand as well as falling private sector investment and FDI (foreign direct investment) flows," he said at a press conference today.
The conditions of the external environment was "far worse than expected," he added. The Government had earlier estimated GDP to grow at 1% or to contract up to 1%.
Najib said nonetheless, the fourth quarter GDP was likely to return to growth while next year should be in the positive territory.
Any recovery would depend on the improvements of the US and European economies, he added.
Yesterday, Bank Negara released the first quarter GDP figure that showed a contraction of 6.2%, and indicated that the second quarter could be "similar."
Two consecutive quarters of negative GDP growth would translate into a technical recession.
Earlier this year, the Government announced the second stimulus package worth RM60bil, bringing the total fiscal spending to RM67bil.
The central bank, after cutting overnight policy rate three times since last November, has maintained the benchmark rate at 2% in the past two monetary policy meetings.
It believed that the accumulated monetary policy initiatives and measures to enhance access to financing were sufficient to provide support to domestic demand.
At 3.50pm, the Kuala Lumpur Composite Index was down 8.76 points at 1,038.9.
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From left, with Forex/Elliot Wave Expert Don Schellenberg, NextVIEW's Paul Yeo and Stephen Lai, "CNBC Chart Man" Daryl Guppy at Bursa Malaysia 2005 -
From left, Forex experts Dar Wong and Don Schellenberg at Singapore Asia Trader and Investor Convention, ATIC 2009 -
From top left, with Trading coach Stuart McPhee and Professional licensed futures trader Brent Penfold at Singapore Asia Trader and Investor Convention, ATIC 2007. -
With Trading Coach and Author of best-selling trading book, Trading for a Living, Dr. Alexander in 2008. -
Interviewed in a business TV Channel in Pakistan while conducting a course and invited to speak at the Karachi Stock Exchange.
Showing posts with label economy. Show all posts
Showing posts with label economy. Show all posts
Thursday, May 28, 2009
Friday, May 22, 2009
Consider this: Malaysia’s economy managed to grow, albeit at a slower pace of 0.1%, in the fourth quarter of 2008 (4Q08) despite major economies including its neighbour experiencing severe contraction – the US contracted by 6.2%, the Euro area shrank 1.5% and Singapore contracted by 16.9%.
It is rather mind-boggling to see such figures, where Malaysia considerably outperformed the other countries during the final quarter of last year. Not that we do not believe that Malaysia is superior to the other three countries as its banking system was untainted by the global financial crisis because it was not exposed to the sub-prime mortgage issue. It is just the extent of the out-performance.
But analysing it further, there is in fact a reason for such an out-performance. It is simply because in this case the apple is not compared with other three apples but rather with three oranges.
Why?
In Malaysia, the gross domestic product (GDP) figures are always released in the form of year-on-year change. The 0.1% growth is arrived at when the real output in 4Q08 is compared against the real output in 4Q07.
However, in the US, Euro area and Singapore, as examples shown above, the figures are based on the percentage difference between the real output in 4Q08 and the real output in 3Q08, seasonally adjusted. For the US and Singapore figures, the figures are annualised.
Hence, while one can compare the performance of the US and Singapore economies when using the above figures, one should not compare them with the figure on the Euro area as it was not annualised and on Malaysia’s economic growth as it was y-o-y and not q-o-q.
For the US economy, the right number to use for comparison to Malaysia’s 0.1% GDP growth in the 4Q08 should be the 0.8% contraction it experienced between the 4Q07 and 4Q08. For the Euro area, it would be its y-o-y contraction of 1.3% in the 4Q08. And for Singapore, the republic’s economic output contracted by 3.7% in the 4Q08, y-o-y.
Hence the right comparison for Malaysia’s 0.1% GDP growth in the 4Q08 should be the contraction of 0.8% in the US, 1.3% in the Euro area and 3.7% in Singapore.
As said earlier, we are not doubtful of the strength of the Malaysian economy, but it is just whether she considerably outperformed the others. If someone wants to compare the 6.2% output contraction in the US, 16.9% in Singapore and 1.5% (not annualised) in Euro area to that in Malaysia, he should calculate Malaysia’s output in the 4Q08 against that in 3Q08. It is also a contraction, by 3.6%, not annualised.
But then, there will be an argument that such a figure may not be adjusted for seasonal factors, such as the number of days in the fourth against the third quarter, the number of public holidays and weekends, and other factors.
Notwithstanding the above argument, and for comparison, Malaysia economy registered growth both y-o-y and q-o-q in 4Q07, that is by 7.3% and 0.8% respectively. Likewise in 4Q06, growth rates were 5.3% and 0.3% respectively for Malaysia. However, one important observation is that in 4Q08, Malaysia economy experienced the first q-o-q contraction in the fourth quarter since 4Q00.
Chart 1: Malaysia Real GDP
Perhaps it is high time for Bank Negara Malaysia to also include quarter-on-quarter performance of the country’s economic output, seasonally adjusted, in its Economic and Financial Development quarterly report. Although the q-o-q figures, yet to be known whether or not they are seasonally adjusted, are available in the statistics table released, most layman investors and traders certainly refer only to the report instead of the tables.
Such an inclusion in the report would certainly allow traders and investors to use the right economic figures when comparing to similar figures of other countries, as well as for investment decision at macro level.
(Note: The 1Q09 GDP numbers for Malaysia are expected to be released not later than 27 May 2009.)
****
Article Contributed By Ameer Ali Mohamed. Ameer is Director, Financial Research of NextVIEW. He has a total of 20 years experience as a corporate journalist, investment analyst and fund manager, including as research head of two stockbroking firms and CEO/CIO of a funds management company.
Republished with permission.
This article was published in the Just Say It column in Shares Investment (Malaysia edition) May 2009. You can get the latest copy of Shares Investment (Malaysia edition) at leading bookstores in Malaysia.
It is rather mind-boggling to see such figures, where Malaysia considerably outperformed the other countries during the final quarter of last year. Not that we do not believe that Malaysia is superior to the other three countries as its banking system was untainted by the global financial crisis because it was not exposed to the sub-prime mortgage issue. It is just the extent of the out-performance.
But analysing it further, there is in fact a reason for such an out-performance. It is simply because in this case the apple is not compared with other three apples but rather with three oranges.
Why?
In Malaysia, the gross domestic product (GDP) figures are always released in the form of year-on-year change. The 0.1% growth is arrived at when the real output in 4Q08 is compared against the real output in 4Q07.
However, in the US, Euro area and Singapore, as examples shown above, the figures are based on the percentage difference between the real output in 4Q08 and the real output in 3Q08, seasonally adjusted. For the US and Singapore figures, the figures are annualised.
Hence, while one can compare the performance of the US and Singapore economies when using the above figures, one should not compare them with the figure on the Euro area as it was not annualised and on Malaysia’s economic growth as it was y-o-y and not q-o-q.
For the US economy, the right number to use for comparison to Malaysia’s 0.1% GDP growth in the 4Q08 should be the 0.8% contraction it experienced between the 4Q07 and 4Q08. For the Euro area, it would be its y-o-y contraction of 1.3% in the 4Q08. And for Singapore, the republic’s economic output contracted by 3.7% in the 4Q08, y-o-y.
Hence the right comparison for Malaysia’s 0.1% GDP growth in the 4Q08 should be the contraction of 0.8% in the US, 1.3% in the Euro area and 3.7% in Singapore.
As said earlier, we are not doubtful of the strength of the Malaysian economy, but it is just whether she considerably outperformed the others. If someone wants to compare the 6.2% output contraction in the US, 16.9% in Singapore and 1.5% (not annualised) in Euro area to that in Malaysia, he should calculate Malaysia’s output in the 4Q08 against that in 3Q08. It is also a contraction, by 3.6%, not annualised.
But then, there will be an argument that such a figure may not be adjusted for seasonal factors, such as the number of days in the fourth against the third quarter, the number of public holidays and weekends, and other factors.
Notwithstanding the above argument, and for comparison, Malaysia economy registered growth both y-o-y and q-o-q in 4Q07, that is by 7.3% and 0.8% respectively. Likewise in 4Q06, growth rates were 5.3% and 0.3% respectively for Malaysia. However, one important observation is that in 4Q08, Malaysia economy experienced the first q-o-q contraction in the fourth quarter since 4Q00.
Chart 1: Malaysia Real GDP
Perhaps it is high time for Bank Negara Malaysia to also include quarter-on-quarter performance of the country’s economic output, seasonally adjusted, in its Economic and Financial Development quarterly report. Although the q-o-q figures, yet to be known whether or not they are seasonally adjusted, are available in the statistics table released, most layman investors and traders certainly refer only to the report instead of the tables.
Such an inclusion in the report would certainly allow traders and investors to use the right economic figures when comparing to similar figures of other countries, as well as for investment decision at macro level.
(Note: The 1Q09 GDP numbers for Malaysia are expected to be released not later than 27 May 2009.)
****
Article Contributed By Ameer Ali Mohamed. Ameer is Director, Financial Research of NextVIEW. He has a total of 20 years experience as a corporate journalist, investment analyst and fund manager, including as research head of two stockbroking firms and CEO/CIO of a funds management company. Republished with permission.
This article was published in the Just Say It column in Shares Investment (Malaysia edition) May 2009. You can get the latest copy of Shares Investment (Malaysia edition) at leading bookstores in Malaysia.
Thursday, February 5, 2009
The are many opinions about the current global economic crisis. Some say economy may recover in 2009, stock market may bottom out, some say it's going to get worst in second half of 2009. Some say the slow down may last up to 2 more years. Some say there is going to be anarchy and some even said it may lead to World War III. What do you think? Can we get out of this economic and financial mess this year?
See the video for some of the people's opinions on the Davos Debates...
Kofi Annan
Bollywood Actor Amitabh Bachchan
Harvard's Peter Galison
Zurich's Financial CEO James Schiro
Bob Forbes of Forbes FY!
Arianna Huffington of huffingtonpost.com
Buddhist monk Matthieu Ricard
Chairman of Intel Craig Barrett
More HERE from Youtube
****
N.I.N.E.
See the video for some of the people's opinions on the Davos Debates...
Kofi Annan
Bollywood Actor Amitabh Bachchan
Harvard's Peter Galison
Zurich's Financial CEO James Schiro
Bob Forbes of Forbes FY!
Arianna Huffington of huffingtonpost.com
Buddhist monk Matthieu Ricard
Chairman of Intel Craig Barrett
More HERE from Youtube
****
N.I.N.E.
Tuesday, January 6, 2009
Stimulus packages here, there and everywhere! They seem to be the order of the day. They are there simply to provide an impetus for growth in a dwindling economy where financial markets cannot.
Interestingly, these current efforts are not taken by individual countries, but rather en bloc. For example, at the recently concluded Asia Pacific Economic Cooperation (Apec) summit, the member economies agreed to coordinate their stimulus packages to avert a global recession.
Late last month, the European Union (EU) launched a Euro 200b financial package, equivalent to 1.5% of the 27-nation union's gross domestic product (GDP). Of this amount, 85 per cent will come from national government budgets with the remainder coming from the EU and the European Investment Bank's budgets.
Thus far, the United States had announced a package totalling US$1.5 trillion. Observers do not discount this ballooning to US$2.0b as economists are expecting an additional US$500b tax cut plan soon. The latest was a second stimulus package worth US$800b of two parts – US$600b to buy mortgage related debt and securities; and US$200b to buy consumer debt securities.
These do not include the possibility of President-elect Barack Obama considering a circa US$1.1 trillion economic stimulus package as soon as he takes office on Jan 20 in a bid to create or save 2.5 million jobs.
Other stimulus packages include Britain's £20 billion (slightly more than 1% of its GDP) and China's 4 trillion yuan over the next two years with emphasis on public welfare projects, infrastructure, environment protection and post quake reconstruction in south-western China.
IS RM7B FOR MALAYSIA ENOUGH?
In Malaysia, a RM7b stimulus package was announced, to be spent on “high impact” projects. The funds would come from savings due to lower than expected subsidies on retail fuel prices following battered global crude oil prices. It remains to be seen if this is sufficient to withstand the current onslaught of the global economic crisis.
What is certain is that the package appears minute, considering it is only 0.93% of Malaysia’s annualised GDP, at current prices of RM751b based on figures for the first three quarters of 2008.
Some may argue that the funds are complemented by the three-percentage-point reduction in the employees' contribution to the Employees Provident Fund, which could release RM4.8b per annum to private consumption if all employees opt for it. However, dwindling exports and net outflow of portfolio and overseas investments are points of concern.
Malaysia’s exports are already affected as its major trading partners – such as the United States, Europe, Japan and Singapore – have either gone into technical recession or are experiencing acute slowdown. Net real exports of goods and services dropped 14.8% in 3Q08, down from 20.0% growth in the previous quarter – a major factor that pulled down the 3Q08 GDP to 4.7% from a revised 6.7% in 2Q08.
Portfolio investment outflow rose to RM38.4b in 3Q08 from RM31.0b in 2Q08, due to the continued global de-leveraging process. Additionally, there was a RM16.1b outflow in 3Q08 for overseas investments by Malaysian companies against an inflow of RM3.6b in the previous quarter.
Hence, we expect additional stimulus to be introduced early next year.
BETWEEN STIMULUS, RESCUE AND BAILOUT
Certainly, the world's governments will have to face cynical comments from their respective opposition political parties and even the people who voted for them. Their cynicism may include their usage positive-sounding words like “stimulus package” to mask what is essentially a “bailout” of financial giants.
Political differences aside, one of the main reasons the leaders must use positive words, from an economic perspective, is to avoid extreme worry among consumers as this would aggravate the already subdued economic situation.
The value of national income is computed from the sum of private investments, public consumption and investments, and exports, minus imports. It would be a disaster if all the elements of investment, consumption and exports contract. So, it all boils down to managing confidence.
While growth in consumer spending, private investments and exports are moving into negative territory, one way to cushion the fall in national income is to increase government spending, with a view that over time, this will mend private sector sentiment.
Granted, stimulus packages must be spent wisely and channeled to sectors that are deemed to have a “higher economic multiplier”. As EU Monetary Affairs commissioner Joaquin Almunia puts it: “If the impulse is not coordinated, one plus one might not equal two, but less, even zero. If it is coordinated, one plus one may equal three.”
If a stimulus package is geared to rescue sinking financial giants, it must be done carefully – to rescue, not to bailout – for two main reasons, namely to rescue the financial sector (an important component of the economy) and to save the employees.
It is a “bailout” if, in the process, the current major or controlling shareholder(s) and top executives of the financial giants are protected while the employees, who have no say in the running of the institution, get retrenched. Giant institutions falter due to the doing or oversight of the top executives and, to a certain extent, the chairman and board members. Hence, they should be replaced if government monies are used to finance the rescue. Otherwise, the same mistakes may be repeated once the economic cycle comes back in the future.
Independent non-executive directors should also be seen to act in the interests of minority shareholders, and not for the benefit of controlling shareholders. It is high time indeed for corporate journalists, in their coverage of listed companies, to also quote independent non-executive directors to make them answerable to minority shareholders and employees.
****
Article Contributed By Ameer Ali Mohamed. Ameer is Director, Financial Research of NextVIEW. He has a total of 20 years experience as a corporate journalist, investment analyst and fund manager, including as research head of two stockbroking firms and CEO/CIO of a funds management company.
Republished with permission.
This article was published in the Just Say It column in Shares Investment (Malaysia edition) December 2008. You can get the latest copy of Shares Investment (Malaysia edition) at leading bookstores in Malaysia.
Interestingly, these current efforts are not taken by individual countries, but rather en bloc. For example, at the recently concluded Asia Pacific Economic Cooperation (Apec) summit, the member economies agreed to coordinate their stimulus packages to avert a global recession.
Late last month, the European Union (EU) launched a Euro 200b financial package, equivalent to 1.5% of the 27-nation union's gross domestic product (GDP). Of this amount, 85 per cent will come from national government budgets with the remainder coming from the EU and the European Investment Bank's budgets.
Thus far, the United States had announced a package totalling US$1.5 trillion. Observers do not discount this ballooning to US$2.0b as economists are expecting an additional US$500b tax cut plan soon. The latest was a second stimulus package worth US$800b of two parts – US$600b to buy mortgage related debt and securities; and US$200b to buy consumer debt securities.These do not include the possibility of President-elect Barack Obama considering a circa US$1.1 trillion economic stimulus package as soon as he takes office on Jan 20 in a bid to create or save 2.5 million jobs.
Other stimulus packages include Britain's £20 billion (slightly more than 1% of its GDP) and China's 4 trillion yuan over the next two years with emphasis on public welfare projects, infrastructure, environment protection and post quake reconstruction in south-western China.
IS RM7B FOR MALAYSIA ENOUGH?
In Malaysia, a RM7b stimulus package was announced, to be spent on “high impact” projects. The funds would come from savings due to lower than expected subsidies on retail fuel prices following battered global crude oil prices. It remains to be seen if this is sufficient to withstand the current onslaught of the global economic crisis.
What is certain is that the package appears minute, considering it is only 0.93% of Malaysia’s annualised GDP, at current prices of RM751b based on figures for the first three quarters of 2008.Some may argue that the funds are complemented by the three-percentage-point reduction in the employees' contribution to the Employees Provident Fund, which could release RM4.8b per annum to private consumption if all employees opt for it. However, dwindling exports and net outflow of portfolio and overseas investments are points of concern.
Malaysia’s exports are already affected as its major trading partners – such as the United States, Europe, Japan and Singapore – have either gone into technical recession or are experiencing acute slowdown. Net real exports of goods and services dropped 14.8% in 3Q08, down from 20.0% growth in the previous quarter – a major factor that pulled down the 3Q08 GDP to 4.7% from a revised 6.7% in 2Q08.
Portfolio investment outflow rose to RM38.4b in 3Q08 from RM31.0b in 2Q08, due to the continued global de-leveraging process. Additionally, there was a RM16.1b outflow in 3Q08 for overseas investments by Malaysian companies against an inflow of RM3.6b in the previous quarter.
Hence, we expect additional stimulus to be introduced early next year.
BETWEEN STIMULUS, RESCUE AND BAILOUT
Certainly, the world's governments will have to face cynical comments from their respective opposition political parties and even the people who voted for them. Their cynicism may include their usage positive-sounding words like “stimulus package” to mask what is essentially a “bailout” of financial giants.Political differences aside, one of the main reasons the leaders must use positive words, from an economic perspective, is to avoid extreme worry among consumers as this would aggravate the already subdued economic situation.
The value of national income is computed from the sum of private investments, public consumption and investments, and exports, minus imports. It would be a disaster if all the elements of investment, consumption and exports contract. So, it all boils down to managing confidence.
While growth in consumer spending, private investments and exports are moving into negative territory, one way to cushion the fall in national income is to increase government spending, with a view that over time, this will mend private sector sentiment.
Granted, stimulus packages must be spent wisely and channeled to sectors that are deemed to have a “higher economic multiplier”. As EU Monetary Affairs commissioner Joaquin Almunia puts it: “If the impulse is not coordinated, one plus one might not equal two, but less, even zero. If it is coordinated, one plus one may equal three.”
If a stimulus package is geared to rescue sinking financial giants, it must be done carefully – to rescue, not to bailout – for two main reasons, namely to rescue the financial sector (an important component of the economy) and to save the employees.
It is a “bailout” if, in the process, the current major or controlling shareholder(s) and top executives of the financial giants are protected while the employees, who have no say in the running of the institution, get retrenched. Giant institutions falter due to the doing or oversight of the top executives and, to a certain extent, the chairman and board members. Hence, they should be replaced if government monies are used to finance the rescue. Otherwise, the same mistakes may be repeated once the economic cycle comes back in the future.
Independent non-executive directors should also be seen to act in the interests of minority shareholders, and not for the benefit of controlling shareholders. It is high time indeed for corporate journalists, in their coverage of listed companies, to also quote independent non-executive directors to make them answerable to minority shareholders and employees.
****
Article Contributed By Ameer Ali Mohamed. Ameer is Director, Financial Research of NextVIEW. He has a total of 20 years experience as a corporate journalist, investment analyst and fund manager, including as research head of two stockbroking firms and CEO/CIO of a funds management company.
Republished with permission.
This article was published in the Just Say It column in Shares Investment (Malaysia edition) December 2008. You can get the latest copy of Shares Investment (Malaysia edition) at leading bookstores in Malaysia.
Saturday, November 8, 2008
The economy is saying to the financial markets "If you jump, I jump.... later". In his seminar on October 25 in Singapore, Author, Private Trader and Trading Coach Dr. Alexander Elder mentioned that normally, the financial market lead the economy about nine to twelve months ahead.Now that the financial markets have taken a dive.... the economy is following suit. We may not feel it now especially in the Asian region... but we shall feel the pinch next year. So, 2009 is going to be a tough year.
Already, unemployment rate in the US has spiked up to 14 year high of 6.5%. About 10 million people in the US are jobless. The economic crisis in the US is deepening. read more here.
Economy saying to Financial Markets "I'll see you soon..."
N.I.N.E.
Thursday, October 16, 2008
Investors all around the world are pessimistic about the current economic situation despite optimism shown in governments. Central banks in Europe including the US have aggressively approved hundreds of billions of dollars to bail out ailing finance companies in hoping to ease the deteriorating financial and economical situation around the globe.Those who still think that the economy would not go into recession is still in wonderland. Those who bought equity and properties last year wished that they should not have invested last year. We are currently only seeing the mortgage crisis affecting the financial markets but what we have not seen yet is the business, automobile and credit card loans which somehow will be a crisis if the economy goes into deep recession.
New economy data include drop of retail sales by 1.2%, higher than the 0.7% predicted by
analysts, as reported in AP news. This made it clear that the consumers are more careful in their spending. Light, sweet crude oil fell $4.09 to settle at $74.54 per barrel on the New York Mercantile Exchange, a 13 months low. Price of Crude Palm Oil fell RM107 or 5.8% to close at RM1,743 per metric ton, currently at a price level 2 years ago.Goverments are trying to cut spendings on developments and concentrate on developments that are crucial only. In Malaysia, the government is looking to relook at stop some projects. This may cause even more concern for the economy. In Singapore, a planned US$24billion petrochemical investment has been delayed because they are still not able to close its project financing.
Yesterday, the US benchmark index, the Dow Indutrial Average shed 733 points or 7.9% to close at 8577.91 points, almost wiping out the two days gains. The lowest close last week was on Friday at 8,451.19. In the Asian region, reaction was mixed but generally lower. Markets in this part of the world is expected to fall sharply amid the fall in the US and European market.
Investors have passed a vote of no confidence and expect the financial markets to fall lower and remain volatile.
Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.
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