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The sandwiched class is always feeling the squeeze!
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Economic News
- Thread starter FHBH12
- Start date
The sandwiched class is always feeling the squeeze!
More welfare can be done but at a cost. Be prepared to bear with higher cost of living.
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Kopi index heading north in 2016!! Merry Christmas!
漲幅10至20%‧雪隆餐飲先吹漲風
2015-12-24 17:48
（雪蘭莪‧巴生24日訊）隨著明年的電費和天然氣將調漲，加上原料及加工食品漲價，雪隆販商公會聯合會預告雪隆一帶的餐飲價格，將在明年初掀起一波“漲價潮”，平均漲幅達10至20%！
- See more at: http://news.sinchew.com.my/node/458821?tid=1&v=mobile#sthash.AYvjLrwi.dpuf
漲幅10至20%‧雪隆餐飲先吹漲風
2015-12-24 17:48
（雪蘭莪‧巴生24日訊）隨著明年的電費和天然氣將調漲，加上原料及加工食品漲價，雪隆販商公會聯合會預告雪隆一帶的餐飲價格，將在明年初掀起一波“漲價潮”，平均漲幅達10至20%！
- See more at: http://news.sinchew.com.my/node/458821?tid=1&v=mobile#sthash.AYvjLrwi.dpuf
Petronas to raise RM29.5bil for Rapid
Wednesday, 15 June 2016 | MYT 7:11 PM
KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) is seeking to raise US$7.2bil (RM29.5bil) for its Refinery and Petrochemical Integrated Development (Rapid) project in one of the largest project financings from Asia in recent years, Thomson Reuters LPC reported on Wednesday.
The state-owned oil company has asked banks for underwriting commitments of at least US$500mil (RM2.0bil) by next week, LPC reported, citing sources.
A banking source confirmed to Reuters that Petronas has issued a request for proposals for the loan to be used to finance the US$16bil (RM65.5bil) Rapid project.
Petronas did not immediately reply to requests for comment.
The project in the southern state of Johor is set to be Malaysia’s largest liquid-based green-field downstream development. It will consist of a 300,000-barrels-per-day refinery and petrochemical complex, with a combined chemical output capacity of 7.7 million metric tonnes per year. - Reuters
http://www.thestar.com.my/business/business-news/2016/06/15/petronas-to-raise-rm29bil-for-rapid/
Wednesday, 15 June 2016 | MYT 7:11 PM
KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) is seeking to raise US$7.2bil (RM29.5bil) for its Refinery and Petrochemical Integrated Development (Rapid) project in one of the largest project financings from Asia in recent years, Thomson Reuters LPC reported on Wednesday.
The state-owned oil company has asked banks for underwriting commitments of at least US$500mil (RM2.0bil) by next week, LPC reported, citing sources.
A banking source confirmed to Reuters that Petronas has issued a request for proposals for the loan to be used to finance the US$16bil (RM65.5bil) Rapid project.
Petronas did not immediately reply to requests for comment.
The project in the southern state of Johor is set to be Malaysia’s largest liquid-based green-field downstream development. It will consist of a 300,000-barrels-per-day refinery and petrochemical complex, with a combined chemical output capacity of 7.7 million metric tonnes per year. - Reuters
http://www.thestar.com.my/business/business-news/2016/06/15/petronas-to-raise-rm29bil-for-rapid/
Actually, this is not exactly good news.
Just in Feb this year, due to low crude oil prices, Petronas announced plans to reduce its capital expenditure (capex) and operational expenditure (opex) for 2016 by between RM15bil and RM20bil.
There were also plans to further reduce the capex and opex by RM50bil over the next four years.
Despite the rapid reduction in revenue and shrinking cash reserves, Petronas still has to provide hefty dividend commitments to the government.
Then suddenly, they wanted to raise US$7.2bil (RM29.5bil) from banks for the RAPID project which was supposed to be shelved.
Petronas is one of the better credit worthy company in the country, trying to raise a few USD billions should not be much of a problem.
However, there are already people looking at the uncanny timing of this loan and comparing this loan of US$7.2 billion against the US$6.5 billion claim by UAE's IPIC against 1MDB and the Ministry of Finance.
Brexit vote means Fed stays put
SAN FRANCISCO | BY ANN SAPHIR
Housing | Fri Jun 24, 2016 12:10pm EDT Related: HOUSING MARKET
Britain's vote to leave the European Union has thrown financial markets into turmoil and means the U.S. Federal Reserve's ambitions for two rate rises this year have been placed on hold.
The Fed on Friday sought to reassure markets that it would provide liquidity as needed using swap lines in place with other central banks, including the Bank of England as the pound touched a 1985 low against the dollar, world stocks lost more than $2 trillion of their value, and investors rushed for the safety of U.S. Treasuries, pushing the yield on the benchmark 10-year note to a four-year low.
Traders of U.S.-interest rate futures even began to price in a small chance of a Fed rate cut, and now see little chance of any rate hike until the end of next year.
"One can forget about rate hikes in the near term," said Thomas Costerg, New York-based economist at Standard Chartered Bank. "What I'm worried about is that the Brexit vote could be the straw that breaks the back of the U.S. growth picture."
Market volatility in the past year, a stronger U.S. dollar in the past couple of years that has crimped exporters' profits, low oil prices and inflation, and weaker economic growth in U.S. trading partners have kept Fed monetary policy on hold at least twice in the past year.
An interview with Kansas City Fed President Esther George published Friday but conducted before the Brexit outcome was known suggested she still believes U.S. rates need to rise soon.
But comments from other Fed officials in the run-up to the referendum suggest they worried about exactly the kinds of shocks that rippled through financial markets on Friday.
Fed Chair Janet Yellen had warned prior to the vote that Brexit could "negatively affect financial conditions and the U.S. economic outlook".
The question now for the Fed and for central banks globally is how long the shock lasts and how far it spreads. Many investors and economists are worried that the exit vote could stall Europe's faltering growth.
"It depends on how bad things would get and for how long they would stay bad," said Roberto Perli, a partner at Cornerstone Macro LLC and a former Fed staffer. "The problem with trying to handicap outcomes here is that there are too many unknowable unknowns."
A British departure from the now 28-member EU will deprive it of its second-biggest economy and one of the most liberal states, economically.
GLOBAL SENSITIVITIES
Joe Gagnon, a senior fellow at the Peterson Institute for International Economics, had thought the Fed would raise rates once this year.
Brexit, however, will throw the UK into recession, and crimp U.S. exports, payrolls expansion and economic growth by "the equivalent of at least a 25 basis point hike" in Fed interest rates. "It could mean no rate hikes this year," Gagnon said.
If the slowdown deals a severe blow to Europe, which in Gagnon's view is a less likely outcome, the Fed could be forced to delay interest rate rises further.
Global events have repeatedly stayed the hand of the Yellen Fed, which is already loath to do anything to curtail what has been a modest recovery from a deep recession in 2008.
In late 2015 the Federal Reserve deferred an expected interest rate rise after global markets swooned in response to an unanticipated slowdown in China's economy.
Earlier this year, Fed officials cited tighter financial conditions brought on by further heightened worries about China as another reason for caution.
Still, few economists expect the United States to tip into recession as a result of this week's vote. And if growth in U.S. employment, wages, inflation and overall economic output continues, the Fed will need to raise interest rates at some point, even though the full impact of Brexit won't be known for years.
"(Fed policymakers) can’t just put policy on hold for several years – that’s not going to happen," Gagnon said.
(Additional reporting by Jonathan Spicer; Editing by David Chance and Andrea Ricci)
http://www.reuters.com/article/us-britain-eu-fed-analysis-idUSKCN0ZA0R6
SAN FRANCISCO | BY ANN SAPHIR
Housing | Fri Jun 24, 2016 12:10pm EDT Related: HOUSING MARKET
Britain's vote to leave the European Union has thrown financial markets into turmoil and means the U.S. Federal Reserve's ambitions for two rate rises this year have been placed on hold.
The Fed on Friday sought to reassure markets that it would provide liquidity as needed using swap lines in place with other central banks, including the Bank of England as the pound touched a 1985 low against the dollar, world stocks lost more than $2 trillion of their value, and investors rushed for the safety of U.S. Treasuries, pushing the yield on the benchmark 10-year note to a four-year low.
Traders of U.S.-interest rate futures even began to price in a small chance of a Fed rate cut, and now see little chance of any rate hike until the end of next year.
"One can forget about rate hikes in the near term," said Thomas Costerg, New York-based economist at Standard Chartered Bank. "What I'm worried about is that the Brexit vote could be the straw that breaks the back of the U.S. growth picture."
Market volatility in the past year, a stronger U.S. dollar in the past couple of years that has crimped exporters' profits, low oil prices and inflation, and weaker economic growth in U.S. trading partners have kept Fed monetary policy on hold at least twice in the past year.
An interview with Kansas City Fed President Esther George published Friday but conducted before the Brexit outcome was known suggested she still believes U.S. rates need to rise soon.
But comments from other Fed officials in the run-up to the referendum suggest they worried about exactly the kinds of shocks that rippled through financial markets on Friday.
Fed Chair Janet Yellen had warned prior to the vote that Brexit could "negatively affect financial conditions and the U.S. economic outlook".
The question now for the Fed and for central banks globally is how long the shock lasts and how far it spreads. Many investors and economists are worried that the exit vote could stall Europe's faltering growth.
"It depends on how bad things would get and for how long they would stay bad," said Roberto Perli, a partner at Cornerstone Macro LLC and a former Fed staffer. "The problem with trying to handicap outcomes here is that there are too many unknowable unknowns."
A British departure from the now 28-member EU will deprive it of its second-biggest economy and one of the most liberal states, economically.
GLOBAL SENSITIVITIES
Joe Gagnon, a senior fellow at the Peterson Institute for International Economics, had thought the Fed would raise rates once this year.
Brexit, however, will throw the UK into recession, and crimp U.S. exports, payrolls expansion and economic growth by "the equivalent of at least a 25 basis point hike" in Fed interest rates. "It could mean no rate hikes this year," Gagnon said.
If the slowdown deals a severe blow to Europe, which in Gagnon's view is a less likely outcome, the Fed could be forced to delay interest rate rises further.
Global events have repeatedly stayed the hand of the Yellen Fed, which is already loath to do anything to curtail what has been a modest recovery from a deep recession in 2008.
In late 2015 the Federal Reserve deferred an expected interest rate rise after global markets swooned in response to an unanticipated slowdown in China's economy.
Earlier this year, Fed officials cited tighter financial conditions brought on by further heightened worries about China as another reason for caution.
Still, few economists expect the United States to tip into recession as a result of this week's vote. And if growth in U.S. employment, wages, inflation and overall economic output continues, the Fed will need to raise interest rates at some point, even though the full impact of Brexit won't be known for years.
"(Fed policymakers) can’t just put policy on hold for several years – that’s not going to happen," Gagnon said.
(Additional reporting by Jonathan Spicer; Editing by David Chance and Andrea Ricci)
http://www.reuters.com/article/us-britain-eu-fed-analysis-idUSKCN0ZA0R6
- Joined
- Oct 3, 2012
- Messages
- 2,705
- Points
- 48
斩草要除根.. 孙子兵法101.:p
http://www.thestar.com.my/opinion/o...06/25/a-quiet-but-certain-end-of-mahathirism/
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Home*>*Opinion*>*Online Exclusive
Saturday, 25 June 2016 | MYT 9:11 AM
A quiet but certain end of Mahathirism
BY*IVANPAL S GREWAL
*
Popular Now in OpinionThe end of a dreamDon’t take voters lightlyLooking up for inspirationReady, set, grow oldAbu Sayyaf setting sights on Sulu Sea
It was April 2009 and an air of optimism captured Malaysia. We were on the cusp of only the 6th leadership change our country has witnessed in over 50 years.
Our new PM was Datuk Seri Najib Tun Razak. The reviews were glowing. Intelligent, cerebral, urbane, progressive and open-minded were the adjectives or terms used to describe him.
He arguably also had the longest on the job training, some 33 years – it is a generation in fact.
1Malaysia: People First, Performance Now was the galvanising slogan that inspired so many and Malaysians were once again hopeful after the shock results of the 12th General Election a year before.
Najib set out to remake Malaysia and prepare it for the challenges and opportunities of the modern world. Malaysia was also emerging from the 2008 global financial crisis. However, the largest obstacle was dismantling the rather entrenched but obsolete decisions and policies of the Mahathir era.
Tun Dr Mahathir Mohamad, our fourth Prime Minister, was our longest serving and electorally most successful Prime Minister.
He also had a soft spot for very large mega structures that put Malaysia on the map but they were also expensive and this put enormous stress on the government's finances and the economy at large.
Wages were suppressed to ensure factories could produce goods cheaply and export them and prices we controlled with active market intervention and subsidies.
So we all felt really good: goods and services were affordable, savings rates were high, properties were reasonably priced and we had the tallest twin towers in the world.
However, the Mahathir model was unsustainable.
First, the rise of China, India and other large countries created new demand and that caused a rise in the price of food and fuel sapped this feel-good factor.
Second, the government had to rationalise subsidies because it was getting very expensive to subsidise food and fuel. Disposal income lessened and suddenly everyone felt a pinch. Wages continued to remain low as businesses opposed any minimum wage.
Furthermore, Malaysia’s low wage and heavily subsidised model reliant on cheap labour and the manufacturing sector was no longer delivering the economic benefits needed to push Malaysia towards developed nation status.
Many economists argued that Malaysia was stuck in a “middle income trap” unable due to policy failures to forge ahead.
Najib took the bold step of convening a special economic committee to study Malaysia’s economic model and they proposed that a New Economic Model (NEM) be implemented which included liberalisation of the economy, ending needless protectionism that has stunted growth and ensuring opportunities were fairly distributed and greater market access for foreign firms whilst achieving social aims but not at the expense of sustainable economic growth and loss of talent or brain drain.
Mahathir donned the avatar of protector of the status quo that was failing. He used the Malay rights group Perkasa as his platform and stymied the New Economic Model and accused Najib of deviating from the national development policy and Bumiputera agenda.
For any Malaysian politician, such accusations can be debilitating.
Najib responded in his usual deference to Mahathir’s long service but stuck to his guns that reforms are needed.
The Economic Transformation Plan (ETP) was introduced that implemented most of the reforms proposed in the NEM including opening up of the banking, retail and insurance sectors but at the same time Teraju was formed to ensure Bumiputra economic interests were protected and advanced. This was a quintessential Malaysian approach of concord.
Najib then sought to free up the political space and repeal out-dated legislation like the Banishment Act and Restricted Residence Act.
The response from Mahathir and his supporters were tepid. However, the old guard fumed when Najib also repealed the much-maligned Internal Security Act that became a symbol of Mahathirism’s oppressive politics. Najib forged ahead and won plaudits nationally and internationally.
For the first time, the Malaysian government under Najib provided financial aid to Chinese, Tamil and Mission schools. Again, the vanguards of Mahathirism bristled at this. Najib also provided funds for temples and churches that have been neglected for years.
When Najib sought to repair Malaysia’s relations with her neighbours and the United States, immediately he was accused of kow-towing to the foreign powers.
But Najib displayed a canny pragmatism in foreign policy and his crowning achievement was welcoming the President of the United States to Malaysia twice.
Despite all the good work, the people were taken in by the divisive and emotionally charged rhetoric of the opposition coalition voted to punish Barisan Nasional (BN) further.
A rational look at Najib’s successes was completely ignored instead many urbanites decided it was time for a change.
However, for reasons unbeknownst to me, Mahathir became even more hostile and in 2015 openly called for Najib to resign. When his calls were unheeded by BN he worked with the opposition he once castigated and belittled.
And the opposition parties, to satisfy their avarice for power, sacrificed their dignity and started to work with the man they have long claimed is the symbol of what is wrong with Malaysia.
In adversity, I believe Najib sensed great opportunity to free Malaysia from the shackles of Mahathirism. Mahathir was removed as advisor to Petronas and later he resigned as advisor to Proton. His influence on these two companies seized and finally, especially Proton, could take the tough decisions to remain relevant.
Najib assured Proton and government-linked companies that they will be independently run and will no longer see active interference from the government.
Najib even went a step further and proposed further divestment in GLCs to ensure the government gets out of the way business and, enlarge and embolden the private sector.
In seven years as Prime Minister, Najib has quietly but certainly ended Mahathirism and put Malaysia on the right track towards achieving vision 2020.
He has done so minus the pomp and fanfare but I would argue, guided by a belief that the age of government knows best is over.
And the validation of this approach is evident from the results of the Sarawak State Election and the emphatic victories achieved by BN in the Sungai Besar and Kuala Kangsar by-elections.
http://www.thestar.com.my/opinion/o...06/25/a-quiet-but-certain-end-of-mahathirism/
×
The Star Mobile AppStar Media Group BerhadFREE - In Google Play
VIEW
Online Exclusive
Home*>*Opinion*>*Online Exclusive
Saturday, 25 June 2016 | MYT 9:11 AM
A quiet but certain end of Mahathirism
BY*IVANPAL S GREWAL
*
Popular Now in OpinionThe end of a dreamDon’t take voters lightlyLooking up for inspirationReady, set, grow oldAbu Sayyaf setting sights on Sulu Sea
It was April 2009 and an air of optimism captured Malaysia. We were on the cusp of only the 6th leadership change our country has witnessed in over 50 years.
Our new PM was Datuk Seri Najib Tun Razak. The reviews were glowing. Intelligent, cerebral, urbane, progressive and open-minded were the adjectives or terms used to describe him.
He arguably also had the longest on the job training, some 33 years – it is a generation in fact.
1Malaysia: People First, Performance Now was the galvanising slogan that inspired so many and Malaysians were once again hopeful after the shock results of the 12th General Election a year before.
Najib set out to remake Malaysia and prepare it for the challenges and opportunities of the modern world. Malaysia was also emerging from the 2008 global financial crisis. However, the largest obstacle was dismantling the rather entrenched but obsolete decisions and policies of the Mahathir era.
Tun Dr Mahathir Mohamad, our fourth Prime Minister, was our longest serving and electorally most successful Prime Minister.
He also had a soft spot for very large mega structures that put Malaysia on the map but they were also expensive and this put enormous stress on the government's finances and the economy at large.
Wages were suppressed to ensure factories could produce goods cheaply and export them and prices we controlled with active market intervention and subsidies.
So we all felt really good: goods and services were affordable, savings rates were high, properties were reasonably priced and we had the tallest twin towers in the world.
However, the Mahathir model was unsustainable.
First, the rise of China, India and other large countries created new demand and that caused a rise in the price of food and fuel sapped this feel-good factor.
Second, the government had to rationalise subsidies because it was getting very expensive to subsidise food and fuel. Disposal income lessened and suddenly everyone felt a pinch. Wages continued to remain low as businesses opposed any minimum wage.
Furthermore, Malaysia’s low wage and heavily subsidised model reliant on cheap labour and the manufacturing sector was no longer delivering the economic benefits needed to push Malaysia towards developed nation status.
Many economists argued that Malaysia was stuck in a “middle income trap” unable due to policy failures to forge ahead.
Najib took the bold step of convening a special economic committee to study Malaysia’s economic model and they proposed that a New Economic Model (NEM) be implemented which included liberalisation of the economy, ending needless protectionism that has stunted growth and ensuring opportunities were fairly distributed and greater market access for foreign firms whilst achieving social aims but not at the expense of sustainable economic growth and loss of talent or brain drain.
Mahathir donned the avatar of protector of the status quo that was failing. He used the Malay rights group Perkasa as his platform and stymied the New Economic Model and accused Najib of deviating from the national development policy and Bumiputera agenda.
For any Malaysian politician, such accusations can be debilitating.
Najib responded in his usual deference to Mahathir’s long service but stuck to his guns that reforms are needed.
The Economic Transformation Plan (ETP) was introduced that implemented most of the reforms proposed in the NEM including opening up of the banking, retail and insurance sectors but at the same time Teraju was formed to ensure Bumiputra economic interests were protected and advanced. This was a quintessential Malaysian approach of concord.
Najib then sought to free up the political space and repeal out-dated legislation like the Banishment Act and Restricted Residence Act.
The response from Mahathir and his supporters were tepid. However, the old guard fumed when Najib also repealed the much-maligned Internal Security Act that became a symbol of Mahathirism’s oppressive politics. Najib forged ahead and won plaudits nationally and internationally.
For the first time, the Malaysian government under Najib provided financial aid to Chinese, Tamil and Mission schools. Again, the vanguards of Mahathirism bristled at this. Najib also provided funds for temples and churches that have been neglected for years.
When Najib sought to repair Malaysia’s relations with her neighbours and the United States, immediately he was accused of kow-towing to the foreign powers.
But Najib displayed a canny pragmatism in foreign policy and his crowning achievement was welcoming the President of the United States to Malaysia twice.
Despite all the good work, the people were taken in by the divisive and emotionally charged rhetoric of the opposition coalition voted to punish Barisan Nasional (BN) further.
A rational look at Najib’s successes was completely ignored instead many urbanites decided it was time for a change.
However, for reasons unbeknownst to me, Mahathir became even more hostile and in 2015 openly called for Najib to resign. When his calls were unheeded by BN he worked with the opposition he once castigated and belittled.
And the opposition parties, to satisfy their avarice for power, sacrificed their dignity and started to work with the man they have long claimed is the symbol of what is wrong with Malaysia.
In adversity, I believe Najib sensed great opportunity to free Malaysia from the shackles of Mahathirism. Mahathir was removed as advisor to Petronas and later he resigned as advisor to Proton. His influence on these two companies seized and finally, especially Proton, could take the tough decisions to remain relevant.
Najib assured Proton and government-linked companies that they will be independently run and will no longer see active interference from the government.
Najib even went a step further and proposed further divestment in GLCs to ensure the government gets out of the way business and, enlarge and embolden the private sector.
In seven years as Prime Minister, Najib has quietly but certainly ended Mahathirism and put Malaysia on the right track towards achieving vision 2020.
He has done so minus the pomp and fanfare but I would argue, guided by a belief that the age of government knows best is over.
And the validation of this approach is evident from the results of the Sarawak State Election and the emphatic victories achieved by BN in the Sungai Besar and Kuala Kangsar by-elections.
Last edited:
The article glorifies Najib without even mentioning the 1Mdb scandal,the rm2,6 Bil donation and money transferred from SRC to his personal bank account which he claims to have no knowledge but was used to pay his million dollars credit card bills
Bank Negara seen lowering OPR
Saturday, 9 July 2016
HSBC Global Research also expects the central bank to further reduce the SRR
PETALING JAYA: HSBC Global Research expects Bank Negara to trim overnight policy rate (OPR) by 25 basis points and further reduction in Statutory Reserve Requirement (SRR).
It has also lowered its 2017 growth forecast for Malaysia to 3.8%, from 4.3% earlier.
HSBC said Bank Negara may cut OPR to 3% this year as soon as the Sept 7, 2016 monetary policy meeting.
“We think Bank Negara may feel compelled to ease for the first time since the global financial crisis. The window for easing appears to be widening, given lower-than-expected headline inflationary pressure, and our expectation that the US Fed will only hike again in 2017,” HSBC said in its Asian economics quarterly report.
“Bank Negara may also continue to cut the SRR, which it unexpectedly reduced in January by 50 basis points to 3.50%,” it added.
However, another reduction would be aimed at further narrowing the term premium between interbank rates and the OPR, rather than signal an easing in its monetary policy stance.
HSBC said that spread had so far been slowly closing, with 3M KLIBOR down 20 basis points year-to-date, suggesting no need for SRR cuts for now.
Nonetheless, HSBC said the central bank’s foreign exchange reserves remained thin, which, along with the high level of household debt, was a factor that was likely to keep the central bank from easing aggressively.
“However, it also suggests that, in the event of a spike in global risk aversion, Bank Negara may have a less than desirable level of control over capital outflows. This is an easy risk factor to forget, particularly now that Fed has turned more dovish,” it added.
On the political front, HSBC said the noise level surrounding 1Malaysia Development Bhd (1MDB) could increase.
“Nevertheless, near-term political change remains unlikely, with Prime Minister Datuk Seri Najib Tun Razak’s ruling UMNO party showing little inclination to push in that direction for now,” it added.
HSBC said Malaysia’s economic fundamentals have not materially improved since its previous quarterly report, and policy options to tackle the slowdown remain limited.
For the second straight quarter, gross domestic product (GDP) growth for Malaysia in the first quarter of 2016 (1Q16) slowed less than expected, expanding 1% quarter-on-quarter (q-o-q) versus HSBC’s and market expectations for growth of 0.6% to 0.7% quarter-on-quarter (q-o-q).
“Nevertheless we continue to expect full-year 2016 growth of 4.0%. For 2017 we recently lowered our growth forecast to 3.8% from 4.3% earlier,” it said.
It noted that private consumer spending in Malaysia had proven to be extremely robust not just in first quarter 2016, but also in fourth quarter 2015 — surging by 2.6% q-o-q on average over the two quarters (non-annualised).
“However, this is not likely to be sustainable,” HSBC said, adding that consumer sentiment remained weak, with the rebound in first quarter 2016 following an all-time low in fourth quarter 2015.
HSBC said Malaysia’s household debt-to-GDP ratio was the highest in Asia.
“Against this backdrop, government efforts to put more cash in consumers’ pockets via a 3% reduction in pension contributions until December 2017, as well an 11-15% hike in minimum wages from July 2016 are likely to help only at the margin, as households’ preference for accumulating more precautionary savings in the uncertain environment is likely to rise. “Inventories, which contributed significantly to the first quarter 2016 GDP out-turn, are also likely to get pared down in time,” it said.
The research house noted that one bright spark for Malaysia would be investment.
“Despite the pull-back in first quarter 2016, this component has – and will likely continue to be – an important driver of growth, as private sector activity related to the multi-year infrastructure projects under the Economic Transformation Programme remains buoyant.
“That said, for 2017 we are pencilling in a less pronounced pick-up in capital outlays, as Europe and China – key investors in Malaysia – are expected to more fully feel the brunt of Brexit and report slower growth,” HSBC said.
For the same reasons, it is now expecting a smaller recovery in exports in 2017, following a likely contraction this year.
“Although oil prices have been rising so far this year, they remain below last year’s average; furthermore only about 15% of Malaysia’s shipments are LNG or oil related, with the remaining exports still weighed down by tepid growth in the key markets.
“Lastly, with the UK’s EU referendum now having cast a pall over global growth, oil price gains are likely to be constrained,” it said.
http://www.thestar.com.my/business/business-news/2016/07/09/bank-negara-seen-lowering-opr/
Saturday, 9 July 2016
HSBC Global Research also expects the central bank to further reduce the SRR
PETALING JAYA: HSBC Global Research expects Bank Negara to trim overnight policy rate (OPR) by 25 basis points and further reduction in Statutory Reserve Requirement (SRR).
It has also lowered its 2017 growth forecast for Malaysia to 3.8%, from 4.3% earlier.
HSBC said Bank Negara may cut OPR to 3% this year as soon as the Sept 7, 2016 monetary policy meeting.
“We think Bank Negara may feel compelled to ease for the first time since the global financial crisis. The window for easing appears to be widening, given lower-than-expected headline inflationary pressure, and our expectation that the US Fed will only hike again in 2017,” HSBC said in its Asian economics quarterly report.
“Bank Negara may also continue to cut the SRR, which it unexpectedly reduced in January by 50 basis points to 3.50%,” it added.
However, another reduction would be aimed at further narrowing the term premium between interbank rates and the OPR, rather than signal an easing in its monetary policy stance.
HSBC said that spread had so far been slowly closing, with 3M KLIBOR down 20 basis points year-to-date, suggesting no need for SRR cuts for now.
Nonetheless, HSBC said the central bank’s foreign exchange reserves remained thin, which, along with the high level of household debt, was a factor that was likely to keep the central bank from easing aggressively.
“However, it also suggests that, in the event of a spike in global risk aversion, Bank Negara may have a less than desirable level of control over capital outflows. This is an easy risk factor to forget, particularly now that Fed has turned more dovish,” it added.
On the political front, HSBC said the noise level surrounding 1Malaysia Development Bhd (1MDB) could increase.
“Nevertheless, near-term political change remains unlikely, with Prime Minister Datuk Seri Najib Tun Razak’s ruling UMNO party showing little inclination to push in that direction for now,” it added.
HSBC said Malaysia’s economic fundamentals have not materially improved since its previous quarterly report, and policy options to tackle the slowdown remain limited.
For the second straight quarter, gross domestic product (GDP) growth for Malaysia in the first quarter of 2016 (1Q16) slowed less than expected, expanding 1% quarter-on-quarter (q-o-q) versus HSBC’s and market expectations for growth of 0.6% to 0.7% quarter-on-quarter (q-o-q).
“Nevertheless we continue to expect full-year 2016 growth of 4.0%. For 2017 we recently lowered our growth forecast to 3.8% from 4.3% earlier,” it said.
It noted that private consumer spending in Malaysia had proven to be extremely robust not just in first quarter 2016, but also in fourth quarter 2015 — surging by 2.6% q-o-q on average over the two quarters (non-annualised).
“However, this is not likely to be sustainable,” HSBC said, adding that consumer sentiment remained weak, with the rebound in first quarter 2016 following an all-time low in fourth quarter 2015.
HSBC said Malaysia’s household debt-to-GDP ratio was the highest in Asia.
“Against this backdrop, government efforts to put more cash in consumers’ pockets via a 3% reduction in pension contributions until December 2017, as well an 11-15% hike in minimum wages from July 2016 are likely to help only at the margin, as households’ preference for accumulating more precautionary savings in the uncertain environment is likely to rise. “Inventories, which contributed significantly to the first quarter 2016 GDP out-turn, are also likely to get pared down in time,” it said.
The research house noted that one bright spark for Malaysia would be investment.
“Despite the pull-back in first quarter 2016, this component has – and will likely continue to be – an important driver of growth, as private sector activity related to the multi-year infrastructure projects under the Economic Transformation Programme remains buoyant.
“That said, for 2017 we are pencilling in a less pronounced pick-up in capital outlays, as Europe and China – key investors in Malaysia – are expected to more fully feel the brunt of Brexit and report slower growth,” HSBC said.
For the same reasons, it is now expecting a smaller recovery in exports in 2017, following a likely contraction this year.
“Although oil prices have been rising so far this year, they remain below last year’s average; furthermore only about 15% of Malaysia’s shipments are LNG or oil related, with the remaining exports still weighed down by tepid growth in the key markets.
“Lastly, with the UK’s EU referendum now having cast a pall over global growth, oil price gains are likely to be constrained,” it said.
http://www.thestar.com.my/business/business-news/2016/07/09/bank-negara-seen-lowering-opr/
The report in the above post can be summarized with one word - NEGATIVE.
Maybe the worse is yet to happen.
On the political front, HSBC said the noise level surrounding 1Malaysia Development Bhd (1MDB) could increase".
So, when someone finally realized that it's "game over", got panic and got desperate and desperate people may tend do desperate things.....
Maybe the worse is yet to happen.
On the political front, HSBC said the noise level surrounding 1Malaysia Development Bhd (1MDB) could increase".
So, when someone finally realized that it's "game over", got panic and got desperate and desperate people may tend do desperate things.....
Which country got so high 7% inflation? In SG, it's less than 1% this year. This "inflation rate" thing is the most misunderstood one.
For eg, the cunning property agents till today sometimes tell buyers: "Are you going to leave your money in the bank and earn only 1% interest? It can't even beat inflation of 3% per annum. If you invest in this XXX property, you get get returns of 50 to 100% in X number of years!"
The calculation of inflation involves many factors. If you do your own personal analysis, the situation is not as bad as it is.
The worst is when a few years ago, people dunno where else to put their money. They are not qualified to invest in SG properties. So they all rush in to throw money in Iskandar properties. These investors will see their money slowly eroding away along the years. Some are already feeling it. No rental, no potential buyers. Money gets locked up in the properties that no one wants to buy over. Some can't even sell to foreigners. Stuck!
If there's nothing good to invest in, why force oneself to buy something so risky?
Just in the last 3 years, those who put their money safely in the banks are earning a lot more than many who bought into Iskandar.
Does your argument apply to investment in Singapore also?
Yes.......
Many people miss out on an important point in property investment: the ability to leverage.
Even if property prices stay stagnant for the next 10 years, if you can rent out your property to cover the monthly loan installments, you will be far better off than putting money in the bank. On the flip side, it's certainly getting more difficult to find properties which can cover the monthly installments though.
Even if property prices stay stagnant for the next 10 years, if you can rent out your property to cover the monthly loan installments, you will be far better off than putting money in the bank. On the flip side, it's certainly getting more difficult to find properties which can cover the monthly installments though.
It's not all the time you can practice leveraging. Not if you buy a condo in Iskandar in the last few years.
For example, the first movers in Medini can't even get decent rentals from their condos. There will be more condos completed in the next 1-2 years. More competition and higher prices paid some more. How to leverage?
Owners who bought properties at other parts can't even sell to other foreigners below 1mil.
In both scenarios, money is stuck.
On the other hand, those who put money in the bank may be making more money!
First you say the importance of having the ability to leverage, possibility of using rental to cover the monthly installment.
Then you also said the flip side is the difficulties finding rental able to cover the monthly installment.
So, what is you point?
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