Friday, September 28, 2018

Malaysia economy so far?

Managed to watch this local production before it was dropped in Penang cineplex yesterday and it was a good one (from Saw Teong Hin, the director and producer of Puteri Gunung Ledang, You Mean the World to Me 海墘新路 etc. and crews). I heard weeping of touched (besides mine) given that number of audience at this point of time is lesser than when it was premiered. I could say 9 May was like second independent day for Malaysia if you know what happened during that day.

OK, snapping back to reality after lights were bright.

Some of us who are financially aware may ask, "How is our economy now since the new government is taking over for almost 5 months?" Well, rather than finding our ex-prime minister's simplistic view on our macro economy by correlating oil price and MYR strength (read it here), amuzing (he did write a detail explanation though...), this is my take on Malaysia general economy situation.

Let's kick start with consumer expectation,


Most of the Malaysians, I assume, could attribute the spike of retail sales and consumer confidence during the period of June to August after the general election because the new government was giving a grace period of abolishing Government and Service Tax and replacing it with Sales and Services Tax (which onset in September 2018). Seeing these columns were climbing back from seemingly bottom during this 5 years, I would say it was reviving from months of low (where election tension was looming). Next, we go on with industrial side.




 Unemployment rate and industrial production remained constant for this 5 years period while manufacturing PMI finally expended from contraction since early of 2018. Our weakening Ringgit versus USD is actually helping us, an export oriented country, if foreign investment is still confident on us over our unstable political situation and the infamous 1MDB case. Rising industrial production? I take it as bottom out. How about our central bank interest rate then?
Falling since 2008 crisis which made sense, given that our economy relies a lot on local consumption (look at how many Proton and Perodua on the roads versus Toyota and Honda). Bank Negara or Malaysia Central Bank raised the rate 2 years after that and today it is maintaining around 3% ~ 3.25%. It would be rising rapidly during 2010 - 2011 but generally, I think previous and recent rise was tightening loan when most people were rushing to buy low in various investments.
In US markets, when yield curves were inverted (meaning short term bond yield rates are higher than longer term yield rate, this is probably due to greed of investors to secure low risk returns), stock market crashed most, if not all the time. While looking at Malaysia's story, it seems the curves were starting to flattening while stock market was consolidating or rally from correction during our last cinematic election,
as of 27 Sep 2018
In a nutshell, would you say this is a recovery from Malaysians' much anticipated situation? I am a bit conservative and I would rather say it is a recession for me. Of course, what happened around macro economy is correlating (if you think there is such correlation) with equity markets around 6 to 12 months or vice versa.

This is my personal opinion as a concerned citizen and I don't trade local market. If you are trading or investing Malaysia market, DO YOUR OWN STUDY and don't ask me what to buy or sell because I have mentioned it above. This simple article was meant to share my view and probably some comment from my reader so that we could exchange thought on finance, economy or anything else.

Til then,
Happy hunting!

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