When BNM goes into the market to mop up what they think is excess money from the system,it means they are aggressively trying to take more money out of the system and redirect it for government use. By doing so, the government does not need to go into more deficit financing in its annual budgets or to mount additional taxes. At the same time, when the free float of cash or near cash is narrowed, inflation can somehow be better managed and the bubble be averted.
So who pays for these papers? Those who will buy these papers range from insurance companies to pension funds and the like such as Tabung Haji,EPF and SOCSO who are collecting money from the citizen every single month. Unit trusts such as Permodalan Nasional could also be buying the funds and so are Islamic-denominated funds.
It is interesting to note that that the government did mention in the 2010 Budget that they will be issuing sukuk funds. Is this that move? If that is so, then there will no longer be any sukuk funds to be provided for the rakyat's subscription in 2010. If that be the case, then ASM1 could indirectly be targeted if it could announced a good maiden dividend in August 2010.
Let us wait and see.
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