Malaysia: Potential Rate Hike?

Just when you think that Bank Negara Malaysia is impervious to savings and pensioners for the last couple of years,her comes Arab-Malaysian Banking Group giving their considered opinion that there could be a possible rate hike this year. How much? They opined a whopping 50 basis points. Why so? They say they were influenced by stronger economic economic conditions.

This is the report from the Business Times Singapore.

"The onset of the global financial crisis set the stage for interest rate cuts worldwide and the central bank followed suit, slashing rates aggressively by 150 basis points to bring down the overnight policy rate to 2 per cent.

Indeed, the three-month Kuala Lumpur Interbank Offered Rate now stands at 2.2 per cent which is a 20-year low.

The report noted that growth in gross domestic product terms showing signs of a turnaround with third quarter GDP contracting at 1.1 per cent compared to contractions of 3.3 and 6.2 per cent in the second and first quarter respectively.

Loan applications for the month of November also lent credence to stronger growth going forward: it rose 36.8 per cent year on year. In fact, the report noted that the actual figure applied for in November was RM47.8 billion, not far off from the last peak of RM52.8 billion set in August 2008.

In tandem with that, total loans approved in November rose by 37.8 per cent year on year compared to 25.4 per cent in October. Loans approved for the business community for the month rose almost 46 per cent.

Meanwhile,inflation which was negative in July was flat in November, indicating that inflation was likely to creep back to positive territory by the second half. Indeed, with rising global oil prices, the uptick could come even earlier.

With inflation and growth coming back, it seems only a matter of time before the central bank adjusts rates upwards. “Our assumption is for a one-time 50 basis points increase in the second half of 2010,” the Arab-Malaysian report predicted.

If that is borne out, it will be good news for savers who were penalised in 2006 and 2007 when real interest rates were actually negative because of inflation outstripping the cost of money.

It will also be good news for the banks. According to the Arab-Malaysian report, earnings growth for the banking sector as a whole for 2010 could be as much as 40 per cent. Growth in 2009 is estimated to be around 8 per cent.

The better earnings growth is expected to stem from lower loan-loss provisions which are expected to decline by 17 per cent after jumping 19 per cent last year.

The report indicated that its estimate of a 50 basis points increase was “conservative” as the central bank had actually slashed rates by 150 basis points since the onset of the global financial crisis. Thus, it was “not inconceivable” that the central bank make a bigger rate hike."

Do we dare a hope a 150 points rise? Nah! For a start,be thankful for 50 basis points.

Surely the Largest Flower Yet!

Something unusual happened in this town called Río Blanco, Veracruz , México. Nestled in the high mountains in the center zone of the State of Veracruz you will discover the largest flower plant listed as the largest flower of the planet.

It stands two meters high and weighs 75 kilos.




Amorphophallus titanum, also called cadaverous flower has the peculiarity of blooming only during three days every 40 years, a privilege that Mother Nature can bestow on this town in Veracruz.

MACC: The Taking on Bala 1-2-3

Yes, the glove has come off and has been flung on to the floor. This is the challenge from Abu Kassim Mohamed, the new head honcho of MACC.

Is this a case of 'a brand new vacuum will suck clean?' or is this more of the wayang kulit we have all seen for the entire duration of 2009?

So, Bala, the MACC is taking you on. You have to name the place and time outsdie Malaysia where you can meet up with the MACC. They are taking you on. One-Two and Three.

Do you have the gumption to pick up the glove and do the needful?

The Prudential Prediction: Overweights and Underweights

Like the photo above, you could be yawning at the stock-market scenario in 2010. You could also likely experience a roller-coaster ride this year. This is premised on the belief that Asian stock markets, after a rally in 2009, will ride 'the tiger' of the new headwinds expected in the US mortgage sector, Prudential Fund Management Services opined today.

While there is a V-shaped recovery in Asia, markets may have been overly optimistic about a US recovery, said Robert Rountree, the head of investment marketing of Prudential Fund Management Services in Singapore.

“We are not out of the debt crisis. The Americans have got a lot of mortgage hurdles in front of them and that will become apparent this year,” he averred.

US banks have seen delinquent loans growing rapidly on their books but the amount of loans that they have written off have been lagging behind quite significantly, he said.

“2010 is going to be a year when the American banks are going to come under pressure again. As these things start to unfold, you could well see a kneejerk reaction in Asian markets,” said Rountree.

Rountree said he is confident that Asia, with its strong reserves position and a robust banking system, to again emerge relatively unscathed.

“We are going to see another shift to the de-linking of the Asian stock markets and the Asian economies” from the developed world, he said.

“The long-term story of Asia will remain intact, any selloffs are buying opportunities,” he said.

In Asia, Prudential is overweight on China, India, Philippines and Thailand. The fund management firm is underweight on Malaysia and Hong Kong.[How sad!]

India is “expensive on current profit forecasts; but forecast earnings for 2010-2012 will likely surprise on the upside,” said Rountree.

For China, although valuations are no longer a bargain, “it is too early to sell,” he said.

Although the outlook for Malaysian equities does not look fantastic, Malaysian corporate bonds may shine after a lacklustre 2009, said Bernice Leaw, head of investment services at Prudential Fund Management Malaysia.

Malaysia’s corporate bonds may attract more interest than government bonds in 2010, helped by “favourable supply /demand dynamic,” said Leaw.

“Corporate bonds would tend to perform well over the mid-to-longer term as companies’ financial standing improves along with the economy,” she said.

Investors’ risk appetite has improved as the economy recovers and the government’s efforts to rein in budget deficits will lead to fewer government bond issuances.

As a result, government bond yields are expected to stay “range-bound on a weak bias,” she said.

Malaysia: Expect a Good Property Market in 2010

So says Peter Lim of property portal, iproperty.

A litle bit of macro economics.

The Malaysian economy was not spared from the global recession. In the first quarter of 2009, her export hit an all-time low of 6.2% (year over year). However, the market improved in the second half of 2009 yet remained relatively weak when compared to other regional markets such as Hong Kong and Singapore.

According to Peter, for 2010, many industrial players feel that Malaysia’s property market will be performing well because:

1. The interest rate is still very attractive despite its tendency to increase in the near future because of the economy’s improving conditions. Furthermore, finance institutions are moving toward risk-based pricing in determining more sustainable interest rates for the industry.
2. Due to the population growth in Malaysia, the demand for residential properties will remain strong for years to come.
3. The removal of the 30% Bumiputra equity quota for companies seeking to list on Bursa Malaysia will encourage more domestic and foreign direct investment, which will further stimulate the property industry.
4. Developers continue to roll out housing projects with innovative designs, higher quality, 10/90 property financing scheme etc.
5. As the economic condition improves and the household income gradually increases, Malaysians will be prepared to commit to more capital spending such as buying houses.
6. As global economy gradually recovers, foreigners are flocking back to Malaysia to buy properties as we have one of the highest quality and cheapest properties to offer in Asia.

If the the government continues to play its active role in creating employment opportunities and improving the purchasing power of its citizens, Peter is speculating 2010 will be one promising year for property investment.

China: Asset Bubble Coolant

The Chinese government does not intend to play with fire. No property bubble and certainly no stock market meltdown can come its way if they stay ever vigilant.

And so it came to pass. Before the 'shove' phase can come on, they capped it at the 'push phase'.China renewed its vow to curb runaway property price rises by increasing the supply of affordable housing and cracking down on housing speculation.

First, China's central bank raised bank reserve requirements [for the first time since a cut in December 2008], signalling that the days of cheap money are numbered.

They warned of excessive borrowing among land developers and indicated that property prices in the country's rich coastal cities are too high, stressing that the government remains focused on preventing further asset price inflation.

In a joint statement, officials at the Ministry of Finance, Ministry of Land and Resources, the central bank, the banking regulator and others said they would continue to increase the supply of land and affordable housing, and set up checks on the property investments of state-owned enterprises.

"Since the second half of 2009, some cities have witnessed fast property price rises and inefficient supply of housing," the statement said.

The State Council, China's cabinet, on Sunday warned of the negative impact of letting hot money flow into domestic real estate markets and inflating prices further.

The Housing Ministry has also called for stricter rules on giving mortgages to second-home buyers and is discussing eliminating discount financing for buyers who already own one home.

Such a gung-ho approach. Don't they mean business?

Yoga Guru's Licence to Molest?

I think that there must be do's and don't in every field where there is physical contact between the sexes.This is applicable even in the field of sports such as football.

But what about indoor pursuits such as in dancing and yoga? Aren't there ethical standards and 'private space' to be observed by these so-called mahagurus?

The picture below shows how things can really go wrong.