A Comedic Routine on the World Economy

UN Report Grim Outlook For Global Economy in 2011




Click Chart For China Bubble Report from Bloomberg


UN Report Grim Outlook For Global Economy in 2011

The recovery from the global economic crisis has been faced with setbacks since the middle of 2010 and the outlook for growth in 2011 remains grim, stated a new UN report pre-released Wednesday.

Akin to a Death Sentence

This article from Patrick Lee who wrote to Free Malaysia Today best describe the facts of the recent price hikes in sugar, fuel and gas. 

Don't forget that the majority of Malaysians today are a poor lot with 57.8% of the total house holds earning less than RM3,000 a month and another 12.9 % of the households earning between 3 to 4 thousand ringgit a month. These are the greater majority of people making up 70.7 % of total households and certainly the umnoputras are not in this category they are in the upper 5 % category living in 24 million ringgit homes.

Patrick Lee wrote:

Subsidy Cuts Adds to Inflationary Pressure Amid Slowing Economy

Malaysia government announced subsidy cuts will result in the increased of petrol, diesel, kerosene, gas and sugar which will spur consumer prices and add inflationary pressure on its majority of low income households. Cost of living will soar and the low income group which makes up more than 70% of the total Malaysian households will face greater hardship and sufferings.(70.7% of Malaysian household earns less than 4000 ringgit a month).

The Malaysia Institute of Economic Research (MIER) has just announced on the same day  that the Malaysian economy growth is expected to slow considerably in the second half of this year. MIER forecast that consumer prices will rise 2.2 per cent this year and added that inflation has climbed by 1.6 per cent in May from a year earlier which is the fastest pace in a year as food and transport costs rose with the strenthening of the economy in the first quarter.

Singapore to be World Fastest Growing Economy in 2010

(Marina Bay Sands - Singapore)

Singapore’s growth accelerated to a record 18.1 percent pace in the first half of 2010, spurring the currency and putting the island on course to overtake China as Asia’s fastest-growing economy this year.

Najib Says Malays Must Stop Relying on Govt

Malaysian Prime Minister Najib Razak has said the country's predominant Malays should not to be too obsessed about the 30 per cent equity ownership target set under the decades-old affirmative action policy. 

In an exclusive interview with Channel NewsAsia, Mr Najib explained the new metrics that will be used to measure wealth for the Bumiputras. 

The Malaysian prime minister has been trying to revamp the country's decades old affirmative action policy as part of his vision to attain developed country status by 2020. 

But in the face of resistance and even accusations that he is backtracking on his earlier promises, Mr Najib said the Malay majority or Bumiputras should stop relying on government protection. 

He said: "The Malays have to change, Bumiputras have to change because this is the 21st century. The only way the Bumiputras can succeed (is) if they are globally competitive. It's not because of government protection and so forth, they must be able to compete and stand on their own." 



Read The Full Report From Chanel News Asia HERE

Singapore and Malaysia

The Boston Consulting Group, one of the leading global management consulting firm has just last week released its Annual Wealth Report and found Singapore to be amongst the top 20 countries with the most millionaires households.

Singapore, (once a part of Malaysia) is a tiny nation of 5.1 million population is ranked at no. 18 with the most numbers of millionaires and rank the highest in terms of density with 11.4 percent of the total households being a millionaire in USD (US Dollar). That is about 3.3 million Malaysian Ringgit. And this is of liquid asset which does not include the value of property owned.

Foreign Investment Plunged 52%!

Approved foreign investment in Malaysia's manufacturing sector plunged 52 percent to 22.1 billion ringgit ($6.9 billion) in 2009 amid the global economic slump but is expected to rebound this year, the trade ministry said Monday.

Malaysia Borrowing Money For Fun...

Malaysian so called sovereign funds has been borrowing lots of money through the issuing of islamic bonds.

The correct definition should be "Sovereign Borrowed Funds" as their funds are all borrowed and unlike other real sovereign funds who invest with their real savings and profits.

Another report from Bloomberg states that Malaysia’s state investment agency may raise as much as S$500 million (USD$353 million) selling Singapore dollar-denominated Islamic bonds to help fund its offer to double its stake in hospital operator Parkway Holdings Ltd., according to two people familiar with the plan. The sale may take place as soon as this month, according to one of them, who declined to be identified because the discussions are private.

Singapore dollar of S$500 million is equivalent to about RM1.2 billion. Aiyah.. No money don't invest lah what for need to borrow to invest?

And another government agency will be borrowing up to 10 billion Ringgit.

The Malaysian national mortgage company CAGAMAS plans to sell as much as 10 billion ringgit ($3.1 billion) of a new type of Islamic bond that would be acceptable to investors in the Middle East, said Chief Executive Officer Steven Choy. Cagamas is developing the new sukuk with Saudi’s Al-Rajhi Bank, which will subscribe to some of the notes to be issued this month, he said.

And Petronas is raising USD2 billion through an IPO of its Petrochemical subsidiaries. Read HERE.

Malaysia government alone last year borrowed through bonds issue of a total of about 90 billion Ringgit.

And early last month Najib announced that the Malaysia government will likely be issuing US dollar denominated bonds and this is what he said:

Malaysian Prime Minister Najib Razak said yesterday that Malaysia will likely tap global bond markets by offering a US dollar Islamic bond to test investor appetite for its assets.

"Most probably it will be in US dollars. There will be sukuk issues. However the amount will be announced later," Najib said at a dinner hosted by the Singapore Foreign Correspondents Association.

Najib said Malaysia did not "actually need" the money, but "it is good for Malaysia" to find a benchmark on how the markets rate its creditworthiness. Read HERE.

Well at least its good to know that we are just borrowing money for fun as we actually don't need it. That's a relief.

Bloomberg HERE

Abdullah Badawi Says This is a Social Reform and not Economic

Apparently referring to Najib Razak's New Economic Model. Abdullah says Najib' Social Reform is not easy. Talking to Stephen Engle of Bloomberg at the recent Boao Forum for Asia in Hainan, China on April 11.



Boao Forum for Asia

---END---

Most Investors Simply Don't Believe Najib's New Economic Model

(Extract of a report from TheWall Street Journal)

As importantly, Mr. Najib mentioned education reform—an area in which pro-Malay admissions policies have made meritocracy a dirty word and denied opportunities to bright minority students, especially from the Chinese and Indian communities. Malaysian companies often complain about the lack of skilled labor, and the country's universities are a big part of the problem.

Low Income Malaysians and Proton

I pick this up from The People's Parliament where it was reported that the Deputy Finance Minister Chor Chee Heung says that Proton is a success in providing affordable cars to the low income Malaysians.

“I believe that low-income Malaysians today would not have been able to have their own cars had it not been for Proton”, says Chor Chee Heung.

Najib Bloomberg Interview

Watch how Susan Li of Bloomberg News rattles Najib Razak with her direct and hard hitting questions in this short video interview during the Credit Suisse Asian Investment Conference of 2010 in Hong Kong last week on March 23.

Susan ask Najib what is his story here in Hong Kong when some says that Malaysia is a "foregone economy" and Malaysia stock market is one of the worst performer across Asia Pacific and she brought comparison against Indonesia being one of the best performer in the World. (Indonesia stock market was the 3rd best performer in the World in 2009).

PM Najib's "New Economic Model"

The Prime Minister Najib Razak is set to unveil his New Economic Model later today.

In the Credit Suisse Asian Investment Conference of Hong Kong last week, Najib in his keynote dialoque has indicated that there would be radical reforms, transformation and liberalization of the economy.

Najib has indicated that the New Economic Model will transport Malaysia to a high income economy by 2020 and calls for the dismantling of affirmative actions that favours the so called "bumiputras" although not so clearly stated by Najib but was widely reported by the international media.

Ringgit Not Wanted!

Prime Minister Najib was posed a question in the recent Credit Suisse Asian Investment Conference on the Malaysian Ringgit, on the plans of his government in reconverting the capital control and freeing up the Ringgit. Najib commented that Malaysia was "rather prudent on this issue and was not in a great hurry to make the Ringgit fully convertible".

Malai in Hong Kong

Yup! I am back in Malaysia from Hong Kong just after Najib Razak the Prime Minister who attended the 13th Asian Investment Conference hosted by Credit Suisse. This conference which is seen as a prelude to the kick off of the Hong Kong Sevens Rugby Tournament, a sporting carnival like event distinctive to Hong Kong. Credit Suisse is also one of the major sponsors of the Hong Kong Sevens tournament together with Cathay Pacific.

1 Malaysia Formula 1

(Heikki Kovalainen crashes his Lotus into the tyre barrier, Formula One Testing, Day Two, Jerez, Spain, February 18, 2010)

The Formula One Grand Prix 2010 kicks off in Bahrain with the qualifying race on Saturday 13 March, where I had watch some of it on TV here in China. Thats right i am travelling again and will be a bit too buzy to do much writing but will try to do some postings when i can.

Top Girl in Singapore from Malaysia

(Top Girl - Lai Kai Rou)

This is a fine example of Brain drain from Malaysia where our best find homes in the better countries and better environment.

St. Nicholas Girls' School (SNGS) of Singapore has produced "Top Girl" two years in a row and this year produced 14 of the 42 best scorers.

This year Top Girl who scored 10 A1s in the Cambridge General Certificate of Education (O Levels) Examination is 16 year old student Lai Kai Rou from Selangor, Malaysia. She is on a bond-free scholarship from SNGS and stays at the Hwa Chong Insitution (HCI) hostel. She has a younger brother, a secondary two student in HCI, who is also also on scholarship.

The Top Girl for last year Haw Sue Hern is also from Malaysia with 10 A1s.

The Cambridge GCE Examination is an internationally recognised certificate and permits direct entry to the world’s best universities and are the standard examination in Singapore for Sec 4 students normally at the age of 16.

Malaysia used to have the same examination but was replaced in the mid seventies by locally designed examination by the Malaysian Examination Council of SPM and STPM.

Well Done Kai Rou! You make us Malaysians Proud and we are happy for you!

 Read Kai Rou's story HERE

Year of the Tiger - What Portends in 2010

Year of the Tiger – What Portends in 2010

The beginning of the New Year of 2010 and the beginning of a new decade and as we ponder on happenings of the past we will naturally wander into and about the future.

For ages since the beginning of civilization people’s thoughts are into the eternal space of time flowing from the future to the past as in “coming and going” in an encyclical nature. (He he, yes , the past comes from the future in meta-psychics and returns to the past...)

The study of cycles is today universal as with the study of astronomy or physics which is the concept of frequency and frequencies as in occurrence and oscillation (oscillate; as from a psychics, binary or mathematical perspective). Any discipline of study will never be complete without the study of its cycle or the forces of it.

China the next Dubai 1000 times or worse

Malaysian politicians (mostly Barisan National) are always narrow and short sighted and likes to engross in bad propaganda belittling the people's mental intellect and that is what they enjoyed doing most. They think that we are fools and they goes about with their falsehood in pretense of what is ethical, fair and just. There are greater things to do but they goes around like clowns talking about ethics when they themselves are the most unethical.

We will leave this ethical story for now and to return another time as my present concern are as written here below.

Can Malaysia sustain another economic crisis and do they have a contingency plan in the event of it happening, China has become a major market for Malaysian goods and produce, and if anything were to happen to China it will definitely hamper growth and generate an economic crisis of the proportion that equates to a catastrophe.

James Chanos, the American billionaire and founder of Kynikos Associates, an investment company in the USA is renown for his intensive strategy in seeking out overvaluation in stocks and fundamental market failures. He is the "guru" of short selling and rose to fame for his research into the overvaluation of Enron Corporation that highlighted the failures of this mega corporation through accounting fraud that resulted in the "Enron Scandal" that saw the closure of Arthur Andersen, the leading accounting firm of its time.

James short sold Enron shares that saw the stock price collapse from over US$90 to US$1 in just over a few months. James is the opposite of Warren Buffet in terms of strategic approach where Warren look for fundamental underlying value and long term investments, James search for fundamental flaws and short selling.

And James have this to say in a recent exclusive with a special edition of the Halftime Report of Fast Money from CNBC:

China: Powering the Global Economy, or the Next Bubble to Burst?

In a recent report, Chanos' firm has been very pessimistic about China, and his firm has even gone as far as to speculate that China could be "Dubai times 1000, or worse."

Chanos points out a stark irony that investors who decry government involvement in US companies are bullish on the Chinese markets, despite the fact that the country's government (China) can "fine tune" the economy to their liking. He is also skeptical of the country's GDP numbers, calling them "massively inflated by under-depreciating a very, very, very shaky capital asset base."

He points out that "bubbles are best identified by credit excesses, not valuations... there is no bigger credit excess right now than China." But how do you play this?

Chanos says that although you can't short China, the short plays are in the first derivative industries: companies which support the raw and imported materials for growth (such as copper, cement and iron ore producers). He also suggests looking into short possibilities in the Hong Kong exchange.

Chanos himself is actively shorting this area, and is "looking for plays on the China investment pool, which we think will burst at some point... Demand in China is over-inflated, that is clear."

Guy Adami, an author, financial analyst and a professional investor and a member of CNBC's Fast Money agrees that the visibility in the Chinese markets is a serious issue, speculating that they could be simply hording commodities instead of using them.


Read Earlier Article on "The Chinese Bubble"