Monday, May 28, 2018

Standing in the eyes of the world V2018

Category: Macro economics

There are lots of BOMB in Bursa Malaysia lately, a lot of counter got limit down due to their close relationship with the previous government and once again, we are in the lime light of the world. WHY?

1998 was the year where Malaysia hosted Commonwealth Game and still having the repercussion from Asian financial crisis which happened a year earlier. That was a spectacular year where we are “standing in the eyes of the world”, where we did a great job with the commonwealth game as well as the same PM whom had did the pegging towards USD.

In 2018, once again we are standing in the eyes of the world, where Malaysian are brave enough to make changes where the 4th PM made a comeback to be the 7th PM. The former PM get investigated, and there are more and more bad things are uncovered.

To be frank, I believe the things that happened each day are even more interesting than drama. Everyday also got bomb be it from the newly elected govt or MACC or even from the police side.

What worry the most is the statement from “Prosperity God Lim”, from 1MDB to our country’s debt/GDP level which had been rocketing from 55% of previous govt to 65% in 1 day, and another day goes up to 75% and yesterday was 80%.  It’s quick where it gone up by 25% within 2 weeks after Ex-boss taking over the country. How BCF wish this could happen to all the share price or KLCI.

Actually, according to international standard, and according to our ex-finance minister, its actually at 50.8%, and it will only become 80% when u assume that the govt will have to pay for all the contingent liability and off balance sheet item.

There are a lot of voices out there saying our prosperity god has yet to change his mentality from opposition to the govt mind-set and it is not right to lump everything together and contingent liability into debt ratio and announce bad things to whole world. Well, BCF have no say on that, however, BCF would like to see things from another perspective.

We believe Prosperity god did it for a reason:

1.      In the past, when “prosperity god Lim” is still “Tokong Lim”, his party and coalition always say that Malaysia is going to bankrupt, and what he do now had proven what they “have” been saying were true.

2.      Transparency, which is part of CAT (Credibility, accountability and transparency). BCF thinks that a transparent govt will always create more confident to the nation as well as investor.

3.      Its more to psychology where once u got up, u have to tell the world how worst it is 1st then only u start to work and improve from there. Then whole world will think and believe that u are doing a good job and u got credit for that.

 Anyway, what’s the down side of it?

1.      After revealing all these numbers, KLCI take a nosedive by 70 points as foreign investor keep selling their shares, as they tend to avoid further bombing from some unexpected news. This had causes a lot of stock in Bursa fell into drain.

2.      Attract the rating agency to reduce country sovereign rating, this might causes lots of havoc such as depreciation in RM and also sell down in bond market. Create more panic selling and selling pressure.

3.      Confident of the investor diminished. That’s y u see the sentiment of Bursa Malaysia turn bad and a lot of stock had been bleeding profusely. Kesian to small investors like us, day day kena bomb.

Anyway, it’s good for prosperity god to clarify each item and gave us a clearer picture at the end of day and this help clear the air and avoid calamity. 

So what do Big Canon think?
BCF do believe that it is good for the govt to be transparent, and after announcing all the down side and all those dirt, so that we can go worst 1st and make a comeback later.  

For investor like us, it wasn’t really a bad thing at all. What being done now could be something good for us instead, because the bad news will help us to battered the index and the market. After all the bad news are out, what more bad news do we have? If there are no more bad news, then that means it’s a good news and it will help the market to go back up! So, its good for us to have all those bad news come out 1st, so that we can find a bottom and safe for investor like us and get something good and cheap. So it’s equal to having tax holiday and promotion in stock market right now.  

We sound like we are very optimistic isn’t it? Well, there are some risk that our readers shall an eye with.

RISK within Malaysia:
1.      Continuous sell off from foreign investors
2.      Sovereign credit rating to get downgraded
3.      Delay of Mega project or suspension
4.      Quarter result bomb

Global RISK which might affect our market.
1.      Tumble of crude oil price
2.      Relationship between Crazy Trump and Fatty Kim
3.      US treasury yield
4.      European Union especially Italy political glut
5.      Rising bond yield for Emerging country (Argentina and Turkey)
6.      World Cup

BCF know, there are so many things to look out and to be aware of, but that doesn’t mean that we should give up and stop looking for stocks that is potential as well as opportunities. Investment is a whole life thing that we shall never stop and the only way to be successful is non-stop learning.

Happy Wesak day to those who are celebrating and happy holiday to others!

May all the HUAT be with us! 

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Raj said...

Its a firesale in a different perspective. Would be helpful if bcf can cover stocks which are at bargain price for small time retailers..

Ezylife said...

Ha ha... That would be interesting

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