Tuesday, February 06, 2007

Lulu The Sceptic

NST's frontpage asked the question, "State of the economy: How healthy is it really?"
The byline (or whatever it is called) below it stated, "Statistics show it's stronger now and more resilient than ever."

sure or not?
"statistics show" - those are two very worrying words.
Heard of this saying, "there are three kinds of lies: lies, damn lies, and statistics" ?

"Malaysia is now in better shape to withstand any mega surge in liquidity that could potentially destabilise the country," said OSK Research economist Sia Ket Ee.
[note: this is an untrained lulu's opinion]
KLSE has been going up and up the past few months. This is mainly due to foreign funds coming in. I asked a friend who is in this business what makes us suddenly so attractive. She said that it's possibly a combination of reasons, the main one being a stronger ringgit against the usd.
so, lulu thought a while, and remembered another conversation with another friend who is here on the M'sia My 2nd Home Program. One of the criterea is to deposit a large sum of money here in our banks. Lets say he puts in RM100,000 last year when the exchange was say, usd1 = rm3.65.
last year, rm100,000 = usd27,397
if he withdraws that money today and converts to usd [using usd1=rm3.52] , he would get back usd28,409 , about 3.7%gain, just on forex.
applying this to the foreign funds in KLSE plus the chicken and egg bull-run, if the foreign funds decide to realise their gains, hmm... lulu doesn't think that we can tahan the surge in liquidity.
lulu views these foreign funds more as speculative, than an investment.

speaking of investments

"Private investment is seriously languishing and the country lacks skills," said Mathur.

In the pre-China, Vietnam and Thailand days, Malaysia used to be one of the first choice for American multinationals. Lulu used to work for a harddisk manufacturer. In those days, Malaysia was the leading manufacturer for both hardisk and all the components. Since then, a number of manufacturers have closed their M'sia sites and moved to those three countries. We need a plan and MITI needs to work harder and formulate better to make ourselves attractive again.

Lulu really wants to see the nation be "darling of foreign investors" again. That is what Lulu thinks would count in this game of a healthy nation. Not a KLSE going up and up due to foreign speculation. They could withdraw anytime, and how they choose to "invest" their money is not within our control. Let us not con ourselves and start celebrating whilst our opportunities run dry.

or maybe this is a lulu opinion. And indeed our ecconomy is VERY healthy.


team BSG said...

The best way to get a feel of the real economy is to compare property prices, personal spending power, how many shops closed,mths bonuses and lots more.

It is not easy, but u can have a rough feel.

Malaysia is lucky ( still but not long from now ), it has got oil. A surge in oil price will surge the countries wealth. Then also commodity prices. These 2 are doing fine, but not the rest.

Also we are seriously & hastily losing our competitive edge( we were no 2 those days in Asia), and all our natural wealth is being wasted by govt policies and useless projects.

Compare with other previously slow but now emerging countries as u have cleverly noted, like Vietnam. China, India.

Then this thing called corruption ( u should know better !)

Then now we have most yr fav leader ? So how ?

wits said...
This comment has been removed by the author.
Anonymous said...

The Share Market Index and Indices are classic example of deceptive statistics to the individual investors.

Example, the OSK shares in the course of around 12 years is still a loss for anyone who have kept them that long, taking into account all the rights and bonus issues etc.

And other well nigh collapsed companies are not mentioned. It's not really an investment, buying into the KLSE. More truly of a Casino, no mistake about that.


zewt said...

2011 is the year of reckoning they say... the year when the oil rigs run dry... then we'll see how.

the market is overheated now by the so called 'foreign funds'. let's see how many ppl will commit suicide when there funds suddenly do a hoodini.