By KINIBIZ
Early Friday morning, Malaysian time, the Federal Open Market Committee decided to keep the US interest rates at 0.25%. But what does that mean for Malaysia?
One possible ramification is that the ongoing capital outflow from emerging markets may slow down, said MIDF Research in a Friday morning research note, considering expectations of a rate hike this week had accelerated sell-down of investments in these countries which include Malaysia.
But the spectre of a rate hike remains looming over the coming months. US Federal Reserve chair Janet Yellen did not deny the possibility of a rate hike as early as next month, though some economists believe this is unlikely given ongoing turbulence in the global economy and market conditions.
In turn, capital outflow from Malaysia had been ongoing for a while. This year alone, for instance, some RM11 billion has left the country up to July, considerably higher than RM6.9 billion seen in the previous corresponding period last year.
And it cannot be overlooked here that prolonged political uncertainty which we have been living with for months is a major factor. Simply put, growing worries over not knowing what will eventually happen in Putrajaya vis-a-vis the prime minister – and the policy implications of either a continuity or a change in leadership – has put a high premium on investing in the country.
Because no investor likes to put his money down in the long term if there are worries that the environment and playing rules may change in a heartbeat. Resolve the political uncertainty and restore stability alongside proper governance and investors may come back in droves.
In any case, here are some of our best news, stories and analyses this past week for your reading pleasure this weekend:
Will Bakke break Sime Darby? Eight years after a mega restructuring into the conglomerate it is today, Sime Darby is now at a crossroads. Can the group manage its heavy borrowings to avoid a rating downgrade while addressing a long-term devaluation issue? Should it break up now? Read more here.
The RM155 billion haze. For perhaps the first time ever, the Indonesian president visited South Sumatra to personally witness forest fires raging out of control, causing haze across Southeast Asia. Dare we hope that there will be a final solution to what is now an annual haze season? Read here.
Najib’s RM20 billion mistake to shore up market. On Sept 14, the prime minister said ValueCap will be armed with RM20 billion to shore up the stock market by investing in undervalued Malaysian companies. But the question is whether this is really necessary. Read more here.
Bangladesh mobile merger good for Axiata. Last week, Malaysian-based regional telco Axiata Group Bhd said it is in talks with Bharti Airtel to merge their telco units in Bangladesh. Should the merger happen? Our resident cat thinks yes, provided certain things fall into place of course. Read further here.
Special Economic Committee needs bigger bang. The recently announced special economic committee, tasked to strengthen our economic fundamentals, came amid expectations of substantial follow-up action. But it needs to step up, says Ramon Navaratnam, chairman of the ASLI Centre of Public Policy Studies here.
Unsustainable development goals. There is a lot of good international leaders can do, but resources with which to do so are limited and require effective prioritisation. And sometimes the targets set by global political conferences are either marginally useful or highly problematic. Read here.
Reading, writing, and refugees. Refugees fleeing disasters and strife is a growing global concern with food, medicine and shelter top concerns. But also belonging in the list of urgent needs is education, which enables the young to look to the future for hope of a better life. Read here.
The trumping of American politics. From afar, the world is tracking the developments in the United States’ presidential race on the Republicans’ and Democracts’ sides respectively. One question sticks out in particular: How far will billionaire Donald Trump go compared to his rivals? Read here.
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— by Khairie Hisyam Aliman, News Editor
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