Wednesday, July 16, 2008

Some positive remarks from Morgan Stanley, JP Morgan, The Economist



I drafted below before the US markets opened. As of 10.30 pm of 15 July 2008, Penang time, Dow is crashing -- below 11,000. Oil is soaring, Fredie and Fannie scared a lot of people, inflation grows fastest in 27 years, dollar is plunging, GM cuts jobs and suspend dividend and plenty of other bad news. I don't have intentions to change my thoughts about three hours ago.

Despite of all the gloomy news coming from the West, there are some good news coming from them recently. Morgan Stanley who called to sell Asian currencies earlier now said ASEAN-4 economies will continue to do well. They are banging on one premise, the central bankers may still in favor of growth over fighting inflation.

(Business Times- 12 July 2008) Singapore - FOR all the concerns about rising inflation, the major Asean economies will likely deliver higher-than-expected growth in 2008, say Morgan Stanley Asia's economists. But the outlook for the region in 2009 looks 'challenging'.

The investment bank has actually raised - if marginally - its forecast of 2008 GDP growth for the Asean-4 region (Singapore, Malaysia, Thailand and Indonesia) to 5.6 per cent, from an earlier estimate of 5.5 per cent.

A stronger-than-expected global growth backdrop and a relatively slow monetary policy response to emerging inflation risks have resulted in the region's 2008 first-half growth being mostly higher than it had earlier forecast, Morgan Stanley says in a report this week.

While it has kept intact its recently upgraded GDP growth projections for Malaysia (5.7 per cent) and Thailand (5.6 per cent), it has now jacked up the forecast for Indonesia to 6 per cent (up half a point) and slashed Singapore's to 4.3 per cent, from 5.1 per cent previously, following the poor Q2 numbers just released.


JP Morgan is another guy speaks positively about Malaysia, they perceive recent political struggle is part of growing pains -- pursuing maturity path rather than derailing democracy institution. As usual, self-critical Malaysians will have nothing good to say about ourselves(which is not a bad thing but sometimes overdone), we have the third guy, PricewaterhouseCooper says Malaysia ranked top 20 investment destination.

(The Edge Daily) 15-07-2008: M’sia still a favoured destination

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KUALA LUMPUR: Malaysia remains one of the favoured investment destinations worldwide amid the gloom and doom of the United States and global economic outlook, even as daily trading volume on Bursa Malaysia plunged to the lowest level in recent years and stocks continued to decline.

While some analysts are of the view that the plan announced by Prime Minister Datuk Seri Abdullah Ahmad Badawi to transfer power to his deputy Datuk Seri Najib Razak had abated concerns about a government leadership struggle, others feel that political tensions still exist.

While wary of the developments, most analysts believe that the country is on the right track towards political maturity and achieving the appropriate reforms in governance.

They say the companies here are still fundamentally sound, with dividend yields still among the highest in the region.

PricewaterhouseCoopers (PwC) says Malaysia is still ranked among the top 20 most favourable investment destinations for the manufacturing and services sectors.

“The Malaysian market is poised for a bounce,” Bloomberg cited Chris Oh, an analyst at JPMorgan, as saying in a report yesterday. The transition of power announced by Abdullah was an “optimal outcome” and provided a “calming effect” for investors who had “steered away from the market”, he said.

However, Malaysia’s relatively strong position may attract “hot money” inflow, whereby foreign funds may take positions to gain from the strengthening of the ringgit in the event of an interest rate hike.


A well respected magazine like the Economist still speaks positively about AAB even liken him to Mikhail Gorbachev if he has the boldness to reform.

DEFENDERS of Malaysia’s prime minister, Abdullah Badawi, liken him to Mikhail Gorbachev: a statesman who emerged from deep inside a declining, dysfunctional system and yet had the courage to carry out risky but badly needed political reforms. With Malaysians squabbling viciously over improbable new allegations against the opposition leader, Anwar Ibrahim, and Mr Badawi’s own heir-apparent, Najib Razak, the system has never looked in more need of a reforming hero (see article). But is Mr Badawi, who succeeded Mahathir Mohamad in 2003, really up to it?

Malaysia is not in such a terminal mess. Compared with the old Soviet Union’s, its economy is a picture of vitality. Nor is it a totalitarian state; by Soviet standards it is an amicable federation. Its problem is that like other places where one party is so dominant, politics has become ossified and corrupt. It could still be reformed without having to start from scratch; but a lot depends on what Mr Badawi does now.

For Mr Badawi does indeed face a Gorbachev-style choice. He could try to shore up the old system. By discrediting the opposition and using the usual perks, threats and blandishments of incumbency, UMNO and its partners could yet cling to office, at least for a while. Or Mr Badawi could embrace reform, clean the system up and compete for power without the dirty tactics. If he does, he will indeed deserve an honourable mention in the history books.


I'm sure there are guys speak negatively about Malaysia but at least no strong condemnations from a few heavyweight foreign institutions should lend some supports to our market in turbulent times like this.

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