The worse may be over

I have predicted some time back  that Malaysia would face a deep contraction of its economy, looking at the external markets and the contractions of other economies in the last quarter of last year.

As a Malaysian, I was hoping that I could be proven wrong and that the country would be resilient enough to go down just 1or 2% , like what the government has announced earlier on.

Unfortunately, I was right.

The official figure for the first quarter has been announced and it is a -6.2% contraction in the first quarter. I would expect the second quarter to be around that.  So far, we have not benefitted from the first stimulus package given out last year.

Looking at the other economies, and the trend of commodity prices ( Malaysia will benefit if commodities go up) ad consumer confidence (US Consumer confidence index hit 54%  for May, a big jump),, I think the worse is over for the world. Most of the advanced economies are starting to bottom out, and  since they have reached the bottom, there is only one way to go, and that is up. What is debatable is how fast will be the uptrend; in other words, how fast will be the recovery?And how long will they remain at the bottom?

Oil prices have gone up a bit to be past US60 per barrel now. When the developed economies of the world recover, the demand of oil will shoot up .

Will there be another round of escalating oil prices? If there is, then any recovery will be capped by this escalating oil prices, especailly if there is a perception that oil demand will exceed oil production. Speculative forces will push the oil prices up.

Malaysia should benefit from an oil surge, theoretically. But the last round , when oil prices went past US$140, the opposite happened when pump price was suddenly raised to RM 2.70. Almost everything went up. NO one in Malaysia (maybe with a few exceptions) really benefited from the surging oil price and that really puzzled my simple mind.

The trouble with these consumer product prices, they do not obey Newton’s laws. Normally what goes up should comes down. But prices of consumer products and food in Malaysia just like to defy Physics, and what have gone up  have remained high there, even when the country is now in recession.

 …………………………………………………………

Perhaps now is the time, for those who have cashed out earlier, to look at investment opportunities and invest cautiously.

In February , when Aussie dollar went below RM2.40, I did advise some of my friends to look at the opportunity, predicting that it would go up once commodities prices go up since you need Australian dollars to buy those commodities.  

If you have invested 10,000 Aussie dollar then in a foreign curency account  , you would have made a very handsome profit. Yesterday, It touched RM 2.80. You would have made a profit of Rm4000 in just 3 months on a less than Rm 24000 capital. (with some crumbs as interest, too).

There are many other investment opportunities. But be cautious. Use only spare money and make sure you have enough cash to cover any emergency use. 

 

24 Comments (+add yours?)

  1. Nick
    May 28, 2009 @ 11:11:46

    Good Morning Sir! You seemed cheerful and writing and advising $$$$. That’s good.

    When Oil Prices goes up >US$ 60/bbl, I am sure M’sia benefits but our donkeys here squanders all our natural wealth. When oil goes over the tops, we cream the froth and derive super-profits. I only hope the country know how to salt away for a rainy day.

    The worst scenario did not happened. there was no meltdown to armageddon like in the 30’s depression. The US$ still looking very strong, the Pound is clawing back above 1.60. S&P just gave a blessing to the US$ that its triple A ratings are intact. I am also cautiously confident that global economies are getting back its normal business. Asian economies are indeed on the roll. Look at Indonesia, really flying. Korea just announced record monthly surplus. Our KLCI already > 1,000 and holding up.

    If we only have a better government i/o this lot. No sense of priorities. Discriminating against bright children by denying them scholarships, useless economic stimulus programs, mooting 3rd bridge in Johor where no one benefits, denying punters like me to place a good bet on the Champions League, totally incompetent government., I feel happier now…..

    Like

  2. James
    May 28, 2009 @ 11:39:26

    Dr Hsu,
    teng hock nan from Penang is asking for Chin Peng to be allowed to return to Malaysia.
    Is this the position of Gerakan or just his personal view?

    Like

  3. James
    May 28, 2009 @ 11:39:46

    Do you think it is okay to allow Chin Peng to come back to Malaysia?

    Like

  4. Dr Hsu
    May 28, 2009 @ 11:49:34

    James,
    pls read this post that i have written long time ago about anti Japanese fighters’s graves in Nilai.

    http://www.malaysiakini.com/letters/61414

    On compassionate and humanitarian grounds, I see no reason why an old man who is a Malaysian should not be allowed back in malaysia, especially when the peace treaty they signed with Dr M’s administration gave them the right to either stay in Thailand or Malaysia.

    We need to forgive and forget and move on..

    That is the teachings of most religions.

    To be sure, he had been responsible for hundreds if not thousands of deaths, including one of the most revered headmasters of my alma mater Chung Ling, Chen CHong Ern, and many of our police forces.

    But why not adopt a bigger heart and forgive? In Buddhism, a killer can be forgiven if he can lay down his killing knives.
    I can understand the feelings of those who have lost their arms or legs, their friends, their sons or fathers; the loss of these people may have altered their whole lives and they may not be able to forget ad forgive so easily as those of us who are not directly involved. But Why harbour hatred until we die? When we have a feeling of hatred, we will not be happy. And it is up to us to abandon this baggage of hatred and be happy in our inner selves.

    I am speaking from compassionate grounds and from the angle of religion..

    Like

  5. James
    May 28, 2009 @ 11:56:04

    Dr Hsu, tq for your fast reply.
    for your info, i saw at Utusan online yesterday that one of your VP Huan Cheng Guan is against chin peng coming back and hit out at Teng Hock Nan.
    That’s why I want to know what is your party Gerakan’s stand in this.

    http://www.utusan.com.my/utusan/info.asp?y=2009&dt=0527&pub=utusan_malaysia&sec=Dalam_Negeri&pg=dn_09.htm&arc=hive

    Like

  6. Dr Hsu
    May 28, 2009 @ 12:01:49

    We did not have any discussion of that in our CC. Whether they have discussed in CWC(Central Working committe which is the cabinet of the party) , I am not privy to that.

    HCG’s views are often very similar to some of the UMNO members, that is my personal impression. That is his right to have those opinion. But his view may not represent the party’s view, just like my views are sometimes very similar to NGOs, and those views do not represent the party’s views, since those views are considered heretic .

    Like

  7. klm
    May 28, 2009 @ 12:13:07

    Dr Hsu. I will predict price increase. In many commodities market, it is supplier market. example:

    1. LNG – all positions have been pre-sold for next 20 years. Mostly to China and Japan. No more supply. We will trying to buy LNG but no supply available.

    2. Palm oil – reduced output due to weather

    3. Crude oil – Saudi now talk of 60-70 USD per barrel . This magic number is considered sustainable price. With the hedge funds and speculators taken out of the market, I dont think the price will go back to the USD 140 per barrel. There will be no windfall for Malaysia.

    Looking at the bigger picture.

    We probably see changes in the world’s industrial structure. We are see some re-engineering going on in the United States right now.

    What impact will these changes have on Malaysia?
    For one, the speeding up of the demise of some old name corporations. We know of Chrysler and GM. Some other old names are dying or at least part of them. Many of them have operations in Penang. This impact FDI. Many corporations are moving to next generation technology, in part to kill off competitors who do not have the funds or the courage to make new investment in this trying time. This further speed up the demise of weaker companies.

    Protection of jobs in developed country will see less investment here.

    I am waiting to see what are the steps the govt is planning to take to overcome these threats. As with changes, there are also new opportunities too. What steps will be planned to exploit the new opportunities?

    I think it will exciting time, if Malaysia plan it right
    If we get it wrong, then we will have to sent people to work in Indonesia to work as maid and labourers. This is an inflection point in the curve of progress. A one in a century moment of change. This financial crisis drives the change.

    Like

  8. AGerakanmember
    May 28, 2009 @ 12:17:33

    James,

    Dr is being reticent.

    Actually, it is because ” one hill cannot have 2 tigers”. Factional struggle, period.

    Like

  9. klm
    May 28, 2009 @ 12:31:22

    AGerakanmember is right. Huan Cheng Guan vs Teng Hock Nan. Fighting to replace KTK. If you analyse Huan Cheng Guan’s tactics, it is the “Thick Black” theory as explained by Dr. Hsu.

    Like

  10. James
    May 28, 2009 @ 12:31:50

    Dr Hsu,
    tq for info. Things are getting worse now as I just read a chinese newspaper while having lunch. Seems that there is a war now between Huan Cheng Guan and Teng Hock Nan. Very big news.
    As a penangite, i feel ashame of gerakan. They should be fighting opposition and not internally

    Like

  11. klm
    May 28, 2009 @ 13:46:47

    I think Huan Cheng Guan will win the fight. He is more ruthless and dirty.

    Like

  12. annoyed
    May 28, 2009 @ 14:11:35

    Huan Cheng Guan, sigh!!

    Teng Hock Nam, sigh!!

    fight lah, si si suak suak lah

    Other than Dr. Hsu, no decent person available in Gerakan,….?

    Like

  13. KL
    May 28, 2009 @ 17:04:13

    Hi, Dr. What are your recommendations on investments ? Foreign currencies, property, stock market, gold, etc ?

    Like

  14. klm
    May 28, 2009 @ 22:08:01

    if Huan Cheng Guan become the next president of Gerakan, he will really kill the party. Some one called him “loud, umno licker and gungho politician”.

    Therefore he should win the fight

    Like

  15. annoyed
    May 28, 2009 @ 23:18:59

    Najib is facing a lot of problems since taking over from Pak Lah.

    Latest disaster, collapse of Jaya Supermarket building in Section 14 PJ while under demolition …..what say you,

    Last quarter -6.2%. Najib said -1% before that. His brother never advise him?

    Like

  16. Dr Hsu
    May 29, 2009 @ 09:51:57

    KL,
    The instruments that you have mentioned, particularly stocks, property and gold, are all good investments at the moment.

    But what to invest depends on a lot of factors, including your financial status, your near future cash requirements, your aversion to risks, your exposure to various forms of investments at the moment etc to say afew things.

    SO it all depends on individuals, but what i am saying is that there are a lot of opportunities now.

    Like

  17. klm
    May 29, 2009 @ 13:01:19

    This is a side track. But this is an interesting story of how America will get talent anywhere in the world.
    The story is n BusinessWeek, and it is about Qi Lu
    (originally from China) – Microsoft new head of online services. He was hired from Yahoo.

    ==========
    Lu has faced tough challenges since he was a boy. Facing persecution during China’s Cultural Revolution, his parents sent him from their Shanghai home to live with his grandfather in a tiny town in Jiangsu province, five hours away. Lu lived without electricity or plumbing, and was so poor that meat was a once-a-year luxury. His first two choices to escape poverty were closed off: His slight build left him short of government weight mandates for coveted ship-building jobs, and his eyesight was too poor to pass requirements for becoming a physicist.

    That left computer science, which he hoped might help him land a job in a radio factory. Instead, after earning his master’s degree, he was assigned to a $10 a month teaching job at Fudan University in Shanghai. One weekend a rainstorm prevented his weekly bike ride home to see his parents, so he was in his dorm room when a student knocked and pleaded with him to attend a talk by Carnegie Mellon professor Edmund M. Clark since only a few students had showed up. Impressed with Lu’s questions, Clark asked to see his research papers and then offered him a scholarship to earn his PhD—even waiving the $45 application fee that Lu says he could never have come up with.

    ===========
    Carnegie Mellon is like the MIT for computer science.

    Just imagine if Malaysia is willing to take talent no matter what race, or place they can be found. Even if it is from its own citizen.

    Sigh!

    Like

  18. Dr Hsu
    May 29, 2009 @ 14:37:54

    klm,
    HCG wont be the president. Latest news alert says that he has resigned from the party. (Kwong Hwa Newspaper). I do not know how true it is.
    🙂

    Like

  19. disgusted
    May 29, 2009 @ 14:38:48

    Cilipadi,

    I am sad I was right about this month, I thought what I said earlier could pass by without incidents. Building collapsed, earthquakes in Indonesia just started and I thought the month of May could be free. But no,…………

    Thw worse has yet to come and it’s going to be a long vigil till end of July……

    monk

    Like

  20. pohwatchdog
    Jun 01, 2009 @ 21:19:02

    It seem that a lot of fortune tellers and karma seekers are making their prediction here.

    Like

  21. huan cheng guan
    Jun 07, 2009 @ 01:39:37

    ordinary layman said politicians are dirty but i dont agreed with that. i beleive politician also have their principle. take for example the appointment of coordinator at DUN macang Bubok ( gerakan seat ). a few names was submitted by the branches and division concern but was all thrown out by the state chairman and instead he recommended an outsider an a MCA member to be the coordinator in the Gerakan State seat. The grassroot protest, but the state leadership did not bother about that. real sad , all this happen in penang. i would like to invite all of you to visit to all the branches in macang bubok to get the true picture of the happening. the truth is always the truth. thanks. huan

    Like

  22. A true Malaysian
    Jun 07, 2009 @ 11:15:23

    huan cheng guan,

    I am surprised you are in here, but, it is a good move you decided to share your view in the forum here. Perhaps you can convince people like Koh Tsu Koon, Teng Hock Nam, Teng Chang Yeow and all to get involved too.

    I think no one here says that politicians are dirty and this is just the general perception that laymen have through the way you politicians, in particular from BN act and say. To me, it is important for you guys to correct such perception of the public by “doing things right” and “doing things with clear conscience” so to jive with what we laymen think and aspire. I am sorry to say that, BN politicians are lacking in this, and to win back our votes, hard works are needed from your side.

    From your comment that a few names were submitted…bla, bla, bla,….and ultimately given to MCA, you just read back, even you consider MCA as outsider despite that Gerakan & MCA are in the same BN family. So, how you expect us laymen look at this?

    This shows that partisan politics & patronage mentality are still very thick in you people’s mind, which, I think, should be get rid of, for your own good and for Malaysian politics as a whole.

    Well, the above is just my 2 sen worth. You can give yourself a thought, no obligation to agree.

    Anyway, welcome Huan.

    Like

  23. Huan Cheng Guan
    Jul 09, 2009 @ 17:02:01

    now the situation getting worst in penang, chin fook weng and teng hock nan are getting their cronies to sign either to sack me or retain 3 years suspension. there is no other options, excepy a or b, to sack or 3 years suspension. I can still recall during schooldays, in an exam, the objective question have a few options, either a,b,c or none of the above. one is a phd and tan sri, the other is a medical doctor and a dato but what they are doing definately lose to a standard 5 students and it is too personal. i agreed with them as they said, they want to nail me to the coffin, ref star 28 jun.

    Like

  24. Trackback: Ringgits versus Aussie dollars « Dr. Hsu's forum

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