Mo' Money in My Malaysia

Ah, 2015, you know, before Brexit and President Trump…  But thinking back, was it really a pleasant time?  The Malaysian Net Foreign Outflow from the equities market was RM 19.5bil.  That’s $4.4bil.  To put that in perspective, that’s Titanic’s worldwide gross multiplied by 2.  For those of you bad in Math, it’s a lot of dough.

So what has brought people back?  The Star’s article titled “Local Funds to the fore?  Poised to invest RM4bil on Bursa” hints that the government’s 2017 Budget shows initiative from and belief of the government in the local market.  That has spurred foreign investors to get in on the act.  That’s what opportunists do.  They flock in a group to dramatize a rise and fall.  Geez, do people work in moderation anymore?  I guess not.

That’s very positive.  And no, it’s not wrong.  There’s no need to be cynical.  Credit where credit is due, foreign money is back.  But, guess what else the case was in 2015?  1 American Dollar was worth less than 4 Malaysian Ringgit.  By the end of the first third of 2015, the relationship was 1 USD to 3.54 MYR.  Unfortunately, it has skyrocketed to RM4.43 today as I am typing this.

And we know Simple Economics, depreciating currency = economic growth, ceteris peribus.  I don’t know.  Could it be the textbook case that our currency has something to do with it?  After all, nobody ever says “It will be more expensive soon, let’s buy then.”  Well, unless you’re trying to get out of paying alimony…

There’s no doubt that the market will ignite from this spark.  The question is “How long will the flame last?”  2017 is an important year for Malaysia.  We are ever so close to 2020 and the next election is happening before the next Star Wars movie.  If we have learned anything from the past year, it is that investing in a country undergoing a public vote is a pretty bad idea.

Confident anti-Brexit investors lost tons after the upset result and Australia experienced a 0.5% GDP drop during election period and blamed it on the rain.  Yes, it’s as ridiculous as it sounds.  And maybe justified…?  Summer saw GDP go up again.  That’s a good case study waiting to be uncovered one day.

Whatever the case, opportunists have migrated back here for springtime.  And yes, the news certainly fits the current season in the Northern Hemisphere.  Good for now, spend now, but stay cautiously optimistic for the future.