Thursday, March 12, 2015
WHY INFLATION DRIVEN GDP GROWTH IS POSITIVE FOR MALAYSIA? ---By Shan Saeed I hope after Govorner Dr. Zeti Aziz conference, economic experts in malaysia can understand what she actually means that Ringitt is undervalued and how exporters can benefit from depreciating ringitt. I admire and respect the woman for her economic thoughts. She is very suave and smart woman. I am still relatively bullish on the Malaysian economy based on my solid market based intelligence gathering in the last 3 years. Some experts might have different economic thoughts based on their financial analysis. The policy levers especially monetary and fiscal policies are working well for the country with confidence as the key driver which is keeping the GDP growth 6% on the upsurge. Inflation driven growth is the new agenda for the policy / decision makers to keep the growth trajectory moving as we navigate through treacherous times. All credit goes to Governor Dr Zeti Aziz for playing the monetary policy in a strategic manner despite exogenous factors dragging various global economies down in the modern day of financial repression. If I were to analyze few key variables of the Balance Sheet of the Malaysian Government, here would be the key statistics on Dec 31, 2014 to share with my valued readers. 1. GDP growth: 6% 2. Inflation rate: 2.7% 3. Foreign Reserves: $116 billion 4. Fiscal Deficit: 3.5% 5. Debt to GDP ratio 55% 6. Economic Confidence: High 7. Current account: Surplus 8. Domestic demand: Strong 9. Unemployment rate 3% 10. Political Stability Yes 11. Financial Stability Yes 12. Investment climate: Favorable Sources: Bank Negara Malaysia, Independent Sources, Market Intelligence, Economist, World Bank, IMF, ADB, Financial Times. There is a strong correlation of economic confidence in those countries whereby GDP growth is higher than fiscal deficit or inflation rate, economies are witnessing growth trajectory in a structured manner. Looking at the economic performance of the Malaysian government in the current environment, it clearly illustrates why her economic growth is in a healthy mode and economic confidence is running high because GDP rate 6% is higher than fiscal deficit 3.5% / inflation rate 2.7% of the Malaysian government. Government looks totally committed in providing level playing field to all players in the market, demonstrating fiscal brinkmanship in reducing the deficit, controlling the Debt to GDP ratio well under 60% and above all keeping the economic confidence in the economy which is currently lacking in many EU-28 countries and even Japan. REAL ESTATE MARKET IN MALAYSIA----The winning horse Investors are still interested in buying properties around KL and Penang because of few good reasons 1. Economic confidence 2. Political stability 3. Financial stability 4. Life-style stability 5. Infra-structure stability 6. Freehold status 7. International significance These above mentioned reasons make it fairly attractive for foreigners and local to take position in REAL ESTATE MARKET to derive long run benefits. GST come or go, smart investors will continue to buy property for WEALTH PROTECTION in these turbulent times.
Posted by Shan Saeed at 12:46 AM
Monday, April 28, 2014
THE RISE OF CHINESE CURRENCY YUAN, By Shan Saeed, I love this news story that went unreported in WSJ, FT, NYT or Forbes. Latest sign of a move away from the dollar as a reserve currency is that China and South Korea recently came to an agreement that allows firms to settle deals in either the Chinese yuan or the South Korea won instead of the U.S. dollar. The agreement is part of a push among emerging countries to internationalize local currencies after the global financial crisis. According to Bloomberg.: "Fed up with what it sees as Washington's malign neglect of the dollar, China is busily promoting the cross-border use of its own currency, the yuan. Chinese leadership will remove capital controls the amount she will achieve Gold target of 10,000 MT in the next 2 years. Yuan is the only currency that appreciated 35% against USD since 2005. CHINA's STRATEGIC GAME PLAN IN ACTION---Follow the Chinese leadership to meet your financial goals Displacing the dollar will reduce volatility in oil and commodity prices and belatedly erode the ‘exorbitant privilege' the United States enjoys as the issuer of the reserve currency at the heart of a post-war international financial architecture it now sees as hopelessly outmoded.In fact, in the past couple years, China has signed international currency agreements with Germany, Brazil, Russia, Australia, Japan, Chile, the United Arab Emirates, Pakistan, Saudi Arabia, Kuwait, Peru, India and South Africa. Japan and India also recently signed a currency deal linking their currencies closer together, and lessening their dependency on U.S. dollars. These agreements are part of a trend that started a few years ago, when a group of the world's most powerful countries, including China, Japan, Russia, and France, got together for a secret meeting – WITHOUT the United States being present or even knowing about the meeting. According to Sam Zell, the 60th richest man in America according to Forbes Magazine, said on a rare interview with CNBC. He said: "My single biggest financial concern is the loss of the dollar as the reserve currency. I can't imagine anything more disastrous to our country. I'm hoping against hope that ain't gonna happen, but you're already seeing things in the markets that are suggesting that confidence in the dollar is waning. I think you could see a 25% reduction in the standard of living in this country if the U.S. dollar was no longer the world's reserve currency. That's how valuable it is." He is my fellow alumni from Uni of Chicago, Booth School of Business, USA. One of the top most respected Middle East reporters Robert Fisk reported on this event in Britain's newspaper, The Independent. Here's what he wrote: "In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealing for oil, moving instead to a basket of currencies including the Japanese Yen, Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar." I recently spoke to a Chinese banker who said: These plans will change the face of international financial transactions. America must be very worried. You will know how worried by the thunder of denials this news will generate. HAPPY INVESTING IN CHINESE YUAN, THE NEW GLOBAL CURRENCY.
Posted by Shan Saeed at 10:16 PM
Monday, March 3, 2014
GOLD IS A SAFE HEAVEN IN TIMES OF UNCERTAINTY------By Shan Saeed Physical Gold and Silver are your WEALTH INSURANCE. Major banks, hedge funds, big investors were bearish on Gold in 2014. I am still bullish on Gold and Silver. The only real assets with solid fundamentals and favorable macro environment. Gold will be trading in the range of $1450 to $1500/oz in the next 3/4 months. Investors are snapping up gold now. Ukraine /Russia crisis is an ideal setting for Gold and Silver upsurge. Oil prices might go out of the roof and touch $120/barrel. Investors are seeking a safe haven amid turmoil in emerging markets and signs of weakness in the U.S. economy. US economy will continue to see slow growth and fear among consumers going forward. Europe will achieve sub-par growth and Japan would try to boost the economy by monetary easing or balance sheet expansion. Gold has soared 12 percent to-date, after plunging 28 percent in 2013, its worst performance in 32 years. A reset is needed to happen in gold and silver. Last week, SPDR Gold Shares, the biggest gold exchange-traded fund, saw a net inflow for the first time since December 2012. SPDR Gold Shares last month reported and suggests that new clients are holding gold for the long run. Meanwhile, trouble continues to percolate in emerging markets, with political unrest in Ukraine and Venezuela. And U.S. fourth-quarter GDP growth was revised downward Friday. Gold has been playing its role as a great diversifier. This will continue for the next 5 years. This rally is for real and investors will take refuge in Gold and Silver. Gold is on track for its biggest monthly gain since July 2013. In general whether it's Ukraine, the U.S. economic data or worries about China, there seem to be a lot more reasons than there were six weeks ago for looking at gold. Take position in Gold, Silver and Oil for solid profits and healthy returns. Disclaimer: This is just my strategic thoughts and global view. All financial transactions carry a RISK.
Posted by Shan Saeed at 1:09 AM
Monday, July 22, 2013
GOLD WILL RALLY SOON------------By Shan Saeed Gold have finally emerged from the losing break and showing its head above $1300/oz. Last week, I told my friend Rola Ezzedine that Gold was going to rally due to an oversold position and a fat doji formation on the chart...I got it right. A doji is a candlestick formation that looks like a cross. If it shows up at the end of a long up (or down) trend, it is a turnaround signal. It is the visual representation of the bear and bulls fighting it out gladiator style... When they fight themselves to a standstill, the momentum is exhausted and the change in direction is almost certain. Gold in a Key Reversal Trend In the last week gold jumped from $1270 to to $1293. The next trigger will be $1,300. If the yellow metal can break $1,300 an ounce, look for a move up to $1,450... If not, look for it to go back and test $1,200 again. Above is how it looks on the Gold ETF GLD. The probability is that this recent rally is a dead cat bounce. So if you're trading options, it is time to sell and buy back when it retests the low. You can trade this chart, but don't count on it going straight up from here; “V”-shaped recoveries are rare. My prediction is consolidation throughout the summer. Long-Term Bullish for GOLD. DON’T SELL YOUR GOLD: Even though Rogers has evidence that gold could drop down to $900 an ounce, he says to hang on to it . . . and start buying more. Soon, he says, it will start an unprecedented move to $2,000 an ounce. In the long term, the prospects for gold look good simply because the prospects for currency look poor. Gold climbed last week after Helicopter Ben Bernanke said he was just kidding about “tapering” his bond buying. What he meant to say was that he was going to keep printing money as long as Wall Street and Washington wanted him to. And they do. Bernanke's proposal to reduce spending $85 billion a month on debt was met with such abhorrence and fear-induced selling that he quickly recanted. And the market rejoiced. I don't know what I'm doing!” Ben exclaimed. “There is no exit plan! “Alright!” cheered the bankers. Gold loves money created out of thin air because gold bugs still believe you can't just print money forever without consequences, that you can't get something for nothing; that there is no free lunch. We all know that money printing destroys money. History is replete with examples: Zimbabwe, Argentina, the United Kingdom. But who knows, maybe the world GDP can grow its way out this hole like the Keynesians talk about... Maybe it can't. No one knows for sure. But buying gold after a 40% sell-off seems like a wise idea either way. Buy low, sell high is what Grandma used to mumble. ________________________________________ Gold Up Again The numbers tell us that the world isn't growing very fast...The consumer has traditionally been two-thirds of the economy. The economy can't expand unless people buy stuff. People are up to their eyebrows in debt, and two-thirds of the new jobs are all part time positions. Gold loved the bad retail number globally and opened up again yesterday. Bad news is good. Poor retail sales mean Bernanke can keep printing, which drives down the dollar and pushes the malleable metal to a three-week high. Stocks go up and stocks go down, but the dollar has been falling since they invented the Federal Reserve in 1913... The 1913 dollar is now worth four cents. Gold was worth $20.67 an ounce a hundred years ago. It is worth $1,293 now. Disclaimer: This is just s research and not an investment advice. All financial transactions carry a RISK.
Posted by Shan Saeed at 11:17 PM
Monday, May 20, 2013
Saudi Arabia is running out of oil------By Shan Saeed, Riyadh's Hidden Energy Crisis: While the world wasn't watching, the Saudis have been covering up a huge secret...A secret so big and game-changing, they've gone to great lengths to keep it hidden. A secret that, when the rest of the world wakes up to its implications, will send massive ripples through the energy markets. For those bold enough to see the truth and act quickly, the opportunity it presents is immense. Saudi Arabia is running out of oil. You didn't read that wrong. It's not a joke, nor is it just my opinion. And I'm most certainly not crazy. It's a stone-cold fact. The report I'm talking about is from the world-renowned think tank Chatham House. I'm sure you didn't see anything in the media touting this report or anything about the Saudis running out of oil on the evening news.Don't take my word for it... Here's an excerpt of the report from Chatham House: " Saudi Arabia's energy consumption pattern is unsustainable...That means on a 'business as usual' trajectory, it would become a net oil importer in 2038." That's right. If the Saudis continue at their current rate of oil consumption, they will become net oil importers even sooner than they want to admit. And truthfully, I think we're looking at much sooner than 2030. Because it seems Saudi Arabia has developed quite a penchant for wasting the one thing the world covets most... How much do they waste? To be blunt, too much. We're talking about nearly three MILLION barrels PER DAY. That's a staggering number, for sure. But get this: That's more than 25% of their oil production. According to the International Energy Agency, the Saudis consume more oil than Germany, a country with 3x the population. Talk about waste! The Saudis use as much oil per person as people in USA do and it has a far higher car-to-person ratio. This is a great opportunity for smart and savvy investors to take position in the global energy market. USA will dictate the global energy market by producing more and more Oil and Natural gas and becoming the net exporter globally. Disclaimer: This is just a research piece and financial market insight. All financial transactions carry a RISK
Posted by Shan Saeed at 4:35 AM
Friday, February 8, 2013
Friday, February 1, 2013
ECONOMIC OUTLOOK FOR UNITED KINGDOM---By Shan Saeed Bank of England--Main task The new Governor of the Bank will have unprecedented powers to direct and regulate the UK banking and monetary system. He will need to work closely with the government of the day, so that Bank policy is complementary to fiscal policy and to the government’s legislative priorities. He will need to shape and lead the team at the Bank to use the new powers wisely, in the national interest. He will need to decide what to do with the large QE program he inherits, and what to do about the malfunctioning banks still with large state shareholdings. Let see and hope the new Governor is someone with good judgement about the state of the UK economy and its position in the world. I suggest there are two crucial tests of an individual’s past judgement. Did they realise the Exchange Rate Mechanism would be damaging to the UK? Did they understand how tying the pound to the DM in the early days would lead to faster inflation, and then the opposite once the inflationary effects undermined confidence in sterling? And did they read the 2005-10 cycle correctly? Did they understand that credit and money was too loose in the period up to 2007, and did they understand that this was corrected too abruptly in 2007-8, jeopardising the liquidity and even the solvency of some banks? Did Mr Carney see the problems with ERM membership prior to the entry, and the dangers of DM shadowing. Did he think the previous policy of money targeting , as the German Central Bank did, was a safer way of controlling events? Did he argue for tighter monetary control with higher interest rates in the boom phase prior to 2007, and argue for a more rapid injection of liquidity in 2007-8? This approach should be allied to controlled administration for any bank that could not meet its obligations, is something that has now been adopted as policy for future crises. Clearly when he took over as Canada’s Central Bank Governor he did understand the need for easier money. Lets see what he has studied the unhappy monetary history of the UK and formed the right conclusions from the torrid and bumpy ride the Establishment gives UK, both through its espousal of the ERM and its encouragement of Boom/Bust in the noughties. Today the priority is to assist the government in its wish to promote faster growth. This in turn will help bring the budget deficit down. The Bank needs to relax immediate controls over bank capital and cash, whilst maintaining a more prudent level than in the period prior to 2007 to assist the recovery. There will be time to demand higher levels of cash and capital once the recovery is under way and as banks generate better profits. The Bank also needs to ensure its current policies of QE and Funding for lending are well designed to maximise the beneficial impact of these extraordinary interventions. The US and the UK – different approaches to fiscal stimulus RBS published some interesting figures on the US. Over the last twelve quarters US public spending has fallen in ten of them, making a total decline of 6% over the period. Despite or because of this tightening of the spending stance, the US economy has grown overall by 4.8%. In the UK the last eleven quarters (since the Coalition arrived) have seen a significant rise in real public spending but only a 0.4% increase in output. In most quarters in the UK the public sector has made a positive contribution to output growth. Those who argue the US has grown faster because Mr Obama has avoided austerity whilst the Coalition has gone for it should look again at the figures. Mr Obama has not increased Federal spending by sufficient to offset state spending declines, so the US has been much tougher on public spending overall than has the UK. Why haven’t the US cuts in spending led to economic decline, as some argue here. Some points to ponder upon.
Posted by Shan Saeed at 6:43 AM