Beware yeah. OPR likely to be hiked upwards. H1 2017

Federal Reserve of the U.S looks at inflation numbers as a key determinant on whether or not they will raise the interest rates. Higher inflation would show that growth is continuing due to better demand. Thus, the rates would rise continuously towards normalisation. This is also one main reason why the US$ continue to be strong thus far even with their current President. What about Malaysia? Well, TA Securities Holdings (TA Research) believes that Bank Negara Malaysia (BNM) will most likely increase the overnight policy rate (OPR) by 25 basis points within H1 2017. There’s just two months left for H1 2017. It said, “We expect the increase in rate to augur well for the banking sector as (profit) margins are compressed by competitive pressures.” Previously, it predicted that the OPR would be maintained at 3 percent for the whole of 2017. The reason for this potential hike is because of an improved economic growth as a result of better performance of the external sector, challenged by higher inflation as well as volatile capital flows amid an on-going US Fed tightening cycle.

Tightening of rates would be the same as increase the rates. Why ‘tightening’ word is used is because when rates increase, borrowers may think twice before they borrow money. Their mortgage payments for example would also be rising too. Therefore, fewer people would borrow and this means a ‘tightening.’  An easier example? When we increase the prices of a certain good, the demand would go down because not everyone would be able to afford the price increase. Labour market is expected to be stable even if there are reports that 500,000 youths are currently jobless. (Let’s get real, some of these people just do not want to work! GO and search for the available jobs today and we would note that companies continue to hire BUT… they need talents. TA Research also said that it believed BNM’s outlook for Malaysia’s economy which appear to be positive. Besides that BNM believed that Malaysia’s household capacity to spend remains healthy as the country household liquid financial assets to total household debt ratio remained stable 140.4 percent in 2016. In brief, value of the assets owned currently exceeds that of the household debt. BNM expecs gross domestic product (GDP) growth of between 4.3 per cent and 4.8 per cent for 2017.
Household debt vs GDP is now 88.4%, down from 89.1%

Meanwhile, analysts at the research arm of Hong Leong Investment Bank Bhd (HLIB Research) and AllianceDBS Research Sdn Bhd (AllianceDBS Research) believed the banking sector remained resilient to support the country’s economic growth. Current exposure of banks to the oil and gas (O&G) comprised just 7.7 percent of total corporate debt. Full article in
Borneo Post here.
Happy following as any change in OPR will not just affect first time buyers but also those who has many properties.

written on 28 March 2017

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Buying a bicycle is bad for the economy?

I read this many years ago and recently someone forwarded it again. Actually, I do think there are always many different perspectives even if we are speaking about the same thing. The image shows a bicycle and it went on to say that cycling is bad for the economy because a cyclist does not buy car insurance, does not buy fuel, does not send his car for servicing and this went on to say that cyclists are healthier, thus they do not need to go to the hospitals and doctors and thus, many job creation would stop. let’s also look at these 4 things then.

#1 – A RM700 bicycle versus a RM70,000 car.

Think about it. If we assume this person earns the same salary whether or not he rides a bicycle or drives a car, this meant that over the next 5,7 or 9 years, this person has an extra RM70,000 to spend. We assume his bicycle repair and upgrade etc will be small. This extra RM70,000 which the person did not use to buy car will still be spent somehow and it will flow back into the economy and I do think the multiplier effects are aplenty too. He could go for holidays… tourism booms. He could go for more restaurant food… restaurants boom.  He could buy more things for more people… happiness booms. I think you get the idea.

#2 – I do not think a cyclist spends just the purchase alone

I be honest. I have a BMX bicycle. I have a Mountain Bike. I have a Racing Bike.  The reason is a simple one, each one serves a different purpose. In fact, the friends who love mountain biking, do ask them if they ever continue to ride the same bike year after year without any enhancements to the parts, without any modifications and without ever changing to a lighter, better and stronger bike as he progresses. By the way, it’s the same lah. When everyone rides a bike, then peer pressure starts too. “Oh… you ride an old design…” “Oh… your suspension is less comfortable, you should try mine…”  The spending / expenses will continue to happen even if it’s a bicycle

#3 No fast food after the biking trip?

If you have friends who bike often, you would also notice their FOOD adventure after the biking trip. I seldom see bikers, after their usual 10km or 20km ride shows off that they eat salad after the ride. And… it does not even need to be after their biking session. Remember… they do not need to spend extra RM1,200 per month on the car instalment?  They would spend more n food and it does not necessary need to be healthy food. In other words, if they were to eat fast food, they have MORE money to eat fast food. Think what will happen to their visits to the doctors… and dentists and even pharmacists.

#4 It’s obvious that the writer wanted the sharing to become viral

Let’s always understand what we read and it’s good to also ponder whether the things said in these viral news are real or just for fun. I would believe the news a lot more if they could quote a research over 10 years showing how some economy in some healthy countries going down the drain just because the people in the country are healthier and drives fewer cars. However, as usual, most of the viral news would not have the source and when this happens, I usually would refrain from forwarding it further.

Oh yeah, I have many cycling friends. ALL of them continue to buy a car and ALL of them continue to spend ever more money for their cycling hobby. Hope this explains why I wrote this article today.

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Time to bid and win a unit of Mont Residence luxury condominium

This is an event for Penang property market. Especially for those who believe Penang is moving in the right direction and Singapore is a good moving benchmark for the long term where the property market is concerned. For this particular event, I think one of the most important reason to drop by the Penang Property Essentials 4-in-1 is to BID and win. I understand that this LIVE BID will start from a price which will not happen again. Take a look at the image for more information. The auctioneer is my good friend,
Stephen Soon

and if he says it’s a great deal, it will be a great deal.

Beyond just this LIVE BID event, the organisers have lined up many established speakers too. Take a look at the image for more information. The Feng Shui Master Mak Foo Weng sat beside me in a dinner before and I like the way he is able to present Feng Shui in an easy to understand manner. He will speak about the winning formula in choosing the perfect house with good health and prosperity. Another friend, Mortgage Guru Miichael Yeoh will tell you how to make the bank say YES to you! Next is a fellow property site ‘adventurer’ cum good friend Ken Lim who will be touching on how Penangites are shifting towards Lifestyle Investment. Ryan Thong representing PropertyGuru would then share about Penang’s Property Market Outlook. Last but not least, Ms. Teoh Hoay Ying would share with us the What Ifs in Estate Planning.

Due to the venue limitation, this seminar is limited to 100 tickets only! RSVP now before it is too late!” Just call the following numbers or email for tickets. 016 – 412 6586, 016 – 419 3313 or email admin@penang-properties.com.my I think this Event is worth visiting. Happy bidding, winning and learning for future investments.

written on 6 June 2016

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The big idea for small units, be real.

Recently, there were many news articles about successful launches of small units. It does seem that these small units are becoming very popular again, despite the current overall slowdown in the property market. Some photos showed people sleeping on the carpet since they arrived early in the morning to secure a spot to get an opportunity to buy. Some news reported that nearly all units offered were taken up. I think small units are worth buying if we are clear that this is by far a better choice than to rent and own nothing, as a single. Some Facebook comments said that the buyers were only given three minutes to make their choice or they will lose the chance. How true? I have no idea but let me share some thoughts about small units and what it can do and most probably cannot do.

Small units can fit you. Yes, you, as a single. Perhaps it can also fit a couple but that’s about it. Please do not think about a family squeezing into it or since you are not cooking anyway, the small unit should be just fine even for a family with one kid.

There’s a limit to its price upside potential. Yes, it’s considered affordable especially since it’s only around RM300,000. If you think it may go up to RM500,000 please think again. Unless the current prices for all the secondary units shoot up, these small units is not going to reach RM500,000 easily.

Easy to sell, because it’s cheap. At the entry price, it’s cheap. When it’s time to sell, not many are willing to sell at just a slight premium on top of the price they bought. Well, take note that there are thousands and thousands of these units. As you know, instead of 1,000 sq ft units, now two units of 1,000 sq ft units might easily be 5 units of these small units!

It’s the trend of future. In Hong Kong, this is already a trend. I have asked many Hong Kong friends, NONE of them likes small units. They were buying them because of the exorbitant prices of bigger units, that’s all. Thus, all the talk about small units being a trend? Call and ask your Hong Kong friends please.

These four reasons are some points to note. Remember, it’s still much better to buy a small  unit compared to renting one. It’s also much better to buy a cheaper unit now, even if it’s smaller compared to trying to save and buy a bigger unit later. It’s also better for singles who’s just not going to take care of a bigger unit. A smaller unit means easier maintenance too. It’s also easier on the pocket so that those who could, would save more for other investments which does not have to be property. There are lots of reasons why small units are good. However, if your thought is everything about a BIG IDEA based on a small unit, then please think again. Happy enjoying your home no matter how small or big or even far.

written on 7 Nov 2015

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Big in size, Small in price, Available?

Some months back, a friend was very surprised with the size of my condo. He said the size is really uncommon and there should not be too many of these choices around. I did a check over a year ago and I just refreshed that search today. I concentrated on just condos with a minimum size of 1,500sf and a maximum price of RM600,000. Two sites were used, propertyguru.com.my and iproperty.com.my  Both returned similar results. I will show the ones found in propertyguru.com.my here.

Take a look at the image. Actually, there are still choices, IF you also want to have space, together with facilities and security but at a price still considered affordable to a married couple today. There are many more choices than just these three. Do search yeah. Seri Kembangan is the closest to KL city centre among these three. It’s only around 20km away. However, jam and congestions are common. Thus, this 20km journey to KL city centre on a daily basis would easily take 1 hour or more depending on what time you start. The bright spot? It’s price has remained on the affordable side. Do your research on The Heritage Residences.

Puchong is another area which has all the conveniences. The only issue would be the high density and thus jams are common everyday. In fact when I was there during one of the weekends, the traffic was still slow moving. However, there are two MRT stations coming up in future which should help a bit. The distance is also further away from KL city centre when compared to Seri Kembangan. It’s around 26km away. Think objectively, property price versus the actual conveniences that you are looking for. Duration of travel to work is definitely not a benefit here. Do your research on Impian Heights.

If you work in Cyberjaya, then you have quite a good choice. A low density one too. Cyber Heights Villa is considered one of the lower density condos around. It’s also surrounded by a serene environment. It’s built in a cluster style, thus ensuring lots of natural lighting. The distance to KL city centre is however a whopping 35km. This meant that your lifestyle would have to be adjusted totally or else you may be late for work everyday.  This was one of my consideration, more because of the environment but in the end, the distance was too much of a deterrent. Otherwise, out of the three shortlisted, I would choose this instead.

There are definitely more choices! Of course, at 1,500sf or higher, this is already as big or bigger than many of the new terrace homes of today. In other words, if you want a landed because of the space it provides, these high-rise units fulfills your requirement too. Happy comparing!

written on 9 August 2015

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Bigger homes, better environment definitely

What is the minimum size for a home which you can accept here in Malaysia?

I have asked this question during many of my talks. “What is the minimum size for a home which you will feel comfortable with?” The answers have yet to be 450 sq ft and below. It’s 450 sq ft or higher. I do think for Malaysians, we would always be able to find such space in our homes except if we only want to stay in certain engihbourhoods.

For example, places where the view is amazing… usually, these are super limited and thus demand outstrips supply and prices would be grossly expensive. I won’t say overpriced because demand is really strong simply because of the demand and supply equation. However, I am not those who would pay such a premium for such views. I amjust not home long enough to sit down and take in the view every day. Haha.

What if your current 200-300 sq ft home becomes a 700 sq ft home and it’s free?

If our home is 200-300 sq ft today, would we be happy if we are given a 700 sq ft home instead? Of course, we have to give up that 200-300 sq ft home. I would be, certainly. Furthermore, this unit exchange is free! Do read about this wonderful news in the below article:

Article in penangpropertytalk.com
   State Local Government, Housing Development and Town and Country Planning Committee chairman, Jagdeep Singh Deo said, “The Penang State Housing Board (LPNPP) has launched the Penang Affordable Homes (RMMPg) agenda which consists of the development of Affordable Homes (RMM) and the urban renewal project.”

“At this stage, Penang has a master plan in which we have identified 14 projects that will be implemented by LPNPP, consisting of nine RMM projects and five URC projects on the island.

Commenting further, Jagdeep said that through the renewal project, each existing owner in the Padang Temak Flat will be given a free house unit with an area of 750 square feet.  Do read the article in full here:
Article in penangpropertytalk.com

Urban Renewal will continue to happen

If we drive around Penang, we would notice that some areas have homes which are in dilapidated state. When the environment of the home looks bad, the mental health cannot be great. However, most of these home owners have been staying there for a very long time and they would not want to move to somewhere bigger which is far from where they are comfortable with today. Thus, the only option is for an urban renewal project.

Make their current home become a better home. There has to be some benefits to the party undertaking this project yeah. Else, no one would want to take this up except the government. As for the government, they would have to prioritise because they cannot just do for one area and forget about the other areas.

If Singapore is used as an example, their older homes are usually redeveloped into new, bigger and with better environment homes BUT the density is higher by building it higher. Frankly, this is okay because most Singaporeans do not drive or own a car anyway. For Malaysia, this has to be part of the plan too. Else, cars will be parked haphazardly all over the area yeah. Need to think ahead before it happens.

I do hope to read more of these good news. Planning is however one thing but making it happen as quickly as possible is another thing.

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My one bigger lah, landed vs condo, does it matter?

Which is bigger? 20 x 60 double storey terrace or a 1,743 sq ft condo? Truth is, I do not care much what’s the answer. I am still sticking to my personal favourite which is bigger-sized condos and not the smaller sized landed. If you say a 20 x 60 landed is bigger, then by all means buy the landed and enjoy it. My good friend who specialises in buying landed properties loves landed and I think he would have his own reasons why landed is a better investment. He has moved from a smaller landed property into a bigger landed property this month. I have moved a few times from my first 700 sq ft apartment to my current 1,743 sq ft condo. Hey, we have something in common! Yes, both of us are moving into something bigger, irregardless of the type of property.

This brings us to the question of which type is better? Landed should be better right? Haha. If I am staying with my family, I want to have a park which I can take a stroll anytime I want. I would like a park where my daughter can cycle safely, within some paid protection. Both types can provide this, especially the newer gated and guarded schemes where the club house and gardens are very common. The only setback would be the distance and the price. It is most probably either in a new area not loved by many yet or if it is in a popular area, the buyers are considered very rich.

I also want to have sufficient space to park my cars. At least 2 or more depending on how many drivers there are in the house. This requirement can also be solved by both types. Of course, the landed supporters would say they are better as they can even park the car right outside the gate or along the road leading to their homes. Truth is, I have had relatives and friends visiting me at the same time and ALL of them were able to park inside because the visitor car park spaces within my condo is really huge, plus every unit already comes with 2 car parks too.

I also want it to be near malls. This is because I love visiting malls. This is where the high-rise people would claim they are better. Some high-rise are just a lift and perhaps a few steps away from a mall. As someone who only owns high-rise, I would say I agree only partially. I would not want to visit the exact same mall every weekday followed by every weekend! Secondly, during working days, I would most probably be eating my dinner before coming home. Thus, a mall or no mall makes little difference.

I want to have more rooms. Long time ago, high-rise were mostly smaller sized. Thus, number of rooms are also fewer. Today, there are already condos which are so big they can fit 5 rooms or more! It depends on the size that you buy. A 700 sq ft apartment definitely can only fit 3 rooms at max but a 1,743 sq ft condo may easily fit 4+1 rooms! The rooms may even be bigger than the 20 x 60 landed unit that we spoke about in the beginning.  Please enlighten those who said landed meant more rooms.

I will not touch on safety, on MRTs or even BBQ facility as both sides have their own points. The most important point is today, ‘what’s your home sweet home size.’ The rest are all secondary because it can be fulfilled some how when we are buying the right property regardless of type. Still disagree? No one would stop you from issuing a cheque for that 20 x 60 unit just as no one has ever stopped me from buying a high-rise instead of a landed. Yes, that’s why both are still growing and why the right size and right location meant high prices. Demand and supply is true for both types. Happy deciding, whether it’s a 20 x 60 landed or a 1,743 sq ft high-rise.

written on 28 Sept 2015

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The bigger the unit, the better it is, definitely. (PPR)

The Housing Development Board of Singapore has this line in their website.
“With more than 1 million flats spread across 23 towns and 3 estates, the Singapore brand of public housing is uniquely different. The flats spell home for over 80% of Singapore’s resident population, of which, about 90% own their home.”
Here’s the site.

I could not find any reliable source to say what’s the percentage of Malaysians staying in some forms of government built homes. I seriously do think the government has a huge role to play when it comes to ensuring that Malaysians do own the home they stay in. This is the only way that they do not pay rental forever and remain poor. Fortunately, I think the government is getting increasingly more concerned because the needs for affordable housing is getting higher but the numbers are not really growing and despite this huge demand and little supply, the number of unsold units continue to be high! Demand will always be selective. Thus, supply that does not meet the requirements would move on to join the unsold units statistics. Well, how about building bigger units then?

Currently, the People’s Housing Project (PPR) size per unit is 600 sq ft. There are now plans to increase it to 900 sq ft. What happens to the price then? This is from the Housing and Local Government Ministry.  Its minister Zuraida Kamaruddin said that the price will be adjusted because of the financial implications in terms of construction costs and subsidies which comes with a bigger sized unit. She said, “We are very careful in terms of price to ensure it will not be wasteful.” Zuraida added that the reason for bigger units is because there are wishes for bigger units from people with large households for a bigger and more comfortable homes. For now, the federal government is drawing up a policy requiring state governments to provide bigger land for the construction of PPR houses and other basic amenities. “With this condition, it will lower the prices (of PPR unit) and will not affect the prices of low-cost houses,” she said. Besides this, the ministry will also be discussing with Bank Negara for flexibility in terms of bank loan facility to PPR house applicants.
Here’s that full article in EdgeProp for reference.

Personally, every time someone asked me about projects, my question is always on the size as one of the key priorities. The reason is very simple. Building a 1,000 sq ft apartment today will be many times cheaper than building a 1,000 sq ft apartment 10 years in the future. This is even assuming that the land is provided by the state government at nearly the same rate as 10 years ago. Construction costs would have gone up as the years go by too. Thus, in the future the focus would still be on the affordability factor. By then, more units would have to be built on the same piece of land so that the costs are more manageable. More units, same piece of land, that would mean smaller units. By then, car parks would no longer be a standard. It would be a premium but the home will be connected to a public transport, whether it’s a bus stop or LRT / MRT stations for example. So, building larger units today is a good decision. Perhaps in the future, the number of people in the households would also be shrinking. When that happens, perhaps larger units are no longer a priority. Happy following.

Featured image source is from Astro Awani.

written on 2 Aug 2018

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The ‘Chinese wave’ is continuing to flow into Malaysia.

I think most of us would agree that China should now be easily the biggest investor in Malaysia. From Iskandar in Johor to Bandar Malaysia in KL and even the East Coast Rail Link (ECRL), they are everywhere. Well, except Carey Island perhaps which may be by India. Read here:
APSEZ and Carey Island with MMC Port Holdings, Sime Darby
  China has overtaken Singapore to become the top foreign investor in Malaysia’s property market. Reported in a few medias. Here’s one of them.
todayonline.com
 Some facts from the article.

Between 2014 to 2016, Chinese companies invested an estimated S$2.6 billion (RM8.21 billion) in Malaysia, compared to Singapore’s S$1.6 billion (RM5.05 billion). This is as per a report by property consultancy Cushman & Wakefield published on March 27 2017. Ms Sigrid Zialcita, managing director, Asia Pacific Research at Cushman & Wakefield shared that since 2016, there are notable shift of Chinese investments into economic projects that will deliver longer-term benefits to the Malaysian economy. A few examples were shared. For example, China Railway together with Johor-based Iskandar Waterfront Holdings has jointly acquired a 60 per cent stake in the Bandar Malaysia project from state-owned 1Malaysia Development Berhad for S$2.3 billion.  This is for the development of the world’s largest underground city. The project includes residential and commercial complexes and Bandar Malaysia is where the high speed rail into Singapore would start. Huawei Technologies has also opened its regional headquarters in Kuala Lumpur while Alibaba Group has been reported to be opening a regional distribution hub within KLIA Aeropolis as well as a logistics centre in Iskandar. One article here:
Kuala Lumpur Internet City within Bandar Malaysia

Chinese nationals under the Malaysia My Second Home programme totalled 8,000.

Some of these
developments are on a longer term

and is not expected to be providing a boost to the employment market immediately apart from construction sector. However this was what my friend who’s a human resource professional in a major construction company told me today. “It’s tough. The number of available workers are insufficient for the amount of construction happening today. That’s why we even give many special benefits to the people working at the site. For example site allowances.” On a longer term, as long as all these new developments happen, we can be quite assured that the
 investments from outside Malaysia

would also continue and as usual with more demand means the real estate prices would also appreciate. As for question of whether this will only benefit these hotspots but not on a larger scale; further away areas, that’s already answered by all the more advanced property markets today. For example Singapore. Prices in further away areas like Punggol or even Chua Chua Kang will continue to increase because prices nearer to the CBD in Singapore is already increasing. When choices becomes too expensive, acceptance of new choices emerge. Simple equation. Happy following.

written on 7 April 2017

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Biggest Prosperity Dragon tunnel in Malaysia is ready for visit

Another attraction in Johor which I would definitely be dropping by in my next visit. Auspicious one nonetheless. There is now a 106.9m-long dragon tunnel, dubbed the Prosperity Dragon in Yong Peng. It was launched by Johor Ruler Sultan Ibrahim Ibni Almarhum Sultan Iskandar. Total construction cost was RM8 million and it took 3 years to build. The interior is adorned with Chinese cultural and religious paintings. It’s built on more than a hectare of the Green Garden of Che Ann Khor Yong Peng Association grounds in Tama Kota Impian here. Full article in
 The Star
 here. It’s air-conditioned and visitors have to pay a minimal fee to view the paintings inside.

According to Johor’s State Tourism Committee chairman Datuk Tee Siew Kiong, this new attraction would attract more tourists and boost the state’s economy. He shared, “This dragon is a symbol of prosperity for Johor and I hope Green Garden will become an iconic destination. The 24 paintings portray the teachings of the Buddha on honouring and obeying parents and another 18 paintings depict the afterlife. Everything about this structure is related to the number nine, which represents prosperity and luck for the Chinese community. Inside, there are 108 stairs and the length of the dragon is 315ft. Both figures add up to the number nine.”

As I have stated, I would definitely be visiting it. However, I would not be travelling into Johor just to visit one structure. It would be good if the state can link a few similar attractions into a 2 days one night kind of tour. Just target the nearest ‘foreigners’ lah. Then, it would really help to bring in more visitors as well as to drive the tourism ringgit. Of course, as they say, the more the merrier. Thus I think this new DRAGON should become an iconic one in time to come. This is especially after more photos of it is shown in the Facebook of visitors. Yes, this is the more important point I would like to bring out. WHY is this not yet widely shown in the Facebook of my Johor friends? Happy visiting.

written on 15 Nov 2016

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Biggest jump in eight years. Singapore property prices. Good?

Could you feel the positive sentiment in the next sentence? “Moving into 2018, we can feel that buyers and investors are now taking action, propelled by the ongoing market exuberance with the bullish land bids and continuous collective sales in the market.” Propnex Realty CEO Ismail Gafoor said this
in an article in channelnewsasia.com
 It was an article about the current state of the property market in Singapore. The private home prices continued its upward trend by rising 3.1 percent in Q1 2018. This level of increase was last seen in June 2009. In the previous quarter prices rose by just 0.8 percent.

Ismail added that the overall prediction of price growth in 2018 would be between 8 – 10 percent. (I wonder if the increments are as high as this number. Hopefully it is.) He also said that he predicted that the transaction volumes would pick up, prices are set to increase by up to 5 per cent as well by the first half of the year.” The reason for these growth would be contributed by higher price points at new launches which would usually push up the resale and existing launches in the future.

Also in the article, Ms Tricia Song, Head of Research at Colliers International predicted a similar number. She said: “We now project average private home prices to rise by 8 per cent (from the 5 per cent forecast earlier) for the full year of 2018, implying a rise of another 5 per cent for the rest of the year.” She added, “We think the rise is front-loaded due to the pent-up demand and buyers’ fear of missing out on good value buys as prices trend up.”
Here’s that article again.
  Between prices going up or coming down, of course the owners and the buyers would be on the opposite sides. However, when supply of the units that the buyers actually wanted to buy is fewer than the demand, then prices would go up. For Singapore’s case, it’s quite clearly also caused by the ever higher land sale prices.

Ms. Tricia also added, “We remain positive on the fundamentals of the Singapore economy and are hopeful of a sustainable gradual property price growth in tandem with the GDP growth. Developers will also be mindful that the softer HDB resale prices may affect the ability of upgraders to purchase more expensive private homes.”

Well, it seems that the property market of Singapore is becoming vibrant again. For the sake of the middle income Singaporeans without a home yet, I still hope the prices do not suddenly jump too far up and too fast. Yes, my wish is the same for the Malaysian property market too. I firmly believe every Malaysian should have a roof over their head and it should belong to them!

written on 3 April 2018

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Biggest stock decline in 87 years is definitely a shock

A good friend told me that he just bought 10,000 units of a dividend stock 2 weeks ago. I think this is the right way to go. If we are still looking at the stock market for quick wins, it may also be a quick loss too. Then, this news appeared today:
US faces biggest stock drop in 87 years. Article in TheStar.com.my
 The two causes for this would be turbulent market and a weakening outlook for the global economy. It also say that steep drops in the equity market has sapped confidence away from fund managers and thus they are now predicting global growth to weaken in the next 12 months.

The article went on to state a few more advanced countries’ lack of confidence in the market and it mentioned the oil price as well which has weakened. Last but not least, the USD weakened very slightly against many currencies. Everyone’s waiting for Federal Reserve’s decision on whether or not to raise the rates in their meeting ending today (19th December 2018).
Here’s that article for reference again.

I just told one room of over 100 people yesterday during my sharing session that based on numbers alone, a financial crisis will not be starting from within. I meant our country, Malaysia. No, not with 1MDB. The amount bandied about is too small versus our GDP, really. It has to be something more significant. However, if the world’s two largest economies are not doing well, then it’s going to be WINTER soon for the rest of the world too. Should all of us be buying undervalued stocks then? That may be a good suggestion, regardless of what happens at the end of today, after Fed’s meeting. Happy investing.

written on 19 Dec 2018

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61% of the world’s women billionaires are in ASIA… (guess which country?)

Please do not guess the U.S. yeah. It’s not in Asia. Singapore is meanwhile a very small country, even if they do have quite a number of billionaires. Okay, it’s also not that hard to be a billionaire if they exchanged their SGD into Ringgit since it’s SGD1 to RM3.06 (as at 2h March 2020). So, yeah, it’s China. Hardly surprising right? Then again, we are talking about women billionaires yeah.

Does that mean women have better chances in China versus women in all the advanced economies?  There’s no such conclusion yeah. One thing is real and has happened. By the way the billionaire here refers to those with their assets calculated in USD yeah. So, technically they are multi-billionaires if it’s in RM. We will write about the Malaysian billionaires in the near future. For now, let’s clap our hands for these women.

Article in thestar.com.my
    According to a recently released Hurun list of 100 self-made women billionaires from 16 countries, China has 61% of the world’s self-made women entrepreneurs with fortunes of more than a billion US dollars. This is 4% up year on year.   The United States women billionaires are second while the United Kingdom is third. China’s total meanwhile is by far more than the U.S. or the UK.

United States have 19 and the UK has 6. All are self-made billionaires yeah. Based on the list, Zhong Huijuan a 59-year-old Chinese entrepreneur who started a pharmaceutical company empty-handed is the world’s richest self-made women billionaire with 106 billion yuan (US$15.1bil).  Within the top 10 list, 9 are from China. City wise, these cities in China has self-made women billionaires. They include Beijing, Shenzhen and Shanghai and newcomers into the list from Hangzhou and Xiamen too. Please do read the full
Article in thestar.com.my

Well, as the typical calculations grow, one needs to just earn US$1 from every Chinese in China per month and it’s already over a billion dollars. Multiply that by 12 and suddenly we realise this, ‘no wonder lah these women could become a billionaire faster than those in other countries…’  Then again, it’s worth nothing that the country must also have the market for these women billionaires to earn such an income every month yeah. China is already the world’s second largest economy. Really thinking of becoming a billionaire? Think of how to break into China yeah. It has a population of probably 1.4 billion today. Happy thinking about it. Just remember to take some actions.

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How many billionaires are there in the world?

The total billionaires in the world? Maybe just many years ago, I remember some number in the hundreds but today, I read that the number of billionaires has hit 2,208 persons, according to Forbes. The richest is not Bill Gates but Jeff Bezos the founder of Amazon.
 The full article in NST here.
Richest Malaysian is still Robert Kuok. Within Asia Pacific, there are 827 billionaires with a total net worth of US$2.75 trillion. (RM10.76 trillion) There are 14 Malaysian billionaires in the list, with Kuok being ranked at No. 96 with US$14.8 billion (RM58 billion) This was followed by Ananda Krishnan (No. 217, US$7.2 billion), Tan Sri Quek Leng Chan (No. 217, US$7.2 billion), Tan Sri Teh Hong Piow (No. 289, US$6.0 billion) and Tan Sri Lee Shin Cheng (No. 321, US$5.6 billion). President of the U.S Donald Trump ranked 766th. The average net worth for these 2,208 billionaires would be US$4.1 billion (RM16 billion), a record high.

Yes, the richest are still getting ever richer. The total combined net worth of this year’s billionaires was US$9.1 trillion (RM35.6 trillion), up from US$7.7 trillion last year. There are 1,490 members who did not get their wealth from their families. This is up from 1,371 in 2017. The list is based on a snapshot of wealth taken on February 9 this year. Forbes used that day’s stock prices and exchange rates from around the world. The list lists individuals rather than multigenerational families who share large fortunes. For some cases, siblings and couples are listed together if the ownership breakdown among them isn’t clear. However to make the cut, the average has to be a minimum of US$1 billion apiece to make the cut. Here’s the article in
NST again for reference.
Alternatively, we can also look at Forbes site for a more comprehensive report.

Forbes:  Forbes found a record
2,208
 billionaires,
 collectively worth
US$9.1 trillion
. (RM35.61 trillion) Among them are
259
 newcomers who made their fortunes in everything from wedding dresses to children’s toys to electric cars.  Within one year, the founder of Amazon, Jeff Bezos increased his wealth by a staggering US$39.2 billion. (RM153 billion) and he has thus knocked Bill Gates to number 2. There are lots of other interesting stuffs too including the 259 new billionaires, how did they got so rich, world’s youngest billionaires and even the richest women in 2018.
Here’s the full article in Forbes for a good reading.

Nope I did not find any main articles related to Malaysia or Singapore on the main page. Jack Ma is worth US$39 billion but he is not the richest in China. That honour goes to Ma HuaTeng with US$45.3 billion. Happy reading and dreaming the next startup yeah.

written on 16 March 2018

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1.5 vs 2.1 vs 1.24 – Population growth or Ageing nation

Source:
https://www.macrobusiness.com.au/2017/01/2017-demographia-housing-affordability-survey/

Birth rate of a nation determines if the population is growing up or going down. The minimum birth rate per woman needs to be 2.1 for the population to be growing very slowly. Any number lesser than 2 means the country is getting smaller every year. I contributed two. So, just on the dot. 2 means I am still below Malaysia’s average. A growing population meant that demand for housing would continue to grow. What happens when the population stops growing? Then it depends on how far is the supply away from meeting existing demands. When the supply is struggling to meet the demand, property prices would still go up. There are many such examples in the world today. An image showing how affordable or unaffordable a typical home is for some countries we know around the world.

By the way, more supply does not mean everything

built would be accepted by the potential buyers.

Sometimes mismatch happens and the unsold units would continue to pile up but that does not mean
supply is more than demand!

Coming back to the actual increase in demand. It has to come from more population. When couples get married, they may move into their new home from their parents’ home. One extra unit of a new home needed.  When they have babies, they want to upgrade. This meant another unit is needed. Their first unit could be sold to newly married couples or even rented out to tertiary education students. Their kid(s) would grow up and when they get married, they would need another unit of home and so on. When this couple gets older, they may prefer a smaller unit or perhaps even a more integrated one instead. They would then get themselves another unit while their current home could be sold to some other families. They would also help their kids buy homes. This is just the demand from existing population and has yet to include international students, foreign tourists and even foreign workers / professionals. Many times, the demand for these new properties would be in major cities where urbanisation continues to happen.  This is the reason why property prices tend to rise faster there when compared to some smaller towns or villages.

In case you think the figure of 2.1 for Malaysia is considered low, let’s look at two more countries right next to us? Thailand’s birthrate is down to just 1.5 despite the efforts of the government to encourage more births among its people. In an
article in channelnewsasia,
 it said that this 1.5 number is lower than Cambodia’s 2.6 and even Malaysia’s 2.1  The article quoted World Bank figures which said that Thailand and China has the highest proportion of elderly people of any developing country in East Asia. It said that the population has already peaked and should start to decrease in 2030.Once this happens, it also meant that Thailand would start to face potential economic problems including labour shortages and a smaller base of income tax payers as the working-age population shrinks.
(By 2050, Malaysia would start becoming an ageing nation too)
  The birth-rate for Singapore is 1.24 in 2015 and this is despite the government giving out cash incentives to new babies.
Here’s an earlier article in cnbc.com

When the birthrate has slowed, then the nation starts to become an ageing nation. For Malaysia, it’s not that far away. By 2040, it is estimated that we would become an ageing nation. By
2050: 24 percent of Malaysians are 65 and above
. For ageing nations, the demand for goods and services may change but on an overall basis, the economy may grow slower. The first thing is
however an ever extending of the retirement age.

Imagine the number of working population shrinking to almost the same number as those retired? I think you get the picture. Due to this, the government’s expenditure would also increase but how would it be able to fund these? For the remaining working ones, the taxes to be paid may start to inch higher too. Oh yeah, the demand for property will definitely change and start to decrease too. Start planning yeah. For Malaysia, it’s around 22 years away. If you ask me, then my answer is that it’s definitely still safe to buy a property lah. Cheers.

written on 17 Feb 2018

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Bitcoin auction by South Korean government. Interesting.

Sometime back, I got a Bitcoin expert in Malaysia to tell us a bit more about Bitcoin. Read here:
Expert Series: Bitcoin questions answered by Suraya (ringgitohringgit.com)

Right after that, bitcoin prices has been going on an uptrend.  Of course, the uptrend has nothing to do with the interview. 🙂  The latest price as per google is as per image. 1 Bitcoin is worth US$2,534.78 (RM10,840). The South Korean government would be auctioning off a total of 216 bitcoins that it confiscated during a 2016 criminal investigation. (Yes, it’s way back in 2016). The value of the 216 bitcoins? Over US$500 million, as per latest bitcoin price. What did the individual do which caused him to be arrested? He was operating an obscenity website. According to the article, this will be the first time that a country’s government will be auctioning off a load of bitcoins. Here’s the full article in coindesk.com:
South Korean government to auction US$540k in Bitcoin.

What would the South Korean gain from this auction? Based on the article, final bid could be slightly lower than the market price, which is currently at approximately $2,525, according to
CoinDesk Bitcoin Price Index
.

The Korea Asset Management Corporation is the country’s asset management operation that oversees state-owned properties and development. It said that digital currencies such as bitcoin can be auctioned off by the government because they are not considered as non-auctionable assets by the South Korean law. From the auction, 3 percent of the auction amount would be considered as auction fee while the remaining will be returned to treasury. Currently, the bitcoin market in South Korea is booming. The domestic exchange platforms Bithumb, Korbit and Coinone have seen significant increases in trade volume in recent months. The article quoted data from
CoinMarketCap
, showing the Korean won contributing to 32.26 per cent of the trading volume of ethers, the cryptocurrency of the ethereum network.

I do not own any bitcoin currently. It’s too volatile for me. However, if anyone were to ask me if I now see bitcoin as gaining more popularity, I think the answer is a firm yes. Some other developments? Bitcoin has been legalised by the Japanese government since April. It says that bitcoin is accepted as a
legal payment method. Read here.
In brief, it will be even more popular in Japan. Meanwhile
Morgan Stanley says that it does not believe bitcoin would be a viable currency in the future.
It says that it views bitcoin as an asset rather than a currency. The reason is because its value is too volatile to be used as payment. To those who bought earlier, I think you now have a ‘paper’ gain. Do monitor the price closely and all the best yeah. Do visit
ringgitohringgit
 for more bitcoin related news. Cheers.

written on 17 June 2017

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Blanket moratorium not the best option for MCO 3.0.

This was the message from Bank Negara Governor Datuk Nor Shamsiah Mohd Yunus said when asked if banks should give a blanket moratorium with the MCO 3.0. She said that all banks already have their payment assistance plans including targeted loan moratoriums which can be offered to borrowers who have lost their jobs or suffered a reduction in income. She said, “Borrowers can also approach multiple channels that have been set up, including BNM’s Credit Counselling and Debt Management Agency (AKPK), if they require advice or further assistance.”

She added, “More importantly, borrowers are getting help that reflect their specific financial circumstances so that they will not incur more cost or debt than necessary and can get back on their feet faster. So loan moratoriums, in this respect, may not be the best solution for all borrowers.”  Do read the
full article in the malaymail.com here.

Should all tenants be granted rental discount automatically?

I am firm in believing that if a tenant is in financial distress, the home owner will try to help the tenant. A discount of 50% is not out of this world and it’s actually going to be a win-win situation. Tenant gets a relief and homeowner continues to have some rental and builds up goodwill. HOWEVER, if the tenant is still receiving his FULL PAY and just simply bluff the owner, then this is grossly unfair to the homeowner. This is why I do not believe in blanket approval for all and not just for the ones who really needed it.

Banks also have their shareholders too. What about them?

Banks have to run their business profitably and they have to pay their people accordingly too. Let’s not forget they also have their shareholders too. Offering a blanket moratorium is not the best option. By the way, if the borrower really do need assistance, the banks would prefer to assist. Imagine if the bank refused and proceed to take back the home or the car, they will suffer losses because the property they take back may NOT fetch a good price currently.

Just look at the auction market for some clues. Many properties go through many rounds before they are sold and it’s a 10% reduction in the selling price for every round! Let’s not even talk about cars yeah. It’s a definite loss as soon as the cars are repossessed and put into auction. The auction price is unlikely to cover the remaining loan amount. As for CREDIT CARD debts, let’s be savvy that many of these credit card issues may not have been caused by COVID-19 alone.

For this particular case, I agree with BNM Governor. Any financial assistance in the form of extension of moratorium should be based on needs basis and should not be a blanket one. I have received message from all my banks to contact them if I needed assistance for moratorium extension. It’s a choice actually. As for what could be done right now, the best is to ensure vaccinations move faster as soon as we have all the vaccination doses arriving in the country or produced.

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Blogging can earn you millions, really.

I read an interesting excerpt on my flight from Kuala Lumpur to Jakarta. Can you earn millions from blogging in something that you are interested in? Make your blog the top read blog for that topic that you blog about? This is definitely not a dream.  I just learnt that Michael Arrington earns USD500,000 to USD800,000 per month. His site is the famous
http://www.TechCrunch.com
 According to facts from
http://www.wrike.com
 he is the richest blogger in the world. I think he works hard too because the updates in his site are as frequent as minutes. Okay, perhaps he can afford many more writers as well.

Actually many of us can strive for this. The world is now full of opportunities because the world is now online. This is not easy work and it requires lots of discipline. You may have to give up some of your online games or Korean dramas. However, the potential is endless. One real example, in terms of actual visits, kopiandproperty.com.com is no longer that small but when I am lazy, the momentum of growth stalls and I would have to do more to get it restarted. Thus, the mantra is discipline, discipline and discipline.

Where would this bring me is unknown. Where I intend for it to go might be clearer; top 10 most visited property site in Malaysia. Yes, versus all the commercially run property sites. Timeline? End 2016. What have I been doing? Well, I told a close friend that I intend to increase the average article per day from 1.9 to 2.2 beginning August. I realised that when there are more things to read, my number of visits go up. Yet, I m working full time and have my adorable daughter and my new 3 months plus baby boy, so the time available is very limited. Haha. Anyway, everything starts with a dream and ACTIONS corresponding to that dream. All the best to me.

written on 26 July 2015

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Bloomberg, Bank Negara Malaysia, rate adjustment and economic growth

In an interview with Bloomberg, the Bank Negara Malaysia (BNM) governor, Tan Sri Zeti Aziz again reiterated ‘BNM is not going to “run the economy to the ground” to achieve low inflation. Risks to growth have to be taken into account.” The reason Bloomberg or any other media asking this question is because they wanted to be able to guess when the next hike in rates would be coming. This is especially after the 25 basis points hike in July and the next upcoming potential 18 September or even the final monetary policy meeting on November 6.

In the same interview, Zeti said the following too:

‘We will look at what the risks are to inflation and the underlying inflation, rather than one-off adjustments that result in higher prices.’

‘Obviously, we’re not going to run the economy to the ground to achieve low inflation, we look at the risks to growth as well.’

In terms of inflation, Zeti said the CPI will increase this year and next due to GST but this is likely to be temporary. In fact, recently Malaysia scored highest in terms of inflation in the latest World Competitiveness Report by the World Economic Forum because of its low inflation growth rate. Potentially, BNM is expecting inflation to be between 3 to 4 percent and this may potentially rise above 4 percent but it is likely to stabilise in the region of 3 percent. She said that the monetary policy would continue to focus on normalisation of interest rate because the current prevailing rate is to support growth. As long as growth is positive and strong, it will provide another opportunity for rate adjustments. On Ringgit, she warned that currencies do not reflect the fundamentals from day to day. As usual, it will be affected by financial flows from events that unsettle the market. Thus, Malaysia is definitely not immune to these developments.

Looking at everything said above, as well as some of the latest reports, my personal conclusion is that without any huge event happening in the world, Malaysia’s growth would continue. This is despite the gloomy outlook said by many of the Facebook comments and yet when you look at PTLM’s page or even Property Insight’s Facebook page, it seems everyone is still eagerly going into the property market! Looking at the rate adjustment, do note that rate adjustments will be up if growth is continuously robust. If rates are maintained, it simply meant that BNM still does not think that the adjustment is necessary yet as it wants to accommodate the growth. Next week rate adjustment? No idea but based on all the signs, not yet.

written on 7th Sept 2014

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Bank, Law, Tax Seminar. Free tickets all snapped up

Latest Update:  ALL free tickets have been snapped up. For those who missed this, it’s really worth the time and the tiny little investment. See you there.

The BLT (Bank, Law, Tax) Seminar is just one month away. This time, it’s in Putrajaya. I will be there too, how about you? Lots of good tips and learnings from three experts in mortgage, legal and tax. All three subjects are essential ingredients for a successful property investment journey. My good friend, Miichael has offered the readers of kopiandproperty.com a total of 15 free tickets to the BLT event on 9th January in Everly Hotel, Putrajaya. As per Miichael, the tickets are based on first reserve first get basis. Link and password is as below.

https://kopiandproperty.eventbrite.com
  Password is
KP9116

Read on to understand more about the BLT seminar.

When Miichael told me about his Bank, Law, Tax (BLT) seminar series, I told him that this is useful to help give more knowledge to potential investors. It should be done on a continuous basis. The reason is because besides the sharing, it should also continue to provide updates from all the changes in the industry. Property investment should be a continuous learning journey. In his BLT Seminar, he has two other experts who will be joining him.

Chris Tan is a lawyer and the founder and now Managing Partner of Chur Associates. I have listened to him a few times and his speech is always very interesting despite law being such a serious topic. Richard Oon is TY Teoh International national tax director and he speaks regularly on everything about tax. I think it is important for any investor to understand the tax implications because some of these can be very high! Miichael Yeoh was once a banker and is today a mortgage guru sought by many people on an important topic; mortgage loans.

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Bank, Law, Tax (BLT) Series: Property Outlook 2016

When Miichael told me about his Bank, Law, Tax (BLT) seminar series, I told him that this is useful to help give more knowledge to potential investors. It should be done on a continuous basis. The reason is because besides the sharing, it should also continue to provide updates from all the changes in the industry. Property investment should be a continuous learning journey. In his BLT Seminar, he has two other experts who will be joining him.

Chris Tan is a lawyer and the founder and now Managing Partner of Chur Associates. I have listened to him a few times and his speech is always very interesting despite law being such a serious topic. Richard Oon is TY Teoh International national tax director and he speaks regularly on everything about tax. I think it is important for any investor to understand the tax implications because some of these can be very high! Miichael Yeoh was once a banker and is today a mortgage guru sought by many people on an important topic; mortgage loans.

The next BLT series would be 9th January (9am – 6pm) in Ampang, Kuala Lumpur. The topic is ‘Property Outlook 2016, the BLT Perspectives.’ Within this series, they will share about their views on the property market outlook for 2016, the impact of regulations and strategies to use moving forward. The investment is pretty minimal. RM99 per pax or RM116 per two pax. Click here to know more:
BLT Seminar Series

Happy learning.

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BNM’s accommodative stance for the economy maintained

In brief, Bank Negara Malaysia (BNM) believes the economy is getting better. It said, “At the current level of the OPR, the stance of monetary policy is accommodative and supportive of economic activity.”  Here is a report in
asia.nikkei.com
 with views from analysts. According to Capital Economics’ analyst Krystal Tan.”The tone of today’s statement suggests that the central bank is in little hurry to adjust monetary policy settings any time soon.” “Inflation could continue to edge higher in February to 4.0% from a year earlier due to rising oil prices, said Weiwen Ng, a Singapore-based economist at Australia & New Zealand Banking Group. (Maintaining the rate tells us that BNM is more concerned on helping the economy to continue growing. It does not think raising the rate is needed despite inflation edging up last month. In January, it is up 3.5 percent.)

Full press release by Bank Negara Malaysia (BNM) as below. You can also read more of their announcements here.
www.bnm.gov.my

At its meeting today, the Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR) at 3.00 percent.

Economic activity in the advanced and emerging economies has continued to improve. Global trade is also showing a recovery. In this environment, the Asian economies are benefiting from stronger external demand amid sustained domestic activity. For 2017, the global economy is projected to expand at a slightly faster pace. Nevertheless, there remain risks to global growth arising from threats such as protectionism, geopolitical developments, heightened volatility of financial markets and negative developments in the prices of key commodities.

Despite the challenging global and domestic environment, the Malaysian economy expanded by 4.2% in 2016. Growth was underpinned by private sector activity, with additional support from the turnaround in net exports. The growth momentum is expected to be sustained in 2017. With the growth of domestic demand being sustained, the more positive contribution from the external sector will lead to a better performance of the Malaysian economy.

Headline inflation is projected to be higher in 2017, reflecting primarily the pass-through impact of the increase in global oil prices on domestic retail fuel prices. Headline inflation would remain relatively high in the first half of the year before moderating thereafter. However, the projected trajectory of domestic headline inflation will be dependent on the future trend in global oil prices which remains highly uncertain. The cost-driven inflation is not expected to have a significant impact on the broader price trends given the stable domestic demand conditions. Core inflation is expected to increase modestly.

The ringgit, along with other emerging market currencies, has continued to stabilise. The implementation of financial market development measures has had a positive impact on the domestic financial markets. Banking system liquidity remains sufficient. Financial institutions continue to operate with strong capital and liquidity buffers and the growth of financing to the private sector is consistent with the pace of economic activity.

At the current level of the OPR, the stance of monetary policy is accommodative and supportive of economic activity. The MPC will continue to assess the balance of risks surrounding the outlook for domestic growth and inflation.

—  end of press release by BNM —

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Household debt vs GDP is now 88.4%, down from 89.1%.

Yesterday, Bank Negara Malaysia released a press statement entitled,
“Bank Negara Malaysia Annual Report 2016”
 Some interesting facts from the long article as follows:

2016 was a year when the world economy grew the SLOWEST since the Global Financial Crisis

Global inflationary pressures remained low, mostly due to weak demand and weak commodity prices, especially crude oil.

Due to the growth concerns, many countries adopted an
accommodative macroeconomic stance (including Malaysia)

Malaysia achieved 4.2 percent GDP growth in 2016 (YES, I personally think this is a very good achievement versus majority of all the countries in the world)

Domestic demand remains the growth anchor, supported mainly by private sector spending. Measures include temporary reduction in employees’ contribution to the Employees Provident Fund (EPF), higher Bantuan Rakyat 1Malaysia (BR1M) payouts (Direct provision to the right targeted households would help the most when it comes to household spending)

Except agriculture, all economic sectors continued to expand in 2016!

Unemployment rate increased from 3.1 (2015) percent to 3.5 percent (2016)  (Technically, this is still considered full employment)

Net employment gains totalled 112,300 and it is concentrated in the high-skilled segments such as professional and managerial jobs (This is very positive indeed. Now we know why the
car sales increased for the more expensive models.
)

We (Malaysia) still have trade SURPLUS even if the amount is smaller.  (Note that largest economy is still having trade DEFICITs)   Currency should appreciate when there is a trade surplus and not the other way around. This is assuming a rational market.

International reserves of Bank Negara Malaysia amounted to USD94.5 billion (equivalent to RM423.9 billion) as at end-2016. As at 28 February 2017, the reserves level amounted to USD95.0 billion (equivalent to RM426.3 billion).

External debt is equivalent to 73.9 percent of GDP as at end 2016. One third is denominated in ringgit which reduces the risks from foreign currency fluctuations. (U.S’s external debt is 95 percent of GDP. To have a reference of
 external debts of other countries, refer here.

In 2016, the ringgit, along with most major and regional currencies, continued to be influenced by shifts in portfolio flows. For the year as a whole,the ringgit depreciated by 4.3% and ended the year at RM4.486 against the US dollar. (As at 24th March 2016, it is at US$1 to RM4.4230; appreciating trend in 2017)

Global economic activity is projected to improve in 2017 (Great for a trading nation like Malaysia)

Malaysian economy is projected to register a sustained growth of 4.3% – 4.8% in 2017.

Domestic demand will continue to be the principal driver of growth, underpinned by private sector activity. (Keep buying yeah)

Inflation for 2017 would be higher, at an average in the range of 3.0% – 4.0%.

Fiscal policy in 2017 will focus on further strengthening of the Government’s fiscal position.(Yes, committed to reduce the deficits further)

Household debt to GDP saw a reduction from 89.1% for 2015 to 88.4% for 2016.  (Household debt to GDP for a few selected countries as follows: U.K (87.6%), U.S (79.4%) and Australia (123%)

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BNM cuts OPR, a positive surprise for economic growth

I just wrote about this recently. Read here:
Accommodative stance needs a further boost, lower OPR?

Today, it happened. Bank Negara Malaysia (BNM) has cut the overnight policy rate by 25 basis points to 3.00 per cent. This is considered a surprise move as analysts were mostly thinking about a cut only towards end of the year. This is considered a positive surprise cut because the window to cut has opened with the Federal Reserve most likely not increasing rates any further this year.

Standard Chartered Bank Head, Asean Economic Research, Edward Lee said that the cut will mitigate some growth risks even if growth is
currently not threatening.
 He said, “In our view, fundamentals required a cut even though growth was not threatening. But we believe a rate cut will help mitigate some downside risks to growth,” BNM said the cut is due to increased downside risks from global growth prospects especially with the recent Brexit referendum by the UK. Thus, it will continue its
accommodative monetary

policies which will be pro-growth.

In brief, this cut should happen way before Federal Reserve increases its rates because as usual, if that side ups its rates, people would love US$ more and it will as usual cause Ringgit to lose some value. I think BNM expects Federal Reserve to do nothing for the next 12 months and this cut should help to sustain some growth momentum which has seen
increased volatility recently.
 With lower rates, there may be more investments happening including even in real estate. Let’s keep following and wishing the best for Malaysian economy.

written on13 July 2016

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Affordable homes? Lower deposit, preferential packages and DIBS proposed

A home is a necessity. Owning one is compulsory, for everyone. Majority may
not have enough within their EPF for their retirement
 but with a fully paid home when they retire, it will be huge plus point. This is why politics should be kept out and the genuine potential owners should be given as much assistance as possible. I generally support something similar to DIBS, as long as the authorities are able to track and enforce who could get it as well as potentially some limitations to the buyers who qualify. Seriously, if the person is thinking of buying to flip, this is not for him.
Just stay out or go casino to gamble instead, it’s faster too.

Reported in a local media, Penang State Housing Committee chairman Jagdeep Singh Deo has proposed a few things for Bank Negara Malaysia’s (BNM) considerations. His first proposal include lowering the deposit required for affordable housing units. I think this has its plus point because I learnt that for many of the buyers for the very affordable units face problems in securing a loan. A developer once told me that he had to sell his affordable high-rise units by two times on average because the loan rejection rate is very high! For a project of less than 200 units, he had to sell it over 500 times! However, on a more rational note, I would advise the buyers to really only focus on those they can afford.

Second proposal is for banks to come up with preferential packages with a longer loan repayment period and lower monthly premium be offered to those applying for these affordable homes. Longer repayment periods, I think the banks would welcome it. They can also set some requirements so that the buyers are tied to them longer. The only issue is that the buyer may then be tempted to go for a more expensive unit instead since the monthly payment is already lower. If they do this, everything falls back to square one. Perhaps we wait for some comments from the banks themselves.

Last suggestion but I think the most significant one is to ask BNM to reintroduce the Developers Interest Bearing Scheme (DIBS) for affordable housing projects. Frankly, I think even if DIBS were to be allowed again, it should this time be only for first-time home buyers. Objectively, if this is available to everyone, the greed to flip for quick profits will come back to haunt the property market. Seriously, this time it may crash because this time, the number of interested buyers have grown tremendously versus many years ago. Unless of course every one of these affordable unit buyers are also only for first-timer.

I think these proposals are also applicable for secondary markets too, als ong as they are within the specified price range. In fact, it may be safer for the banks to do this for the secondary market as the valuation is already stable and not as unpredictable. If we were to ask anyone in 2012 about 2016, I do not think anyone would have expected 2015 to be bad and the potential for 2016 to be worse. Thus, predictions are always debatable but value of the secondary property is much more certain. Happy waiting, especially for first-time home buyers. This may be your ticket to a new home in future.

written on 2 Apr 2016

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Bank Negara Malaysia – Reserves at 3 digits again.

It’s not easy to get back the belief once we are stereotyped. Well, I think for the export numbers thus far, it’s not everything bad with a weaker Ringgit. Of course the GDP growth is supported by rising exports but the retail sector is not doing well it seems. Many window shoppers perhaps but fewer buying these days. In fact, when my friend
Miichael Yeoh
 asked for comments about whether the property market is up or down, I would say most of the comments were on the negative side. Miichael summed it up by saying the property investment would always have its risks. One sign of whether the economy is getting better or worse would be the international reserves numbers. The more trade surplus, the higher the reserves would rise. The higher the deficit, it should be on its way down. It is currently up. Below is from
www.bnm.gov.my

— start —

The international reserves of Bank Negara Malaysia amounted to USD100.4 billion (equivalent to RM431.0 billion) as at 15 August 2017. The reserves position is sufficient to finance 7.9 months of retained imports and is 1.1 times the short-term external debt.

— end —

Besides that, as reported in
theedgeproperty.com.my
,
CIMB Investment Bank Bhd and Public Investment Bank Bhd said Bank Negara Malaysia is expected to maintain the Overnight Policy Rate (OPR) at 3% until end of 2017, after Malaysia reported second quarter (2Q17)economic growth at 5.8% from a year earlier. CIMB shared, “With the economy exhibiting resilience, we think monetary policy will remain on an extended pause, and hence reiterate an end-2017 Overnight Policy Rate forecast of 3.00%. Malaysia’s external position remains exposed to the volatility of portfolio flows, which are susceptible to turning on a dime, when market sentiment weakens.” Public Investment gave its views about inflation and the economy. “Additionally, the pressure to inflation is likely to be transitory in nature. Given that, we don’t foresee the need for OPR to be adjusted either way, as it is seen as accommodative and conducive for the economy.” My personal views earlier here:
Hike Interest Rates? But why….
 Happy believing.

written on 23 Aug 2017

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BNM foreign reserves up slightly to US$94.7 billion

Yes, at least, it has stopped going down. Whether it’s a short break or a potential turnaround we have to wait for the next few weeks. We are talking about Bank Negara Malaysia’s (BNM)’s international reserves. It rose slightly by RM1.3bil to RM357.7bil (US$94.7b) as at Aug 28 compared to just 2 weeks ago. Note the following statement seriously and please compare this with that currency which has been going extremely strong versus the whole world simply because its economy is showing positive signs.
“The reserves position is sufficient to finance 7.4 months of retained imports and is 1.0 time the short-term external debt,”.

Short-term external debt includes short-term offshore borrowing, non-resident holdings of short-term ringgit debt securities, non-resident deposits with the banking system and other short-term debt. This is considered a big fall when compared to the end of 2013. At that time, the total international reserves was at RM441.91 Billon (RM134.9 Billion). As at 31 December 2014, the international reserves was at RM405.5bil (or US$116.0bil). For those who may not know, BNM publishes this data every 2 weeks and it is available here:
http://www.bnm.gov.my

Feel free to visit and also read the many different articles there. Helps us to understand many more things about ASEAN integration too.

There has been too many negativity in Malaysia recently. Our Harimau Malaya was even beaten 10-0 by UAE. Share market is up and down without any regard whether the company is fundamentally strong or not. Ringgit has hit new lows after new lows. However, I firmly believe everyone should understand more about the banking sector, about fundamental stock investing and most importantly understand what has happened since 1998 especially all the pro-active actions from BNM, especially the current governor, Dr. Zeti. Yes, I remain firmly positive. Please do not follow me. Just do what you believe in. Everyone have their own opinions and many have used their Facebook to state so. Happy following and believing.

written on 5 Sept 2015

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Malaysia’s GDP growth for Q2 looks healthy

In brief, Malaysia’s
GDP is growing pretty healthily.
 It’s supported by domestic demand (most important!). Sentiments improving. Financial institutions have sound

overall asset quality and profitability.

Exports should grow as the global growth is improving too. Inflation is still above the usual, at 4 percent. Borrowers still have
access to financing to purchase homes.

(As long as one qualifies yeah)  Full press release by
Bank Negara Malaysia as follows:

— start of press release  —

ECONOMIC AND FINANCIAL DEVELOPMENTS IN MALAYSIA IN THE SECOND QUARTER OF 2017

The Malaysian economy expanded by 5.8% in the second quarter of 2017 Growth remained supported by domestic demand, particularly private sector spending. From the supply side, the improvement was driven by a broad based expansion across all major sectors. On a quarter-on-quarter seasonally adjusted basis, the economy grew by 1.3% (1Q 2017: 1.8%). Headline inflation declined to 4.0% due mainly to lower domestic fuel prices.

Domestic financial stability was supported by strong institutions and orderly market conditions In line with global trends, overall volatility in the domestic financial markets was low amid improved sentiments. Domestic financial institutions continued to demonstrate sound overall asset quality and profitability. Domestic funding conditions also remained favourable and supportive of financing needs of businesses and households. Eligible borrowers continue to have access to financing to purchase houses but the oversupply in the office space and shopping complex segments continued to depress occupancy rates.

Going forward, the Malaysian economy is expected to grow at above 4.8% in 2017 Given the strong growth in the first half of 2017 at 5.7%, the Malaysian economy is expected to expand by more than 4.8% in 2017. Domestic demand is projected to underpin this expansion. On the external front, exports are expected to benefit from the stronger-than-expected improvement in global growth.

Headline inflation is expected to moderate further in the second half of 2017, reflecting the waning effect of global cost factors. For 2017 as a whole, it is expected to average within the forecast range of 3.0% – 4.0%. The Bank also wishes to feature two issues. The first – “Outcomes of the Reference Rate Framework: Moving Towards More Efficient and Transparent Practices” – highlights the three outcomes that drive the implementation of the framework. The second – “Liberalisation of Motor Insurance Business: Rewarding Good Risk Management” – highlights how equitable pricing for consumers purchasing motor insurance can be achieved under the new operating environment.

Bank Negara Malaysia 18 August 2017

— end of press release —

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BNM gets stricter. Not so good news for some banks.

Bank Negara Malaysia (BNM) has just gotten stricter. I think they want to prevent the potential for a future financial crisis due twosome irresponsible behaviours of some ‘too large to fail’ banks. Like those in DEVELOPED nations. Reported in thestar.com.my was the below new measures that will be effective immediately. I think these measures are good and is on paris not better than many developed nations in the world today. If you want, you can read the full article in The Star here. Else, summary as below:

It strives to achieve the following:
Increase transparency, reduce risk arising

from opaque oversight, dampen leverage and overall risk-taking for the bank. The first thing which makes sense totally and something which I hope ALL Central Banks in the developed world would do. STAGGER the variable bonuses of senior employees and deal-makers over a period of time instead of rewarding them immediately. This is necessary because any deals closed, should it go bad would leave the bank to carry all the risks. With this new measure, these employees would definitely be more careful before closing any
potentially bad deals.

One more which would affect quite a number of banks would be that there is now a cooling period of 5 years for the chief executives of banks before they can be appointed as chairman of the financial institution. All other points include the following: (As per thestar.com.my)

• substantial shareholders cannot hold senior management positions;

• the board must approve and oversee a plan to weather a crisis when the financial system comes under stress; and

• boards cannot have more than one executive director unless there are special circumstances.

• individuals must be able to raise concerns about illegal, unethical or questionable practices in confidence and without the risk of reprisal

• the boards of banks should comprise of a majority of independent directors. The independent directors should not be sitting in the post for more than nine years.

I love these new measures. Hoping for more and this is the reason why I think  the new bank governor is a good appointment. He is definitely working for Malaysia.

written on 6 Aug 2016

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Accommodative stance is good. Trade numbers to decide instead.

A little earlier, I wrote about Bank Negara Malaysia (BNM)’s potential monetary decisions. I believe they should continue the policy of being accommodative to the growth. Here’s that article:
Hike interest rate? But why….
The reason is very simple, we are not trying to push the ringgit up. The trade numbers, especially better and positive numbers should be the push. Yes, this should be the case even if the largest economy continue to hike its rate. Earlier article here:
Yellen: Next financial crisis not happening during out lifetime

On 13th July, BNM released a statement which tells us more in-depth the reasons why they are maintaining the OPR. Do read yeah.

— PR by BNM —

At its meeting today, the Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR) at 3.00 percent.

The global economy continues to strengthen with growth becoming more synchronised across countries. Industrial activity and global trade are exceeding earlier projections. In the advanced economies, the broad-based increase in investment amid the steady growth in consumption is raising growth prospects. In Asia, growth is expected to be driven by domestic activity and stronger external demand. Risks to the global growth outlook arise mainly from political and policy uncertainties in the major economies, geopolitical and financial market developments, and volatility of commodity prices.

The Malaysian economy performed better than expected in the first quarter of 2017. Growth was lifted by stronger domestic demand with additional impetus from exports. Going forward, the more favourable global growth prospects will lead to sustained export performance and generate positive spillovers to the domestic economy. Private consumption will be underpinned by higher wages and employment. The improved investment outlook is being driven by new and ongoing infrastructure projects, and stronger capacity expansion in the manufacturing and services sectors. Overall, the economy is expected to register higher growth in 2017.

Headline inflation moderated to 3.9% in May, due mainly to the decline in domestic fuel prices during the month. Headline inflation is expected to moderate in the second half of the year mainly reflecting the waning effect of global cost factors. Underlying inflation, as measured by core inflation, will be sustained by the more robust domestic demand but is expected to remain contained.

The domestic financial markets have been resilient. The ringgit has remained stable with a more balanced demand and supply of foreign currencies following the implementation of the two financial market development measures. Banking system liquidity remains sufficient with financial institutions continuing to operate with strong capital and liquidity buffers. The growth of financing to the private sector has improved, consistent with the pace of economic activity.

At the current level of the OPR, the stance of monetary policy is accommodative and supportive of economic activity. The MPC will continue to assess the balance of risks surrounding the outlook for domestic growth and inflation.

— end of PR —

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BNM: 6 months moratorium on all bank loans (except credit card balances)

Just in case you still did not receive this via Whatsapp and you forgotten to login to Facebook and for some of us who have never listened to the news on tv today, here’s a big news for Malaysia from our Bank Negara Malaysia (BNM). It’s now an automatic six-month moratorium on all bank loans – except for credit card balances.

Article in malaymail.com
    In a statement by the central bank’s deputy governor Jessica Chew, BNM said the measure was designed to ease the cash flow of small and medium-sized enterprises and individuals that are likely to be most affected by Covid-19.

“Banking institutions will grant an automatic moratorium on all loan/financing repayments/payments, principal and interest (except for credit card balances) by individuals and SME borrowers/customers for a period of six months from April 1, 2020.”

The moratorium is automatically applicable to loans and financing that are not in arrears exceeding 90 days as at April 1, 2020 and is denominated in Malaysian Ringgit.

““For corporate borrowers/customers, banking institutions are strongly encouraged to facilitate requests for a moratorium on loan/financing repayment/payment in a way that will enable viable corporations to preserve jobs and swiftly resume economic activities when conditions stabilise and improve.

“This may also include the appropriate consideration of additional financing to support immediate cashflows and the rescheduling and restructuring of existing facilities to allow reasonable time for businesses to fully recover from current disruptions,” said Chew.

The statement from Bank Negara Malaysia is a long one. Please read a more complete one in the
Article in malaymail.com

Briefly, if you REALLY have difficulty to pay your home loan, you have 6 months to work yourself out of the situation. Reminder, ONLY IF.  It’s also to help the SMEs so that they could stay focused on the business and not to worry everyday with the loans and financings they have taken earlier for business expansion for example.

I do think this is a good thought because we would definitely prefer to have a V-shaped recovery.  If we do not help the businesses, once it close down, it will be much tougher to reopen and recovery will thus be even slower.  I believe this measure is a pre-emptive one to help businesses as much as possible. They may not need to retrench and these workers will continue to have salary to spend. The economy is key as soon as COVID-19 is over.

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Worrying about the recent Overnight Policy Rate increase? (What’s that?)

I think only one person sent to me the Bank Negara’s recent Overnight Policy Rate hike of 0.25 percent. Perhaps this is because it is not that significant? Depending on the loan amount, 0.25 percent may not be significant actually. Based on a RM400k loan with everything the same and an adjustment of 0.25 percent upwards, the difference in amount is RM55 per month. This is equivalent to about 4 cups of Asian Dolce Latte in Starbucks Malaysia. Or alternatively, curb spending by around RM2 per day every month. Of course, if one has around 5 properties of RM400k, then that RM55 becomes RM275. Still acceptable because a RM400k property’s appreciation per
year, even at just 0.25 percent is worth RM1,000 per year or RM83 per month. Theoretically, still a gain as long as the property is for own-stay or rented out. To understand a bit more on the implications, we can also read what Miichael has to say in his recent article in
miichaelyeoh.com
 Miichael is a mortgage expert with 20 years of experience and is also an author and co-author of 2 books. He shares a recent story as well as some of the recent BLR increases by the banks operating in Malaysia today. His advice in brief? “Proper Planning.” Nopoint in over-stretching and then sweating everytime our Bank Negara says that OPR is about to be increased another time. Article by Miichael Yeoh below.

— start —

The recent announcement by Bank Negara Malaysia (BNM) sees the increase of Overnight Policy Rate (OPR) by 25 basis points from 3.00% to 3.25%.

“With the economy firmly on a steady growth path, BNM said the Monetary Policy Committee (MPC) decided to normalise the degree of monetary accommodation.” Reported by  NST

Thus BNM thinks it’s about time to increase the OPR based on the strengthening of Malaysia’s economy. OPR had been stagnant since July 2016

Some banks Base Lending Rate (BLR) and Base Rate (BR) that increases:

Public Bank (Effective 30th Jan 2018 onwards) BLR 6.72% to 6.97%, BR from 3.52% to 3.77%

CIMB (Effective 2nd Feb 2018 onwards) BLR 6.75% to 7%, BR 3.9% to 4.15%

Maybank (Effective 29th Jan 2018) BLR 6.65% to 6.95%, BR 3.00% to 3.25%

Affin (Effective from 30th Jan 2018) BLR 6.5% to 6.75%, BR 3.85% to 4.10%

Hong Leong Bank (Effective 30th Jan 2018) BLR 6.79% to 7.04%, BR 3.78% to 4.03%

What will happen to Malaysia with such an increase?

Banks will increase their profits

Fixed deposit rates will increase (Good news for those who likes savings)

Base Lending Rate (BLR) and Base Rate (BR) will increase (Thumbs down for borrowers)

Inflation will decrease. We are at 3.7% in 2017. How much you think will increase again?

Personal inflation will increase again. How much do you think is our own inflation right now?

Let’s talk about BLR and BR. If OPR increases, they will go up also. What will happen to the borrower’s instalment?

Monthly installment goes up

Maintain monthly installment but your borrowing years will increase.

In summary, something got to increase.

For example:

Loan amount                    RM 500,000

Current interest rate:   4.5 %

Tenure:                              30 years

Current installment:     2553.43

An increase of 25 basis point equivalent to 0.25% to 4.75% will see an increase of instalment of 2,608.24. An increase of RM 54.81. Some people will say this is not much some says otherwise.

In reality OPR are volatile. In can either go up or go down. When you buy a house are you going to be worried for the next 30 years when you take up a loan with the bank?

In my seminars and I mentioned before, borrowers must know how to hedge against the interest rate as we will be taking the loan for long term. It will be too late if borrowers start to panic now. Do you know 20 years ago when I was working in the bank the interest rate is more than 10%.

What you should be doing is to start proper planning whether you are the first time property buyer or investor.

I have a good friend. He drove all the way from Kuala Lumpur to Penang to meet me. He was worried after he buys the house what will happen if interest rate were to increase. This is the first time he is buying a house and he does a very carefully planning as this will be his biggest borrowing going forward.

What I told him next he is still doing until today. Since he already do a proper planning, he will know how much excess fund he has after deducting his instalment. I encourage him to take up a flexi loan. Put the excess fund into your flexi account. What will happen is that it will help to reduce the interest payable. When the interest rate increase, he will not feel the extra burden as he has already paid more than his installment. This is called hedging against interest rate.

I always belief in doing proper planning. I hope my write up helps.

See you on my next article.

— end —

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BNM: OPR stays at 3 percent

I think no one anticipated any change in the Overnight Policy Rate. Of course for those with mortgages, they would prefer if there are no changes upwards. Else, they will be paying more. Actually, adjusting upwards is also an indication that the economy is doing good. Adjusting downwards would mean that the economy would need an even more accommodative stance. So, not moving means neutral lah, not bad right. Haha. Anyway, Bank Negara Malaysia’s statement as below. If you prefer to listen to a video, it’s
here:

— Start —

At the Monetary Policy Committee (MPC) meeting today, Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR) at 3.00 percent.

The global economy continues to expand at a moderate pace. Growth across the advanced economies has been modest. In Asia, economic activity has been supported by domestic demand amid weaker export growth. While volatility in the international financial markets has subsided, markets remain vulnerable to setbacks and changes in sentiments. Going forward, downside risks to global growth remain high following uncertainty over the growth momentum and policy shifts in major economies, and unresolved issues post the EU referendum in the United Kingdom.

For Malaysia, growth moderated slightly in the second quarter of the year, following weaker net exports and a drawdown in stocks. Domestic demand, however, remained the key driver of growth, with private consumption and private investment growing at a faster pace. Going forward, private consumption will remain supported by wage and employment growth, with additional impetus coming from announced Government measures to increase disposable income. Investment activity will continue to be anchored by the on-going implementation of infrastructure projects and capital spending in the manufacturing and services sectors. On the external front, export growth is expected to remain weak following subdued demand from Malaysia’s key trading partners. Overall, the economy is projected to expand within expectations in 2016, and to remain on a steady growth path in 2017.

Headline inflation moderated to 1.1% in July. Inflation is expected to be at the lower end of the 2 to 3% range for 2016 and to remain relatively stable in 2017 given the environment of low global energy and commodity prices, and generally subdued global inflation.

Domestic financial conditions have remained stable since the previous MPC meeting with financial markets continuing to function in an orderly manner. Financial institutions continue to operate with strong capital and liquidity buffers and the growth of financing to the private sector is consistent with the pace of economic activity. Banking system liquidity remains ample.

At the current level of the OPR, the degree of monetary accommodativeness is consistent with the policy stance to ensure that the domestic economy continues on a steady growth path amid stable inflation, supported by continued healthy financial intermediation in the economy. The MPC will continue to monitor and assess the balance of risks surrounding the outlook for domestic growth and inflation.

— End —

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BNM: Pre-emptive measure is better.

A day after the
OPR was adjusted
, I saw a comment in Facebook which said that this reduction in OPR is because the economy is weakening. Let’s hear what our Bank Negara Governor, Datuk Muhammad Ibrahim wanted to say. It was reported in Starbiz. He said, “The decision to cut the overnight policy rate (OPR) is a pre-emptive action to ensure that the economy continues to remain on a steady growth path. It’s not that we expected growth to be weaker in the second half. We anticipate it to be stronger and that growth for the whole year is expected to remain between 4% and 4.5%. Now, what we intend to do is to ensure this happens. Basically it is a pre-emptive move.”

Besides that, there is now a window of opportunity especially with inflation having gone lower than expected. Inflation expected to be at 2-3% in 2016 which is lower than an earlier estimated 2.5-3.5%. Not too hard to see why, everyone has been cutting back on purchases and thus the producers are also
adjusting their prices too.
Muhammad also said that there are currentlyno further plans for adjustment of interest rates over the next few quarters but BNM is ever ready to do it if necessary. Due to the dynamic environment, BNM looked at many factors before deciding on monetary policies including developments in other countries. Decision is always forward looking.

Yes, needless to say, I think our new BNM governor is another good fellow. Keeping up the proactive measures is extremely important as developments around the world continue to affect a small nation like Malaysia. Happy reading.

written on 16 July 2016

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