Economy Malaysia for 3Q 2021 is negative BUT…

We have movement control order (MCO) for the whole of 3Q.  Thus, it is quite a certainty that the number will be in red; negative. Selangor and Kuala Lumpur only moved into Phase 3 on 1st October 2021. In other words, people only started to be able to have more freedom to travel in 4Q 2021. This is why 3Q 2021 was a negative one. However, based on all indications, 4Q 2021 will be a recovery quarter and this will continue in 2022 as well.

Please do read the full release from
Bank Negara Malaysia as below. (Source is BNM website)
 as below:

— start —

Economic and Financial Developments in Malaysia in the Third Quarter of 2021

The Malaysian economy declined by 4.5
%
 in the third quarter (2Q 2021: +16.1%)

The Malaysian economy contracted by 4.5% in the third quarter of 2021 (2Q 2021: +16.1%). This was largely attributable to the strict containment measures particularly in July, under Phase 1 of the National Recovery Plan (NRP)
[1]
. Economic activity subsequently picked up as more states transitioned into Phase 2 with less restrictive containment measures
[2]
. On the supply side, all economic sectors registered a contraction. The construction sector contracted the most due to operating capacity limits. On the expenditure side, domestic demand declined by 4.1% (2Q 2021: +12.4%), weighed down mainly by the contraction in private consumption and investment activities, while continued increase in public sector consumption spending provided support to growth. Governor Datuk Nor Shamsiah said “Progressive lifting of containment measures and continued improvements in the labour market will be key to support the recovery going forward”. On a quarter-on-quarter seasonally-adjusted basis, the economy registered a decline of 3.6% (2Q 2021: -1.9%).

Headline inflation moderated to 2.2% during the quarter (2Q 2021: 4.1%). This was due mainly to the dissipation of the base effect from fuel prices, and the implementation of the three-month electricity bill discounts. Core inflation remained at 0.7% during the quarter (2Q 2021: 0.7%).

Exchange rate developments

The ringgit depreciated by 0.8% against the US dollar in the third quarter of 2021. This largely reflected the broad strengthening of the US dollar following greater clarity from the US Federal Reserve that it would likely begin tapering its asset purchase programme towards the end of the year. Since 1 October, the ringgit has appreciated by 0.9% (as at 9 November) against the US dollar, broadly in line with the trend in other regional currencies. The ringgit was further supported by an improved domestic outlook amid the economic reopening and higher commodity prices. Going forward, as uncertainties regarding global liquidity adjustments and developments surrounding the path of the pandemic remain, financial and foreign exchange markets are expected to be subject to periodic bouts of volatility.

Financing conditions

Net financing to the private sector recorded an annual growth of 3.9% (2Q 2021: 4.4%), reflecting lower growth in both outstanding loans (2.9%; 2Q 2021: 3.6%) and outstanding corporate bonds (6.5%; 2Q 2021: 6.9%). Outstanding household loan growth moderated to 3.2% (2Q 2021: 5.3%), amid slower growth across all purposes. Loan applications and disbursements, however, improved in September given the relaxation of movement restrictions. For businesses, outstanding business loans grew by 2.4% (2Q 2021: 1.3%), supported by higher working capital loan growth. This expansion was also mainly driven by the wholesale and retail trade, restaurants and hotels, and manufacturing sectors, in line with the resumption of business activity amid the reopening of the economy.

The Malaysian economy is expected to improve following the normalisation of economic activities

For 2021, the domestic economy is on track to expand by 3.0% – 4.0%. Growth will be supported by the increase in economic activities as containment measures are progressively relaxed, amid continued policy support. The various relaxations of restrictions for fully vaccinated individuals including for interstate travel would also spur tourism-related activities. In addition, the strength in global demand will continue to support export growth.

Going forward into 2022, Governor Datuk Nor Shamsiah explained, “Malaysia’s growth trajectory is expected to improve given resumption of economic activities, further improvement in the labour market, continued policy support and expansion in external demand. The progress and efficacy of vaccinations, compliance with Standard Operating Procedures (SOPs) as well as the ability to effectively contain outbreaks from any new COVID-19 variants of concern (VOCs) will be key to the expected recovery.”

Year-to-date, headline inflation has averaged 2.3%, and is projected to average between 2.0% and 3.0% for 2021. Underlying inflation, as measured by core inflation, is expected to average below 1.0% for the year. In 2022, headline inflation is projected to remain moderate. As economic activity normalises, core inflation is expected to edge upwards but remain benign given the continued spare capacity in the economy and slack in the labour market. The outlook, however, continues to be subject to global commodity price developments and some risk from prolonged supply-related disruptions.

See also:

Table 1: GDP by Expenditure Components and Economic Activity
Presentation Slides (PDF)
Press Conference Video
Publication: Quarterly Bulletin Third Quarter 2021

[1]
 The NRP, announced on 15 June 2021, replaced the Full Movement Control Order (FMCO) that was earlier announced on 28 May 2021. There are four phases of the NRP, of which Phase 1 contains the most restrictive containment measures.

[2]
 As at end-September 2021, only Perlis, Sarawak, Terengganu and Pahang were in Phase 3, while Labuan and Negeri Sembilan were in Phase 4 of the NRP. The Klang Valley first entered Phase 2 on 10 September 2021 and later into Phase 3 on 1 October 2021.

Bank Negara Malaysia
12 Nov 2021

© Bank Negara Malaysia, 2021. All rights reserved.

— End —

Moving forward, economy Malaysia is positive because the world is also positive

In fact, for 2021, the expectation is for the domestic economy is on track for a 3-4% GDP growth. The main reason is because of the recovery in economic activities (plus all those pent-up demand yeah, just look at car sales, popular malls etc to understand why I say so).  Meanwhile the lockdowns are progressively being lifted across all states.

In fact, we already have a quarantine free travel arrangement with
Singapore if we are travelling by flight starting end of November 2021. Read here for the full news
. Briefly, it is starting from 29th November 2021.  Remember yeah, it is quite a certainty that the international borders would continue to relax all the current restrictions too.
Here are the updates for a few countries including USA. (click to read)

Last but not least, the global economy continues to recover and this will support export growth which is essential to economy Malaysia. Remember yeah, we have trade surplus yeah (meaning we export more than what we import. So, value of Ringgit should be on the rise too due to higher demand…) and we are not like some country which has trade deficit, kept printing ever more money and yet the value of their currency somehow remains strong… Erm…

Happy understanding.

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Economy Malaysia: 14.2% GDP growth for Q3 2022. Super high, good or just okay?

GDP growth is always a comparison yeah. Then only we know whether it’s up or down

GDP growth number is always a comparison with the same period a year ago. Thus, a high number for Q3 2022 may also because of a low or negative number for Q3 2021. Nevertheless, please do not take away from the fact that a growing economy is still a growing economy and to look into details as to where the growth is coming from. Thus, if I am to rate the Q3 2022 growth, we cannot say this is super high because it was a comparison. It cannot be just okay because in comparison to countries around the region, this is definitely very encouraging indeed.

Let’s exceed the 2022 GDP predictions for economy Malaysia!

So, in my opinion, this is a good set of numbers for Q3 2022 and I do think we will exceed the projections for the full year growth which was projected earlier. Iinternational Monetary Fund (IMF) says Malaysia will grow by 5.4% for 2022. Let’s see if I am right okay. Do read the full Press Release from BNM for our latest set of numbers for Q3 2022. It includes the inflation numbers and also what’s helping this growth in GDP too.

Press Release from
Bank Negara Malaysia. (Click here to view in BNM site)

Stronger expansion of 14.2% in the third quarter (2Q 2022: 8.9%)
The Malaysian economy registered a stronger growth of 14.2% in the third quarter of 2022 (2Q 2022: 8.9%). While there were base effects from the negative growth in the third quarter of 2021, growth was also driven by strong domestic demand, underpinned by improvements in labour market and income conditions, as well as ongoing policy support. Exports remained supported by strong demand for E&E products. The recovery of inbound tourism lent further support to economic activity.  By sector, the services and manufacturing sectors continued to drive growth. On a quarter-on-quarter seasonally-adjusted basis, the economy grew by 1.9% (2Q 2022: 3.5%). Overall, the Malaysian economy expanded by 9.3% in the first three quarters of 2022.

Headline inflation is likely to have peaked for the year at 4.5% during the quarter (2Q 2022: 2.8%) while core inflation increased further to 3.7% (2Q 2022: 2.5%). As expected, the increase in headline inflation was largely driven by the base effect from the discount on electricity bill implemented in the third quarter of 2021, as well as sustained increases in core inflation and price-volatile items. The inflationary pressures reflected the confluence of elevated cost pressures, particularly for food-related items, and strong demand conditions.

Exchange rate developments
The ringgit depreciated by 4.9% against the US dollar in the third quarter of 2022 (YTD until 9 November 2022: -11.2%), in line with regional currencies which depreciated by an average of 5.5% (YTD: -9.5%). This reflected the continued strengthening of the US dollar amid further monetary policy tightening by the US Federal Reserve and higher investor risk aversion due to moderating global growth prospects. Nonetheless, strong domestic growth mitigated
further downward external pressures on the ringgit
. Moving forward, although domestic financial markets may face the risk of higher volatility, spillovers to domestic financial intermediation are expected to remain contained, supported by Malaysia’s healthy external position and well-capitalised banking system. The Bank will continue to closely monitor market developments and ensure that adjustments remain orderly to support effective intermediation for the economy.

Financing conditions
Net financing to the private sector grew by 5.4% (2Q 2022: 4.9%) supported mainly by higher outstanding loan growth (6.1%; 2Q 2022: 5.4%), driven by the household segment. Meanwhile, outstanding corporate bond growth remained sustained at 3.5% (2Q 2022: 3.4%). Outstanding business loan growth stood at 5.0%, as the growth in loan repayments outpaced that of loan disbursements. Loan applications remained forthcoming across segments and most loan purposes. For households, outstanding loans grew by 6.2% mostly on account of high growth in loan disbursements for the purchase of houses and cars.

The Malaysian economy will be supported by firm domestic demand
The economy will continue to expand, albeit at a more moderate pace, in the fourth quarter of 2022. The expected slower pace of growth reflects the more challenging global environment as well as absence of base effects. Nevertheless, growth for the whole year of 2022 is expected to remain robust given the strong outturns in the first three quarters of the year.

Looking ahead, the Malaysian economy is expected to expand by 4.0 – 5.0% in 2023
[1]
. Bank Negara Malaysia Governor Tan Sri Nor Shamsiah explained, “The Malaysian economy will continue to be supported by firm domestic demand amid continued improvements in the labour market. Growth would also benefit from the realisation of large infrastructure projects as well as higher tourist arrivals. However, Malaysia’s growth remains susceptible to a weaker-than-expected global growth, higher risk aversion in global financial markets, further escalation of geopolitical conflicts and re-emergence of supply chain disruptions.”

Headline
 inflation
to moderate for the remainder of 2022
Headline inflation is expected to moderate in the fourth quarter of 2022, but remain elevated. The base effect from the discount on electricity bill which contributed to higher inflation in the third quarter will dissipate in the fourth quarter of 2022
[2]
. Overall, headline inflation is expected to average at 3.3% in 2022.
[3]
 Underlying inflation, as measured by core inflation, is expected to stay elevated for the remainder of 2022 given improving demand amid the high-cost environment.

Moving into 2023, headline and core inflation are expected to remain elevated amid both demand and cost pressures, as well as any changes to domestic policy measures. Additional upward pressures to inflation will remain partly contained by the existing price controls, subsidies, and the remaining spare capacity in the economy. The balance of risk to the inflation outlook in 2023 is tilted to the upside and continues to be subject to domestic policy measures on subsidies, as well as global commodity price developments arising mainly from the ongoing military conflict in Ukraine and prolonged supply-related disruptions.

See also:

Table 1: GDP by Expenditure Components and Economic Activity
Publication: Quarterly Bulletin Third Quarter 2022

[1]
 Source: Economic Outlook 2023, Ministry of Finance Malaysia.

[2]
 The discount on electricity bill was implemented in 3Q 2021 under the PEMULIH Electricity Discount scheme.

[3]
 Source: Economic Outlook 2023, Ministry of Finance Malaysia.

Bank Negara Malaysia
11 November 2022

— End of Press Release from BNM —

Property market should lag Economy Malaysia if you ask me

I will be alarmed if the property market is growing fast and yet the economy is in the doldrums. Frankly, speculation is always bad for the property market, for the stock market and for anything and everything which people term as investment. Investment means LONG TERM. If we invest today and we get immediate returns, that’s not investment yeah. Haha. That’s just gamble.

This is why everyone is saying the property market is slow currently and I think it makes sense. Let’s hope that these positive set of numbers will mean higher pay next year for many people. Well if the employer is doing well and they do not want to pay you higher, then change jobs lah. There are many employers who are willing to pay more to get talents. However… if we are unable to find another job which pays us more, is it the market issue or perhaps we could also look at the value of our role too. Remember, do more, get higher pay. Do the same and get higher pay means very soon one will be out of job. Happy understanding and following economy Malaysia news.

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2020 GDP forecast can be negative, can also be positive.

What are your thoughts for the GDP growth for 2020? After such a miserable Q1 plus the seemingly never ending Movement Control Order (MCO), I think everyone already expecting the worst numbers for Malaysia. The worst I heard from some of my friends? One said negative 5 percent. Let’s just say I fully disagree yeah.

Malaysia has already announced a stimulus of RM260 billion and a lot of it goes to the ones most likely to spend the money. These would already provide the multiplier effects and if we are able to slowly restart the economy by June, I do think the growth can still eke out something closer to zero… Yes, just a hunch.
Earlier forecast here.

Article in nst.com.my
   The Malaysian Institute of Economic Research (Mier) said that Malaysia’s GDP for 2020 could post up to 3.8 percent growth under the best scenario but could also be as low as a negative 1.02 percent under a worst case scenario. Mier deputy director Professor Dr Jamal Othman said this was based on the world oil price of around US$35 per barrel in the second half of 2020 and throughout 2021 as well as the government’s RM260 billion Prihatin stimulus package.

Jamal said, “Had there been no Covid-19, our GDP should be higher by RM72 billion this year after taking into account the Prihatin stimulus package. Without the stimulus, our GDP loss will be a lot larger by RM123 billion.”  He added that under the worst case scenario, up to 2.4 million jobs could be lost. The Prihatin stimulus has been able to protect 955,000 jobs.  Please do read the full article here:
Article in nst.com.my

When it comes to forecast, let’s just read every forecast and the reasons stated for them. Then, we could make our own assessment as to which is more likely to happen. By the way, it does not mean these experts are going to be right with their assessments yeah. Most of the time, it could be inaccurate but what we learn is how they come to their conclusion. This will already be a good learning.  For example, now we know the MCO will affect the growth tremendously.

We also know the potential worst case scenario for job losses and this will also help us to understand why property market may be subdued for the rest of the year. My wish is simple. Let’s keep MCO if it is still needed but continue the reopening steps based on best practices learnt from other countries which has started this reopening. Every mistake is also a learning so that we could manage the reopening of businesses better. In the mean time, stay home.

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Economy Malaysia summary: Inflation is 2.2%. Net financing at 4%. Gross impaired loans at 1.7%. Means what?

It’s important to always note whatever people say by looking at actual numbers. They say market is bad, ask them why they say so and ask them to elaborate and ask them for the numbers supporting what they say.  They say market is going to recover, ask them all the same questions too. Let’s always look at numbers so guide what we do yeah. Below would be the latest numbers. My conclusion will be at the end.

News Release from
Bank Negara Malaysia. Click here for the website source.

Monetary and Financial Developments in July 2021

Embargo :
Not for publication or broadcast before 1500 on Monday, 30 August 2021
30 Aug 2021

Headline inflation declined to 2.2% in July

Headline inflation declined to 2.2% in July (June: 3.4%), reflecting lower inflation for transport, as well as housing and utilities respectively.
The lower housing and utilities inflation (July y-o-y: 0.7%; June: 3.2%) was mainly due to the implementation of the three-month electricity tariff rebate, beginning July 2021.
Underlying inflation, as measured by core inflation, remained stable at 0.7%.

Moderate IPI growth at 1.4% following imposition of FMCO

Overall IPI in June recorded moderate growth of 1.4% as FMCO restrictions limited production activity to only essentials and those involved in global value chains. Electricity production also declined amid lower demand during FMCO.
However, manufacturing production continued to expand due to firms’ adaptability through extending working days and operationalising new production capacity, particularly among E&E, and selected primary-related industries.

Continued moderation in net financing growth in July

Net financing growth moderated to 4.0% in July (June: 4.3%) due to lower outstanding loan growth (July: 3.0%, June: 3.4%) and outstanding corporate bond growth (July: 6.5%, June: 6.9%).
Outstanding household loans grew by 4.2% (June: 5.2%), with moderation across all loan purposes amid the containment measures and mobility restrictions.
For businesses, outstanding loan growth increased to 1.3% (June: 0.9%), supported by higher working capital loan growth (July: 2.5%, June: 1.6%).

Domestic financial markets continue to be influenced by COVID-19 developments

In July, financial markets were affected by concerns surrounding the global and domestic growth outlook following the rise in the spread of COVID-19.
Globally, these concerns led to an increase in demand for safer assets, contributing to a decline in US Treasury yields and a broad-based strengthening of the US dollar. In line with this, the 10-year MGS yield declined by 11.3 basis points and the ringgit depreciated by 1.8% against the US dollar.
The FBM KLCI had also declined by 2.5% as investor sentiments were affected by the rise in COVID-19 infections domestically and the imposition of stricter containment measures (FMCO) in Kuala Lumpur and Selangor.

Banking system liquidity position remained supportive of financial intermediation

The banking system continued to maintain healthy liquidity buffers with the liquidity coverage ratio (LCR) remaining strong in July (June-21: 149.1%).
Banks’ funding profile remained stable amid sustained growth in deposits as individuals, businesses and non-bank financial institutions continue to maintain precautionary cash buffers.

Asset quality remains supported by sound risk management practices of banks

Overall gross impaired loans ratio increased marginally to 1.7% (Jun-21: 1.6%), driven by the household segment.
Banks continue to set aside additional provisions against potential credit losses, which currently stand at 1.9% of total banking system loans.
Banks continue to facilitate repayment assistance for viable borrowers facing temporary financial difficulties amid credit risk outlook that remains challenging.

— end of media release from BNM —

Economy is definitely still moving

Inflation meant that consumption and demand for goods and services are still present. Just go to MidValley Megamall today to understand why it’s slowly recovering yeah.

Loans growth simply meant people still have a stable job and they are still buying. It can be a property or a car but in order for the banks to lend, the borrower has to qualify in the first place. Savvy?

Gross impaired loans means the potential bad debts and these are also growing slowly. I think we need to also note that there are definitely people with financial stress. The more important this would be the non-performing loans yeah. With the current moratorium, this should also help the situation too.

Let’s wish for the economy to move even faster once the economy is fully reopened. It’s happening yeah.

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Economy Malaysia: Heading towards recovery BUT…

What’s happening to Economy Malaysia. Up or still Down?

If you attend any property talk, do ask the speaker about the economic growth and the effects on property market. More often than not many fail to realize that for the property market to remain vibrant or even under the growing phase, the economy must move first. This is why when there are articles about ‘Economy Malaysia’, I will definitely cover it. This gives everyone another understanding about the potential for the property market.

Article in edgeprop.my
  DBS Bank said Malaysia’s economy is starting to recover gradually from the Covid-19 crisis following a tumultuous 2020 and 2021, but is maintaining its growth forecasts of 4% for 2021 and 5% for 2022.

It said in a note, “An emerging recovery is helped by vaccinations reaching critical mass and falling infection rates, allowing for a safer and wider domestic reopening, and considerations to relax international border restrictions. In our view, supportive economic policies — as seen from the expansionary Budget 2022 — should also bode well for growth prospects going into 2022.”

However there are issues such as China’s growth slowdown which is a dark cloud preventing Malaysia from expanding at a faster pace. It also expects Malaysia to take the first step in raising its overnight policy rate by 25 basis points (bps) in the second half of 2022, from 1.75% currently.

Malaysia’s government borrowings are expected to stay elevated in 2022 with net domestic borrowings projected to be at RM97 billion, very close to 2021’s estimated size of RM98.8 billion. Please do read the full article here:
Article in edgeprop.my

When the economy recovers…

People with more stable job outlook will start to think of investing into a property versus renting to preserve the cash (down-payment). It’s a simple fact that when times are uncertain, people will prefer to keep cash versus buying something which may tie up all funds such as a property of RM500,000 or higher. It’s just not that comfortable especially with unemployment creeping upwards.

Businesses will be more willing to invest for potential future gains. For example, buying better machines, investing into a bigger commercial property for future business expansion and with all these new investments, it meant that they need more manpower. This will drive the property market as well as to increase the number of jobs. When there are more jobs, more consumption will soon follow.

Generally, sentiment will be positive when Economy Malaysia is a positive one. No one likes a negative number every quarter. These are some of the reasons why economic growth will drive the demand in the property market. Just need to note that bad properties remain bad properties regardless of the economy yeah. Sometimes, buying an overpriced property will mean many years of holding on… or sometimes they say, hanging on… Happy reading.

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Economy Malaysia: Bouncing Back most likely. Who said that?

I am always positive with Malaysia. I meant our diversity of food. 🙂

Okay, for economy Malaysia, please do read what HSBC Group has to say. If you are not going to accept and prefers to read bad news, then skip this article lah. Remember whatever you believe take the appropriate actions. Do not just be a hypocrite in saying that it’s bad but kept buying undervalued stocks and then laughing all the way to the bank when the economy rebounds.

If you like to read an earlier assessment by Fitch Ratings, click here yeah:
Economy Malaysia: Latest Review
. Else read on for HSBC Group’s assessment. Oh yeah,
HSBC is ranked 7th out of the top 100 largest banks by asset size in the world. (here’s the stats)

Article in themalaysianreserve.com
  HSBC Holdings plc co-head of Asian economics research, Frederic Neumann, said World Bank’s latest growth projection from 6% to 4.5% was just a temporary drag. He said, “The growth is sitting right now at 4.1% but we have forecast 5.4% growth for 2022 because we believe Malaysia can bounce back due to various reasons.”

Neumann said among the reasons includes the huge amounts of foreign investment into Malaysia and its unique position in capturing supply chains in South-East Asia. There is also the resilient manufacturing sector.

He said, “Malaysia is one of the world’s largest exporters of finished automotive chips and benefits from the current supply shortage. It’s biomedical (surgical gloves) and commodity sectors (palm oil and liquified natural gas) should see sustained volume growth this year” Please do read the article in full here:
Article in themalaysianreserve.com

Vaccination will be the key to economic recovery

By the way, the below is one latest chart showing where Malaysia is versus the advanced nations for vaccinations. We have already leapfrogged countries like Australia, South Korea, Japan in total vaccinations and unless some special circumstances happen, by end August, we would be ahead of the US as well.

The reason is because they have barely moved versus 2 months ago when they reached 50% vaccinations for one dose for the population. Yes, this is all dependent on whether we get the vaccines on time which was one major reason why vaccinations were slow previously. Image source:
https://ourworldindata.org/covid-vaccinations

No need to believe me on vaccination and economy.
This is what International Monetary Fund (IMF) said. Happy reading about it too.
Briefly, Covid-19 cases are NOT going to go away. However, when vaccinations reaches the herd immunity level, then the number of hospitalisations and death will be under control. That is what all the countries are aiming at. Singapore has even moved on to treat Covid-19 as endemic and no longer an epidemic. Hope you know the difference. by reading more in google yeah.

Briefly, we are not doing badly as per IMF… and Fitch Ratings and now HSBC. Not doing excellently either as vaccinations have yet to hit what we targeted. Cheers.

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Financial news: When the economy is supported by domestic consumption

Hokkien: Eh chan beh see means “can complain means won’t die”

Too many friends I know say that the Malaysian economy is bad. These friends did these things: two went to Norway… one bought a new EV… MANY have the top of the range branded smartphone… most others are on holidays where the hotels they stay really does show that they have the money to pay. Let’s say I believe all of them. It meant that they represent minority then? Since, the Malaysian economy in Q1 2023 is estimated to be GROWING by 5.7 percent and the main reason for this expansion in economy is domestic consumption.

In other words, Malaysians buying lots of stuffs or spending lots of money here within this country which many friends say economy is bad. Ask any economist and they would tell you that if the expectation is that the economy is NOT going to do well, chances are they will NOT be spending their money because they are worried they would not get it back! So, this is what I say as “eh chan beh see…” Yes, I am a Hokkien.

Article in themalaysianreserve.com
  CGS-CIMB Research economists estimated that Malaysia’s economy has grown by 5.7% year-on-year in the first quarter of 2023 (1Q23).

The strong services sector and improvements in the labour market were key factors behind the growth, with distributive trade contributing 45.2% to the services index and growing by 10.1% in 1Q23.

CGS-CIMB economists Nazmi Idrus and Mas Aida Che Mansor said, “Based on the available data, which covers more than 80% of Malaysia’s GDP, we estimate that the economy expanded by 5.7% year-on-year (yoy) in 1Q23, softer compared to the 7.0% in 4Q22 but still relatively robust, in our view.”  Please do read the report in full here:
Article in themalaysianreserve.com

What happens if the economys is really growing robustly for 2023?

Many Malaysians would still continue to complain and at the same time may spend more. That’s good. Many Malaysians may say that the numbers are incorrect. Haha. Whatever. One more thing that will most probably happen is that the interest rate will rise further. This is because growth in economy should be moderate and should not show signs of heating up too much. The interest rate rise will seek to cool down speculative activities. This has been happening all over the world yeah. It’s like a sudden release of pent-up demand due to the Covid-19 lockdowns previously.

What are the other countries where the rates rose?

Just google for the news yeah.

Yes, I do think if the whole world kept increasing their rates, Malaysia has to follow. Else, people will kept saying that because of the rising rates in other countries, therefore ringgit will depreciate. Happy reading.

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EcoWorld and RM500,000 gated and guarded landed?

Every now and then my friends would ask me if there are any projects below half a million which is landed. When I told them to look further, they would say it’s too far. Anyway, there’s another one being launched by EcoWorld, a double-storey landed called Graham Garden. This is part of its
Eco Grandeur.
 Of course, do note that the said property cannot be within Kuala Lumpur city centre or any other popular areas in your mind currently. It’s in the North-West of Klang Valley or Ijok in Kuala Selangor. Distance wise, take a look at the google map. Around the same time as that of many other slightly further away projects and actually comparable to many of the distance my colleagues are travelling today.

Before everyone jump with excitement, do note that our
current lifestyle would also have to change.

Driving to work would need to be earlier too. The plus point is that you will stay in good development versus inability to buy any in the new popular areas within Kuala Lumpur. Besides that, this new development is also 40km from Petaling Jaya and 18km from the Sungai Buloh town centre. So, to those working in these two places, this may be another option.

Graham Garden makes up about 10% of the township’s residential offering. According to it’s president and CEO Datuk Chang Khim Wah, “These homes are affordable without compromising on quality and are targeted at first-time home owners.” It’s a strata precint (means no one can simply paint their units in crazy colours) and it’s
gated and guarded
 with perimeter fencing and a central guard house to facilitate visitor management system.  Total number of units are over 1,000. Yes, this is definitely a huge piece of land and developments will be continuing for a very long time. Completion is 2019. So, want to take a look? As usual, a proper launching portal has been set up
here
.

written on 11 Sept 2016

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Did not do well first 6 months. Will still hit yearly target.

How many companies do we know who did not perform well for the first 6 months BUT they could still hit their yearly target because they will start to do well in the second half of the year? Not many of these companies around that I know. Of course even during this COVID-19 situation, there are those few essential companies where their first 6 months performance were fantastic. Glove companies for example. I am sure you have heard of them. What about property developer then? Here’s one such company yeah.

Article in theedgemarkets.com
  CGS-CIMB said that Eco World Development Group (EcoWorld) set a RM2 billion sales target for its financial year ending October 31 2020 but it has only achieved a lower sales for the first 6 months and one main reason was because of the Movement Control Order (MCO)  However, CGS-CIMB also said that the group could still hit its current target because of good sales momentum and aggressive marketing initiatives.

In an announcement yesterday, EcoWorld said the mandatory closure of all its sales galleries and construction sites throughout the MCO period affected earnings, with revenue for the second quarter ended April 30, 2020 falling 36.4% to RM345.4 million from RM543.18 million a year ago. Net profit has fallen by 48% to RM21.39 million from RM41.17 million previously. For more details, do read the article here:
Article in theedgemarkets.com

Do we think the recent property market boost under PENJANA (click here to read more) will also be helping property developers? If the answer is yes, then we could now also look at the whole market as well yeah. It meant that EcoWorld will not be the only property developer who will benefit from it. Oh yeah, as usual, if we could not buy their properties, we could still buy their shares if we believe what the analysts are saying and what the companies are announcing. I personally do not own any EcoWorld shares. Their latest overview in number as below:

Image source:
https://klse.i3investor.com/servlets/stk/8206.jsp

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EcoWorld: Has hit RM3 bil target, aiming at RM4 bil for 2016

A close colleague is a strong supporter of Eco World. Probably because she has recently bought a Eco World development but may also be due to the fact that she joins every single event organised by them. Haha. First of all, there’s nothing wrong with supporting a developer who has enabled you to earn good returns. I personally love IOI Properties because it was a condo built by them in Penang which sparked my interest in property investment and this very condo I bought was sold for a return that I could only dream about previously. Okay, back to Eco World. It has hit its target of RM3 billion for 2015.

For 2016, it is now aiming for RM4 billion. Somehow, slowdown in transactions does not really show up in Eco World’s books? Okay, perhaps they could have sold more without the current negative sentiment. It will be launching eight new commercial development projects under its Business Masterplan series. It’s president and chief executive officer Datuk Chang Khim Wah said in an interview by Starbizweek, “People are definitely still buying – they may be more selective about what they buy but we see that the demand is still there. It is just a matter of how you present your product and convince people to come in.”

He said that they will help the buyers of their eight new commercial projects with grants, subjected to terms and conditions. He said that business grants of between 2.5 percent to 3.5 percent would be given to buyers who is also the end-user if they set up business within six months of taking over the keys of a new development. This grant will be paid over a period of 12 months from when they start their business. These eight projects include The Stride Strata Offices & Serviced Apartments 1 &2 @ Bukit Bintang City Centre, Eco Somerset @ Eco Sanctuary, Retail/Office and Sky Pod @ Eco Sky in the Klang Valley; Eco Bloom @ Eco Meadows in Penang; and Eco Business Park III, Eco Vantage @ Eco Tropics, Eco Palladium @ Eco Spring and Eco Galleria @ Eco Botanic in Iskandar Malaysia.

I always favour property developers who are pro-active and think ahead. The current situation may happen because the market is slowing but truth is, when the market slows, the developers who think and act fast tend to do better. 3 years ago, in the beginning of 2013, one developer laughed at my sales people and said that they can easily sell all their units without much advertisement. I was still in my previous job with a leading property portal in Malaysia then. He said, “If we could not sell these units within 6 months, people would laugh at us.” Actually they really did not manage to sell because they were pushing it at the higher end of the price per sq ft and the market went down after that. Let’s hope more developers are creative and not rely only on arrogant sales people who knows very little when the market slows. Happy buying.

written on 11 Apr 2016

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EcoWorld – land buy is ok, will meet Selangor government

An article about EcoWorld yesterday received lots of attention. It was about their largest purchase to date. In fact I think in terms of the land price, it would be the largest that I have ever read thus far. EcoWorld was purchasing a piece of 2,200 acres land in Ijok, Kuala Selangor. Before I could publish it, there was an update that the land acquisition has met with a hurdle. It was due to the announcement from the Menteri Besar Incorporated (MBI) that one of the piece of the lands that they were trying to buy is involved in a dispute in court. Read it here:
EcoWorld: RM1.1 Billion for 2,198.4 acres of land in Kuala Selangor

Today, EcoWorld responded swiftly to allay fears of this hurdle.

It said that it will quickly meet up with MBI Inc to clarify on MBI’s announcement earlier. In fact, EcoWorld said that that particular piece of land that MBI was talking about is actually a separate piece of land from the one that EcoWorld was buying. They would be addressing any concerns. EcoWorld is also protected in the sense that land acquisition’s pre-condition include having the vendors obtaining the approval of the state authority of Selangor for the transfer of the lands to Paragon Pinnacle Sdn Bhd (PPSB) a wholly owned entity of EcoWorld. The vendors also have to ensure any legal disputes with the state authority of Selangor are resolved before the SPAs become unconditional.

An earlier statement from MBI said that the parcels of land that EcoWorld intends to buy is in the intended township of Alam Mutiara which is involved in a legal court proceeding with the state government. Thus, MBI said it would explore any legal relief of remedies, including the potential of an application for an injunction due to the actions of the vendors. In brief, it meant that MBI might throw a spanner into the land acquisition deal by EcoWorld until the dispute is settled.

I think the land deal would be beneficial not only to EcoWorld but also to the state of Selangor as well as the future buyers as long as everything is legally concluded. I would personally like to see the actual development plans too. I have passed Ijok twice and I think the distance is still acceptable. This is even in comparison to areas closer to KL city centre, for example, USJ. The duration taking into consideration the super jams are a huge deterrent for me. Even the prices in USJ today are very prohibitive too. The only thing going for it is because it is already a matured and established neighbourhood and those who have been staying there would definitely not move to a totally new neighbourhood. For new owners / buyers, they have no history to fall back to. Thus, think duration and not just distance and the options would suddenly open up. Happy waiting for this current issue to be cleared up.

written on 25 Sept 2015

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EcoWorld Malaysia: Charting own future

The talk of a merger between EcoWorld Malaysia and UEM-Sunrise. This merger news received much attention when it first appeared. Many commentaries on both the bad and the good and also all those juicy rumours too. Anyway, all these can be considered ended. EcoWorld Malaysia chairman Tan Sri Liew Kee Sin announced that the talk has ended. He said, “The cessation of talks on the proposed merger will enable EcoWorld Malaysia to actively pursue other corporate proposals that may be more complementary to our present growth plans and strategies.”

Article in thestar.com.my
 Tan Sri Liew shared that within the month of November and December of 2021, EcoWorld Malaysia achieved a very strong start with RM500mil sales already achieved. Liew shared that the group would now be able to focus on the group’s own business plans for FY2021 which includes a sales target of RM2.87bil for EcoWorld Malaysia which is 25% higher than the actual RM2.30bil sales in FY2020. Do refer here for the full news.
Article in thestar.com.my

3 things to note in the article for our understanding.

Photo by Pixabay on
Pexels.com

#1   Merger Talk has ended but Tan Sri Liew said this about EcoWorld Malaysia, “certainly remain open to the possibility of future collaborations with UEM Sunrise, should another opportunity arise.”  There’s no such thing as a firm no in the corporate world. It’s only whether the merger could achieve a win-win situation for both.

#2   The property market is definitely not quiet if we look at EcoWorld’s achievement for November and December. Do note that they have a sales target of RM2.87 billion for FY2021 which starts in November 2020. In other words, the target is around RM239 million every month and EcoWorld is ahead of its target.

#3    It has a higher target for FY2021 versus FY2020.  This is a good sign as well or perhaps FY2020 was indeed not such an awesome year? Anyway, a higher sales target is definitely a positive sign for the company and of course the property market as a whole. Do note that we are not sure if there would be changes since MCO 2.0 has started and may continue for a few weeks more.

Conclusion:

A positive sign does not mean we should buy that property we were viewing just a while ago. It has to meet our expectations. Our expectations meanwhile must not be based on what that professional sales person told us. It has to be based on understanding of the property price of similar property in similar area. Buying at a high price, regardless of the developer name will still not save us. All the best in your property investment journey.  Need some reference?  Article here:
Start Strong. your Property Investment Journey

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Financial news: EcoWorld net profit dropped in Q1

Developer’s profit or loss is also a sign of the market health

Imagine everyone telling you that the property market is going to make a comeback. Then you went to take a look at all the public listed property companies and realises that every company you researched are all suffering from losses. This gives us a very good sign that all is not well with the property market even if many people were telling us otherwise. This is one reason why we should always take note of the financial reporting from property developers. It would be better if many of them if not majority of them are reporting profits. Here’s another one even if the overall number seems to be dropping.

Article in themalaysianreserve.com

ECO
 World Development Group Bhd’s (EcoWorld) net profit dropped by 10% to RM57 million in the first quarter ended Jan 31, 2023 (1Q23) from RM63.36 million a year ago.

The property group told the stock exchange today that revenue for the quarter fell 9.1% to RM484.7 million from RM533.4 million a year ago, due to lower contributions from several parcels, which were substantially completed in the financial year 2022 (FY22).

Revenue was also affected by the earlier Chinese New Year celebrations in January 2023, which slowed down work progress during the festive season. This, it said, is expected to normalise and pick up in the upcoming quarters.

In the first four months of FY23, EcoWorld recorded RM1.35 billion in sales, which was more than the RM1.28 billion achieved in the same period of FY22. This represented 38.5% of the group’s FY23 sales target of RM3.5 billion.  Please do read the full article here.
Article in themalaysianreserve.com

How is the share doing for EcoWorld?

We only need to ask google and it will tell us. Do refer to the image below. If EcoWorld could sustain the dividend yield, then buying into the company at the current price meant that there is a potential dividend yield of 6.49 percent. This is considered healthy yeah. Plus the fact that should it report better results in the quarters to come, chances are the price would also inch upwards too. I do not own shared in this company and will not be buying any for now.

Happy following all other news yeah

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Just EcoWorld or is the property market improving?

EcoWorld is a name known to virtually anyone looking to buy a property here in Malaysia. No surveys done, just a guess. It has just reported a set of encouraging results for the financial year ended 31st October 2017. Yes, this meant that its financial year would be 1st November to 31st October. Q1, Q2, Q3, Q4 would be Nov – Jan, Feb – April, May to July and August to October respectively. In an article in
TheStar: Stronger Fy17 earnings for EcoWorld, hits RM4 billion sales target
, EcoWorld Development Group Bhd has reported that it has hit the RM4 billion sales target from its Malaysian projects for FY2017. It shared that its earnings were up 62 percent from RM129.8 million to TM209.58 million a year ago. Its revenue is up by 14.8 percent to RM2.91 billion from RM2.54 billion a year ago. The chairman of EcoWorld Malaysia and executive vice chairman of EcoWorld International Tan Sri Liew Kee Sin said: “This marks the third consecutive year in which combined EcoWorld Brand sales have exceeded the RM6bil mark.”

It said that within Q4, it achieved 46 percent of the total yea’s target. Main contribution came from their extremely successful marketing campaign; EcoWorld Design-Nature-Art (DNA) launched at the end of September 2017. It involved the concurrent launch of five of the group’s projects in the Klang Valley and Penang. Its President & CEO of EcoWorld Malaysia Datuk Chang Khim Wah shared, “Collectively these five contributed approximately RM1bil sales to the group in the final quarter of FY2017 with the balance of around RM800mil contributed by the Group’s other ongoing projects in the Klang Valley, Iskandar Malaysia and Penang.” Despite Brexit’s concerns, president & CEO of EcoWorld International Datuk Teow Leong Seng said sales in the UK have been steady with continuing interest in all three ongoing projects. Teow also highlighted that
EcoWorld International has announced three new corporate deals recently.

To read in full, this is the link to the
Full article in TheStar

I think we have TWO interesting potential learnings here. One, is this result applicable only to EcoWorld Malaysian operations or is the property market in Malaysia really improving for the past couple of months? If we have been reading a bit, there were indicators that the market is still relatively stable. It’s definitely not moving downwards. Recently, the Malaysian Institute of Estate Agents (MIEA) president Eric Lim shared that the current property market is stable and moving at a moderate pace. Here’s that article in
FreeMalaysiaToday.
Since the property market is relatively stable, then it must be something which EcoWorld has done right. Perhaps the amount that they spent on their DNA campaign has given them that edge. Many times, the reason why we think a certain developer is good may not be because we have bought a property from them before. It may also be due to the many right things that they have done. I think the days of one day half-page advertisement in newspaper to sell properties are long gone. These days, traditional and new media must work together. Let’s conclude that property market did not suddenly improve. This time, EcoWorld’s marketing team have excelled in what they do, via DNA. Cheers.

written on 15 Dec 2017

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EcoWorld anticipating a strong end to 2015, thus far.

During good times, majority of all developers would report good if not great results. Is currently considered a bad time? Well, my colleague told me that she wanted to buy a new shoplot but she may not get the chance because those who have registered are many times of the units being offered. Thus, it is now based on luck as it will be by ballot basis. Majority of REHDA members said that they anticipate tough times for the remaining of 2015. Read here: 40% Unsold even after launching. Well, President / CEO of EcoWorld Development group Datuk Chang Khim Wah said this right after the EGM, “We know the market will be challenging next year, but looking into sales that we achieved so far, even in the last two months at all our sales galleries, we see the demand is still quite good.”

Eco World Development Group Bhd is optimistic of achieving its 2015 sales target of RM3bil because as of August 2015, it has already achieved RM2.37 billion. Overwhelming responses were seen for their Klang Valley and Iskandar Malaysia launches thus far. During the EGM, it has also obtained shareholder’s approval for the proposed development of 181.96ha of leasehold land in Batu Kawan, Penang. Overall gross development value is expected to be RM10 billion spread over a total period of 10 years. First phase which comprises of residential landed homes would be launched end of 2016.

I think it’s plain to see that for some developers, when they have been successful with an earlier project and informed the whole world about it, the selling of their next integrated development is made easier. If you already noticed, many of these branded developments continue to tell the world via all medias, cleverly. Oh yeah, it does not apply to developers who use newspapers mostly. Seriously name me three projects from the newspaper last week that you can remember today? Yes, it is true that even online I may not remember what I read about last week but the awesome thing is, I can still look back easily via online. Last week’s newspaper? Haha.

There is no guarantee that projects from these branded developers would be successful forever. It’s still very important to buy objectively because if you are buying it simply because of the developer, I think you are taking on a high risk. I have a colleague who bought a project which he felt is the best place for him to stay when he retires. Well, he really did buy a retirement home because after buying it, his whole family said they are not moving there today. He would just have to find something to do with it for the next 12-15 years I think. Happy reading and understanding why you buy, not just from whom you buy from.

written on 17 Oct 2015

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ECRL? Renegotiation will incur fines, if it happens

We already two huge announcements; the scrapping of the High-Speed Rail and the MRT Line 3. Here’s the article earlier:
High-Speed Rail cancellation: versus flight tickets and experts’ views
 Next question, is the East Coast Rail Link (ECRL) going to be scrapped as well? Well, I personally think it will continue. Yes, I saw some charts showing the cost of the HSR which has to be paid over 100 years. Let’s not debate about whether the cost is too high or too low or whatever. That one let’s leave it to the government. The question we should ask is whether the project will have its benefits. The answer in brief is, yes. There are now news that the government will proceed with the ECRL but wants to renegotiate the terms of the contract.
The article in TheStar here.
 As per the article, the ECRL, for which China’s Exim Bank is forking out 85% of the funding, is about 13% complete. This is one major reason why this will not be easy to negotiate too.

According to senior lawyer Philip Koh,”Even if the project is not scrapped, there could be penalty charges as the other party would have incurred mobilisation costs.” Koh said further, “A contract under Malaysian law and international commercial law is binding and must be completed, otherwise there will a breach with consequences of liability in damages.” He also shared that if the parties involved have sovereign entities, or governmental shareholders, then government to government negotiations could be the starting point. Commercial Law and Public International Law practitioner Datuk S Murugesan, “However, we must remember that an agreement is already in place now. There is very little we can do if China refuses to re-negotiate.” He said that if this should happen, then the Malaysian government must fall back to the contract document to decide on its next move. “We must then look at the agreement to see what is the compensation payable in the event of early termination or if there are other mechanism in the agreement that allows for dispute resolution or mediation.”
Do refer to full article in TheStar here.

What are your thoughts about ECRL? Do you think it should be scrapped? According to an earlier report before the general election, when SPAD opened a public inspection setup at their headquarters for the ECRL, it received a whopping 95 percent approval from 15 east
coast districts. Full article here.
 Within the article, it quoted UUM’s Professor Amir who said that the ECRL project will also create employment opportunities for many Malaysians. He said, “There are reportedly 22 stations on the ECRL, when it is finished. So just imagine how many jobs can be created with these stations. The ECRL will also galvanize the smaller towns on the way, and these towns’ economy will be boosted by the ECRL.” It’s hard to calculate projects solely on the revenue that it may bring. This is because many public transportation projects will usually not be profitable. Happy following.

written on 31 May 2018

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ECRL? More time needed to study the benefits

Is the East Coast Railway Line cancelled or postponed? Depending on who you ask perhaps. The supporters for it will say it is merely postponed. The rest says that it has been postponed and that it has been announced formally many times. When I google for more info, I do find never ending articles about the cancellation, postponements and even the potential fines from the cancellation. At least the High Speed Rail KL – SG is now formally deferred toa starting date of
2031. Earlier article about the joint announcement here.

How about understanding this from our Economic Affairs Minister Datuk Seri Mohamed Azmin Ali? He said that ECRLis still in an on-going discussion. The cabinet has discussed and Prime Minister Tun Dr Mahathir Mohamad has asked to be given a little more time to look into the suitability of the project. He added, “In the ECRL project, we must look whether the project can create value and give benefits to the people in an economic situation which is highly untenable currently.”  He added that the reason for the current situation was because its implementation previously was not transparent. He said, “Almost RM20 billion had already been paid out when the progress of the project was still at the minimal level and (it is) something that should be investigated.”
Full article in edgeprop.my here.

Frankly, whether to continue or not to continue, it’s not about whether it was badly managed previously. It’s not even about transparency of payments. All these can be solved since we have the new government, right? The answer should just be on the potential economic benefits to those along the line as well as the country as a whole. By the way, it’s not about the cost and how long the government needs to pay back yeah. If it is only looked at from the cost vs revenue part, I do not think we should have built the PLUS highway (same argument last time), the KLIA (same argument last time) and even the current MRT SBK and the upcoming MRT SSP. With connectivity comes economic activity and of course contributing to continuous economic growth for the country. Oh yeah, the High Speed Rail? Earlier article here.
It’s new demand, not the existing
 Happy following the discussion.

written on 5 Oct2018

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EDRA sold for RM9.8 bill CASH to CGN, China

I just published an article about this on 22 November. Read here:
Edra Global Energy Global Berhad to be sold to a consortium

Today, according to a report in The Star, 1MDB is selling its entire power assets under Edra Global Energy to China General Nuclear Power Corporation (CGN) for RM9.83 bill cash. Yes, CASH. The transaction is expected to be completed in February 2016. There is little need to debate on whether CGN paid too little or too much or even whether 1MDB is selling at a gain or at a loss. The most important on the agenda is that one of the source of uncertainty is now really being removed piece by piece. For the nation as a whole, I think this is a clear gain.

With this, it meant that that rationalisation plan by 1MDB is on track. CGN won because it met the objectives of 1MDB which was to maximise value and this investment also meant a major Foreign Direct Investment commitment into Malaysia. More importantly, CGN’s Chairman of the Board, He Yu said, “This investment represents a major commitment by CGN Group as part of a long-term, global diversification initiative. We are extremely impressed by the highly regulated, stable and transparent independent power producer framework in Malaysia, which has given us the confidence to make a long-term investment to the country. The CGN Group is a responsible and involved investor.”

I think the attention would now turn to the land related assets of 1MDB. I wish them the best in selling and then disappearing from the radar. Whether they were bad, good or with huge potential, I really do not care. I am a Malaysian and I only want the best for Malaysia. In this case, anything causing uncertainty should be removed. Oh yeah, I believe in the next 5 years, as long as the economy of these countries that Edra operates in continue to grow, rest assured that CGN has bought into the future potential of power. Well, power assets will always be a great one to have. Happy investing in the right energy related counters if you are taking a long term view.

written on 23 Nov 2015

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Edra Global Energy Global Berhad to be sold to a consortium

Reported in Bloomberg dated 21 November 2015. Edra Global Energy (Edra) may be sold  soon, to an international consortium. Yes, this international consortium has submitted a higher bid than our own Tenaga. Maybe it’s a good news for Tenaga since their shares were dumped when it was revealed that they were submitting a bid. Never mind that the asset they are trying to buy is related to power generation and Tenaga IS an energy related listed entity. Anyway, I hope those who kept 1MDB on  defensive mode is now happy. I think everything that has been blamed on one company including the economy, the Ringgit and even potential bankruptcy is going to clear soon.

As per the report, 1Malaysia Development Bhd (1MDB) will be finalising an agreement to sell Edra to a Chinese-led consortium. They include China General Nuclear Power Corp and Qatar’s Nebras Power QSC. Era is said to be valued at about RM10 billion which is higher than what Tenaga was bidding for. Oh yeah, part of the reason for this higher bidding is also because of the weaker Ringgit which coincidentally was supposedly caused significantly by 1MDB in the first place. Government approval would be needed for this deal to go through because China General Nuclear consortium wants to own at least 50 percent of the business while the current regulation is that foreign investors may only own as much as 49 percent of Malaysian power producers. This is due to the current subsidy structure for electricity plants.

This piece of news has however not been confirmed by any of the parties above and 1MDB said that it will not comment on any deal which has not yet been finalised. Where power plants are concerned, as per 1MDB’s website, it owns a net generation capacity of 5,594 MW and is the largest independent power producer in Bangladesh and Egypt. Besides investments in plants in Pakistan and the United Arab Emirates, it is also Malaysia’s second biggest independent power producer, second only to Malakoff.

I would prefer for Malaysian owned companies to own power generating plants in other countries and not the other way around. With growing economies, all countries need to use ever increasing power and thus these power generating assets are going to be worth more with time. I do not know any country in this world that has an ever cheaper electricity rates. Certainly not within Europe and definitely not within ASIA where majority of the countries are still growing much faster than the western world. However, I would have to vote for a better sentiment and thus perhaps this salami be a necessity. We can always look for other opportunities in future but I hope it’s not through 1MDB. It’s time to move on. Happy anticipating.

written on 22 Nov 2015

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Education will always be attractive for the property market

Young Malaysians going overseas for their degrees usually go to three main countries; Australia, the U.K. and the U.S. Normal students like myself would get a room as accommodation like the rest but there are the richer ones whose parents would get them a property instead.

According to an
Article in TheGuardian here,
 wealthy parents from outside the UK bought about £2bn (RM10.82 billion) of property in London for their children who are enrolled into private schools and universities in the capital. According to Knight Frank, foreign buyers snapped up 2,162 properties valued at a combined £2bn in the year to the end of May, up from £1.65bn in the previous year. Liam Bailey, Knight Frank’s head of research, said the properties – which had an average value of £925,000 – were bought to be used as a base while the owners’ children were at schools such as Eton, Westminster and Harrow, or universities in or near the capital. He added, “Our analysis shows just how important the standard of top London schools is to wealthy international individuals, and the demand this contributes to the London property market.”

The demand comes from buyers from China and Hong Kong, followed by those from Singapore, India and Russia. As for how wealthy these parents are, well, there’s an 18-year-old student from China who recently moved into a £5m (RM27 million) TWO-BEDROOM flat in the refurbished Centre Point building. She is studying in University College London. The 117 sq m apartment has panoramic views from the bedroom stretching from the Royal Albert Hall to Wembley Stadium. (With this relaxing view, every student will be able to concentrate on their studies if they stay here. 😛  )

Kathrin Hersel, the property director of Almacantar, Centre Point’s owner said that the parents were attracted to the building because of its location “in the very heart of London” and the high level of security, including a 24-hour concierge, keycard entry and security cameras in every lobby. Those staying there have access to a 30m swimming pool that stretches the length of the building, as well as a gym, sauna, spa and private cinema. The tenants of the affordable flats do not have access to any facilities. Henry Pryor, a luxury property buying agent who’s always tasked to look for properties by rich overseas students said, “An awful lot of people do buy property in London and other academic centres like Oxford, Cambridge, Durham and Leeds, to give their kids a base and have somewhere to stay when they visit. It also gives the parents the option of a good income stream.” Full article in
Article in TheGuardian here for reference.

I think we have also noticed that Chinese students (from China) in the local tertiary education scene has grown by leaps and bounds. International students wise, there’s already 172,886 in Malaysia at the start of 2017. This is expected to top 200,000 when
2020 comes. Here’s the article in juwai.com
  There are already 15,000 mainland Chinese students during the same period. That’s almost 10 percent of all the international students. Perhaps we can see similar trends then? Of course, the major reason for them coming to Malaysia is also because of affordability. UK qualifications at a fraction of the price and studies are all conducted in English which is something the mainland Chinese would appreciate. Look at the image. Malaysia really do represent great value. Anyway, let’s welcome more international students yeah.

written on 16 Sept 2018

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Education, really that expensive?

A friend told me that since I have two kids, I better prepare RM1 million for each of them. I looked at her and said, ‘Stop joking. Why would they need so much money for?’ She said that just education alone would cost more than half of the RM1 million today. Again, I asked her to explain. She said the cost of a foreign degree is now easily RM500,000 for a 4 year course. She quoted Australia. I did some checks online and I think she is right. However, if it is ONLY because of an education and no other reasons such as potential migration in the future, there’s little need to spend to much. There are already options to study within Malaysia for Australian university degrees. UK ones too. The last I checked, even American degrees could be done locally.

Of course, if my kids are extremely good and they got accepted into Cambridge or Oxford, they would most probably be on a scholarship. I am not sure if I would want to pay so much money for their studies if they are just an average student. To be very direct, if I am an interviewer, I would believe someone with a 1st Class Honours Degree from Malaya University is by far better than one with a 2nd class lower Honours Degree from Cambridge. Yes, this is my personal opinion. Oh yeah, after working for a few years, it’s everything about your work performance. I have not seen any of my fellow managers hiring experienced candidates simply by looking at the university from where their candidates graduate from.

There are a lot more which we should provide for our children. However, provide it to them objectively based on what they need and what we could really afford. Understand what’s really necessary and what is not. Give them our time and teach them well. Majority of all my friends and colleagues did not graduate from those top of the world universities. We are all doing just fine and in fact a friend who got a 3rd Class Honours Geography Degree from USM has a business doing so well he could travel the world. Nope, his business has NOTHING to do with his degree at all. All the best, regardless of where you may graduate. However, I will not be spending RM1 million for a degree education. My children would have to be extremely good or they can get a normal degree like the majority of us. I prefer to use the money for quality family time instead. Happy saving!

written on 25 May 2016

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Education savings fund can be complemented by property too

Property investment must NOT start before we have enough savings. It should also NOT be the only form of investment, I think it’s too risky. It will NOT give you quick returns, thus aiming on a longer term is super nice. A colleague asked me about advice on some education savings fund. I told him, honestly, whatever fund you intend to start saving for your new baby’s education, it should be complemented by a property strategy. Then, I asked him, how much do you think is enough for an education fund? He said if overseas, half a million should be the minimum by the time the fund is needed. Assuming it’s RM500,000 how much would you need to save monthly for the next 18 years? Well, RM500 per month is definitely not enough. RM1,000? Assuming inflation does not kill everything that the fund gives you as dividend, well, perhaps you may hit RM500,000 by the end of 18 years. Savings is a very good way to achieve your financial goal and it is also quite safe and low risk too. Once you do the calculation, you would note that saving RM1,000 can indeed give you RM500,000 easily in 18 years. (as long as interest rates do not stay as low as currently) However, I asked him to also consider buying a property instead as a hedge as well as a
 form of ‘savings’
 for his current baby and perhaps babies in the future.

Okay, coming back to education funds, well, it may not necessary be for education. If your kid is really an amazing student, more often than not, a scholarship awaits. Or else, play sports, get into national team and scholarship awaits too. My sister got quite a good deal because she was a state player for softball. Okay, if your kid is not the top end ones, then it is ok to get just a degree. These days, there are many colleges or universities that you can enrol your children into and even if it is one of those dual award ones, one degree by the local university college and another one from the overseas university, the total cost would not reach RM100,000 for a 3 year course. In fact, the last I heard, it’s just RM60,000. During my time, it was just RM35,000. So, should you not save? Please, you must save but a
property strategy can also be done in tandem.

Get a property
 which you can rent out easily
. Even if the mortgage could just barely cover the rental. Note that if property prices do not rise, the rental would soon give you great returns based on your capital investment. If however the property prices rise a lot and your rental return is bad in terms of %, it’s even better right? Sell your property and repeat the process. What if you can’t rent out your property? Well, today if you still buy a property that could not be rented out, I think the ‘wrong’ is on you. Go online, search the ones which can be rented FIRST. Then only look at the current prices. If it’s secondary, more often that not, you can still find. For new ones, sorry, the prices have gone way too high for any rental to be self-sufficient. As for capital appreciation, considering that your property price is just RM300,000, a 2% up every year is still RM6,000 per year! This is already RM500 / month. Remember your savings in the first paragraph??

written on 11 Nov 2014, edited on 3 Dec 2016

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Ekovest’s listing and EPF’s stake means I am in too.

Yes I am writing below as I will be having a stake. Indirectly maybe but still a stake. No idea if I may buy some units when it’s listed in Bursa come 2018 but my Employees Provident Fund (EPF) already has a 40 percent stake in it. Need to read the full article?
Here.
Else, below would be the brief. Ekovest Bhd will be listing its infrastructure asset to raise at least S$500 million (RM2.1 billion). It would bean IPO for its highway concession business. If it’s listed, the proceeds would be used to reward its existing shareholders and expansion of the company. Do you like an expressway type of stocks?

The highway that we are talking about is called Konsortium Lebuhraya Utara-Timur (KL), or Kesturi in short. It holds the concession to maintain the 18-kilometer Duta-Ulu Kelang Expressway (Duke) and its coming 16-kilometre extension. Yes, I use DUKE at least once a week these days.  More expressways would mean more connection choices and buying a stake meant that
EPF would have a stable recurring income
. These days, it’s getting harder to buy assets providing stable incomes. Another plus point is the fact that Greater KL is welcoming ever more new working professionals and these expressways provide access from the suburbs to the KL city centre.

Within the first-half of 2016, the IPO volume in Malaysia was just $210 million. This is less than 26 percent when compared to last year’s $253 million, according to Dealogic data. Any new over a billion ringgit listing is definitely a good news for the market. These days, the appetite for stocks are down, just like the demand for properties which is showing in the transaction numbers.
Growth is still projected to be between 4 to 5
percent by the government. No one is predicting a recession yet but the negative sentiment has actually increased because of the U.S. election which Mr.Donald Trump won. Happy following.

written on 9 Nov 2016

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KWAP willing to accept 4 percent returns from property investments

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Election result in UK boosting demand for property

London’s property market is alive again, after the UK election. David Cameron will continue as Prime Minister and this time, without the need of support from any other political parties. He is the one who said that the next crisis is coming. Read here:
Next crisis is looming – PM of 6th largest economy in the world
  If all the reports are true, it seems that international buyers are queuing to re-enter the property market.

According to one Becky Fatemi, managing director of central London agents Rokstone, “The first five serious inquiries on properties started to come in just after midnight, and as of 10am this morning I have had over 50 inquiries on London property, via calls and emails.” Can it be this crazy I wonder but then again this is a story from an agent. So, one must also look at other signs and not rely on just one piece of news. ”

One major piece of uncertainty was from the Labour party which during this election lost big. Labour party said that IF they had won, they would introduce a mansion tax on homes costing £2m or more. Besides, with the Conservatives win, the current economic policy is likely to be stable. Of course the article also said that because London’s prices are already very high, the growth in property prices is likely to come from outside the capital. I trust this statement quite a lot, even with the growth in interest from the international buyers.

Today, whenever we see any Australian or even London properties being exhibited here, it’s almost always a high-rise and most of the time, the size is only sufficient for a single to stay. Or perhaps buying for the children who may be studying somewhere there. Do take note that the reason for this is simple. No property developer would be trying to sell a small unit here if they can sell bigger units. After all, even Hong Kongers or Singaporeans would still prefer bigger units even if their current place is not as big as countries such as Malaysia. The only reason for these high-rise small units is because of Affordability. Prices have gone way too high for them to be able to sell anything bigger at a lower price.

If whatever was reported in the online article is true, UK’s property market may continue to be vibrant for the next ten years. I think developers such as SP Setia or Eco World would be reaping huge profits in this case. Oh yeah, both of them are LISTED companies, even if you cannot afford to buy their properties in UK. If you believe this, better start making plans to visit London and the outskirts. Who knows, your next big chest of profit is coming from London.

written on 9 May 2015

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When petrol prices do not go up, will we own a property faster? (Hmm…..)

The world oil price is always a cause for instability. It’s not good when it’s extremely high and it’s not really that awesome for many oil producing countries when it goes too low. Despite the fact that demand for oil CANNOT suddenly go up or go down within days, the oil price can still fluctuate A LOT every day or every few days. How about if someone were to tell you that the demand for oil will stagnate as early as 2020? In other words, it should no longer be growing! Perhaps by then the price for oil will be much more stable? By then, we do not need to worry about any fluctuations in petrol prices? We can then
save even more and we can buy our property even faster
!  🙂  Hmmmm…..

Are you driving a hybrid car today? One that tells you NOT to drive above 55km per hour, else it will start the petrol engine? Haha. To those driving full-electric car today, you may be changing the world for better and worst. Better because the environment should be cleaner with lesser pollution. Worst for oil companies because you may be playing a part in making their lives even more difficult. Anyway, it was
reported here
 that within a decade, oil companies may face a half in growth of oil demand beginning as early as 2020! It says that the prices of electric cars and renewable technology is going to weaken the demand for petrol. The report gave many details but this is the most significant.
Electric cars will account for a third of the road transport by 2035. The report was jointly issued by financial think tank Carbon Tracker and the Grantham Institute, both in London.

Oil and gas giant BP meanwhile just predicted last week in its 2017 Energy Outlook that oil demand from cars would continue to rise well into the mid-2030s. By 2035, electric vehicles will only be making up 6 percent of the global car fleet. If it’s just 6 percent, then the demand for oil will still be very strong and all oil companies should continue to do well. (OR they can buy more renewable energy companies in preparation for that day)

Before we start debating on whether it’s around 30 percent or 6 percent, there’s another forecast which was issued by Bloomberg New Energy Finance. It estimated that electric cars will account for a 22 percent market share by 2035. 22 percent is still a very significant number and it’s over 3 times higher than what BP has predicted. Anyway, when we google for news about oil and gas companies together with renewable energy, it shows that many of them are already moving into renewable energy. Two examples here:
Moving towards renewable energy

as well as
Exxon, a renewable energy company?
  So, perhaps a more likely scenario is that we will start to enjoy these electric cars when the oil and gas companies are also pushing for it, somehow in the future. Personally, I will join the electric car crowd only when the charging stations are aplenty. For now, to save the world, I will only buy energy efficient electrical goods. Happy driving whatever car that you own today.

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written on 4 Feb 2017

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Electronics Sector Vibrant – Property Sector Supported

In Penang, the electronics sector is a very important sector for property market. The reason I say so is because more often than not a lot of these manufacturing companies would hire engineers as well as other functions to support operations and these are the potential buyers of properties. This is especially so when these professionals got married to each other and thus, the combined income allows them to support the property market for the above RM500,000 properties. That’s one key reason why many of these high-rise properties which are not above RM650,000 are normally well sought after. In fact, when you ask around, a lot of these engineers who are just reaching 30-35 are still without a property to their name. Of course whether they buy or not depends on individual preference and the property prices because even these professionals could not buy if the property prices becomes totally unaffordable.

According to a recent report in an English daily, the electronics industry in Penang will have a very good first quarter of 2015. This is despite the fact that the first quarter is normally a slower period. For 2014, the electronics segment which covers the industrial electronic components, flex-circuited, printed circuit boards (PCB) and PCB Assembly (PCBA products) would be announcing better results compared to 2013. For 2015, the growth would continue with the following products which are becoming popular in the market. They include wearable smart devices, portable health equipment, light-emitting-diode (LED) automotive lighting, energy-saving home appliances, box-built medical and touch-screen display products. I think we can identify some of these products easily as we can see them being used or sold in many places.

Of course, as usual, when there are good news there are also the downside. What if there’s a slowdown in the industry? Well, truth is, all these companies that are reporting better results would just have to continue understand their business and their industry and keep themselves up to date with the latest needs from the market. A more pertinent question to the property market vibrancy would be how many of these companies are moving up the value chain and hiring even more engineers instead of labour intensive which is going to be too competitive in the near future anyway. There’s really no way that Malaysia can compete with much bigger countries on this account. For now, I think the support from the electronics sector to the Penang property market is very strong and it is very much related. If the whole electronics sector go down, it will definitely have a bearing on the Penang property market’s continuous growth. For the engineers, keep up the great work. 🙂

written on 28 Nov 2014

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Withdraw EPF at 55 or 60. Why I decided on 60.

First of all, if you think it is your money, thus it should be by your side and not be kept by EPF, then by all means please withdraw it at 55. Log into the EPF site tonight or before 5th May and state your decision; withdraw at 55. Here’s the URL:
https://secure.kwsp.gov.my/secured/member/login

If you are nearing your retirement age and you struggle every month just to make ends meet, then it’s best that you withdraw at 55. If your family member needs YOUR EPF money and begs you to withdraw the money for them, I would suggest to think really carefully. It is your money so that you can use it for you until the day you bid goodbye. If you are a seasoned investor in BURSA and you would like to withdraw the money because you are confident that your investment will yield higher returns, you MUST withdraw asap.

However, if you think you want to withdraw because you want to put it into unit trust, please think carefully. Are you looking at aggressive funds with lots of equity or are you looking at bond funds? If it is aggressive fund, I wish you the best because you may want to enter at the right time. If you did not, it would take some time for your unit trust to give you a decent return. If you are thinking bond fund, well, take a look at the chart. EPF dividends from 1996 till last year has been pretty okay and would definitely be comparable if not better than any bond fund. Oh yeah, return for 2015 may be good too because EPF had just earned a huge profit by selling one property in London.

If you think you want to withdraw because of 1MDB which will bankrupt EPF, please note that you have better be retiring soon because if 1MDB is going to cause EPF to go bankrupt, it will not be waiting for another 10 or 20 years or even 30 years to do so. It should be soon. Of course, please do not withdraw to put into Fixed Deposit. It has only beaten EPF in 1997 and I seriously do not believe FD can beat EPF because your FD is one of the cheapest cost of funds for the banks when they lend money BACK to you. If your FD is high, then your loans would also be much higher too. I am not sure if that’s what we may want.

Okay, enough about withdrawing at 55. Why withdraw at 60? If we have been contributing to EPF from the time we started working till 55, the amount of money we have inside EPF when we are 55 is at its highest level. In other words, if we not touch the money, the returns from the years of 56 to 60 would be the highest ever in our EPF saving’s history. That’s one major reason why if I am not really struggling and I have enough for my monthly expenses, I would prefer to allow my biggest savings (EPF) to earn the biggest return, in amount. That is why for the past many years, investment continue to be high on my priority list and I would like to treat EPF as what it should really be, my retirement funds. Perhaps I may stop work at 56 and may live another 25 years. 🙂   I think withdrawing only at 60 is okay for me. Yes, only for me. Maybe the best would be up to the members to decide and both options are available? Yeah, perhaps.

written on 22 Apr 2015

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DO not impose restrictions on me as to when I can withdraw my Employees Provident Fund (EPF) money. The government’s intention to amend the EPF Act and increase the withdrawal age from 55 years to 60 years is uncalled for. Instead, the government should come up with an option either to allow me to withdraw at the age of 50 or 55, or at 60. The government needs to understand that I am working in the private sector and EPF is the only source of savings I have upon my retirement. Unlike government servants, I do not get a monthly pension. Instead, it would be good if the government continued with the control mechanism to deter people from withdrawing at an early stage, resulting in zero savings when they reach the age of 55 or 60. Furthermore, it is for me to decide whether my health permits me to continue working beyond 55. Even though the retirement age has been increased to 60, an employee may no longer be a permanent employee after that. Most private sector employers tend to give annual renewal contracts subject to their needs and requirements. Even the EPF contribution rate varies when we reach 56 and above. Instead of increasing the age for withdrawal, it is best that the government and the EPF board come up with a blueprint, and advise me on what is their investment plan and how it is going to benefit me in the future. The government should also advise me on other means of growing my EPF money besides encouraging me to invest in trust funds. Apart from EPF contributions and personal savings, are there any savings that the government can come up with before one attains retirement age? The government also needs to explore ways not to tax an individual for his earnings after 56 and above. The only source of income I have is through working in the private sector. Do not further tax middle income earners like me by not allowing me to withdraw my EPF money at the age of 55. Please bear in mind that the average income earned by me is less than the income earned by any of the members of parliament. These people are elected by individuals like myself to serve the public and to govern this nation. But they tend to forget their salaries are paid by the public by way of numerous tax contributions, etc. Hence, please serve in the best interests of Malaysians and for this nation. Lastly, please stop harassing contributors like myself from enjoying my hard-earned EPF money in my old age.

Read More :
http://www.nst.com.my/node/80977

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Elon Musk says to let the recession come. Do you agree?

Elon says to let the recession come. Do you agree?

I wrote this the other day about a friend who told me that a financial crisis may just be coming.
Red Alert for Inflation it seems
 I told her that predictions will continue to happen and the truth is, one day it will come true. Just need to always remember to keep looking for opportunities before then because time is something once lost is lost forever. Then, I read this article about how Elon Musk wishes for the recession to come.

Article in theguardian.com
 Elon Musk has asked that the global recession which has been predicted should just come. This was his response to the question about the recession potential from a Twitter user. Musk said, “This is actually a good thing.” He continued, “It has been raining money on fools for too long. Some bankruptcies need to happen.” he continued, “all the Covid stay-at-home stuff has tricked people into thinking that you don’t actually need to work hard. Rude awakening inbound!”  Do read the full article here. Lots of more details about how Tesla has benefited tremendously from loans during its early phase.
Article in theguardian.com

If recession does come, can people buy cars?

Actually, this is a very good question. Tesla produces cars. If there’s a recession could people still afford to buy Tesla cars then? The answer may just be a yes. This is because the price of a Tesla meant that it’s not for the more ordinary people. More for the higher earning power people and frankly speaking, many of these people may just be okay in a recession. The ones who will not be okay would be the ones who does not have high earning power and when the recession comes, they will not be able to afford a new car, much less a Tesla.

I was there when 1998 financial crisis happened

By the way, I have no idea what will happen when the next recession comes. However, in 1998, I could still the effects from a 1997 ASEAN financial crisis. I give you an example. Many colleagues brought their lunch boxes and there was this one lady colleague who ate cream crackers for lunch every other day. At the time, RM2.50 per 400gm pack and this can last her one week. Today, the same 400gm cream cracker pack is RM4.50. I have not seen any colleagues doing that yet but rest assured, if a recession does happen, this cream cracker lunch may happen again. Perhaps I should also follow. Cream crackers with black coffee is amazing yeah.

I disagree with Elon Musk. I do not wish for a recession.

Maybe one major reason I disagree with him is because he can survive and most probably thrive in a recession because of his high networth and thus there would be lots of opportunities for high networth individuals during bad times. I disagree with him because many people will suffer and it’s not just the organisations. Many people will be unemployed and many may not be able to find another job quickly and easily. I would prefer all the overpriced and overvalued organisations to be valued back at their fundamentals instead. Deflate the potential for recession and not burst it.

Here are two must-read articles before the next recession

How prepared are you? 4 steps to prepare…
 It’s not when it happens. It’s not what we do at the time. It’s what we do now which will determine if we will survive or thrive when a recession indeed comes.

Strive to be a talent, not just an employee.
  When there are many people who could do our work, it’s easy for them to take over. When there are few people who could do our work, we become a talent and it’s harder for the organisation to find someone new to do the work. Are we categorised as among the ones who will find it easy to get the next employment if we needed to?

Happy anticipating if you believe what many are predicting. Just be prepared.

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