Thursday, June 14, 2018

Moody debunked Hari Raya wishes

Today is the last day of Ramadhan and tomorrow begins the celebration of Aidil Fitri.

Be careful on the road to ensure a Selamat Hari Raya. Was just told a nephew had a road mishap yesterday that caused the life of his wife and child with himself badly injured. Al fatihah 

This blog made a premonition of an upcoming market black hole two weeks ago.  A commentator dispute us and confidently claimed we will be proven wrong. It would be most welcome.

The intention to be the prophet of doom is to forewarn the new Malaysia Baru government, which remained drowned in euphoria, Mahathir's vengeance, and DAP's impatience to undertake revolutionary change.

It is unthinkable but they seemed unaware of the current happenings and implication of their actions to the stock, capital, currency and commodity market as well as the country's economy at large.

They can't deliver on their manifesto but resorted to cooking up bankruptcy and 1 trillion debt lies [read here, here and here] to the detriment of economic confidence on Malaysia.

No witch hunting could ever achieve any result in a matter of weeks [read here]. Its mind boggling that they intend to do so without compromising on the rule of law.

Foreigners continued stock selling 

Bursa Malaysia did not cross critical CI support level of 1,700. The lowest was at around 1,715. It tapered off and moved sideways since then.

The worrying trend is foreigners' selling remained. At the end of last week, almost RM7 billion worth of shares were sold by foreigners and it is not over.


Latest: Today, Thursday

If not for Moody's statement yesterday [read here], foreign short selling syndicate would have taken advantage of the long holiday and thin market to attempt the push below 1,700.

The Edge reported:
Foreign outflows from Malaysia stocks gain momentum

Bloomberg June 14, 2018 09:51 am +08

KUALA LUMPUR (June 14): Foreign selling of Malaysia's stocks accelerated in the past week as the nation's benchmark equity index fell and the Malaysian ringgit weakened.

The 5-day moving average of net foreign outflows accelerated to $69.3 million, compared with the 20-day average outflows of $60.6 million, according to data from the Bursa Malaysia Bhd compiled by Bloomberg.

The FTSE Bursa Malaysia EMAS Index fell 0.4 percent over the past week and the ringgit lost 0.5 percent against the dollar to 3.9938.

Read on here.
Yesterday's outflow is the 26th consecutive days (Latest: today's the 27th) that foreign investors pulled money out of Bursa Malaysia.

On average, RM242 million pulled out every market day by foreigners. The pace of withdrawals accelerated to past week's average of RM277 million daily pull out.

Foreigners have been pulling out money continuously since GE14 due to statements from our new Finance Minister and PH policies that was announced.

Every time Tun Dr Mahathir or Lim Guan Eng opens their mouths, the more foreign investors lose confidence.

Moody's exposed Guan Eng's lie

Guan Eng reply to Moody is that they do not know our true debt situation. Moody do not pander to anyone. Maybe DAP think they will bow to RBA's incessant daily slander.

Despite cases of past abuse by rating agencies on corporate rating, Moody remain one of the top international credit rating agency.

Foreign fund managers managing tens of trillion of US dollars still rely on their ratings to make their investment decisions.

He was seriously embarassed to be told government lied by Dato Najib [read here]. And his rebuttal was typical political twist to warn not to confuse the people. Only the ignorant and naive get confused.

Ktemoc had a field day here with Mahathir who seemed to think the Japanese will lend money to a new government generating fake data and recycling old ideas like EAEC and second national car.

Japanese PM said will consider. It sounds like a reluctant banker politely rejecting loan applicants.

Despite his claim that new government wants to be more conservative in the treatment of debt, he should heed Moody's concern on the new government's fiscal policy.

That is unless they are not concern with credit downgrade as Mahathir said. Do not assume the cetus peribus that Moody will not downgrade Malaysia's A- rating.

If this trend of continuing to irresponsibly shoot their mouth continues, Malaysia will be in deep trouble.

Foreigners leaving bond market

As it is, yesterday's Edge Financial Daily reported the above concern. NST report below:
Foreigners sells RM12.9 billion of Malaysian debt securites in May


June 11, 2018 @ 3:56pm

KUALA LUMPUR: Foreigners were net sellers of Malaysian debt securities for the second month, a staggering RM12.9 billion in May compared to RM4.7 billion in April, the biggest drop in 14 months or since the record RM 26.2 billion fall in March 2017.

Kenanga Investment Bank Bhd said the outflow slashed foreign holdings share in Malaysian debt securities to the lowest in eight years since June 2010 to 14.2 per cent against 15.2 per cent in April.

“Investor sentiments were rattled by the unprecedented outcome of the 14th General Election and by the subsequent news flow on the Pakatan Harapan government’s policy decisions.

“External factors were also less encouraging as the US growth indicators point north, suggesting a more hawkish US Fed.

“Along with rising global trade tensions, demand for emerging market’s bonds as a whole weakened in May.,” it said in a report today.

The month’s sell-off was broad-based across both short-dated and long-dated securities. Short-dated securities registered the largest outflow in 14 months of RM2.3 billion compared to RM638 million in April.

The 26.1 per cent decline of 6.8 per cent in April in foreign fund flows led to foreign holdings of total shortdated Malaysian bonds sliding to 53.9 per cent compared to 60.4 per cent in April.

Similarly, foreign holdings of long-dated securities (MGS + GII) recorded the largest outflow in 14 months of RM9.8 billion.

Read more here.
The US indeed increase interest rate last night. However, the capital flight out by foreigners may not merely be about US interest rate but due to beyond the usual fundamental factor.

In a video presentation that is currently viral, Israel Prime Minister Benjamin Netanyahu said, "Countries that don't have relation with us ... they're gonna be isolated."

Is this to come for countries like Malaysia that oppose the opening of US embassy in Jerusalem?

Ready for Ringgit rush

Since the GE14 result, the Malaysian Ringgit ended its uptrend from late last year to weakened at the 4.00 to the US dollar from the level of 3.90. In forex language that is 1000 points!

From a longer perspective, the chart looks below:

Mahathir made an issue of Ringgit weakening when he began his onslaught of Najib.

After Najib stabilise the economy and monetary standing, are we to see another 1998-2000 crisis with this time Najib being imprisoned for another trumped up charge?

As of yesterday, The Star here reported Ringgit begin to slide near the 4.00 level before the Fed announcement.

It does not stand a chance with all these capital outflows. The son of OUB Founder commented in his Facebook:

Pardon his language, but we share the view. It could happen over the long weekend and just mark-up after the holidays.

Certainly, it is hope to turn for the better with more clarity on government policies in days to come. The hope is there will be a new economy blueprint to achieve the Vision 2025 and beyond.

In the meanwhile, the hope is left to higher oil price and exports in the face of looming US-China trade war, capital outflow from the emerging markets and ECB plan to unwind their bond buying program.

Oil Palm under pressure

Out of pride, Mahathir do not want anything to do with China. It will not take long before he succumb to the feet of the modern Emperors of the Middle Kingdom.

Insulting them could only come at expense of local oil palm industry.. The Star reported from Bloomberg below:

Crude palm oil falls to lowest since July 2016 on export concerns


Wed, Jun 13, 2018

KUALA LUMPUR: Palm oil for August delivery on Bursa Malaysia Derivatives dropped as much as 1.1% to RM2,300 a ton on Wednesday, lowest intraday level for most-active contract since July 2016.

The CPO futures was at RM2,303 by midday break; down 8% year-to-date.

The prices fell for 8th straight day, heading for the longest run of losses since June 2016

Sentiment is bearish after Malaysia’s crude palm oil export tax, which may affect short-term demand, says Gnanasekar Thiagarajan, head of trading and hedging strategies at Kaleesuwari Intercontinental in Mumbai.

There are concerns that sluggish demand and palm oil’s high production season from July onward will lead to higher inventories.

Weakness in U.S., China edible oil markets is also adding to the weak sentiment

Read here.
The higher inventories are beginning to be a problem before analyst acknowledge it.

The breakeven cost for palm oil plantation is around RM2,300 per ton. Yesterday, market support broke the support level.

Palm oil may fall further to RM2,290


June 14, 2018 10:44 am +08

SINGAPORE (June 14): Palm oil may fall further to RM2,290 per tonne, as suggested by a projection analysis.

The contract is riding on a wave c from RM2,457. The projection analysis reveals that this wave has deeply pierced below the 138.2% level at RM2,315. Chances are it may extend to RM2,290.

The bounce triggered by the support at RM2,303 looks like a pullback towards RM2,324, the May 4 low. This pullback may end around RM2,330, as suggested by a falling channel.

A break below RM2,303 could confirm the extension of the downtrend towards RM2,290.

(Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own. No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses.)
Sorry for all the bleak reports. And sorry for not sharing these tips earlier.

The new government has a crisis in hand. They should not be drowned in their victory. Majority of 123 seats does not indicate political stability. Anything can happen beyond BN Sarawak pulling out of BN.

Oil palm will effect 800,000 small holders. They have to get down to the serious business of governing.

They new government should learn to conform to the norms of governing a nation and need to rebuild confidence among the local and international business community.

With this reminder, we wish all readers Selamat Hari Raya, Maaf Zahir Batin. Drive safely. Do not be too festive and indulge in excesses.

Oh yes, enjoy free World Cup from the government which handsomely benefited Astro.

* Edited 14/6/2018 9:30 AM


Anonymous said...

To be honest, this just a strategy by PH, the crony will benefit and buy the shares, then sell it. This is how then will act.

Please see the market trend and which shares become high after Tun M annouced, he will become Education Minister.

Unknown said...

World cup..
What will it benefit to me?
And other rakyat that dont care about football?
O ok.. 32mil malaysian... only me and 2 millions others dont watch football is it?
So lebih yg ramai suka dr tk suka ya?

Pengundi Pekan said...

As a layman what I understand from your interpratation is Moody and these foreign fund manager do support Najib's kleptocracy goverment and dont care whatever the rakyat mahreim suffering...

Selamat hari hari raya bro..

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