Wednesday, 23 September 2015

Did Najib just print RM20b money for the stock market?!?!

Article by straitstimes showing they inject funds into the stock market:
http://www.straitstimes.com/asia/se-asia/najib-unveils-66b-boost-for-malaysian-stock-market

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Dear Friends,

This is worrying!

I wonder how the malaysian government is going to cough up the RM20b for the stock market. With reserves dropping below $100billion as reported by bloomberg (below), it sure looks like malaysia government is "printing" the money just like what US, Europe, Japan and China did these few years.



But the problem is that Ringgit is already plunging crazily. Now the currency is 1USD to 4.35 Ringgit. With this printing of money, ringgit will continue to drop against the USD. The extra funds, although is good for the stock market and economy, it is bad for the ringgit.

Don't be alarmed if you see 1USD : 5 Ringgit if the government really adopts such a loose economic monetary policy now!

The problem with malaysia is that it is a small country. Being a small country, printing money never solves the problem. It will only lead to hyper inflation and currency depreciation.

Recently Janet Yellen, the FED chairwoman announced not to increase interest rate due to concerns over China and the emerging market. Malaysia, being one of the emerging countries, is perhaps the first to declare a "fund injection" a.k.a printing money,  to save the stock market. I do not know if other emerging markets will follow suit.

Hopefully not! If not, I do foresee an Asian Financial crisis happening again. Currency might be attacked like what happened in 1997!

Praying silently...

Rgds
Daniel Loh
www.danielloh.com


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