nov increase pun ok.

So OPR increases BLR will increase. This causes loan and FD interest to increase right?
So OPR can be seen as a double edge sword right?

Yes. That's why investors are concerned and sensitive over interest rate as cheap money is not longer available especially at US, a lot of anxiety in the market whereby there's a potential for Federal Reserve to hike the interest rate for first time since financial tsunami in 2008.

Hi

Thanks for the reply.
1. WHat do you mean by "cheap money"?
2. Why does increasing the interest by Federal Reserve causes anxiety? I know that last time US almost defaulted on its debts. That was what was worrying. BUt I cannot see how does increasing interest causes anxiety

Sorry. I am very noob.

This post has been edited by Ramjade: Aug 4 2014, 06:26 PM

1. The interest rate at US is nearing to 0%. IIRC it should be 0.25%. Cheap money equals too many cash in the market and this is true for US since they have been printed so many cash with 3 rounds of easing. Recently, they just planned to end QE3. In Europe, it's negative deposit rate.

2. When interest rate in US does go up, cheap money invested in other markets like emerging markets will go back to US. This will hit the currency and economy of the emerging markets. We saw this phenomenon last year when Federal Reserve started to say they wanted to end QE3. Countries depend on foreign fund like Indonesia, India and etc will suffer if their current current is not prepared for the outflow.

Of course, I'm just quoting examples from the developed market and in Malaysia, this may not happen but as interest rate goes up, loan is getting not cheaper.

This post has been edited by David83: Aug 4 2014, 06:32 PM

Ok, I am starting to understand a little. Next question, why does the cheap money goes back to US? Is it because people are having confidence in the US again so they remove their investment from developing country and pump it back to US? Am I right here?

Another question is why it may not happen in Malaysia? The last I check, Malaysia is still a developing country.

You're correct about the first section.

About the second section, I may confuse you. The outflow of foreign fund will definitely affect Malaysia as we're still relying heavily on FDI. What I tried to highlight the correlation of extremely low or negative interest rate may not happen in Malaysia as of nearest future or decade unless Malaysia is heading to Greece path and we're stating to print money to become banana paper money.

Sorry to confuse you.

This post has been edited by David83: Aug 4 2014, 06:39 PM

Mainly because the US is less risky than Asia. Yes basically that, for the same interest rates, most people would rather put it in the US than Asia.

The reason it won't happen here is because people want to diversify into Asia emerging markets. The local market is severely underpriced. The Phillipine Stock Index (PSEI) is 3X more expensive, and the economy is so bad their people come here to work as maids.

This alone shows you how defensive we are. So people who like to have defensive diversification in Asia EM usually invest in Malaysia. I mean, where else would you invest if you wanted to invest in Asia EM?

This post has been edited by wodenus: Aug 4 2014, 07:07 PM

i will invest in SG

Er Singapore, China, S.Korea?

Thanks again

This post has been edited by Ramjade: Aug 4 2014, 06:54 PM

Singapore and South Korea are developed countries.. I meant developing markets in Asia. China is weird... there is supposed to be a lot of growth but it is not reflected in the share prices.

Noone trust China government not to suddenly change rule on them?

Ocbc 3 months FD 4.5% applies to those fresh fund and those opening up new smart saver (SS) or dormant acount only. The only choice left for those having their Ocbc FD matures is Islamic FD, 3 months 3.55% or 12 months 3.8%. Am I correct?

Warrior, I went to MBSB this afternoon, this is what I heard from 2 MBSB staffs:
After merging, MBSB's 4.7% 5 years FD should not be available for new customers; but it
will still valid and continue as usual for all existing customers until this 5 years FD contract
matures. After this 5 years FD contact matures, then this 5 years FD cannot be renewed
anymore.

If they can merge successfully, they will form a new bank on 1 January 2015.

So, the last call to place 4.7% for 5 years FD with MBSM should be in this December or earlier.

I think I should place MBSB 5 years before it is gone; but I am still thinking will they
revise their rates soon? , I asked MBSB about this question, they said the
chance to revise higher than 4.7% is slim..

Boss, the last day to place Affin 4.05% for 15 months FD is 30 December 2014.

Don't forget to check out Affin OMG deal:
http://www.affinbank.com.my/General/Whats-...uble-Bonus.aspx

TQ for the info.

Now to take up this offer! Imagine a non-PIDM product "protected" by M'sia's biggest bank! (if the merger goes through...)

How to transfer money from maybank to MBSB?

go MBSB before you regret.

Received sms UOB 3.9% for 13 months FD valid till 31 Aug

I rec'd one too. All this could mean one thing - rates are going UP!