Actually you guys, both bulls and bears, need to think deeper. It's not as simple as it appears from a layperson's point of view.
When there is a crisis in the west, there is a 'flight to quality'. This means liquidity flows out from the affected nations, seeking assets in safer or more high yielding nations. That their citizens and institutions in the West still have tonnes of money, but they simply do not have the confidence to invest their money in their own assets and businesses, and spend it on goods and services in their own country.
When their central banks start to print money in bulk in order to stimulate local spending and investment, even more money flies out, seeking quality and yields. The excess money flowing out of their countries starts a currency war, pushing down interest rates across the globe, making debt cheap and attractive everywhere, even in countries where the economy was still healthy.
So where are these safe places for money to hide? Examples are the "global cities" like NY, London, Paris, etc which were not just unaffected by their domestic crises, and kept rising like nobody's business.
When credit is cheap and easily accessible, any asset whose price is determined by access to credit has a tendency to rise. Asset inflation is an unwanted but acknowledged side effect of monetary easing.
This is why you see property booming in not just Malaysia. You see it booming in India, Indonesia, NY, London, Paris, Australia, Canada, Thailand, South Africa, Brazil, Hong Kong, Singapore, etc etc etc... countries which have little in common when it comes to domestic factors.
China during this period was at the brink of a slowdown, and threw in trillions of Yuan in fiscal stimulus in 2008-2009, jumpstarting the global economy again by creating a lot of artificial demand for commodities. This meant that commodity suppliers like Malaysia were not as badly hit as it should have been. Our two largest trading partners are China, and Singapore who is an even larger recipient of foreign hot money.
A healthy, growing economy is supposed to have high interest rates. However, the presence of global monetary easing and an meant that we had stimulus level interest rates 'forced' upon us, even when our domestic economy was by no means weak thanks to Chinese stimulus.
US tapering was supposed to be the start of the reversal of this trend, but many people overreacted. Tapering is not the withdrawing of the printed money. It was simply the slowing down of the printing of money. The US is still printing tens of billions every month, and will do so until the end of 2014. We don't even know if the US will start withdrawing the money then, and when it will allow interest rates to rise.
At the same time, the end of US money printing coincided with the end of the EU austerity, which would be replaced by EU monetary easing, and also the sudden introduction of Japanese Abenomics. Hence, to a great extent the supply of global liquidity is still kept up by trillions being produced by Japan and the EU.
Now if you told me back in 2008 that you could have predicted that monetary easing by the US would end in 2014 and not 2010, I would call you a genius. If you could have told me that the EU would switch tact from austerity to monetary easing, I would call you a genius. If you could have predicted that Shinzo Abe would start monetary easing as well in 2013, I would also call you a genius.
Everyone else is simply just lucky that things turned out this way.
if najib dint use our bullets, yes i would agree the price would still go up.
all the big countries are using a lot of steroids.
after 2008 we dint collapse because of China. and we ourselves used a lot of steroids too.
and we are running of steroid shots already.
household debts very high, country debt high, corporate loan high.
Businesses arent doing good. inflation is running wild, cost of living increasing.
May 4 2014, 07:26 AM
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