Funny thing is almost everyone saw this coming years ago but few took afford to mitigate the risk by investing offshore.

Malaysia’s high external debt level makes it vulnerable to confidence shocks, Moody’s Investor Service Inc said.

Moody’s said this external debt has grown from 30 percent to 100 percent from 2012 to 2015, financial daily The Edge reported.

This is according to Moody’s latest report ‘2017 Outlook-Negative Outlook As Low Growth, High Debt Limit Policy Options' made available to its subscribers today.

http://m.malaysiakini.com/news/362845

The writing is on the wall for those who know how to read.


This post has been edited by icemanfx: Nov 15 2016, 02:31 AM

Double posted, ts kindly delete.

This post has been edited by icemanfx: Nov 15 2016, 07:38 AM

For project funded by China, most spending will be in China.

Believe what could be repatriated has repatriated.

There is a political doctrine to feed the peasants with debts. When incurring debt e.g property, credit card, peasants feel happy and satisfy. After the peasants are indebted, they are more concern with food on table than politics.

This post has been edited by icemanfx: Nov 16 2016, 09:00 PM

Capital control is normally the last tool to be used by central bank. BNM will only impose capital control if bulk of MGS farang holders is exiting in a short period of time else BNM could increase MGS yield or interest rate to reduce capital outflow.

This post has been edited by icemanfx: Nov 17 2016, 04:48 PM

It is all depending on which (i.e BNM foreign reserve, MYR forex rate or borrowers burden) has the higher priority. Those lower down the food chain is collateral damage.


This post has been edited by icemanfx: Nov 17 2016, 05:40 PM

Bnm try to control offshore banks which are not within their jurisdiction? Offshore myr derivative is used by mgs farang holders for hedging. This could encourage mgs farang holders to exit soon instead of waiting for more restrictions.

If RMB continue to slide against USD; after inauguration, Trump may impose punishable duty on import from China. This could impose more downward pressure on MYR.

What is happening currently is only a prelude, the real show is after potus inauguration.

You ain't see nothing yet.

The basic reason why ndf exists at the first place is bnm restrictions and influence on onshore myr trading I.e away from bnm control.

Most investors use ndf to hedge their exposure on myr. To curtail ndf will likely to cause investors to withdraw from myr exposure e.g mgs.

If myr depreciate further, Chinese contractor will ask for price revision or cut in donation.

If Bnm withhold onshore banks transaction for the banks offshore activity is effectively sanctioning. If this practice persists, many foreign banks may withdraw from onshore.


This post has been edited by icemanfx: Nov 20 2016, 04:40 PM

Bnm could officially ignore ndf. However, foreign investors couldn't ignore the margin between ndf and onshore rate. If margin widen or high for extended period may prompt them to exit mgs for safety pastures.

They will find a Jewish to take the blame.

This post has been edited by icemanfx: Nov 21 2016, 06:18 PM

Some banks may choose to close their onshore operation here or abstain from future mgs participation.

This post has been edited by icemanfx: Nov 21 2016, 06:56 PM

Krystal Tan, an Asia economist at Capital Economics, noted that the country needs to roll over a large stock of short-term external debt, equivalent to around 28 percent of its gross domestic product (GDP), making the ringgit vulnerable during periods of weak risk appetite.

Tan expected the central bank would continue to intervene on the currency.

Foreign currency denominated debt was equivalent to just under 40 percent of Malaysia's GDP, she noted.

http://www.cnbc.com/2016/11/21/why-malaysi...mp-tantrum.html

Wrong move or assumption by bnm could lead to exodus of mgs farang holders.

If Bnm impose capital control, the gomen can forget to promote mgs to farang for years. Liquidity in local market could dry up pretty quickly.

Most if not all property investors have gold and silver mountains backing; interest increment won't be enough to cover a family dimsum or wanton mee lunch. Further, kangkong land economy is resilient. 25 or 50 basis points increment will be hardly felt.

Bnm last cut of 25 basis points was hardly felt by the market. Similarly, for 25 basis points increase.

Accepted at what rate?

Short term fluctuations is never rational or logical.