Recently oil problem make the market red ...
I heard from 1 experience ppl , he said now the market will be almost like 1997 , need to wait about 1 year to recover ...
Guys , how do u think ? Time to sell out all the stock ?

This post has been edited by YuNGSeNG: Jun 24 2008, 12:11 AM

Why sell when there is a 'Big Sale'?

Big banks are planning to increase mortgage rates next month. Please be aware that BNM will definitely increase overnight rates @ its next meeting.

Our market is definately in the bear market, but how severe? Well depends on the monetary and fiscal policies the BNM and government enacted.

I don't think it is wise to say that things WILL happen BEFORE it happens, right?
If you do, please provide the source and supporting reasons as well so it does benefit everyone.

Just my 2 cents worth of opinion. Do not have to take it seriously if you don't want to

if it really Bear..it need 3-4 years time to recover..not 1 year....

Again, this is a public forum; and you may treat my comments/opinions as speculation but since i work with a big financial institution , i can only release what i can to help my fellow friends in the forum without endangering my job.

I didn't say that you are not allowed to share, but what I was trying to say is to please include more details so that everyone can benefit.

I am a newbie here. My relative, who is working in a local bank, also told me the same information. In fact, I bought a new car and was told that the interest rate has gone up for hire purchase. I will not be surprised that interest rates for other loan will be up soon.

Any 'speculation' on what the new rates will be?

The speculation is the BLR will be 7.5%. For the hire purchase, I was quoted 2.2% for new car two weeks ago. But, last week, they told me that it is 2.35% now. If I don't commit, possibly will be another round.

I share the same opinion as you do. The history migth repeat itself. High GDP and interest rate.

Until 1997, Asia attracted almost half of the total capital inflow to developing countries. The economies of Southeast Asia in particular maintained high interest rates attractive to foreign investors looking for a high rate of return. As a result the region's economies received a large inflow of money and experienced a dramatic run-up in asset prices. At the same time, the regional economies of Thailand, Malaysia, Indonesia, the Philippines, Singapore, and South Korea experienced high growth rates, 8-12% GDP, in the late 1980s and early 1990s. This achievement was widely acclaimed by financial institutions including the IMF and World Bank, and was known as part of the "Asian economic miracle".

What come next is pretty obvious where recession strike, HP loan was at 8%, Mortgage Loan was at 14%, FD rate was at 12%. Until Dr M slash the BLR, pegged the ringgit before the economic come to live in early 1999. The question is are we there yet ? is still too early to tell at the moment, we need to reach an optimum level before it plunge, probably is in the process.

This post has been edited by smartly: Jun 24 2008, 02:44 PM

if you want to say it will be the same, i guess not with 1997 crisis.
this time will hit even worse toward younger generation due to unable to control thier spending.
it will be far worse then 1997. it may happen not this year and maybe 2 more year to go. now is still sustaning

Before the crisis, Malaysia had a large current account deficit of 5% of its GDP. At the time, Malaysia was a popular investment destination, and this was reflected in KLSE activity which was regularly the most active stock exchange in the world (with turnover exceeding even markets with far higher capitalization like the NYSE). Expectations at the time were that the growth rate would continue, propelling Malaysia to developed status by 2020, a government policy articulated in Wawasan 2020. At the start of 1997, the KLSE Composite index was above 1,200, the ringgit was trading above 2.50 to the dollar, and the overnight rate was below 7%.

In July 1997, within days of the Thai baht devaluation, the Malaysian ringgit was "attacked" by speculators. The overnight rate jumped from under 8% to over 40%. This led to rating downgrades and a general sell off on the stock and currency markets. By end of 1997, ratings had fallen many notches from investment grade to junk, the KLSE had lost more than 50% from above 1,200 to under 600, and the ringgit had lost 50% of its value, falling from above 2.50 to under 3.80 to the dollar.

In 1998, the output of the real economy declined plunging the country into its first recession for many years. The construction sector contracted 23.5%, manufacturing shrunk 9% and the agriculture sector 5.9%. Overall, the country's gross domestic product plunged 6.2% in 1998. During that year, the ringgit plunged below 4.7 and the KLSE fell below 270 points. In September that year, various defensive measures were announced in order to overcome the crisis. The principal measure taken were to move the ringgit from a free float to a fixed exchange rate regime. Bank Negara fixed the ringgit at 3.8 to the dollar. Capital controls were imposed while aid offered from the IMF was refused. Various task force agencies were formed. The Corporate Debt Restructuring Committee dealt with corporate loans. Danaharta discounted and bought bad loans from banks to facilitate orderly asset realization. Danamodal recapitalized banks.

Growth then settled at a slower but more sustainable pace. The massive current account deficit became a fairly substantial surplus. Banks were better capitalized and NPLs were realised in an orderly way. Small banks were bought out by strong ones. (Unfortunately, this was an excuse for the government-linked banks, which were actually in a weak financial position to force the smaller banks out of the market. Ironically, it was the smaller banks, managed in a sound financial manner, that were dissolved, instead of the larger politically-favored banks.) A large number of PLCs were unable to regulate their financial affairs and were delisted.

KLSE fell below 270 points in 1997 !!!!! So what worse can it be ???

Agree with smartly's comment - especially the political-favored bank. Mahathir did the right thing during the crisis in 1997/1998 for the finance and economy. I don't agree with Mahathir's handling of Anwar. However, over the years, what Mahathir did has damaged the foundation of this country. He invested our wealth in areas that we are not competitive and will not sustain. For example, keeping petrol price lower in order to support proton - which is incompetent and should be sold off. Because of proton, nobody in government bothered about public transport (train, taxi and bus). Now, we are in the dilemma of high petrol price (despite Malaysia is producing oil). Low interest also encouraged unwise consumer spending and majority of the people live beyond their mean. Mahathir did more harm than good for this country.

Badawi is equally bad in the handling of economy. The recent handling of petrol price showed his incompetent. Ban foreign car from pumping Malaysian petrol. After that, increase the price and lifted the ban. Now, a different pump price for foreigners. The idiot government think that every service station owners have nothing to do except following the government policies that change like weather. How to put more pumps at the station to sell to foreigners? How much more the service stations have to invest in the facilities in order to implement the new ruling? How to enforce this new policy i.e. make sure foreigner ready pump the expensive ones?

KLSE is still 1,100 points and above. But, we know this is a manipulation. A lot of companies are not traded or the market capitalization is very low and should not be qualified for listing. Imagine, RM 2,000 is considered as low income and all new fresh graduates are asking for this salary. The truth is RM has been devalued. The currency is weak.

The existing government is not competent to face the coming turmoil. I am not saying PR or Anwar will solve the problems. Either BN or PR, Malaysia is going to be in trouble because of the economy policies. BNM governor could even say "It is too early to see the impact of the recent fuel price increase on inflation and growth". As a layman, I just read the newspaper and I already know that what happened to countries with the same situations e.g. Indonesia, France, Netherlands, and etc. Truck drivers in France were protesting. Fishermen in Netherlands refused to go out for catches. Do we really need to wait until disasters strike us then these bureaucrats will know the impacts? With the quality of the government ministers (who did nothing but coming out all funny policies that change and change) and policy makers, Malaysia is definitely heading into serious trouble for this coming turmoil.

in last to say..i still preffer Mahathir as PM rather that BADAWI>>>..but over is over..we have to face the issue now..

Yup, me also agreed.
Although Mahathir managed Malaysia in some dictator ways, at least Mahathir managed to take Malaysia out from Asian crisis '97 and bring prosper to Malaysis during his tenure as PM.
But compared Abdullah, i can't see his strength managing Malaysia. He is too weak and the most i fed up with him is because of his flip-flop management. Better he step down and give to some one more capable.

Anyway back to topic, i think market is heading to recession time. Bear market will soon emerged when more bad news coming out. Some analysts predict recession could come in early next year.
But market is unpredictable, any possibilities could happen.
If you compared to March this year, when almost everyone of us(maybe to me) think market will collapse due to credit crunch but most of banks announced good results and market reversed, rally for 1++month until May 2008.

For cautious purpose, it is better to invest small portion only and keep cash for raining days if recession does come.

Bear is already in the market and sitting besides everyone quietly until most people don't notice. (everyday price drop 5 cents, 10 cents until when one starts to realise then already with paper loss of 20-30%.

Yes, in this kind of market condition, don't need rush to buy, slowly take tiny piece by piece as market won't suddenly turn into bull run one, most of the upside is due to technical rebound recently.

Typical eg would be Genting (because monitor it mah), from 6.50 down to 6.00 then bounce off to 6.20, then slowly dropped again to 5.70 then bounced to 6.20, then continue to go down to around 5.50, then bounced a bit to 5.70. Then dropped again to 5.20 then bounced again to 5.60. You can see the pattern of lower and lower trend. So want to buy, take piece by piece, don't need take it one or two shot as it is in down trend, nobody knows when is the bottom.

Yup, current gov decision is quite flip-flop until nobody knows what they want to do or plan to do, or no plan at all, which won't be good for the stock market. Stock market doesn't like uncertainty, as businesses need certainty of policy for future planning and expansion.

For comparison with 1997, current bear market is just about 20%-25% of the severity of 1997 crash. So if one predict the market will be as bad as 1997, then still long way to go. Although economy might get into recession or some trouble ahead, the current situation and problems still far from matching 1997 condition. But on US banking side, different story, they are facing multi-decade financial crisis which some of the banks shares have dropped as much as 60-70%. Typically well known name like Citigroup from 50-60 to now around 18. <-- this (the severity of drop) quite matching the severity of Asian 1997 crisis time.

This post has been edited by cherroy: Jun 24 2008, 09:05 PM

Badawi's damage is obvioous and short term. Those problems created by Badawi are so obvious. Mahathir's damage is root cause and long term. Most of Mahathir's damage is not so obvious.

Take example, policies on Proton. Countries like UK, Sweden already sold their car companies to American or German. Car industry requires economy of scale and export. But, in Malaysia, stupid government still invest or award special grant to a company that is weak and incompetent. Duties have been imposed into the car. If you need to adjust the price for the car, it impact the 2nd hand value of the car. When car price is high and public transport is lousy, how much you need to pay the employee to travel to work? So, for some "good" decision from Mahathir, long term damage are there. Now, it is so difficult to remove this "cancer" from the economy. Look at Cyberjaya, when Malaysia started the MSC project, Wipro India was selling cooking oils. But, today, Wipro is the 4th largest outsourcing company in the world. For MSC? We see property prices that are the same as Mont Kiara, PJ. Can you imagine a condo in Cyberjaya was sold at RM 300K? Who are the developers in Cyberjaya?

Badawi is weak and incomponent. But, this gave opportunity for people to watch clearly. Mahathir is strong, whatever he did wrongly always appears to be right. And, now, people will see:

a) Malaysia produces oils but retail price is higher than any oil producing countries.
b) Malaysia produces cars but retail price is 2nd highest in the world.
c) Malaysia has oils and cars, but everywhere you go, you pay toll.

These are legacies from Mahathir but become Badawi's problems. Public transport as well, have you seen a city with 1 million popullation with 5 types of train system? Monorail + KTM commuter + Star + Putra + ERL? These are infrastructures that will stay for long term!

Mahathir always like to talk big and look big. He never involved in the actual implementation. If you look into the scholarship. Everything we talk about quota. But, for scholarships, so many years people never realized that non-bumiputra got less than 10% until recently. There are so many policies implemented without notice. Malaysia is a democratic countries but the press control is worse than communist China.

If Mahathir is strong and guide the nation to a normalisation (i.e. follow the steps of Indonesia to scarp bumiputra polcies, equally opportunities, and etc), I probably will excuse his wrong investment in economy and political issues. He never made use his strength to make Malaysia a normal country. Instead, he allowed further polarisation. Kampung Medan was one example. So, he used his strength power but not for the good of this nation. As a result, Malaysia remain as it is -> a country that takes care of the majority -> the only one I am aware besides South Africa. You go to Australia, the majority (white) takes care of the minority (indigenous). You go to US, the majority (white) takes care of the monority (black, south american or carribean)... in Malaysia, the majority takes care of majority... Isn't this strange in 21st century? Mahathir had the power to change this. But, he did not do it.

This post has been edited by ongss: Jun 25 2008, 01:08 PM

We are now in the BEAR market. Probably worse than 1997/98