The year was 1995, economic boom had brought prosperity for South East Asia's 5 tigers, Malaysia being one of them. With constant and growing foreign inflows, Malaysia could finally develop itself and crept closer to its dream of "Wawasan 2020". Free from political turmoil and boasting one of the cheapest labor in the region, it seemed wise for foreign investors to invest for a big profit with minimum risk.
In 1997, one currency speculator didn't think so. He alone had brought down the infamous BoE and now his sights were fixed on the South East Asia big 5. At first Thailand came crumbling down, devaluing its baht and soon the disease spreaded. Singapore wasn't spared either. The big 5 economies of South East Asia felled to one currency speculator, whose name is as poisonous as the name Judas.
Fast forward to 2008, the signs are similar, it look similar, smells familiar, and one might ask, "are we going to see a repeat of 1997?" Korean Central Bank lost its war against currency speculators; the won severely beaten up. Thai had to devalue, along with Vietnam. Inflation reigns high among all emerging nations while growth has stagnated. The central banks hands are tied, there's nothing they can do as they have to maintain price stability.
In the morning, Asian central banks furiously selling the dollar, but by the time London and New York market opens, the dollar further strengthens. Malaysia Central bank has lost billions overnight, trying to defend the ringgit. Therefore my friends, it's only time when Malaysia had no choice but to forgo intervention. IF that happens, capital flight is a certaintly; as if that hasn't happened already.
So my friends, why is KLCI heading down towards 900 points? Answer is very simple; because 1997 is repeating itself. Checkmate Malaysia, checkmate.It is NOT a repeat of 1997. It will be WORSE than 1997 and we may NEVER recover. The SIMPLE reason is we NO LONGER have the spare OIL MONEY to bailout like in 1997.