Rafizi Ramli’s sotong economics
LSS Report
Today I am convinced that Rafizi Ramli is an amateur in financial analysis.
Today, Rafizi claims that Tabung Haji may have lost up to RM3 billion if Bursa Malaysia dropped by 10% in 2015 and the reserves are negative.
How utterly simplistic this Rafizi is!
Having pages of analysis and tables is of no use if your basic assumptions are already all wrong!
He is wrong again for these reasons.
1) Bursa did not drop 10% but 5% last year.
2) Even if Bursa dropped 5%, it does not mean all of TH’s stock-holdings have dropped. Some lost money while others made money – which is why you have such things as portfolio investments.
Why do you think mutual funds from Public Mutual and Prudential still pay out dividends and bonus? They invest in the same Bursa stock market as TH, too, correct? Or did Public Mutual and all other unit trusts also lose money and have negative reserves? Use your brain lah!
3) Only about 50% of TH’s investments are in equities – and not all of them are listed. Up to 30% are in money market (government securities, bonds, etc.) and up to 20% are in properties – which all still paid positive returns,
4) Rafizi failed to acknowledge that TH’s multi-billion investments in London properties made returns of as much as 200% over the past two years, which TH has wisely cashed in with bumper profits.
5) Many of TH’s stock market and equities investments paid dividends – regardless of share price performance.
6) Rafizi failed to understand that some of the biggest TH investment in the stock market has crossed the 20% threshold where TH has to equity-account or consolidate the accounts and cannot just use stock market valuation. Such companies include Bank Islam, which is TH’s largest equity investment ,which it owns 53.6% (profits grew in 2015) and TH Plantations (72.8% ownership).
The TH CEO already clarified that BNM’s earlier comments on TH’s September 2015 reserves did not take into account other assets, properties and shareholdings.
Also, Rafizi’s insistence that TH’s reserves are negative is an insult to the Auditor-General of Malaysia who has audited the accounts and confirmed that the reserves are positive and hence legally able to pay dividends.
And, more laughably, Rafizi said this on Bank Islam and TH.
“These assets can’t be liquidated because they are in the form of loans that were given out by Bank Islam to customers and also the federal government,” Rafizi said, in pointing out that the entity that covers 80 percent of TH’s additional assets when consolidated was Bank Islam.
“So, in order to pay off all its liabilities, TH has no choice but to liquidate its own assets, and based in the statement ending in 2014, they don’t have enough money to pay everyone if all TH depositors withdraw their savings immediately,” he said.
Lapiji, what you are describing applies to EVERY SINGLE FINANCIAL INSTITUTION (FSI) in the world.
If any FSI had their depositors withdraw all their deposits at the same time like you said, no FSI would be safe.
That is the very basic nature of FSIs – they use deposits to generate return by lending or investing longer-term in other areas to get higher returns so that they can make a profit and pay interest to their depositors.
If you want to be completely safe then keep your money under your blanket but you will end up with zero returns and there would also be no such thing as FSIs.
It cannot be that Rafizi does not understand this or he just wants to continue poking TH so that the depositors to do a bank run and hence get TH to collapse?
What is your motive, Rafizi?
And why are you still keeping more than half a million ringgit in TH if it is unstable?
