Malaysia’s economy: facts never lie
Salleh Said Keruak
There are so much doomsday predictions by prophets of doom regarding Malaysia’s economic Armageddon. Of course, the soothsayers are mostly Malaysians opposed to Prime Minister Najib Tun Razak and those aligned to Pakatan Harapan. Basically, it is mere political rhetoric and not financial analyses based on economic fundamentals.
I remember once when the Malaysian and Singapore stock markets took a dip because of the rumour that then Prime Minister Tun Dr Mahathir Mohamad’s daughter had eloped with an Indian man. What economic fundamentals caused the stock markets to dip? None at all, other than unfounded rumours that were later proven false and the stock marker went up again. And even if the story was true why should the stock market be affected?
Time and again this has shown that Malaysians react to rumours and even if the rumour has no bearing on the economy people still panic. For that matter, if fundamentals were taken into consideration, shares prices would be within single-digit PE ratios (or at the most less than 20) and not in the triple digit or close to triple digit ratio. This shows Malaysians have no notion of how to invest and what to invest in. At least ASB has a PE ratio of less than 15 — meaning you double your money in less than 15 years and not over 50-90 years.
If one were to read the media reports, especially those online, it would seem that Malaysia is on the brink of an economic collapse, like what happened in the 1920s when the world sort of ‘came to an end’ when the stock market collapsed, banks went bankrupt, and people lost their jobs and homes and had to sleep on the streets.
That scenario cannot reconcile with the fact that investors are still coming to Malaysia to invest and every year we are seeing an increase in foreign investments. For that matter, the reports from the likes of World Economic Forum, World Bank, rating agencies like S&P, Moody’s and Fitch, etc., have all rated Malaysia favourably.
Another example would be Malaysia’s new Sukuk bond offering of US$1.5 billion, which received an overwhelming response yesterday despite weaker global conditions. The US$1.5 billion Sukuks was over-subscribed by 4.2 times when it received a subscription of US$6.3 billion. This shows that Malaysia’s long-term fundamentals remain appealing to investors. Compare this to Indonesia’s Sukuk offering last month where their US$2.5 billion Sukuk was 3.4 times over-subscribed.
