Fitch downgraded Malaysia credit rating outlook to negative

Even though I am not too agreed but it serves as a good warning to BNM and our policy makers. GDP deficit widening and household debt sky rocketed.

Unproductive loans prevailed together with unnecessary spending. E.g. Car prices and loans that need to protect national car. Lower the car price and increase the petrol price to tax by usage basis.

We will have continue problems because politics put in front of economy. But I think Malaysia still lucky. Because Fitch does not factor in resources that Malaysia owe like Oil and Gas. Explored and unexplored.

But it did serve as a good warning that the day may come if we are still like the current mode of managing our economy.

Ringgit weaken to 3.23 vs USD

Weeks ago we forecast potential surprise interest cut. The reason behind is many central banks embarking devaluation of its currency to maintain its competitiveness of their export.

Lately due to some China data and lower GDP in the first half. Economists are suggesting the recent RM weakness is due to this plus certain US funds pull out from KLSE. (What a joke when net buying by foreign funds is positive for more than months)

Personally, we feel that it may not be intervention or no action from BNM to allow RM drop via basket of exchange instead of interest rate. BNM lowered RM by other method. I would not say is a bad move but will give us a strong signal that BNM is always intend to maintain a weak RM to protect our export.

We sold mildly Bonia at RM 3.04

We still holding 90% of Bonia. We sold some to lock in certain profit. We managed to disposed at day high of RM 3.04 and continuous switching to Qcapita, Kawan Food and Multico.

Apple profit sank 22%

Apple profit beat estimate at $7.47 over $7.32. Yes, it did manage to beat estimate but flat revenue and profit sank may signal a prolong peak or start to fall signal. We are not so optimistic of Apple unless a catalyst is on its way. Current PE of 15 times is fair as of now with some cash pile.

China PMI reading lowered to 47.7

With month to month drop from 48.2 to 47.7. The recovery data shown the world economy still weak. With recent internal measure by the Chinese central bank, the data shown valid retreat. We believe is prudent measures on local demand that offset the slight recovery over the world. We maintain cautious optimistic view on China economy.

BSDREIT privitasation uninteresting for both of its’ price and reason

Boustead announced corporate exercise to privatise BSDREIT via proposed offer to other share holders at RM 1.90 and special dividend of RM 0.20 per share.

The price offered is uninteresting and defeated its purpose for REIT listing at the first place. If shortage of plantation land will affect yield. BSDREIT should exercise on more acquisition rather than privatisation. If REIT’s rule need to pay out more dividend that hinder their new plan. Then I am not sure why are available methods like private placement and right issues that can raise more cash. Worst, they can co-operate with property developer to transform partial of the land use to maximize the land value via township development.

Of course this is our view as minority share holder but we think this is a classic example of good resources but poor management.

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