Anything recently associated with 1MDB purchased will be slashed down by investor.  TNB is an example and recently Affin as well.  We don’t like Affin decision to buy TRX land too.  However at this price is a bargain to us.  We bought at RM 2.20 again.

We have also bought ARREIT at RM 0.815.  We like the current yield level and renew our interest in some MREITs.

Currencies weaken across emerging markets due to currencies devaluation war is on the table.   However, RM dropping more than most currencies.  Perhaps lake of confidence due to 1MDB or political issues. 

However we think may be is due to the reason oil price dropped to USD 40 per barrel.  As Malaysia planned budget on USD 110 per barrel.  In the review of budget and projects last few months ago.  Only certain uninterested projects were stopped.

Are we going to borrow to finance our budget?  With the new GST of 6% started April 2015.  We believe RM weakness added with deliberate intension to cushion the budget planned.  As we cannot stop projects end up may affect GDP growth lead by infrastructure development.

Oil price drop from USD 110 to USD 40.  Perhaps RM may need to adjust 40% – 50% in order to balance the planned budget?  Or may be around RM 4.2 to RM 4.3 against USD?  Perhaps only until new budget announced in October 2015. 

We believe KLCI will find clue from RM movement next week.  However, we think the current prices are attractive and will continue to buy KLCI.  We stop all overseas investment due to weak RM.

Due to the poor performance of Boustead Plantation after its listing for quarters.   We have decided to sold off all last week at RM 1.24.  On the other hand we bought Paramount at RM 1.60, Maybank average at RM 8.45, Affin at RM 2.31 and MBSB at RM 1.47.

If without 1997 repeat of history, we think the market is oversold.  There is value in the market now.  But I really don’t know how much it will go lower or even a major political shock is on its way.

But we bargain hunted again for great values in the market.  We bought Paramount at RM 1.63 in average, MBSB RM 1.50, Cypark RM 1.55, OCB RM 0.78 and EIG at RM 0.99

We will buy slowly in this marathon of great values.  Honestly, we acknowledged that we have problems both internal and external in the markets.  But averaging investment in great values is always our strategy.  But really slow buying.

We believe FED may have bullet to up rates by 25 basis point.  But that’s going to be for long.  As if USD continue to up.  The country export will cause big problem.  Probably oil price and gold may return its upward trend.  Selling on news and we believe USD is definitely overvalue now.  We will sell USD and buy gold.

We bought MBSB at RM 1.57 and Affin at RM 2.38.  We will continue to buy mildly as we forsee this correction due to both external and internal problems will prolong.

Perhaps all seen Obama tricks by forcing USD devaluation first follow by strong economy growth.   Mote central banks will somehow revenge and currencies devaluation war worsen.

We believe parking money in asset related tools will be best protection.  We don’t know how it goes further but we continue buy cheap at any given time and sell high.

We bought KSL at RM 1.46 and ARREIT at RM 0.855.  We do not plan to invest anything externally due to weak RM exchange rate.  We may buy more AUD if RM strengthen back below RM 2.90 vs AUD 1 level.  We will buy more if there is bargain in the market.

We believe the fair value of RM even in wake of FED interest rate hike still at around RM 3.30 – RM 3.50 against USD.  However, we strongly believe that it is 1MDB and the way of handling it from governemnt to political parties are in disastrous governance stage.  1MDB and the current situation must change in order for RM to rebound if without international change of financial situation.