4/23/2013
The precarious nature of investing in Malaysia
When Mahathir scuttled the CLOB shares trading in SGX, billions of Singaporean dollars went up in smokes. Hundreds of thousands of Singaporeans simply got burnt with their investment in CLOB shares turning into waste papers. That was how precarious and unpredictable the changes in policies dished out by the Malaysian leaders.
With Mahathir out of the picture, things get a bit better, a bit of normalcy returns. Then with Najib doing a Deng Xiaoping by establishing better relations with Singapore and in a way opening up Malaysia for investment, things get to look more rosy with Singaporeans becoming the biggest investor in Iskandar Economic Zone. Billions are likely to be invested in this project alone and also in other parts of Malaysia. Everything is looking fine, till yesterday.
The Malaysian Generation is a national affair but with cross border implications. Anwar sent an awakening call to foreign investors yesterday by saying that though all agreements will be honoured should his party won the election, things will not be the same. There will be changes to favour Malaysians. Now, what is Anwar saying? What would he do or change to the investment climate in Iskandar and how would it affect the Singaporean investors? The latter are now sitting back and watch and wondering what would happen to their investment if the changes turn out to be unfavourable. Would it be another CLOB of a different kind?
Just when one thinks everything is fine, dark cloud is forming. Investing in Malaysia is precarious and subject to the changes in political fortunes.
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26 comments:
RB, investment overseas all have sovereign risk lar. Even investing locally have political risk in policiy changes and party changes etc. may be one hold gold even that also have risk like fluctuation in prices etc
Those who invested in Malaysian realties in the last decade should be reaping huge returns.
As long as UMNO exists, nothing can be guaranteed as "totally safe".
As a cuntry, Malaysia is a bit "kayu" compared to super efficient Singapore. The best thing Singapore did was to kick these kayus out :-) and sever the racist ties with UMNO. In all that time past, Malaysia has never been able to keep up with the progress of Singapore.
Jealousy of Singapore is a national pastime in Malaysia. Don't get me wrong, I spend a lot of time there (I'm in JB now)-- I love it -- can do anything, unlike Singapore. But their jelousy is so neurotic, they would fuck themselves up just to "tekan" Singapore.
e.g. CLOB: Singapore was so good to aid in liquidity in their market for fucked-up shares. People on both sides of the causeway benefited -- until jealous asshole in UMNO decided to end it to "punish" Singapore. What happened was many of their fucked puki mak corporations also suffered.
A good outcome of the election would be for investors to get nervous and pull out their money. That would cause the JB property market to collapse, meaning more Singaporeans can buy houses and buildings in JB.
The hard core fact is the BN will never rule Malaysia forever, and the opposition will come into power sooner than later. So the policy will change and the tide will against foreigners investing in Malaysia.
Wow - Matilah, first time in talk sense without the filth in a long time.
Agree with you - it is typical of Malaysian jealousy.
CLOB was the best example of a win-win arrangement between MY and SG, but fell victim to Mahathir's jealously and hatred for SG, and Daim's greed. It was a rip-off.
CLOB actually facilitated active trading in Malaysian stocks, and investors on both sides of the Causeway are able to arbitrage and improve liquidity.
However, because he thought the trading volume and commission "rightfully belong" to Malaysia, he tak shiok and decided to cut his nose to spite his face. He would rather SG not earn a dollar if MY only earned 50 sens.
@The:
I'm waiting for the Malaysians to fuck themselves up next Sunday.
When emotions are high, and people go to the ballot, they'll leave their (little bit of) "intelligence" behind and allow their negative emotions to guide their choice at the voting booths.
I don't mind corruption at all. In fact, if there is a state and a government, I would be VERY SURPRISED if there was NO corruption.
Bottom line is: can you make lots of filthy, sexy money?
Corruption is but another form of "arbitrage" -- you have to pay a "premium" to get special favours which are priced in the free market for bribing people in power.
Matilar good post but why are you in job? You mean singapore lorong what ever not cheap enough and you outsource your needs? Knn give spore economy a boost lar
In jb not job
Najib Razak might be "corrupt" as alleged by his detractors. However if you are a Cantonese towkay, you'd have probably done A-OK under this present "King Of UMNO". Whenever economic liberalization goes into effect, you can do very well if you have "connections" and move swiftly.
Ini semua baik. Hanya membayar wang sahaja kepada puki mak kepala kontol UMNO!!
Satu Malaysia!
@1208:
Knn. JB is my 3rd home lah. Some more JB gals damn juicy, which suits their friendly "come-fuck-me" nature. Go to health center to get healthy lah.
Singapore economy good lah. I like to spread the love, make "good relations" with our neighbours.
Go buy 1208 - first prize and kopi for redbean.
Buy me kopi no need first prize lah. Where on earth can anyone buy kopi for friends and no need to pay except here. Let the advertisers do the honour while you guys just do a few clickings will do.
Cheers.
It all comes in a package. Economic progress and foreigners friendly policy vs economic regress and local friendly policy. It is good to change hands once a while. This is what it should have been. Not one party rules forever. Thats lousy.
My bet is opposition will win and foreigners will see their investment suddenly disappeared. THis is the game they are playing with foreigners all along. The muslims cherished their brotherhood more than money.
Matilar, don't bluff lar, jb chicks are at least half the price here in singapore in health centre. S$50 shot F15 is m$50 shoot F18 in Jb lar
If what Anwar said amounts to a precarious situation for investors should he be elected, it is just a reply to what Najib has been telling those in Johor that if BN loses, the Iskander Project is also at risk.
Nothing is totally safe until it actually happens. This is also the same tactic used by the PAP to scare the shit out of voters in Hougang and Aljunied GRC and Punggol East.
There is nothing absolutely safe in this world. Charities, Private Schools and Insurance companies just has 27.5% of their deposits in Cyprus banks confiscated in broad daylight, apart from the loss by citizens.
For the records, if my memory serves me, Malaysia has always maintained that their exchange has never recognise CLOB from day one, but SGX guaranteed trading on CLOB...can anyone enlighten please
@jeffgoh
Yes. I remembered that too.
When CLOB shares were suspended from public trading.
A lot of people lost money because the banks that provided share financing said that the CLOB shares were no longer valid collateral.
And required additional collateral.
Many could not raise the additional collateral, and as a result had to sell their homes at a bad price since the property market was also affected by the CLOB debacle.
There were a few lone voices advising CLOB investors that their shares are not worthless.
It's just that there was no public market for the CLOB shares for the time being.
Anyhow.
Long story short.
An "approved" person was eventually appointed to buy back CLOB shares with a small haircut for the share holders.
Like our famous $2 companies in Singapore.
The "approved" person appeared out of nowhere.
What would it be like if Malaysia just said all shares bought under SGX's CLOB were invalid and they would not accept them back? Would then be SGX's responsibility to honour the shares bought by the investors through SGX?
Unfortunately some pea brain thought it was easy money to make from the haircut but at the end all the share prices collapsed, including the companies and the loss was tremendous and no one became responsible. Just a bad purchase.
Hi RB.
You are right to question SGX's responsibility in that fiasco.
But legally.
The CLOB shares are not worthless.
If you are the registered shareholder, you are listed in the public company's books as a shareholder.
It's just that you don't have a place to publicly trade your CLOB shares.
And in the meantime.
You are still entitled to the dividends.
Pure speculation on my part.
But maybe Mahatir had to shut down CLOB trading because he wanted to implement capital controls.
If you remember, back then, everything was done with paper.
So if a Malaysian wanted to bypass Mahatir's capital controls.
He could buy e,g. Maybank shares in Malaysia Stock Exchange.
Sell the same number of shares in CLOB in Singapore.
Sign the share transfer forms in Malaysia.
Get a courier to deliver his Maybank share certificate (plus share transfer form) to his Singapore stockbroker.
The Singapore stockbroker then pays for the Maybank shares into the Malaysian's Singapore bank account.
Anyhow.
This is just a trip down memory lane for me.
Cheers & have a cup of kopi on me!
Hi Anon 11:28,
The shares technicaly have values if the company still exists and may receive dividends. But this loophole can be sealed if Mahathir simply declare all shares bought from SGX Clob are invalid and would not be recognised by the companies in Malaysia.
Yes, Mahathir did not recognized CLOB, but that was because he was being a pain in the arse as there is nothing for him to recognize. All OTC markets are operated that way.
Mahathiu also did not recognize the 5 cents per gallon that we paid for our water. He also did not recognize that Singapore is no longer in Malaysia and not to be kick around like an adek. He also does did not recognize Singapore's sovereignty.
Heck, he did not, does not, and will not recognize corruption even if he and his family members were involved in it up to their neck. MISC, Consortium, NS Highway, Pantai Hospital, Perwaja Steel, Proton, MAS, Bakun, etc.
Unfortunately at that time he was the law and what he said was the law.
Funny to find Sinkies more interested in corruptions that happened and happening in other sovereign nations.
NO CORRUPTION IN SIN? Lolx!
Who are the Law-maker in Sin? The People? ROFL.
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