HAPPY
CHINESE NEW YEAR!!! Well, here we are at the start of the year of the “Water
Dragon”. And true to its name, it seems to be all gloomy and wet in Kluang.
However, I don’t see that spoiling the festivities. Spirits are still soaring
high and celebrations are still taking place all over the neighbourhood. It
certainly is good to be back home after quite a while.
The
Year of the Water Dragon….Let’s start of by knowing what the dragon actually
means. The dragon, in the Chinese astrology chart symbolizes power. It was also
the symbol of the emperor. The dragon is known for its unpredictable and
temperamental nature. But it is also known to bring luck and fame to many, as
it is surrounded by “mystical forces”.
So
what does the year 2012 entail for us in terms of the economy? Well, it
certainly is going to resonate with the essence of the dragon by being very
unpredictable in the macro sense. But on the micro sense, it is time to make
money on the short term market gains. Granted that we are not going to
experience a market boom like that of 2010, but there are going to be little
spikes here and there that will benefit the investor. The market’s
unpredictable nature will be due to the new skeletons emerging from the first
world closets.
With
the Eurozone having already met 5 times since the start of the year with sound
financial decisions yet to be made, the Eurozone slump is going to dampen the
global market as a whole. This, like I have been saying since last year, is
going to enable Asia to recapture glory. And some of the countries in the Asian
region have indeed taken excellent steps (some way ahead of the others) in
addressing the potential crisis that looms in 2012.
Indonesia
was one of the first to act on it. Having reduced their interest rate around
the 3rd quarter last year, Indonesia had generated funds to provide
liquidity in the market to urge more investment spending within the country. With
more money for investments within the country and the strengthening of their
local demand and supply, Indonesia has gone the distance where many might
reach, only after a VERY long time. As cost of production weighs down the many
countries as their market demands aren’t met, it seems to be more feasible to
outsource production to countries where the cost is just but a fraction of
their actual production cost. And here is where the Asian region jumps into the
front lines.
Besides
Indonesia, there are other countries that are looking at growth this year.
Truth be told, anything beyond the national inflation is a very reasonable rate
of growth at this point in time. The countries that might be experiencing such
growths will be those like Indonesia, Malaysia, Sri lanka, India and China.
Well, I’ve already spoken on Indonesia and I bet many would have had a mixed
feeling upon noting Malaysia’s name in the lineup.
Truth
be told, Malaysia actually has excellent room for growth. But that potential
would only be reached when the penned plans are put into action. Malaysia has
rather blatantly announced of a reduction in
interest
rates. Chances are many may have missed it (or did you?) Before the end of the
year, the Malaysian National Bank @ Bank Negara Malaysia (BNM) had introduced
new notes to the public. Many had gotten excited and had made tedious efforts
towards getting their hands on the first print of these new notes and coins.
They had announced that this money shall be coming into circulation by the
middle of this year. So naturally, they are going to be printing more money.
When more money is being printed, there will be more supply of money than
demand which would decrease the interest rate; but this would only be
temporary. This would urge more investment spending in Malaysia. However, where
these funds are going to be channeled would determine the rate of growth in the
nation. The reduction in interest rates would affect the fixed deposit rates in
the banks. As it would cost lesser for banks to acquire loans from BNM, there
will be a lesser demand for public money; which would negatively affect the
fixed deposits. Loans are going to be available but banks are going to be very
stringent as they are still very weary of the global financial crisis.
As
for the political scene being able to boost the national economy, it is going
to end up being an old maid’s tale. As the postponement of the elections have
been feverishly taking place since last year, the corporations funding these
campaigns and corporations expecting funds from the political parties are
growing faint. It is only going to be a matter of time in which they (the
corporations) would decide to practice detachment. So basically, the Malaysian
market is not going to be severely affected by the elections.
As
for a country like Sri Lanka, the rebuilding of the nation has become priority
for the nation as they need to be able to generate their own funds to sustain
in this currently sloppy market. Laden with natural resources and excellent
investment opportunities for the many different sectors, Sri Lanka has become
an interest to many investors globally. Of course, with the emotional stigma
still existing due to the civil war, it has given the perfect opportunity to
certain countries and races, which do not have much of an emotional connection
with the populace of Sri Lanka, to pour in their funds. To be honest, it is these
countries and individuals who are going to reap the best gains available.
As
for India and China, they have the population and the supply. So the market is
pretty self sustainable. But they still have their drawbacks. India, with its
political turmoil might be facing a little bit of a stagnant growth in certain
sectors. And these sectors might drag the general economy of the country.
China, still being moved by the US, is going to have restricted growth too.
That is why; these countries have been actively channeling their money to other
countries to reap gains from them.
That’s
the gist of the global economic scene for now. So, I would personally advise
investors to partake in the continuous growth by staggering their investments
and making a continuous stream of investments throughout 2012. Do take note,
the best time to make money is to ride the markets when they are down, not when
they are high. So let’s ride the dragon people!
By,
Ashveen
Chakravarthy Sekaran
Jan
24th, 2012
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