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__earth Male
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  #1 Old 18-12-2004 Default Malaysian Economy

Hullo. A nice little news from bloomberg.

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Malaysia's Foreign-Currency Rating Raised by Moody's (Update2)

Dec. 16 (Bloomberg) -- Malaysia's foreign-currency rating was raised to A3, the highest level since 1998, by Moody's Investors Service, which commended efforts by Prime Minister Abdullah Ahmad Badawi's government to reduce its deficit.
investor confidence is up and running again =)

let us welcome back the bull!
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  #2 Old 18-12-2004 Default

Hopefully that this would in turn bring in a stream of good news.

Our manufacturing revenue goes up 23% in October 2004.

http://biz.thestar.com.my/news/story...3&sec=business

Better rating from Moody would give Malaysian companies much better borrowing rate.

_earth or others who know better, perhaps could brief us more on this issue about the importance and benefits of the improvement of such rating.
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__earth Male
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  #3 Old 18-12-2004 Default

Better rating means the chance of defaulting on the bonds is smaller. higher rating makes it easier for malaysian govt and firms to raise bonds - more foreign direct investment and project and stuff. also, msians dont have to offer a high interest rate in order to borrow money from outside.

all in all, basically, it encourages more money coming into msia.

If you get bad rate, people will be reluctant to invest in your country and the only want to attract people is to offer higher interest rate, which is always painful.
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  #4 Old 17-06-2005 Default

Comfortable house, fun holidays, nice car……….yes, but at what cost?

Are all of these worth the systematic dismantling of democratic institutions that is the foundation of every developed country in this world?

Many Malaysians equate monuments like the Twin Towers and the Sepang F1 track with developed nation status. But survey the truly develop nations in the world and you will find that each and everyone of them is built on a solid foundation of vibrant, and functioning institutions of democracy - vibrant legislative body, an independent court system, a free press and checked executive.

Measured against these benchmarks, it does not take much imagination to rank Malaysia two shades above a banana republic.

The running of the country is always a one man's show. It was like that for the past 22 years, and it looks like Pah Lak has inherited it all.

The whole government machinery is like an impotent old man when the mind says "yes" the body part can't move at all. Poor old man!

No doubt, his has utilized some of these powers to some economic good for the country, a portion of which you enjoy now, but again, at what cost to your fellow Malaysians, to your children and your children's children?

We have achieved some progress but at what price.

As Petronas accounts are state secrets we don't really know how much of our children's future have been squandered on dubious deals.

Malaysia now sits at No 39 of Transparency International's Corruption Perceptions Index compared to Singapore's No 5 spot. And the difference in the quality of living between the two countries is quite apparent.

The old man studied in English in his time and forgot about the story of "The king and his new clothes" until a small boy said he was naked.
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  #5 Old 17-06-2005 Default

Quote:
Originally Posted by coolstudy
Malaysia now sits at No 39 of Transparency International's Corruption Perceptions Index compared to Singapore's No 5 spot. And the difference in the quality of living between the two countries is quite apparent.
It cant be deny that that Malaysia needs to improve but I dont think its suitable to compare two countries with different economy background and in different size.

By the way, is there any site that we can refer to for countries bond or companies in Malaysia?
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  #6 Old 19-06-2005 Default

For countries, a few.

S&P is one. Moody is another.

For Malaysia, donno. Bank Negara maybe? But I dont see anything at BNM website.
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  #7 Old 19-06-2005 Default

coolstudy u sure sound like an uncle, the way you say children and all

Investor confidence is getting better, but there wouldn't be another bull like that in 1996... with most players going for the big fish called China now.

I wonder, what does revising the peg have to do with the bond rating? Anyone care to elaborate..
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__earth Male
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  #8 Old 20-06-2005 Default

Eh, I need to reread macro. I've forgotten almost half of those macro models.

I'm not sure if pegging/flexible exchange rate directly affects rating.

Bond rating usually, as far as I know, is related to interest rate (with risk premium added). Interest rate, among other things, measures the riskiness of investment. Most of all, these rating firms usually have their own econometrics models. Hard to say how they do their rating unless somebody came across their explanation of their model somewhere on the net.

However, in large open economies at least (which Msia is not), since interest rate affects capital outflow/inflow, it does in the end affect the real exchange rate. All these relationships to correspond to if and only if. Therefore, if it's pegging, capital outflow/inflow stays steady and interest doesn't change.

I'm not sure how the case for small open economy make into. Maybe el_empty knows more? el? pst, help here.
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  #9 Old 20-06-2005 Default

Quote:
Originally Posted by __earth
For countries, a few.

S&P is one. Moody is another.

For Malaysia, donno. Bank Negara maybe? But I dont see anything at BNM website.
Yes I believe there's RAM or Ratings Agency of Malaysia. However, RAM has been plagued with credibility issues when it gave a pretty high rating for a company called CIBT, and this rating allowed the company to be issued a license to operate in Labuan despite a highly publicised scandal in Australia.

hey look, jeffooi wrote something about it.

As for Malaysia's economy, my speculation is that it's heading for another disaster/bubble. Malaysia has been thriving on an economy that relies on foreign investment since the 80s. In economics, the Solow Growth Model makes a compelling argument that young economies (like Malaysia) tend to grow very rapidly because of factors like untapped market and influx of foreign cash.

But in basic economic growth, we cannot rely on this factor accumulation for too long. Right now all we're doing is sit and wait for money to come in - but the reason why foreign investors are willing to pour money in is because they *believe* Malaysia will become more and more productive in future. So there needs to be techonological (or productivity) growth, which doesn't seem to be happening. For the last 20 years, we have been relying on the petroleum and manufacturing industries to drive our economy, but we've not really been making and researching our own products.

phew... what a long and nerdy post.
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  #10 Old 20-06-2005 Default

Quote:
Originally Posted by __earth
Eh, I need to reread macro. I've forgotten almost half of those macro models.

...

I'm not sure how the case for small open economy make into. Maybe el_empty knows more? el? pst, help here.
haha i need to reread as well. i'm an old man now.... *cough*

now _earth is right in that rating agencies will have their own (very) complex formulae in calculating the scores. i'm not entirely sure if pegging (or the removal of the peg) would affect bond rating scores, but i bet you it would.

see, what happens in a peg is basically a country's central bank (Bank Negara) defending the currency's (RM) value. in an international currency exchange market, traders continue to buy and sell the ringgit, which in an unpegged world, would mean that the ringgit's value will change. the peg however essentially means that bank negara will proactively buy and sell ringgit to keep the value at it's designated value.

now revising the peg will have a few implications:

a) the nation's reserves will be spared from all this buying and selling. this is good because it bank negara now will have funds to insure the country against future losses. ie. it's great to invest in malaysia

b) the cost (exchange rates) of trading in malaysia will change, but to what extent nobody knows. but i this should not adversely affect our bond ratings since expected returns are high.

again i don't know if a new currency policy affects our ratings. but if it will, in some way, influence the economic climate in malaysia, i'm sure bond ratings will move to reflect this climate.
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