04 October 2010

Why Malaysian market keeps going up?

Recently, I personally have a chance to met up with some businessman from different industries.

When we chat about business, they said "very competitive la".
When we chat about economy, they said "still very uncertain eh".
When we chat about KL market, they said "why keeps going up ahhhh?".

While newspaper and media are reporting a slew of  news regarding Euro debts problems, US high unemployment, Japanese deflation, and China's scary property bubbles, our market charging ahead unobstructed. In contrast, Ringgit is heading to a fresh 13-year high against USD, KLCI is trying to out-beat its highest ever level, surpassing the pre-crisis level now. Although our economy was not as good as pre-crisis, our KLCI did. Why?

Malaysia to gain from world's liquidity...

Taking a macro-economic view, this is all due to the liquidity that the world governments created to rejuvenate their economies out from the 2008 recession. Actually, we are one of the by-products of too much liquidity that was created. Just take yourself as an example.
Would you invest your money to get a better return compare to fixed deposit now?
What would be your investment then?

The answer is quiet clear-cut, YES, I will invest into share market, mutual funds, or property. Definitely not fixed deposit. Right?

Remember, US and other developed countries with great liquidity are having a near record low interest rate (almost zero). Ultimately, it encourages or forced people to invest and spend, instead of "eating" interest in banks.

Then, they channel their money into those high growth countries/region, the one which came out earliest from recession. 2009 we have Australia, New Zealand, and BRIC (Brazil, Russia, India, China). 2010 we have south-east Asian countries, where Malaysia is one of them together with Indonesia.

It's not purely based on our economy, but, liquidity from other countries.
* Hint: What are the most popular mutual funds in the market now? Then, you will know the answer...

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