At RM322.5billion, Malaysia Budget 2021 is the largest budget in the country’s history. But will it pass?
This post was originally posted here. The contributor to this article,@Denise is one of our many community members on InvestingNote.
While the World Bank has come forward to welcome the overall stance of Malaysia budget 2021, it is still unclear if the bill will pass.
Malaysian finance minister Tengku Zafrul Tengku Abdul Aziz tabled the 2021 national budget in parliament last Friday on Nov6; also the first budget under Prime Minister Muhyiddin Yassin’s administration.
But already, it appears the current administration is in for a bumpy road ahead. There are a lot of doubts if the budget is even able to pass because of politics.
In his budget speech, the Finance Minister has projected the economy to expand between 6% and 7% next year.
In response to that, Mr Anwar argued that the projections of development figures in the budget proposals were unrealistic and “not responsible”. He also commented that the budget was “misleading” and benefits cronies instead of the people.
Besides Anwar, The Pejuang party leader, Mahathir, also joined the disapproval of the budget in a Facebook post saying he wants it modified so that it is “more realistic”. His reasons were that the pandemic requires more money to be spent by the government, but it has also affected the Government’s revenue.
Mahathir further questioned where the money will come from, considering the deficit of about RM85 billion is much bigger than the development budget of RM69 billion.
Accordingly, there is a high possibility the passage of the budget would be blocked by Members of Parliament with a no-confidence vote against Mr Muhyiddin.
However should the bill is passed, these could mean the following for Malaysians and the economy:
i) Employee Provident Fund (EPF) account-holders will be entitled to withdraw up to RM500 per month, for one year from their EPF Account 1. Before this, account holders are only allowed to withdraw once they reach 50 years old.
ii) Certain sectors are bound to benefit from the budget 2021, and others not:
On a more positive side, the setback seemed to be avoided after the king pressed MPs from both sides of the political divide to support the Bill. It was the first time in Malaysia’s history that opinions have been sought from opposition lawmakers on the Budget’s formulation.
It is worth pointing out that the Government usually makes additional changes before the final bill is passed. After all, this is just the first reading of the budget.
Let’s hope Malaysia is able to tide through this crisis! 🇲🇾🙂 $KLCI(^KLSE.IN)
Once again, this article is a guest post and was originally posted on Denise‘s profile on InvestingNote.
Become a part of our community and also see what other investors are saying about the current market right now: (click on the view now button)
InvestingNote is the first and largest social network for investors in Singapore. Find out more about us here.
Download our free app here:
Also, join our telegram channel here: t.me/investingnoteofficial
We’re here to keep you in touch with the latest investing & stock-related news, happenings, and updates!
Do You Know What The Effects Of Quantitative Easing Has On Commercial Banks?
This post was originally posted here. The writer, Kyith Ng is a veteran community member and blogger on InvestingNote, with a username known as @kyith and has 1095 followers.
Quantitative easing means to liquify the financial markets and the main economy, a lot of money was pumped into the financial system.
The straightforward deduction is that if you create money from out of nowhere, either your currency is going to shit or that inflation will run rampant.
We are not seeing both in the United States right now but a lot of the people are speculating it will be a matter of time.
I wonder whether that will really happen. I say this because I can’t say I am that competent to make that deduction. Usually, we have to know to a good extent what I am talking about to make that conclusion.
I do think that from what I hear, we have created an interconnected system that will create more than 2 standard deviations, 3 standard deviation volatility.
One of my favorite people on the financial blogosphere Cullen Roche of Pragmatic Capitalism explained that when the Federal Reserve infuses money, it is an exchange of very short-term liquid money with long-duration money/bonds.
In a way I understand it but if I cannot illustrate it out well, then maybe I do not understand it as well.
In any case, BCA has a good explanation about what happens when the Central Bank buys back commercial securities from the banks.
It sought to help to explain the relationship of Central banks with the monetary system.
I used to not get the relationship of Central Banks that well but the way to think about them is like the Bank of the financial institutions. They somewhat act as the lender of last resort.
If banks produce the lifeblood of the financial system, then they have to be functioning.
But what if the banks are not functioning?
An increase in uncertainty in the global markets has exacerbated the dollar bull market and market outperformance.
This post was originally posted here. The writer, Kyith Ng is a veteran community member and blogger on InvestingNote, with a username known as @kyith and has 1091 followers.
With the FED having a mandate to hold the short-term interest rate for a prolonged period of time and their willingness to let inflation run above 2%, it makes us wonders if interest rates would ever tick up amongst the uncertainty.
BCA Research points out that in the past 30 years, there has been a strong link between major moves in real 10-year yields and the amount of excess savings in the economy.
Currently, the gross private savings have been very well boosted by the fiscal stimulus but also that people tend to become more prudent when things are uncertain.
As people’s salary regain traction and consumer sentiment recovers, it is likely the savings rate will decline and perhaps yield might start moderating upwards.
I am thinking less about the REITs but more about whether the insurance companies and the finance company can finally have some yield spread to play with so as to earn some interest income. This would change the picture for the financials and insurance company as to whether there is a catalyst for the share price to do well.
BCA has this idea for people to remain overweight global equities in your core positions but it would be good to pair with a portfolio of stocks to short. These are the stocks that are particularly vulnerable if the market corrects.