Happy Challenging Year 2024

Seemed people in the market are banking on a better market for 2024 in the light of Federal Reserve expected to lower interest rate and the usual gang bang wham bam of bond going up and Wall Street too. 

They hope the spillover sentiment will see Bursa "bobos" (pierce through) 1,500. All the best to them because a comment we read somewhere described 2024 to be as challenging as 2023 due to geo-global tensions. 

The Russia-Ukraine war reversed the post-Covid 19 recovery and left the EU in economic devastation and food inflation globally, Now came the Gaza genocide and the latest is the potentially explosive Red Sea conflict. 

Read and believe the Western media claim of Israel winning it hands down. It is far from over. One social media video claimed the cowardice Jews of Israel are leaving the country. Some 40% Israeli plan to leave for permanent holiday. 

Political and more so, geo-global political issues will detour any confidence build-up in any market and economic initiatives. 

As a finance guy more keen on the future and what's next moving forward than historical centric accountants, last week's Edge Weekly entitled "9 factors to watch for 2024" is a good read.

But its not available online to republish. So we take the gist of the article. The 9 factors below:

1. Geopolitical conflict

Naturally ... its about Russia-Ukraine war and heightened Middle East conflict. The impact will be on energy, commodity, inflation, and geoglobal economy. Inflation up and Fed will postphone Quantitative Easing plan. Economy will remain still soft and bye bye market.

2. US-China conflict

More the trade tension than pivot on China. 

Latest is export control by US and its allies of advanced computing and semiconductors products to China. Biden restricted investment by American companies in Chinese technology companies. China retaliated with export restriction of gallium and germanium.          

Biden and Xi Jinping met at the November 15 Apex Summit in Frisco and agreed on several areas of cooperation. Will the resolve? A hawkish US US under Democrats will not. Wait for Trump return. 

It can be good for Malaysia. If China still could not recovered its economy, its bad for Malaysia.  

  

3. Fiscal and subsidy rationalisation

During tabling of Budget 2024 in October, few new taxed announced but still no GST. As usual, the ever complaining Malaysians will not appreciate the low revenue and the fact that only 19% of Malaysians pay tax. 

Neither will they appreciate that unproductive RM80 billion spent for subsidy out of about RM400 billion annual government budget. Diesel subsidy rationalisation will begin in stages and sense hording started since they were recent complain of no diesel at gas stations. 

See how petrol subsidy will be rolled out. PADU database beginning its operation to compile data on those qualified for subsidy. It will be tough and whose got money for stock market investment.

 But we can't go on living for almost a quarter century of continuous budget deficit. This is coming from moi who use to argue that government should share the wealth of the nation. It was a reaction to the exuberant lifestyle of the economic plunderers.

Some will claim removing subsidy doesn't happen under Najib. Sorry to say he wanted to do it but was not in the political position to do it.

 Not surprise he agrees with Rafizi. Off course he has yet to learn the art of rolling out policies effectively.   

4. Oil prices

Brent oil price did not reach the expected USD100 per barrel. In fact, it softened. Crude oil price is critical for oil exporting country and Petronas dependent Malaysian government. Goes back to the RM50 billion petrol, diesel and gas subsidy. 

Can we afford it with revenue not doing so well? Back to factor 3.

 Need to monitor development on Opec+ plan to cut supply and whether a new Saudi really do not kow tow to the American. They are muted on the Gaza genocide.    

5. FDI flow

Anwar and Zafrul announced FDI commitments in the tune of RM230 billion and heard political commentator bandied the figure of RM300 billion on social media. Do they know something we do not know? 

So far approved investment - foreign and domestic - is only RM125 billion for 2023. Lower to RM163 billion and RM208 billion for 2022 and 2021, respectively. Forget the years before messed up by quarrelsome Mahathir and egoistic Muhyiddin.

The key number is approved investment and remember all our neighbours are going for FDI and they have better terms and cheaper labour to offer. We are sceptical of the figure and Zafrul. Heard he paid FDI brokers. Highly reliable source claimed he had his hands in the same cookie jar as Muhyiddin and Rosli Dahalan did.    

Back to FDI, has Zafrul prepared the country for any possible supply disruption in the event of heightened factor 1 and 2? 

6. Elections around the world

Until election is over, nothing gets done. Taiwan in January and it links with conflict with China. US Presidential election will be a rematch in which Trump is expected to return and to say he has his own mind is an understatement.

 Even Bangla Desh and Indonesia having their election. 

7. Global interest rates

Focus on Fed move. A cut is positive for Malaysia and lessen pressure on Ringgit i.e. food imports. 

8. Climate change

Some claim it is a Freemason conspiracy, but one cannot ignore the occurence of high temperature in Spain, floods in Northeastern Australia, and so on and so forth. Its affecting commodity prices like wheat, regional rice, cocoa in West Africa, etc. 

It so significant a factor that food security is the buzzword today. Malaysia better buck up. PMX should sack the DG for rice at MOAFS and cancel the rice concession to BERNAS. It has been the Kerala plunderer's oppression vehicle on poor padi farmers of his home state and yet the adore him as hell. 

9. China factor

Irrespective of what the busuk hati (ill intent) West has towards China, their economic growth has been overwhelming but that is the past. The post Covid 19 recovery fell below expectation due to weak domestic consumption. Then there is the massive default due to the tailspin in the property sector. 

China is now facing deflation. That is bad news and similar experience Japan faced. GDP for 2023 could be 5% but slower expected for 2024. Weaker growth is bad for world economy. More pronounced for Southeast Asian countries like China-export driven Malaysia.        

     

Lets end the message with this FB posting of one Salahuddin bin Hisham, below:

A CHALLENGING 2024 

We are a blessed country. Good climate, relatively free from natural calamities, fertile soil, and resources. There is enough for all the rakyat to live comfortably and be happy. But never enough for the greed of the few and very old. 

Time for reset. No pulling of brakes. No second guessing. No doubt creating using worry and fear the pain of change from the retired generation and advantaged lot. 

Reset for the sake of the future generations. Our grandchildrens. 

Change and ignore self serving politicians and owner serving media. The new generation must reset and cast aside past prejudice. Remove blocks including mental. 

Or we are another Sri Lanka. A challenging year lies ahead for economic recovery amidst rising geo-global instability, possibly WW3 emerging, and being forced to take side.

Happy 2024 to all readers.

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