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Rightways: Business and Economy
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WHO Coronavirus disease (COVID-19) -Get the latest information from the World Health Organization about coronavirus.
Donald Trump
again struggled to reassure a fearful nation on Thursday as it emerged the US now has the highest number of confirmed coronavirus cases in the world.
News that America had surpassed virus hotspots China and Italy with 82,404 cases of infection, according to a tracker run by Johns Hopkins University, broke as the president was holding a press conference at the White House.
His instinctive response was to question other countries’ statistics. “It’s a tribute to the amount of testing that we’re doing,” Trump told reporters. “We’re doing tremendous testing, and I’m sure you’re not able to tell what China is testing or not testing. I think that’s a little hard.”
Trump later spoke to the Chinese president, Xi Jinping, by telephone and had what he described on Twitter as a “very good conversation”. The two leaders discussed the coronavirus in “great detail”, adding that: “China has been through much & has developed a strong understanding of the Virus. We are working closely together. Much respect.
So many people can't die in vain, so many companies can't go bankrupt for nothing. The world needs to learn from each failure.
Mankind needs to see where we stand, what the risks are, and we must act.
Pompeo and other US elites must be responsible for damaging superpower cooperation if the pandemic worsens, while China
cannot join hands with the US due to the war of words. Politicians like Pompeo focus too much on their personal political interests. They will eventually be remembered as negative role models in the history of mankind's battle against COVID-19.
On March 16, the novel coronavirus vaccine developed by Chen and her team entered clinical trials. On March 20, 108 volunteers were injected with the COVID-19 vaccine developed by China.
Defeating the coronavirus is the common expectation of all mankind. All countries are called on to join hands in the fight.
It's hoped the US government could follow the trend when formulating its policies.
There is no substitute for concerted multilateral action. For this, we happen to have an instrument that seems made-to-order for
this extreme emergency. The G20 should once again come to the fore and do the needful.
Tourists wearing protective masks walks by
the Duomo in central Milan on February 27,2020 amid fears over the
spread of the novel Coronavirus. - The number of COVID-19 infections in
Italy, the hardest hit country in Europe, hits the 400 mark late on
February 26, with 12 deaths. (Photo by Miguel MEDINA/ AFP)
But keep cool, negative volatility will likely be followed by positive volatility
The coronavirus (Covid-19) outbreak has officially reached Western shores.
Since last week, the virus has spread to Europe, Brazil and the Middle East.
New cases have emerged across Europe.
There have been more than 81,000 people infected with nearly 3,000 deaths so far.
Just the previous Wednesday on Feb 19, stocks in the US were complacently at record highs, never mind that Asian markets were roiling and taking huge hits, thanks to the coronavirus that first took roots in Wuhan, China.
Asia has been battling this disease since January. Markets have been volatile but have since recovered as the number of infections have reduced and governments have been diligent at handling the disease.
It is like the domino effect, with the same reactions, panic and emotions that happened throughout Asia now migrating to the West.
It is almost deja-vu, seeing the fear and market reaction, no doubt the impact to the Dow and S&P 500 has a significantly larger impact.
The Covid-19’s largest impact is the fear it has transmitted with rapid speed.
In the US, stocks fell for a sixth straight day on Thursday, with the S&P 500 price index falling 4.4% and bringing this pullback officially into correction territory. On a six-day basis, the Dow Jones was down 13.4% at 25,766.64.
This plummet followed California governor Gavin Newsom’s revealing on Thursday that the state was monitoring 8,400 people for potential Covid-19 infections.
Adding to the bleak outlook, Goldman Sachs slashed its profit outlook and warned the outbreak could cost Donald Trump his reelection in November.
The MSCI all-country global index has dropped more than 7% over this six-day period. Considering stocks were at record highs the previous Wednesday, this is very harsh and painful.
Why, Tesla was all the hype earlier in February. It was US$901 on Feb 21, and new higher target prices were being touted by analysts, nevermind that the stock still didn’t have a price to earnings ratio.
In the last five days, Tesla’s share price had tumbled more than US$200 or 32.7% as of Thursday to close at US$679.
Don’t panic
For the average investor, panic has likely set in.
Whose confidence level would not be shaken with a 12% decline in the S&P 500 in six trading days?
Now talk of a 20% decline is starting to emerge.
Meanwhile the 10-year US treasury yield dropped below 1.3%, remaining in record-low territory.
The downward spiral in oil also continued with WTI crude toppling 2.71% to trade at US$47.41 per barrel on Thursday.
Brent oil hovered at the US$51.42 level.
So just barely two months into 2020, it is Covid-19 which has been responsible for crushing markets and dismantling profits across the globe.
Many have already slashed market forecasts for the year.
In the past two market stories featured on StarBizweek, readers would know that Fisher MarketMinder thinks that fears over the virus’ market impact are overdone. It thinks that this is part of a longer-running pattern prevalent throughout this bull market.
“The stock market will do what it does – rise and fall.
“If you’ve got a plan based on your risk tolerance and investment horizon, don’t let fear make you swerve in the wrong direction and lose traction.
“Panic is never a good investment strategy, ” says Fisher MarketMinder.
It adds that Covid-19 is grabbing attention because it is new and somewhat novel, but that doesn’t mean its economic effects far outweigh more familiar diseases.
The Center for Disease Control and Prevention estimates that there were 34,200 deaths in the United States from influenza during the 2018-2019 flu season.
For infections of Covid-19 outside of China, the mortality appears very low.
Furthermore, the people who are dying tend to be the old and immuno-suppressed or otherwise sick.
“Supply chain disruptions as officials work to contain the outbreak probably dent growth temporarily, but markets are efficient and likely pricing in these expectations as companies issue statements.
“Short-term volatility could linger, but patience should pay off, in our view, ” it adds.
As legendary investor Ben Graham once said, stocks are a voting machine in the short term and a weighing machine in the long term.
“Sentiment wins in the short term, but fundamentals matter most over more meaningful stretches.
“The ‘why’ and ‘how much’ behind sentiment swings strike us far less important.
“The emotional swing itself is what matters.
“Market fundamentals likely didn’t change on a dime seven days ago, ” says Fisher MarketMinder.
Thursday’s drop simply put US stocks back at mid-October levels.
Furthermore, the world hasn’t fundamentally changed.
While there is no way to know when this drop will end or how much further it will fall, no drop is permanent.
“Whether the rebound starts in days or weeks, whether it is fast or slow, if you have held on thus far, we think you ought to reap the good that comes with the bad.
“Corrections hurt your long-term returns only if you don’t participate in the rebounds that follow them.
“Selling may feel good at a time like this. But when you remove emotion from the equation, all it does is transform a market decline into an actual portfolio loss, ” says Fisher MarketMinder.
Another investor who is cheering is one of the smartest investors in the world, Warren Buffett, chairman and CEO of Berkshire Hathaway.
He says the stock market rout we’re witnessing today is “good for us.”
“We’re a net buyer of stocks over time, ” he says on CNBC.
“Most people are savers, they should want the market to go down.
“They should want to buy at a lower price.”
Buffett’s comments came as Dow futures were down by about 800 points or 3% on Monday as stocks around the world plunged as the Covid-19 outbreak escalated.
Regarding the coronavirus specifically, Buffett made clear that he is “not a specialist.” And he warns that “a very significant percentage of our businesses one way are affected.”
However, he reiterates that investors should be more focused on the long term, not the short term.
“If you’re buying a business, and that’s what stocks are... you’re gonna own it for 10 or 20 years, ” he says.
“The real question is has the 10-year or 20-year outlook for American businesses changed in the last 24 hours or 48 hours?” the legendary investor asks.
Chinese diplomat hits back at U.S. claim of "Huawei threat" https://youtu.be/taIYEG-HYx4
https://youtu.be/dhR0r8XsFx0
Chinese FM: U.S. accusations against China are 'lies'
https://youtu.be/bI56Ezv3iZQ
It takes all kinds to dominate in a world obsessed with economic might and political power.
AS a young boy growing up in the 1960s, I watched many Western movies and TV shows about cowboys and Red Indians, and as expected of a naïve and ignorant kid, I cheered for the “good” guys – the cowboys.
And because they were portrayed as such, the Red Indians were the “bad” guys to me. They were the savage lot, while the Caucasian men were the civilised group trying to help them. And routinely, the Red Indians would be defeated.
As I reached my teenage years and read more about the West, I realised that my supposed heroes were the ones who robbed these natives of their land, violated treaties and consigned the Red Indians to living on reservations.
The most famous Red Indian, Geronimo, the head of the Chiricahua Apaches, and his men were arrested and despatched to Florida as prisoners of war. Some of them were even discarded at crocodile-infested swamps.
Fast forward to contemporary Hollywood movies – the modern-day bad guys are always the Russians, Albanians and Arabs.
They are usually portrayed as one of brutal spies, criminals, human traffickers, drug dealers and terrorists, and in more lurid plots, all the above.
In The Equalizer, Denzel Washington, who plays a former intelligence agency man latterly driving a cab, goes after sadistic Russian gangsters and predictably, decides to kill all of them – in equally brutal ways.
In the John Wick movie series, Keanu Reeves also goes ballistic going after some Russians.
For some reason, all these ex-operatives are reclusive, divorced or widowed, still connected to their agencies, and as always, their loved ones get harmed (mostly killed) by the Russians, which invariably leads them to needing to settle the score.
Albanians hit the big time after the 2008 movie, Taken, which starred Liam Neeson, who plays Bryan Mills, another retired CIA operative whose teenage daughter and friend get kidnapped by human traffickers (Albanians) while holidaying in France.
In Taken 2, the 2012 sequel, the film follows the family to Istanbul, only to be kidnapped yet again, along with his former wife, by the father of one of the men he killed while saving his daughter two years previously.
It wasn’t just the Albanians who suffered from bad press as until today, my wife still refuses to go to Istanbul – as a result of the movie.
Fortunately for me, I have been to Albania. It’s a beautiful country with good people, and nothing like what the movies depict.
In the case of Arabs, we are accustomed to seeing them portrayed in poor light. They were womanising oil sheikhs at one time and are now mostly barbaric terrorists. Scenes with them are stereotypically sound tracked to the call of the Azan.
Mexicans, typically, are drug dealers. Likewise, Colombians, Cubans and Venezuelans. Well, in the movies, at least.
The hip hop loving African Americans in the United States, with their bling and bad attitude, are a dangerous lot. And thanks to their racist slurs, smaller Asians like us avoid antagonising them.
The latest bad guys are the Chinese. However, Hollywood isn’t quite ready to cast them as the standard stereotype because they are explicitly aware of mainlanders having plenty of clout.
Experts predict that by 2020, China will be the world’s largest cinema market, with box office revenue expected to leap from US$9.9 billion (RM41bil) in 2018 to US$15.5 billion (RM65bil) by 2023, according to a report by PricewaterhouseCoopers (PwC). In the first quarter of 2018, China surpassed the US in box office revenue for the first time.
It has been reported that China is presently Hollywood’s biggest foreign market, and according to projections by PwC, this year, the Chinese box office will likely rake in US$11.05 billion (RM46bil) compared to ticket sales in the US, which is expected to amount to US$2.11 billion (RM8.8bil).
So, unlike with other nationalities, Hollywood won’t mess around with the Chinese anytime soon.
Failed Hollywood movies, like The Terminator: Dark Fate, which starred Arnold Schwarzenegger, were rescued by the box offices in China.
Hollywood understands the power of money well. In fact, Christopher Nolan’s Dark Knight wasn’t even submitted for Chinese approval because of a dubious Chinese businessman character in the 2008 Batman movie. But in the Western media, whether in the US, Europe or Australia, China is being painted negatively, in a blatantly concerted way.
Everything from Huawei, to face recognition and to Xinjiang, and now Coronavirus, China has been the bogeyman.
The elephant-in-the-room theory is that the US wants a “freed Tibet” because it’s angling to build an air base that can send jets into China within minutes.
Adding to the spin doctoring, rioters and vandals in Hong Kong are relentlessly referred to as pro-democracy protestors to burn in the minds of the audience that they are the good guys.
HK policemen are painted as brutal when, ironically, tougher tactics are applied elsewhere, including by the American police.
The US is disturbed by the South China Sea, although it’s thousands of miles away and isn’t even a claimant. It’s strange when you think it has military bases in the Philippines and the vicinity.
The disdain for China even turned comical at some point. When a group of Vietnamese were found dead in a UK truck last year, newsfeeds initially revealed they were Chinese.
As the media scrambled for answers, one reporter, who was pressed for an answer, told his live audience that they could possibly be Chinese who fled to the UK because of their protests over the Xinjiang issue.
The underlining reason is simple – the Western media no longer wants to report about China in a balanced way, resenting its growth to become an economic power in just 30 years as it sits behind the US as the second largest economy in the world.
The narrative is the same: China should be feared and doubted, while Chinese scholars in the US ought to be treated as spies. And advanced technology better than that in American products be branded spying devices.
Hostility towards China has intensified and with the outbreak of Covid-19, there is no silver lining, what with spins of resenting Chinese president Xi Jinping, concealing figures of casualties, cover up, poor food preparation and filthy eating habits. And there’s also the racist perception that Chinese people are to be avoided and cooked up stories of uprising against Xi Jinping.
Of course, there’s also the twisted religious angle – that the Chinese are being punished, either for their eating habits, or again, the treatment of Muslims in Xinjiang.
The war against China is being waged in various fronts because it is deemed to have threatened the international order dominated by the US and its allies.
It doesn’t matter if the US is led by Donald Trump or a Democrat president, which could be worse, because the end game against China will simply be the same.
The Coronavirus epidemic has damaged the image of the Chinese. Their invincibility and ascent have taken a knock, so Xi Jinping must prove that China can beat this killer virus soon.
It’s a bad time for China nationals still travelling, but then again, even ethnic Chinese elsewhere are affected.
The average American believes everything they watch on CNN or Fox TV. No one should be surprised since only 45% of Americans – or 41.8 million – have been overseas. That’s an improvement, being 9% more than in 2018.
There is a far bigger picture here, one rooted in the concept of master and servant.
Not too long ago, China was a far-away mysterious country where cheap toys, low grade garments and fireworks came from. In the last couple of decades, the most populous country learnt technology well from the west, like how Japan did in the 1980s.
Today, the republic is on the cusp of achieving world domination. And that’s not a point lost on any superior or inferior nation.
Blockchain endorsement: Xi said China will
increase investment in blockchain technology after chairing a study
session last week on developing the industry, state-owned Xinhua
reported.— AP
https://youtu.be/hfNcct7ZfbE
https://youtu.be/KoDD2Yk0bjE
Shenzhen tech index surges 5.3%, the most in eight months
Investors urge companies to develop blockchain businesses
BEIJING: Chinese investors snapped up every blockchain-related stock in sight after President Xi Jinping said Beijing wants to speed up development of the technology.
The gains were widespread yesterday, with Insigma Technology Co and Sinodata Co among more than 60 tech shares surging by the daily limit in Shanghai and Shenzhen.
The excitement coincided with a 26% rally in Bitcoin, and also boosted stocks with more tenuous connections to blockchain, like baby-food producer Beingmate Co and selfie-app developer Meitu Inc.
Xi said China will increase investment in blockchain technology after chairing a study session last week on developing the industry, state-owned Xinhua reported late last Friday.
The market reaction shows how far an endorsement from Xi can go in China, where high-level officials yesterday began their first major policy meeting since early 2018.
“Most of these companies, especially those that are just beginning to state their connection with blockchain today, are trying to take advantage of the hype, ” said Li Shiyu, fund manager at Guangdong Xiaoyu Investment Management Co. “It shows how much excitement can be triggered by something stressed as a priority by the top man himself.”
The Shenzhen Information Technology Index closed 5.3% higher yesterday, its biggest advance in eight months.
Hundsun Technologies Inc, Easysight Supply Chain Management Co, YGSOFT Inc and dozens more companies with officially registered blockchain businesses rose by the 10% limit.
In Hong Kong, traders singled out Meitu due to its plans for an encrypted user-identification system.
The shares surged as much as 30%. Pantronics Holdings Ltd - which earlier this month said it will change its name to “Huobi Technology”, a reference to a digital currency exchange - rallied as much as 67%.
American depositary receipts of Chinese blockchain companies also surged last Friday.
Investors pressured other firms to jump on the blockchain hype, using an online Q&A platform to submit thousands of questions on their plans to use the technology.
“Please proactively make expansion plans in blockchain to jump on state policies - doing so would be the best reward to investors, ” urged one shareholder of development-store operator Hunan Friendship & Apollo Commercial Co. — Bloomberg
Broad measures spelt out under Budget 2020 will likely sustain the economy, if there is no further escalation in trade fights.
A glimmer of hope emerged after the US outlined the first phase of a deal to settle some issues related to trade, but there is a lingering suspicion that China could be just buying time as it will most likely not concede to any loss of sovereignty.
China is developing its own ecosystem that could be “outside the reach” of the US, and it is possible that the time bought with such rearguard actions may allow China to achieve its aims.
Malaysia, a trade dependent economy, can only hope that it all works out well, if it can integrate into both ecosystems, said Inter-Pacific Securities head of research Pong Teng Siew.
More stimulus measures would be undertaken should the global economy worsen and in the worst case scenario, Malaysia would have room to spend more if it increases the budget deficit, currently at 3.2% of the gross domestic product (GDP).
The worry is that a further deterioration in global trade tensions may push the global economy into recession. If that does not happen, these Budget 2020 measures should be able to sustain the economy, according to RHB Research Institute chief Asean economist Peck Boon Soon.
Given the external headwinds that continue to pose more downside risks, it looks like Budget 2020, which attempts to spread out its positive effects, has been designed to brace for rough times.
Some positive impetus could be derived from measures to support tourism, construction and infrastructure, as well as small and medium scale enterprises (SMEs), said AmBank Research head Anthony Dass.
Tourism-related businesses such as food and beverage, accommodation, travel and transport, shopping and entertainment will likely benefit.
Recognising the importance of SMEs in driving growth, a string of measures to facilitate their financing needs, ease of doing business, faster adoption of high technology and green initiatives, should also bode well.
The bottomline is that resources are limited while the government still aims for fiscal consolidation and repayment of all debts.
Spreading out these scarce resources will probably succeed in paring off any broad-based slowdown, but it will be hard to make a dent when the sense of a loss in economic momentum is gradually settling in, said Pong.
More measures are required to stimulate the economy but in view of the gloomy global outlook and domestic issues, it is still overall, a good budget.
However, the allocation between capital and operating expenditure is still imbalanced; there is too little capital expenditure and there appears to be ‘little effort’ to reduce operating expenditure.
This will have a long term effect, especially in an aging society, according to Areca Capital CEO Danny Wong. In view of concerns over the lack of investments and falling revenue, efforts to boost foreign direct investments and tourism are welcome but more robust steps are required.
A correction in property prices may be a remedy for the overhang and inaffordability issues especially among young people.
The budget tries to forestall a price pullback, which would affect developers stuck with high land prices, by allowing foreigners to fill the demand gap.
But demand has evaporated, partly caused by the migration of mid-level talent and delays in household formation, the driver of long term demand and new home construction. Developers, lulled by the padding of demand through low interest rates for borrowers, high financing margins and easy access to debts, find it hard to lower prices.
They had thought the elevated level of demand was sustainable but it was not. Reduced prices may mean less profits but possibly a lifeline by way of cashflows, and may help restore delays in household formation and loss of talent, said Pong.
A worrying trend is that more and more young Malaysians are moving out of the country in search of jobs.Even mid-level expertise and talent is migrating; previously, it was mostly those who were highly mobile internationally.
A major cause is the lack of growth in real purchasing power.
Is the projected GDP growth of 4.8% achievable?
With the government continuing its spending and development initiatives, growth should remain robust, supported by services and construction, higher production from agriculture and mining. But manufacturing is expected to moderate.
Malaysia can achieve its 4.8% growth target, said Hong Leong Bank chief operating operating officer, global markets, Hor Kwok Wai.
However, in view of slower world GDP growth of 2.8%, AmBank Research expects growth of 4.0% with an upside of 4.3% for Malaysia.
Coming up with a further set of stimulus, should things worsen, may be a challenge.
Columnist Yap Leng Kuen is watchful of the tech war. The views expressed are the writer’s own.
Both China and the US still have resources to sustain a
trade war, but further consumption of those resources is unnecessary
since their goals have proved naive and absurd.
The situation is still highly uncertain, but the historical indicators
will gradually be corrected. China and the US will not get lost and the
world will benefit from the implementation of the consensus reached by
the two heads of state, assuming the responsibility to both countries
and the world and moving steadily towards the final end of the trade war
in stages.
AS talk of a recession picks up, a veteran fund manager, Ang Kok Heng of Phillip Capital Management Sdn Bhd, correctly points out that the Malaysian stock market has been in “recession” in five of the six years since 2014.
Hence, he does not envisage how it can get worse for the Malaysian stock market if the global economy does go into a recession next year. Fears of a global recession have picked up pace based on the behaviour of the US yield curve.
The yield curve, which charts the spreads of US debt papers of various tenures, has inverted several times in the past few weeks. Most people would not understand what an inverted yield curve means.
Simply put, it means long-dated debt papers of 10 years giving lower returns compared to shorter-term debt papers such as two-year US Treasuries. It causes what is called an inverted yield curve.
It goes against the normal behaviour of US Treasury yields because long-term debt papers should give a higher return than short-term papers.
The consequence of an inverted yield curve is that it will lead to banks reducing their lending activities because their margins are narrow. Eventually, it results in companies reducing their activities and the country going into a slowdown or recession.
An inverted yield curve has been the precursor to all past recessions (see diagram).
However, there are some who are disputing the fears of an impending global recession based on the behaviour of the bond yield curve. Their reason is that the bond yields are not behaving as what they should due to the governments all around the world printing money to keep interest rates artificially low since 2009.
Interest rates have become so low to the extent that European banks are offering no returns on deposits. This means depositors do not get any money for keeping their money in the banks. Borrowers instead get discounts on their installments.
It’s happening in Europe because government bond yields there have turned negative.
For instance, the yield on 10-year Switzerland bonds is negative 0.74%, while German bonds of a similar tenure yield negative 0.52%. From France to Denmark, government debt papers have negative yields.
Only some countries such as Portugal and Spain still have positive yields on their debt papers.
Analysts believe that this has resulted in investors resorting to buying US debt papers that still offer positive yields. Hence, the price of bonds across all tenures in the US has gone up, causing their yields to come down.
The search for yields has also resulted in the narrowing of the difference between what the two-year and 10-year debt papers offer. And there have been several occasions in the last one month when the yield on the 10-year paper was lower than the two-year debt papers.
Apart from the behaviour of the yield curve, the other indicator that is seen as a precursor to a recession is the declining manufacturing sector all around the world caused by the trade war between the US and China. The Purchasing Managers’ Index (PMI), which is a leading indicator to assess the state of the economy, has been declining for all major economies.
For Malaysia, the PMI has been less than the 50-point benchmark for almost a year now. The same trend is seen in China, while the indicator has started to decline in the US in the last few months, which some see as a result of the trade war.
The trade war has caused supply disruptions, impacting the manufacturing sector.
However, there are other indicators that do not indicate a recession is imminent.
Banks are fairly well-capitalised and have pulled the brakes on lending. We do not hear of banks being impacted by major corporate defaults except for some financial institutions in China. Malaysian banks, for instance, have weathered the storm quite well so far, thanks to Bank Negara keeping a tight rein on their lending activities.
There has not been any run-up in asset prices. Property prices in countries such as Malaysia have remained subdued since 2015 after Bank Negara pulled the brakes on lending. Since 2014, Bursa Malaysia has closed lower every year, except for 2017.
The only exception of rising asset prices is Wall Street that has soared to record highs. Stock prices are hitting all-time highs due to improved earnings growth.
Technology companies such as Apple and Amazon are US$1 trillion companies. The other technology companies such as Facebook and Alphabet are enjoying growing valuations because of earnings growth.
No other stock exchange in the world has such a large concentration of technology companies than the exchanges on Wall Street. All technology companies, even from China, want to list on Wall Street.
Even Alibaba is listed on the New York Stock Exchange and not in Hong Kong.
It has been 11 years since the last recession, but the world’s central banks have resumed their printing of cheap money to keep interest rates low. The European Central Bank has resumed quantitative easing, while the US Federal Reserve is reducing interest rates. In essence, central banks are taking these measures to prevent a slowing economy going into recession.
In the meantime, it has caused fear among people and companies. Companies are holding back on spending, and in fact, cutting down on their debt.
A clear indicator is in the US where companies raised the most amount of corporate debt. Apple and Disney raised US$7bil worth of debt papers to reduce their borrowings.
In Malaysia, corporations have been deleveraging for the past few years in anticipation of a slowdown. Companies are not expanding, as indicated by the declining private-sector gross capital formation.
It is only reasonable for companies and people to save for the upcoming rainy days. Even governments are cautious in spending. For instance, in the upcoming Budget 2020, many are expecting the government to start spending. But there is also a view that the government will adopt a cautious stance as it continues to strengthen its balance sheet and reduce debts.
If nobody spends for fear of a recession, it would be a self-fulfilling prophecy.
Most people are expecting a recession, meaning negative growth. Fear of a recession has translated into a slowdown that the world and Malaysia are experiencing. If this fear continues to perpetuate, a recession would be a self-fulling prophecy.
It is good to be fearful, but being too fearful and conservative will also result in lost opportunity.
As Ang of Phillip Capital puts it, in times when fears of a recession seap in, cash must be held to seize opportunities. Holding cash as an investment is not a wise option.
Malaysia may, to a certain extent, be less
vulnerable with the revival of major construction projects which in view
of the country’s strained finances, have been shrunk to cut costs. The
Singapore economy may undergo a “shallow, technical recession” in the
third quarter.
Unknown future: As Singapore further cut its
growth forecast, New Zealand, India and Thailand also cut their interest
rates signalling concerns on growth outlook. — AFP
Coronavirus death toll, infections and recoveries 
