Brexit happened first. It was an unexpected result and it sent the Pound Sterling (£) plunging. Effects to the ringgit? Insignificant in terms of any relevance but huge in terms of benefit. In fact it was considered good because parents with students studying in the UK will now be paying less. (Including my close colleague’s son) On June 22nd 2016, before the vote, it was RM5.93 to £1. One week after the vote, on 30th June 2016, it became RM5.31 to £1 (Source: XE.com) This was a fall of over 10 percent within one week. (Fortunately, no one forwarded foolish comments such as Britain going bankrupt….) As at 16th Dec, after becoming the worst Asian emerging currencies post Trump presidency results, it is now RM5.59 to £1. (Still a fall of 5.4 percent). By the way, British Prime Minister has NOT yet submitted the application to bid goodbye. The best or worst has yet to come, for Britain.
Next, Trump won. Another unexpected result as per most medias. However, if you google for some alternative news, they said Trump was already winning many months ago. Barack Obama tried so hard to help Clinton’s campaign but in the end, it just did not work. ‘Making America Great Again’ is a believable motto. This win has huge effects to Malaysia (not so much economically because Malaysia has a huge trade surplus versus U.S anyway for a long long time) For first 10 months of 2016, Malaysia has a trade surplus of US$20.6 billion with the U.S (Yes, it meant Malaysia is exporting by far MORE stuffs to them then they exporting to us) Source: www.census.gov However, it affected emerging market’s currencies tremendously. Just 7 days before the election, the exchange rate was RM4.19 vs US$1 Suddenly, 7 days after the election, it became RM4.34 versus US$1. A drop of 3.6 percent within 5 working days? Haha. Okay, so our economic fundamental switched suddenly? Read here: All the countries are worst compared to the U.S. economy? No.
These days China is the white knight said to be ‘saving Malaysia for some unannounced reasons.’ (In BM, it’s called ‘ada udang disebalik batu.’ Frankly, I think these statements are just nonsense. China is already the second largest economy in the world and its reserves are the largest in the world. By the way, do you know what’s the U.S.’ debt to China? It’s ONLY U$1.157 trillion, as of September 2016. Source: www.thebalance.com Do not bother with your 12 digit calculator, you won’t be able to change that into Ringgit… Suddenly, it does seem that China’s has a ‘ada udang BESAR disebalik batu’ by lending so much to the U.S.? Haha. Anyway, I have no idea because I do not know any of the American Presidents or even China’s President Xi JinPing, thus could not call them and ask. However, I can only show you the numbers.
Personally, I hate rhetorics. Life should be simple. Yes = Yes and No = No. Except for speculation or gambling, NOTHING fundamental changes overnight. If property prices can change overnight, that’s definitely crazy or speculative. The reason is simple, our salaries do not suddenly jump double or triple times. For Brexit, wait till the negotiation starts between Britain and the European Union. For Trump, it’s better to see what he would really do because it’s no longer a campaign. It’s now a career. Haha. As for China, I personally have not read of any country which refuses to accept China’s assistance. As a Malaysian, I prefer them investing here rather than elsewhere. Happy understanding and thanks for being a supportive Malaysian.
written on 17 Dec2016
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