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Uncertainty is never good for the economy. Reminder to all.

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I am against Brexit. I do not think going it alone is going to be beneficial to any country in the European Union. I know there are lots of reasons for and lots of reasons against and that it’s the decision of the majority (of those who voted). By the way, there were enough NON-voters to have swayed the decision either way yeah. So, ‘technically’ it’s not a majority of the majority’s decision. While this may not have a significant impact to Malaysia but the lessons learnt it this; uncertainty is never good for the economy.

Article in Bloomberg.com here. CME Group Inc. is moving out of London into Amsterdam.  It has been managing Europe’s largest short-term financing from London. The reason to move is because the exchange operator wants to guarantee continental firms can continue to use it if there is a no-deal Brexit. (This meant that the European Union (EU) does not give any special concession to Britain and treats it like the same way it treats non EU members.)  What it wants to do is to eliminate the risk that its EU-based clients could lose access to the European repo market. There has been some warnings about the danger of “split liquidity pools,” where trading becomes more difficult and costly because investors on different sides of the North Sea can no longer trade with each other. John Edwards, managing director of BrokerTec Europe said, “Nobody knows what the European landscape is going to look like in five months’ time, let alone three years’ time.” Full article in Bloomberg here for reading. 

There are no Brexit kind of decisions here in Malaysia. However, let’s all understand that no investors love uncertainty. Policies needed to be formulated for the longer term and be followed through with good implementation. Just like property investments, it should be for the long term. However, if things are uncertain, there will be limited action in the real estate world. A very important focus is on the affordable home for Malaysians needing one. If there is a need for a centralised agency, then quickly put in place action place for one and start communicating what will be delivered to people who are waiting for one. The recent allocation under Budget 2019 for affordable homes for example, could we have more details how this amount will be used? Some people are not doing anything because they are waiting for the details. Happy implementing.

written on 9 Nov 2018

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