RUMOURS VS FACTS, SPECULATION VS ANALYSIS

I've heard stories about most major banking and financial Institutions are having special meetings to revise and reformulate monetary policies.

I do agree with these actions as the stock market may rise again PROVIDED the best monetary policies are introduced into the marketplace.

One thing for certain, investors are digesting rumours rather than facts, speculation rather than analysis - people just don't have the patience to wait nowadays. Many have told me that this is going to be short term but that 'short term' are dominating the market with making strange shapes. One news from the US...say unemployment rate, then it would finally affect the whole world.

One thing for certain, there are still investors taking risks waiting for 'the right time to sell' - even minimum gains is good enough but many seem to find strength in weakness (opportunity to buy/profit taking) where efforts to strengthen of holdings in equities are seen. Despite its sluggish performance, surprisingly USD may get better - lowest interest rates offerings, plans of liquidity etc.

Well, as for me, besides than unit trust, I'm also looking into GLC's bonds at the moment. Will be back soon..

Pengeluaran Bon sebagai Alternatif Penstabilan Ekonomi - Nik Zafri

Nota ringkas ini lebih kepada haipotesis ekonomi dan pengarang tidak memberikan apa-apa jaminan kejayaan sekiranya haipotesis berikut digunapakai.

Pengeluaran bon untuk menstabilkan ekonomi juga dikenali sebagai Bon GDP- Gross Domestic Product. Reaksi balas yang berlaku apabila cadangan ini dikeluarkan ialah kenaikan faedah.

Apakah kelebihan dan kelemahan Pengeluaran Bon berkaitan GDP :

1. Servis Bon adalah tinggi dalam suasana pasaran sihat tetapi akan rendah apabila pasaran tidak sihat.

2. Bagi peminjam - pengeluaran ini akan menstabilkan perbelanjaan awam dan Kerajaan akan dapat servis apa-apa hutang semasa suasana pasaran yang sihat dan kurang memberikan servis hutang jika berlaku sebaliknya. Krisis hutang dan kegagalan membayar hutang akan dapat dikurangkan. Apabila ini berlaku, ianya akan membantu proses pemulihan.

3. Bagi pelabur - kerugian mungkin berlaku serentak dengan masalah gagal membayar hutang. Jadi, jika dibandingkan dengan bon konvensional, bon yang berkait dengan GDP dapat memastikan bayaran total yang leibh tinggi dan ini pastinya akan mengurangkan kebarangkalian kegagalan pembayaran hutang.

4. Kerajaan dapat membantu membiayai sektor yang berpotensi apabila bon berkait GDP dikeluarkan. Tidak mustahil, sektor yang baru atau sedang berkembang umpamanya industri pembuatan akan menyasarkan untuk disenaraikan dalam Bursa Malaysia kerana pengeluaran bon akan dapat memperbetulkan pasaran saham.

5. Pengeluaran bon ini juga akan dapat menambahbaik pasaran modal (terutamanya bon korporat - dalam kes di Malaysia - Bon ini dikeluarkan oleh GLC) Sektor korporat juga dapat mengurangkan kos dan menambahbaik kecukupan modal sekiranya bon ini diintegrasikan dalam struktur kewangan.

-----------------------------------

ISSUANCE OF 'GDP-LINKED' BONDS

There has been some interesting stories I heard in the market about the intention of the Government to issue bonds to stabilize the economy. When plan of economic stabilization involves, these bonds are known as "GDP-linked"Just a short comment (I hope)

There are a number of things to talk about whenever anybody touched about GDP and linking it to bonds.But one of the most popular reactions would be the increasing interest in creating bonds.

1. Bond servicing is higher during rapid growth but lower if the growth is slow.

2. For borrowers - issuance may stabilize public spending as Government can service more debt during affordable times and less during difficulties. It is also said to lower down crisis of debts and defaults. When you reduce the service of country's debt during recession, it may help in the recovery process.

3. For investors - losses may happen due to defaults. Thus, comapred to the conventional bond, this kind of bond (GDP-linked) can ensure higher total payment hence reducing default probability (what am I saying? )

4. The Government can help in financing some potential sectors if GDP-linked bonds are issued. In theory, some emerging or new sectors (any industry esp. manufacturing) can target to be listed in the Bursa Malaysia if they wish as bond issuance can help correction in the stock market.

5. It also helps in improving capital market as well (esp. corporate bonds - in Malaysia's case - the bonds issued by GLC). The corporate sector can reduce cost and improve capital efficience once bonds are integrated into the financial stucture.