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As 1Q2009 approches, I believe there will have more bad news in the global economy as a whole to unfold.
The market is bracing for an unprecedented slowdown in such a short time and with all the expansion in capacity experienced in 2007 and 2008 by most industries, this is going to be a long and widding road, as most has already come to know.
Going forward, Ringgit will be weak again USD and most currency but toward the end of the year, 4Q2009, USD and Yen will weaken and the single currency that will strengthen will be Euro. So if you are in currency, think about this, although I do not support such unproductive trade in Forex.
Property market will weaken and the only hope remaining would be local consumption as well as government primed projects, mainly infrastructure projects.
I still believe basic fundamental for malaysia economy remain firm, with the exception of slower export and commodity prices. Crude oil is firming up and I maintain my view since last year that this will eventually trade in the USD70~80 per barrel Band. CPO will therefore move up to 2300 ~ 2500 per ton. Commodity export will remain stable with declining volumn but better pricing will balance it up. There are still 6 billion people in this world so the consumer for basic need are still in place. That is my view.
Of cause there are industries which will face greater reduction in capacity such as building material, wood based industries and raw material like iron, coal, copper etc, but basic needs in food will remain.
The financial crisis is getting in the way of trade facility and therefore, there is a break down in how the system work. This will take time to heal and once the trust in the financial market, especially in the deriative and swap market, then inter-continental trade will begin to normallise, and international trade will resume to it usual form, perhad not as before with the reform it is going through.
The aftermate is still not in clear view with most developed country flooding the market with liquidity and basically printing more currency to promote availability of capital and funding. All this will take a toll on inflation but if everyone is facing the same problem taking the same prescription, the market will accomodate such risk.
So, 2009 will be a difining year and for those who have the cash, this is definately the time to buy into company that was once deem too expensive to buy. As long as their busines model is right, the management is strong and they can ride out of this storm, they will become stronger.
The world is going through a re-shuffling of wealth and assest.
Tbull.
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