I am not trying to commend like a financial expert. I am just uttering out my gut feeling. What does the above event means to Malaysia?
Since the financial tsunami started in mid 2007, the global market has been washed with wave and wave of bad news. The collapse of Lehman brothers has created the crisis of confident in the financial market. Suddenly everyone started to hold the handbrake, all of a sudden, nobody wants to lend, and the river of money just stop flowing. It caused a big problems for companies who needs credit for their businesses to continue to run. That is the bad things about bank, they only lend u money when u don't need it. When you desperately needs money to run your business, they will shut the door and says,"we are pulling back to limit our exposure" this is life.. everyone wants themselves to be taken care of. Story like this continue. In the end, the government has to stand out and provide credit to the illing company like GM, Chrysler, Big banks.. to let then river of money to continue to flow. If the river stop flowing and dried up, that's it, our society's prosperity will end. The worst case scenario would be we will go back to gold standard and suddenly you will find your wealth shrink to 1 tenth of your current worth.
The dilemma continues and suddenly Citi says they are in profit making position for the first 2 months of 2009. That is a great good news to everyone. As Citi is the largest bank in terms of asset base, Citi making profit means ppl are paying their loan in Citi, ppl has money to pay back their loan. This is definitely good sign as river of money shows a sign of recovery from stagnant.
At the same day, the Malaysian government has tabled the RM 60 billion worth of mini budget which gives incentive to all levels of the society. There are criticism that the stimulus package is not enough to prevent the country from getting into recession. However, I am optimism. If the US is recovering, or not to say recovering, where the recession in US is bottom up, the stimulus package in Malaysia would be just nice. Instead of pumping in more money which will pose the inflationary threat for the country in the future, the 60 billion package may provide a buffer to the economy from slipping into recession while waiting for the global economy to recover and prepare our people for the next economy boom party.
I might be optimism.. haha.. The odd is I might be wrong as most of the experts are telling us that the bad times are ahead. Let's see what will happen next.
The best shares to invest in for the moment is those related to platation, oil and gas where share prices have been battered down because of the financial crisis. One undeniable fact is, energy is always in demand. Therefore when the economy recovered, the 1st to lead the rise would be energy and commodity related stock.