Evaluation of the article(s) and the outcome of the recent market development in the field of multinational finance
Current developments in the market includes ;Selloff was mainlay sparked by looming concerns on the naton’s debt level
Source: https://www.bloomberg.com/news/articles/2018-05-21/foreign-outflow-in-malaysian-stocks-accelerate-to-four-year-highMalaysia’s stock market had a volatile start following a three-day holiday for the election, before the benchmark inched up 0.4 percent for the week. But alongside that advance, overseas investors have been taking flight, selling $625 million of stocks last week, Malaysia’s biggest stock outflow since August 2013, according to data from Bursa Malaysia Bhd., the nation’s stock exchange.
The main transactions are being done by the local funds to support the market along with retail investors. In truth, local investors are confident for the prospect of the country than foreigners. However, Mahathir’s attempt to soothe investor jitters haven’t staunched the flows. The new prime minister introduced a team of five advisers well-known in official and business circles in Malaysia and intensified efforts to seek evidence of wrongdoing at the 1MDB sovereign fund.
Foreign inflows had dwindled to just $10.3 million as of Friday, down from $937.8 million on April 30, the data show.
Yet, the market is resilient. There is one thing that is propping up the Malaysian market; oil. The price of oil has rallied, which will help boost government revenue and oil and gas contractors in Malaysia. There are also local funds that believe Mahathir will follow through with his promise to find ways to boost the stock market and lead a business-friendly administration.
However, some strategists remain unconvinced by the market gains. This is reflected in the actions of several big firms and holdings. For example, CGS-CIMB Securities, which lowered its year-end target for the benchmark at 1,820 before the election, reiterated the projection on May 21. Yet, Malayan Banking Bhd. has expressed optimism for financial markets following the election.
Geopolitical tension between Washington and pyongyongSource: https://www.nytimes.com/2017/08/11/business/dealbook/stock-markets-trump-north-korea.htmlThe sell-off in global markets accelerated on when tensions between the United States and North Korea escalated, driving investors toward havens. In fact, Asian stock markets closed lower and European indexes opened sharply down on fears the feud between Washington and Pyongyang had raised the risk of actual conflict.
Hong Kong’s benchmark Hang Seng Index fell 2 percent, and South Korea’s main share index also dropped. Stock markets in Britain, France and Germany were all lower by noon in London. Investors moved their money into what they apparently deemed safer assets. The Japanese yen and Swiss franc were both stronger, and the price of gold rose for the third consecutive day. The yields on British and European bonds, which move inversely to the price, fell.
Despite attempts by some U.S. officials to calm sentiment, fears of escalating military tension between North Korea and the U.S. are dominating market attention. This is evident in the massive sell-of in the global markets. However, there is still a notion that the markets are reacting modestly. This could be backed by the belief of many that the risk of military hostility between the two nations are minimal.
Yet, despite the geopolitical uncertainty ,American stocks had been reaching new highs This observation driven by strong corporate profits and optimistic executives.Trade war between China and US
Source : http://www.freemalaysiatoday.com/category/nation/2018/04/07/malaysia-can-gain-from-us-china-trade-war/ https://www.malaymail.com/s/1607655/us-china-trade-war-will-hurt-malaysia-uob-economist-says
Fare driven Asian economies, for example, Malaysia could be influenced if an all out exchange war between the US and China were to occur. For Malaysia and any sending out country, you are gotten in the middle of if exchange strain does raises. Nobody is saved, particularly the more open Asian nations that are broadly presented to exchange.
US President Donald Trump marked a presidential reminder that could force duties of up to US$60 billion (RM233.7 billion) on imports from China and confinements went for anticipating Chinese-controlled organizations and assets from getting US firms with touchy innovations. The effect would not simply be limited to Asia, as the US exchange duties presentation and the conceivable multiplication of further protectionist exchange arrangements could in the long run affect worldwide fares and exchange exercises too. In the event that worldwide exchange relations decay drastically, the outcomes could be a more grounded US dollar as financial specialists move to place of refuge resources.
In the short run, the greatest failures are shoppers in China and the US. There would be here and now picks up for Malaysian exporters, was less cheery and long haul standpoint would be very distressing. Be that as it may, Malaysia may be less influenced than some different nations since it delivers its own items and also advanced hardware items. Worldwide monetary development would be influenced even in the medium term on the grounds that the exchange war would prompt lower utilization in both China and the US. At the point when the two biggest economies on the planet see their developments drop, worldwide exchange will back off and at last Malaysian fares will be influenced.
Yet, we anticipated expanded market vulnerability comprehensively and said this would bring down financial specialist certainty and prompt a decrease in business and customer spending.
Evaluation and Recommendations
Frankly, I think there is no serious problem. Foreign investors into our stock market is like the weather, it changes. They come and they go. If they all want to pull their money out, by all means. It is an open economy, and they will be back, sooner or later. I rather that LGE fixes the fundamental issues regarding our economy like the debt, transparency of the use of public funds, corruption within the FM and misuse of public finances by the executive. Find a way to pare down the debt like he did in Penang. Fix that, they will eventually come back. If I have the funds, they sell, I buy, especially stocks are cheap now. I rather we rip the band aid off first. Then once people start seeing a progressive and sustainable method of clearing the debt, within just a few months into it the foreign influx will zoom back in. That’s how speculators work. And by virtue of being one of the most “transparent” country in Malaysia will be good enough to take in a lot of S.E Asia bound foreign investments, beating out other countries in the region.