Apologies For Unanswered Comments

This is so embarrassing. All the time I thought that my blog had mostly silent readers as I get very few comments in my email box. Apparently, my lack of knowledge with blogger-google knowhow led me to believe that all comments will be directed to my gmail account.

Now I accidentally found out that I had to log into my Blogger Dashboard to see the comments that needed to be moderated. I was shocked to find over 800 comments from readers that I am seeing for the first time. I apologise profusely for this. Many of you must have thought that I just dumped all comments, questions or cannot take criticisms. I am now in the process of moderating the comments and will go post to post to answer them. Its so silly, its a bit funny.



p/s photos: Miwa Oshiro

On Bank Negara, PPP & The Ringgit

hishamh said...

A couple of problems here. Purchasing Power Parity (PPP) is no more than an academic curiosity these days, for the simple reason that it doesn't remotely describe currency movements even between advanced economies, much less for emerging markets. So there is no firm foundation for using it as a basis for evaluating currency misalignments.

It therefore follows that analysing currency policy based on PPP values is also a red herring.

In fact, based on current theories, it's possible to argue that the causality runs the other way from your analysis - an export-oriented strategy results in low relative incomes and a depressed exchange rate, rather than a weak currency being used to support export competitiveness. Which means that the MYR exchange rate is in fact market-determined, and there is no deliberate central bank policy to weaken the currency.

3:14 PM

hisham,

You make a few good points... herein lies the 64,000 dollar question... is Bank Negara deliberately suppressing the ringgit?

Considering that the ringgit is tightly controlled, and is not totally freely exchangeable overseas, BN exerts a lot of control over the ringgit. What I mean is that no hedge fund or trade would seriously dare to bet against BN's persuasions, they would rather bet alongside with BN's persuasions. When the currency is "limited" in its free trade and its circulation, that is tantamount to controlling the currency - not that that is a bad thing. For a small open economy like ours, we cannot seriously have a totally free floating currency, how do you think our exporters and services sector going to adjust if in January the ringgit is 3.6 to the USD and in May its 4.1 but by October its 3.1.

I am more concerned in the usage of the ringgit to shape the industries we have over the longer term. Yes, short term, fighting inflation is priority number one followed by maintaining a sustainable economy. But just look at where the ringgit has been over the past 20 years. I remember it was 2.7. What that tells me is that we are deliberately attracting FDI via such a mechanism.

The ringgit should be managed, but manged to appreciate so that we can flush out those industries that should not be here. We need to move up the value curve. Ifwe have an internal target of 3.2 average for 2010, 3.0 average by 2011 and 2.8 average by 2012, believe you me, we will see some industries being taken out naturally or indrectly. The kind of FDI we attract will be different for sure. We have the resources, don't short change ourselves, don't keep adding low cost foreign workers, it makes the substantial bottom rung of the industries stay manual and low value add.Yes, its easier said than done as industries will be displaced, jobs will be lost... in other words this is exactly the structural unemployment that we need to go through. Its tough, business wise and politically, but being in positions of leadership, we must make tough decisions or else we will lock ourselves into the same sandstorm. It is very sad to see the same sunset industries still operating in Malaysia 5 or 10 years from now.

... Oh, you want to do large scale manual soldering... go to Malaysia, there got plenty of cheap labour... Even if we keep bringing these labour intensive FDI, the best jobs that Malaysians can hope for is factory manager of a labour intensive factory looking after foreign workers. Get the ringgit to where our resources should be, and not cater and pander to the lowest common denominator.


p/s photo: Miwa Cocoa

And They Say There Is No Collusion ...

You can actually get governments to do certain things. Shares of Macau plays rocketed yesterday, bucking the general market declines, following a report that China has quietly eased restrictions to allow residents of Guangdong province to visit the enclave more frequently.

Industry executives now expect the Macau casino sector to bring in record gaming revenues in October, boosted by the looser restrictions and the upcoming Golden Week holiday, Reuters reported.

Galaxy Entertainment (0027) jumped 9.5 percent to close at HK$3.79, defying a 0.7 percent decline in the benchmark Hang Seng Index.

Shun Tak Holdings (0242), a Macau- focused conglomerate controlled by the family of Stanley Ho Hung-sun, jumped 9 percent to HK$6.69. SJM Holdings (0880), Ho's casino flagship, rose 5.1 percent to HK$4.52. Melco International Development (0200), which is owned by Lawrence Ho Yau-lung, jumped 7.7 percent to end the day at HK$5.87.

The authorities now allow mainland travelers from Guangdong to visit Macau once a month under the Individual Visit Scheme, instead of just once every three months, Reuters quoted industry sources as saying. The restrictions started to be relaxed 2 months ago and were loosened even further since September 1.

"Gaming revenues for the first two weeks of the month have been good," one executive said. Another unnamed casino executive said September gaming revenues will be "very good" and October will likely set a new record high. Now is it just kind timing or what??? Just when the 3 major operators in Macau have filed for IPOs in HK, we see these restrictions being lifted??!!

Backed by big-name cornerstone investors, the institutional tranche of Wynn Macau's HK$12.6 billion public offering was oversubscribed by up to five times when it started bookbuilding yesterday.

The casino operator attracted six high-profile investors who poured US$250 million (HK$1.95 billion) to subscribe for shares with a six-month lock-up period. They include Lifestyle International (1212) managing director Thomas Lau Luen-hung who subscribed for US$50 million worth of shares and Sun Hung Kai Properties (0016) non-executive director Walter Kwok Ping-sheung who is seeking US$20 million worth.

Wynn Macau plans to offer 1.25 billion shares at HK$8.52 to HK$10.08 each, which is 29.4 to 34.8 times its estimated earnings per share of 29 HK cents this year. Wynn Macau's net income slumped 34.8 percent to HK$903.7 million for the first half ended June 30 as Macau's gaming industry contracted.

These developments will pave the way for a spectacular listing of Wynn Macau and Macau Sands - and guess what, Genting Singapore will be an indirect beneficiary, followed by Genting Berhad, but the former is a much better play.

p/s photos: Miwa Oshiro Cocoa