Tweetchat: Is Malaysia’s downgrade exaggerated?

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Inside Investor’s Tweetchat held on August 2 discussed Malaysia’s current bearish economic perspectives and touched upon the question if Fitch’s credit rating downgrade was exaggerated or even justified.

However, tweets acknowledged that something has gone out of balance in Malaysia’s fiscal policy.

Participants said that reforms are urgently needed if Malaysia’s wants to maintain its current position as one of Southeast Asia’s strongest markets. It will have to introduce fiscal reforms, decrease the government’s debt level as well as leverage private company debt and will have to see it becomes less vulnerable to global money flows.

For example, up to 50 per cent of outstanding government bond of Malaysia are held by foreigners. By allowing this, Malaysia put itself in the danger to get heavily hit when the global financial ecosystem turns against it.

The question if Malaysia was prepared enough for the ASEAN Economic Community was answered with a careful “Better than others,” but there are still issues of tariffs and trade barriers to resolve, and awareness in the private sector is low.

A probably justified questions was raised by asking if credit agencies have enough merit to downgrade an entire country after earlier blunders they made. However, global investors are still listening to credit agencies’ decisions and that’s what counts. Fitch’s analysis was proper, based on the given macroeconomic fundamentals. In case of the Philippines, which received 3 upgrades lately and expects another one, nobody questioned the rating agencies’ decisions in terms of their merit.

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Reading Time: 2 minutes

Inside Investor’s Tweetchat held on August 2 discussed Malaysia’s current bearish economic perspectives and touched upon the question if Fitch’s credit rating downgrade was exaggerated or even justified.

Reading Time: 2 minutes

Inside Investor’s Tweetchat held on August 2 discussed Malaysia’s current bearish economic perspectives and touched upon the question if Fitch’s credit rating downgrade was exaggerated or even justified.

However, tweets acknowledged that something has gone out of balance in Malaysia’s fiscal policy.

Participants said that reforms are urgently needed if Malaysia’s wants to maintain its current position as one of Southeast Asia’s strongest markets. It will have to introduce fiscal reforms, decrease the government’s debt level as well as leverage private company debt and will have to see it becomes less vulnerable to global money flows.

For example, up to 50 per cent of outstanding government bond of Malaysia are held by foreigners. By allowing this, Malaysia put itself in the danger to get heavily hit when the global financial ecosystem turns against it.

The question if Malaysia was prepared enough for the ASEAN Economic Community was answered with a careful “Better than others,” but there are still issues of tariffs and trade barriers to resolve, and awareness in the private sector is low.

A probably justified questions was raised by asking if credit agencies have enough merit to downgrade an entire country after earlier blunders they made. However, global investors are still listening to credit agencies’ decisions and that’s what counts. Fitch’s analysis was proper, based on the given macroeconomic fundamentals. In case of the Philippines, which received 3 upgrades lately and expects another one, nobody questioned the rating agencies’ decisions in terms of their merit.

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