Malaysia’s stock market rise points to a bubble

  • PR would have suffered serious losses in 2013 polls if hudud was major issue, says DAP
    PR would have suffered serious losses in 2013 polls if hudud was major issue, says DAP

    Pakatan Rakyat would have suffered devastating setbacks in Perak, Pahang, Negri Sembilan and Melacca if it had made hudud a major issue in last year’s general election, DAP advisor Lim Kit Siang said. The Gelang Patah MP (pic), who had earlier said hudud was never a vote-winner for PAS in previous elections, gave an illustration of how PR... …

  • Court acquits PKR rep, rules 10-day notice in public assembly act ‘unconstitutional’
    Court acquits PKR rep, rules 10-day notice in public assembly act ‘unconstitutional’

    The Court of Appeal today struck out the charge against Selangor's deputy speaker Nik Nazmi Nik Ahmad who was charged under the Peaceful Assembly Act for failing to give police a 10-day notice for a rally last year. A three-man bench led by judge Datuk Mohamad Ariff bin Md Yusof also ruled in a unanimous decision today that Section 9 (1) of... …

  • Assembly law cannot criminalise public gatherings, court rules
    Assembly law cannot criminalise public gatherings, court rules

    PUTRAJAYA, April 25 ― The Court of Appeal today unanimously ruled it unconstitutional to criminalise spontaneous public assemblies in breach of the 10-day notice required under the Peaceful... …

  • Albukhary International University withdraws decision to cease operations – Bernama
    Albukhary International University withdraws decision to cease operations – Bernama

    The Albukhary International University (AiU) in Alor Setar, Kedah has withdrawn its decision to cease operations. Second Education Minister Datuk Seri Idris Jusoh said the ministry was informed of the matter by the management of AiU through a letter Wednesday. "With that decision, the matter is no longer an issue," he told reporters... …

  • Jalan Bukit Bintang stretch remains closed to traffic
    Jalan Bukit Bintang stretch remains closed to traffic

    The 500m stretch of Jalan Bukit Bintang (Jalan Tun Razak-bound) between Chulan Square and Menara Worldwide will remain closed to all traffic, said Mass Rapid Transit Corporation Sdn Bhd (MRT Corp) today. At 10.42pm last night, a sinkhole appeared at the left lane of Jalan Bukit Bintang, said MRT Corp in a statement released this morning. The... …

  • Bible ban in Pahang hotels draws flak
    Bible ban in Pahang hotels draws flak

    Islamic authorities in Pahang have overstepped their jurisdiction by banning non-Muslim religious materials in hotels in the state, say political and religious leaders. The Pahang Islamic and Malay Customs Council's (Muip) recent prohibition is the first ever such ban to be issued in the country involving hotels, and has drawn strong criticism... …

By Zurairi AR

KUALA LUMPUR, May 29 — Malaysia’s stock market is at risk of becoming a bubble, as it goes through an unsustainable growth spurt fuelled by a global thirst for yield, said a report by international analysts the Centre for Economics and Business Research (Cebr) today.

Together with neighbours Thailand and Singapore, Malaysia’s debt-to-income ratio has reached between 120 to 130 per cent of its gross domestic product (GDP), a trend which has continued since 2011 after global outlook towards the region turned positive.

“Stagnation in industrialised nations means investors are turning to emerging economies in search of higher yield. ASEAN stock markets have ridden this wave of capital, sending stock prices skywards.

“But the growth rates we are seeing in some countries ... are not sustainable, and could hint of an emerging bubble,” said Cebr’s Head of Macroeconomics, Charles Davis in the quarterly “Economic Insight: South East Asia” report here.

According to the report commissioned by UK-based Institute of Chartered Accountants in England and Wales (ICAEW), Cebr warned that a strong increase in credit often results in inefficient investment, coming from the hope of a future that might turn out less rosy than previously expected.

Cebr joined a chorus of growing fears that Malaysia may be swallowed up by an economic bubble now enveloping ASEAN, even as the countries bask in the growth arising from “hot” money flowing in from developed economies.

Kuala Lumpur witnessed a net foreign inflow of US$63.45 million (RM192.5 million) last month, extending the year-to-date net offshore inflow to US$3.6 billion.

“If this growth continues, these economies will run into increasing signs of overheating or bubble characteristics and bust risks later on,” said a report in April by Robert Prior-Wandesforde, Head of India and Southeast Asia Economics for Credit Suisse.

Despite that, Cebr expected a healthy growth outlook for Malaysia provided the projected positive growth story remains, and urged careful judgment to ensure the credit growth and capital inflows are used for laying the foundation for the future instead of fuelling a bubble.

“For the moment, debt levels are around half of what they were at the peak of the Asian crisis. This is fine for now but would be a cause of concern if credit growth continues to outpace nominal GDP growth at the same rates we see today,” said the regional director of ICAEW South East Asia, Mark Billington.

Continuing its gloomy outlook for Malaysia, Cebr predicted a 4.4 per cent GDP growth for Malaysia in 2013, a low rate pressured by a rise in tax.

Malaysia’s GDP growth is expected to slow even more in the next few years to 4.2 per cent in 2014, and 4.1 per cent in 2015, said the report.

Last year, Prof Douglas McWilliams, Chief Executive of Cebr, had come up with an even gloomier 2013 outlook for Malaysia, predicting a growth rate of only 3.8 per cent. 

Earlier this month, Malaysia reported a gross domestic product (GDP) growth of 4.1 per cent in the first quarter compared with the same period a year ago. It was the slowest pace of growth since the third quarter of 2009, and lower than the 5.5 per cent rate expected by economists.

Follow @YahooMalaysia on LINE for daily news updates.

Comments on Yahoo pages are subject to our link to Comments Guidelines. You are responsible for any content that you post. Yahoo is not responsible or liable in any way for comments posted by its users. Yahoo does not in any way endorse or support comments made by its users.

  • MH370 passenger’s partner tells of strange email from sacked Fox officer The Malaysian Insider
    MH370 passenger’s partner tells of strange email from sacked Fox officer

    The partner of an American passenger aboard the missing Malaysia Airlines flight MH370 has spoken about how a Fox executive who was recently sacked by the news station had contacted her offering to raise funds on her behalf. Sarah Bajc, whose partner Philip Wood is among the 239 people on board the missing plane, told the Sydney Morning Herald... …

  • My last moments with Pa: Ramkarpal Singh The Malaysian Insider
    My last moments with Pa: Ramkarpal Singh

    A week after the tragic crash that took the lives of veteran lawyer and politician Karpal Singh and his personal aide, Michael Cornelius, his son Ramkarpal recounts the final hours with his father that fateful day. This is his story, as told to V. Anbalagan, assistant news editor. “My parents (Karpal and Gurmit) had gone to Pantai Hospital... …

  • In Disney's shadow, homeless families struggle Associated Press
    In Disney's shadow, homeless families struggle

    KISSIMMEE, Fla. (AP) — When they moved from Georgia to the theme park playground of central Florida four years ago, Anthony and Candice Johnson found work at a barbecue restaurant and a 7-Eleven. Their combined salaries nevertheless fell short of what they needed to rent an apartment, so the couple and their two children have instead been hopping among cheap motel rooms along U.S. 192. …