KUALA LUMPUR, Feb 27 — The state of Malaysia’s economy, coupled with no undue government intervention in it, has made the country an attractive destination for foreign investors, said International Quality Investments (IQI) chief economist, Shan Saeed.
“Looking at the economy from a foreigner’s perspective, I believe government intervention (in Malaysia) is unnecessary and this has (actually) maintained confidence among investors. Malaysia will continue to grow and attract investor inflow.
“Confidence has become the most important non-variable in the macro economic equation.
“When some European banks introduced the zero-interest-rate-policy (ZIRP), it did not help stimulate the economy going forward nor attract investors, and this is not what is happening in Malaysia,” he added, at the “Gold as a Safeguard Against the Ringgit’s Decline,” seminar here today.
Naming Switzerland, Sweden, Denmark and also Japan as countries that introduced the ZIRP, he said they face a lot of challenges in the current environment and more volatility in the global financial market, with this volatility continuing until 2020.
He also said the introduction of the ZIRP was positive for the gold market as investors won’t keep their money in banks.
“They will concentrate more on gold, silver and real estate instead,” he added.
Asked about the ringgit’s performance, Shan said the local currency depreciated 17 per cent against US dollar in 2015.
“If the downtrend continues this year, it would not be a surprise, as other currencies have also fallen. I expect the ringgit to be at between RM4.40-RM4.50 to the US dollar by year-end.
“This is also due to the performance of China’s renminbi which will fall to between 10-15 per cent, as well as oil prices.
“I foresee oil prices rebounding to between US$50-US$60 per barrel, while trading at US$30-US$40 at present,” he added.
On the Federal Reserve raising interest rates, Shan said this is unlikely and opined that the first hike in December 2015, was based on a “market panic” situation.
Meanwhile, earlier in his presentation on gold, he noted that the favoured metal served as a counter balance against the ringgit’s depreciation, while helping balance other asset classes.
Gold, as a safe-haven investment is expected to continue its uptrend going forward, particularly when the current equity and bond markets are volatile.
“Commodities will remain on the radar of investors due to unpredictable government policies, high levels of sovereign and negative policies and quantitative easing, which will keep asset classes in an artificial zone,” Shan said.