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Thursday, 16 February 2017

(Tradeview 2017) - Asean Fixed Income Conference 2017

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Dear fellow readers, 

As some of you all may know, my background is a professional in the Corporate M&A and Real Estate industry. Recently, I was honoured to be invited by RAM Holdings Berhad as part of the delegate to the ASEAN Fixed Income Conference 2017. 

The conference held in Mandarin Oriental, Kuala Lumpur on Valentine's Day congregated the brightest minds in the financial sectors including World Bank economists, local, ASEAN and Asian bankers, fund managers, academicians, analyst, regulators, lawyers and the media. While the topic primarily relates to the Fixed Income markets, there were many good intellectual sharing and knowledge exchange that would be beneficial to understanding the of the current financial markets. I would like to take this opportunity to share some key takeaways for all.

Once again, these writings are just my humble highlights (not recommendation), feel free to have some intellectual discourse on this. You can reach me at :

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1. 2016 was tough year as 2.5% global growth which was lowest since 2009 and trade growth was ~2+%

2. World Bank Economist Dr Rafael Munoz Mureno believes Malaysia economy for 2017 will be a continuation of 2016 but likely to achieve a 4.3% growth in GDP.

3. Vincent Conti of Standard & Poor believes oil price will not go too much above $60 per barrel for crude oil.  On 2 reasons, shale oil production will be efficient above $55 per barrel hence will kick in should the price sustains above $55 USD coupled with high level of global inventory. This was align with Tradeview forecast of USD $55-65 per barrel for 2017.

4. Most of ASEAN is in energy trade deficit when it comes to oil except Malaysia and Indonesia. Inflation driven by oil price but if oil price remain low then unlikely.

5. Growth in productivity level key for growth for countries and most important to move from current level to high income nation like Singapore and Korea

6. Indonesia banking and infrastructure has huge potential as lagging behind countries like Malaysia and Singapore which means bond market big opportunity for growth provided there is ASEAN integration. 

7. Malaysia services sector is key as it is one of the main sector of Malaysia that is closer to competitors based on the submission of information to TPPA as per World Bank research. TPPA unlikely to happen with the pullout of US.

8. Malaysia 55% debt ceiling is important. Many infrastructure project ongoing but there is worry of the debt level as such the government is managing actively but contagion liability still persist

9. Indonesia has policies like tax amnesty and recapitalisation of SOE to manage fiscal deficit while going on with infrastructure 

10. World Bank Economist do not think Malaysia will be able to achieve high income nation in 3 years as the benchmark moves globally and will required a nation to exceed global benchmarks to qualify. However, that should not be the key milestone for a country but productivity instead should be the focus.

11. Mr. Nik Mukhariz Director of CIMB Fixed Income Research believes the valuation of the current bond market is very attractive to foreign investors and offshore funds. There is some strong indication that the yields are good and will likely have some capital inflow back to Malaysia markets soon. Apart from Malaysia, Thailand deemed the forgotten market is also looking interesting for the investors. Also confident that Malaysia can achieve better GDP growth for 2017. 

12. Dr. Park, Principal Economist of Asian Development Bank believes that 2017 uncertainty of the economic condition will prolong. Monetary policy of the US should normalise this year as it has been a case of a "patient being in an emergency room for too long". BOJ and ECB struggling to meet inflation targets. Central bankers around ASEAN are adopting a wait and see approach due to US normalising rates.  


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Food for thought: 

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