Saturday 15 February 2014

Let’s have GOOD disagreements

Honest people will always have disagreements, as we hold differing views, opinions and interests. How we resolve our disagreements reflects our individual maturity and values as well as those of the society in general.

I first heard of the terminology GOOD and BAD disagreements used by the Archbishop of Canterbury. How appropriate it is for Malaysians today to understand how we can disagree, but in a positive manner.

We have managed to politicise and polarize everything, from education to economics and issues of race and religion. We do so to seek popularity, to shield our ignorance or to further our own vested interests.

Literally, anything that someone says or does that we disagree with, we issue threats or resort to name-calling, labelling and bullying. We use intimidation (by abusing the system or through lies and slander) to silence what we do not want to hear. This is BAD disagreement.

A GOOD disagreement allows room for differing voices to be heard. Where debates are won on the basis of facts, discoveries and articulation of ideas and opinions. It allows for the possibility that there is no one answer, no one truth, where accommodating differing views and needs may be necessary.

I like to use the example of the revocation of FZ daily permit as an example. Clearly, I have a disagreement with the Government. I believe FZ should be granted the printing permit while the Government obviously now thinks otherwise, after first agreeing to issue it.

A BAD disagreement would be to allow our differences of views to be politicised. It also means to make accusations of intent without reasonable evidence or to resort to any form of intimidation.

One popular view expressed for the revocation is that FZ is anti-establishment and I am a friend of Datuk Seri Anwar Ibrahim and his family. This only serves to politicise the issue, and I do not believe this to be the reason.

I have known Datuk Seri Najib Razak and his family, as well as Datuk Seri Zahid Hamidi, the Home Minister, for as long as I have known Anwar.  For those who see everything through a political lens, let me add to your confusion. The printing permits for The Edge and The Edge Financial Daily were granted some 20 years ago when Tun Dr Mahathir Mohamad was the Prime Minister and Home Minister.

Another popular view is that the revocation shows that the Government is rolling back on the press freedom it had promised. Again, I would be totally surprised if this is indeed the case. It only serves to cast everyone into “my camp or your camp”.

The days when the print media industry is the aggregator and distributor of news are long gone. We have moved from scarcity of information to an overload. Reading habits have changed. The only place where news is still contained is in North Korea. Even there, the walls are porous.

Indeed, the contents of FZ are already available online, for free. And its articles are often printed in the pages of The Edge Financial daily.

More importantly, issuance of a print publishing permit and press freedom and a fair and politically neutral media are really quite separate issues in Malaysia. How many of our newspapers, operating with permits, are really free and fair?

I prefer to pursue this disagreement we have with the Home Ministry in a GOOD way and not allow it to be politicised.

Firstly, we must respect the law and the processes. The next step is to go to court for a judicial review of the decision made by the Home Ministry. We have succeeded in obtaining leave from the court to do so before the recent revocation. Our appeal will go through the judicial process.

In court, both the Government and The Edge will be able to present our respective case, respecting the court to make a fair decision.

This is not the first time that I have taken a body of the Government to court. In 1995, I did the same when Phileo Allied took the then Kuala Lumpur Stock Exchange to court after it tried to stop us from implementing PALDIRECT, an innovative platform for online stock trading and banking.  I believe the various vested interests wanted to block us because we were the first to have online financial transactions and have been a threat to them.  

Today, every bank and stock brokerage in Malaysia or Singapore is using a similar system.

Secondly, we will pursue this rationally by articulating to the government and the public our reasons, our vision, our values and why FZ Daily can further the interests of the public at large.

Our vision is to enrich lives, through communicating insights and analysis. We want to contribute to nation building in the process.

Central to this is the need to reject corporate kings and instead, to embrace fair and free competition with greater social and economic inclusion. This will benefit the country through greater efficiency, innovation and producing superior products and services.

Only then will the best minds stay in the country. Only then can we attract knowledge-based companies. Only then will productivity improve.

The solution to achieve a stronger, healthier and fairer economy, with higher wages, greater employment, rising stock market and ringgit, rest squarely on whether we are prepared to have an inclusive economy. This is the economic transformation we desperately need. This is what The Edge stands for.

Whether we get the printing permit for FZ daily is really secondary. Whether, as a businessman, I am able to operate in Malaysia is inconsequential.  The world operates on fairly free capital and human mobility and there are endless opportunities.

I will practise GOOD disagreements. I invite others to join me.

Thursday 13 February 2014

Interest rates, exchange rates and foreign selling

Malaysian corporate bond yields have been rising since middle of last year. The 10 years AAA-rated yield is up by 10% to 4.6% yield to maturity. Besides higher cost of funding to Malaysian corporates, the market has also become tighter in liquidity. 


This confirms our view in the special report, The State of The Nation, that interest rates will rise in 2014.

Another confirmation of our view in the special report is the continued exodus of foreign institution funds from Malaysian equities. Foreign investors sold RM3.7 billion of stocks listed on Bursa Malaysia in January 2014. This is 118% more than the RM1.7 billion sold by foreigners in December 2013.  The first week of February 2014 saw a further RM1.1 billion of Malaysian stocks sold by foreign institutions.

Local institutions, like EPF, bought RM3.1 billion of the stocks sold by foreigners. Local retail investors turned positive in January, first time since August 2013, probably on expectation of a lunar new year rally.

Consequently, the Ringgit fell nearly 2% against the US dollar.

Note that this is despite the fact that the longer term US interest rates actually fell in January 2014. The perception of slower economic growth in US resulted in the fall in equity prices as funds moved into the safer treasuries, causing yield to fall as bond values moved up.

The effect on Malaysia is we saw no change in foreign ownership of Malaysian Government Securities (MGS), at around 45%. When, not if, the US interest rates rises (as it surely will with the US economic recovery becoming more evident), foreigners will sell our MGS. What will be the impact of this capital outflow?

The Edge Malaysia now has a weekly section on Update of The State of The Nation report. It aims to provide insight, analysis and understanding on what will happen to the economy, the stock market and the exchange rates.