This Week’s Top Headlines

i) The latest wage report, released by the Department of Statistics Malaysia on Friday, reveals the staggering pay discrepancy between the rich and the poor. More than 1 in 3 Malaysians are paid less than RM2,000 per month.

ii) The Malaysian market continues to recover amid strong buying sentiment from foreign investors. According to MIDF’s report, this marks the third consecutive week of net buying from them, as they acquired RM637.8 million of equities in the week ending 28 July.

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Malaysians are severely underpaid.

On Friday, the Department of Statistics unveiled that Malaysia's median salary rose from RM2,400 in March 2022 to RM2,600 in the first quarter of 2023, representing an 8.3% y-o-y increase.

In other words, half of the population earned less than RM2,600, while the other half earned more than this amount.

The median salaries for males were 4.6% higher than females, at RM2,664 compared to RM2,545. Male formal employees accounted for 55.5% or 3.58 million persons, while females made up the remaining 44.5%, comprising 2.87 million individuals.

Across ethnicities, Chinese people recorded the highest median monthly wages at RM4,000, while other ethnicities were the lowest at RM2,000.

While the overall median salary increase seems good on paper, the reality is that Malaysians are severely underpaid, and the wealth gap is enormous.

When represented in a horizontal bar chart, the distribution of wealth decreases exponentially as the salary figure increases, but it abruptly skews towards the rich (ie. those earning more than RM15,000 per month).

A whopping 82% of formal workers earn less than RM5,000 per month.

Meanwhile, 35% of the population, accounting for 2.257 million individuals, earn below RM2,000 per month, placing them in the absolute poverty category.

RM2,000 per month is not enough to survive in Malaysia.

Bank Negara Malaysia’s recommended living wage is RM2,700 per month, while EPF’s Belanjawanku Study estimates that a single person living in the Klang Valley requires RM2,600/month to survive.

Bear in mind that these are the minimum figures required to survive, not thrive. RM2,600 per month is barely enough for single people these days, especially when rent costs and food prices are through the roof.

This crisis underscores the urgent necessity for a progressive wage system, as low wages stand out as one of the primary reasons for the alarmingly low savings rate among Malaysians.

As of May 2023, only 18.4% of EPF members had achieved the basic savings target of RM240,000 in their EPF accounts.

This only gives them RM1,000 per month to survive for the next 20 years, which isn’t nearly enough.

Malaysian market recovers amid aggressive buying from foreign funds.

In the past three weeks, foreign investors have made a dramatic entry in the Malaysian market.

According to MIDF’s weekly fund flow report, they net bought RM637.8 million of equities on the week ending 28 July - the highest level since over a year ago.

From 14 to 28 July, foreigners bought a total of RM1.387 billion of equities in notable sectors such as utilities, plantation, and financial services.

During this period, local institutions and retail investors opted to take profits.

Local institutions only net bought RM54 million on Monday (24 July) but were net sellers for the rest of the week. This is their third consecutive week of net selling at -RM403.9 million.

Like the local institutions, local retailers also net sold for the third consecutive week at -RM233.7 million. They net sold every day at -RM35.4 million on Monday, -RM63.8 million on Tuesday, -RM54.3 million on Wednesday,

However, the substantial buying activity from foreign funds outweighed the outflows, leading to a remarkable 6.04% rebound in the FBMKLCI over the past three weeks.

Stocks that have seen huge inflows include Tenaga Nasional (TENAGA), Maybank (MAYBANK), and Public Bank (PBBANK).

Meanwhile, the ringgit has stabilized at RM4.5530 against the US dollar after an impressive 3.49% rally within a span of 21 days.

The recovery in the Malaysian market is one of the main drivers to the ringgit’s strength, as foreign investors are required to first hold the ringgit in order to acquire equities in Bursa, leading to increased demand for the currency and contributing to its appreciation against the US dollar.

That’s all for this week’s newsletter!

DISCLAIMER: The information contained in this newsletter is for informational and educational purposes only. Nothing herein shall be construed to be financial, legal, or tax advice. The opinions of this newsletter are solely that of the publisher.

Get early access to our newsletter and miss nothing from the markets. Join our journey towards financial literacy today.

Our private announcement group will keep you updated with market movers and urgent matters. For only $1/month, you'll receive our weekly newsletter every Sunday night and daily notifications on important events, some with detailed thoughts from economist Mr. Sani Hamid and RinggitPlus founder Hann Liew.

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