This Week at a Glance…

i) Foreign interest in the Malaysian market continues - The net inflow was 2.3 times higher compared to the previous week.

ii) Ringgit depreciates to RM4.7064 - Now at a 10-month low, but it’s not all doom and gloom.

iii) The DuitNow QR fiasco - Maybank, Public Bank, Hong Leong, and CIMB have agreed to waive merchant fees from QR payments.

Scroll down to read the details.

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Bursa market retains interest from foreign funds.

Foreign investors continued to net buy on Bursa Malaysia at RM550.9 million for the week ending 22 September.

The net inflow was 2.3x higher than the week prior, and the highest over the past eight weeks.

They were net buyers every day, registering net purchases of over RM100 million daily except on Thursday (21 Sept).

The top three sectors that saw the highest inflows were Utilities (RM197.0 million), Transportation & Logistics (RM110.1 million) and Consumer Products & Services (RM72.8 million).

Exchanging hands with local institutions

Stocks that gained attention from foreigners include YTL Power International, Public Bank, Malaysia Airports, and Petronas Dagangan. They acquired a total of RM274.9 million in these equities.

However, local institutions were offloading three of the top four stocks that saw net buying from foreigners, suggesting that both sides were exchanging hands for the week.

Ringgit depreciates and disappoints.

On Friday, the local note closed lower at RM4.7064, only 4 cents away from its all-time low of RM4.74 in November.

The reasons for this were previously discussed. To summarize:

• US inflation spiking back up to 3.7%.

• US Fed forecasting one more rate hike by end of the year.

• China’s economic slump due to the real estate crisis.

• BNM expected to pause OPR for the rest of the year.

The weakness has sparked debate and disappointment, with netizens assuming that a declining ringgit is detrimental.

Pelabur Bijak, a prominent finance influencer on Twitter, suggested citizens spend more in order to increase inflation.

Elevated inflation will push Bank Negara Malaysia to hike the OPR and therefore strengthen the ringgit.

This suggestion is not silly. It can work.

But if BNM hikes the OPR, it will only strengthen the ringgit in the short-term. The central bank’s mandate is to maintain the stability of financial markets and the ringgit - it only has the power to reduce day-to-day volatility.

The long-term trajectory needs to come from better government policies.

Politicians must stop campaigning on the ringgit’s weakness and concentrate on more economic indicators such as GDP growth.

Our economy needs to outpace the growth in other emerging markets, then investors will be willing to come in, and the ringgit will naturally benefit.

A well-controlled fiscal position is also essential. We must refrain from excessive borrowing to finance the country's expenses.

Next, the ringgit must be highly tradable to encourage foreign investment. Don’t put unnecessary restrictions that make it harder for start-ups or businesses to invest in our country.

*This was discussed in one of our recent Spotify sessions with financial experts Hann Liew and Sani Hamid (all credits go to them, I just summarized their points).

Weaker currency, different opportunities.

Rather than crying over spilled milk and the 101 things that the current administration “should’ve” “would’ve” “could’ve” done, we should use it as an opportunity.

A declining ringgit makes working overseas more attractive. You don’t have to commit to a full-time job. Look for part-time freelancing opportunities that pay you in any strong foreign currency.

There are so many sites on Google for you to do so.

Alternatively, you may DM small to medium social pages and offer your services, be it copywriting, marketing, photography, etc. Some of them are surprisingly humble and offer good rates.

A declining ringgit is also a telltale sign to diversify your investments. It’s not to say that the Malaysian market or the local note are doomed.

Diversification does not only include having multiple stocks and bonds, but currencies as well. Whether it’s SGD, USD, etc, you need to have some assets that are not necessarily in the ringgit, with the percentage depending on your risk profile.

What else can we do?

DuitNow QR Fees to be implemented by Nov 1, RHB Bank not absorbing the cost.

PayNet, the service provider behind DuitNow, will be implementing transaction fees on merchants starting from November 1.

To clarify, there are two types of fees:

i) Merchant Discount Rate (MDR)

- Charged to merchants receiving payments.

- 0.25% fee for QR payments from current/savings account or E-Wallet.

- 0.50% fee for QR payments from credit cards.

This fee structure is not fixed. It will depend on whether banks decide to absorb the additional cost.

CIMB, Public Bank, Hong Leong, and Maybank have clarified that DuitNow QR fees will be waived until the end of the year.

RHB Bank, meanwhile, is planning to implement this fee in October.

ii) RM0.50 transaction fee

- For peer-to-peer and personal transfers above RM5,000.

- Businesses will not be affected.

- This fee will not be charged with MDR for the same transaction.

PayNet is confident that the additional fees will not cause businesses to hike prices.

Some netizens also agree with the service provider, saying that the charges were previously implemented on credit cards anyway.

But for me, I think that businesses (especially those with tighter margins) will use this as an excuse to raise prices, even when most banks have announced that fees will be waived.

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.

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