Again, we all know there are people who comment without thinking. Whose capital flight are we talking about? From my conversations with various people in the market, there are two types (1) institutional money (2) retail/individuals money. (1) institution money that are foreign money that began flowing out from the US when the Federal Reserve were buying bonds to lower the US interest rate. With US economic growth and interest rate down, the money flowed into the emerging markets looking for higher returns. This is the main reason why the currencies of the emerging markets appreciated some 4-5 years ago. Now, the US Central has signaled it will start to bring US interest rates up again. So, the money that came in 4-5 years ago have begun to flowing out the last 10-12 months. Also, many public-listed companies, both GLCs and non-GLCs buy assets abroad for investment purposes. Every time a purchase is made, RM has to be exchanged to the currency of the country of the new investment. A lot of Chinese business families have been taking money out of Malaysia for a long time now. Their private bankers indicate to me these, in Singapore, HK, London, Switzerland, Germany and Vienna are in the hundreds and hundreds of billions. (2) In regards to high net worth individuals, usually they smuggle the money out by issuing fake invoices from overseas or when they export their sold goods overseas, the bulk of the proceeds of the sale do not enter Malaysia. There are also smaller amounts that seep through our borders through money changers, diamond sales, art sales etc. So, next time before you comment, think. Failure to do only reveal your own stupidity and ignorance. Thank you.
Posted on: Wed, 17 Dec 2014 06:40:33 +0000
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