Continue from my previous article in Sept 2021, we learn that there are three ways to define sovereign debt : statutory debt, official debt and total debt. While, total debt is more accurate to do so. We can notice from the special "windfall" tax recently.
We can see from KLSE participant that during the period of state border opening, foreign side became net buyers while local institutions keep retreating.
Remarks : Local institutions consists of mostly the sovereign, pension and government linked fund.
On global side, the energy supply : coal & crude oil will be the parameters which affect global economy recovery from the pandemic. Current crude oil price is having an upward trend because Saudi side refused to increase oil production to cover back its previous loss from pandemic. They are able to do so because of the shortage of alternative energy supply : coal.
The supply of coal has interfered the activities of manufacturing sector. First, factories need to pay higher electricity cost for production. And, in country like China, the government limit the electricity usage of factories thus disrupting the production line then causing reduction of goods supply in the market and finally the price hike of finished goods.
While crude oil is the core item used in transport, whether by air or land. Together with the ongoing peak of sea freight rate, it will be hard for global economy recovery.
Company like TENAGA (5347) will face not only the high price in its raw material : coal & gas , but also ICPT rebate mechanism plus special "windfall" tax.
We can see from developed countries like, United States , United Kingdom, Germany, France..... One of the issues in economy recovery is the skyrocketing of CPI index. While , this is not difficult to understand since currently price for raw materials , sea freight, energy : coal & crude oil .... all in upward trend. While, for domestic market, it is 2.0% and 2.2% respectively for August & September 2021.
The United States CPI index will be the parameter for FED rate hike which will then dampen the market , whether stock or bond. So, recently FED reacted by slowly reducing the amount of quantitative easing into the market. While, the rate hike is a must in upcoming months. At that time, central bank of all over the world will adjust their interest rate respectively .
Nov 2011
Chan Hang
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