Many Malaysians will still remember the Asian financial crisis of 1997/98. Nearly 20 years ago, the then crisis was responsible for the greatest capital market crash in the country and forced many structural changes we see today in the financial markets.
It was a time of great turmoil, with people losing their investments on a scale never seen since. Companies for years bankrolled on easy credit were leveraged to the hilt and crumbled under the weight of their debts as business evaporated and the cost of credit soared.
Shares traded on the stock exchange mirrored the scale of the troubles. The benchmark stock market index plunged from a high of 1,271 points in February 1997 to 262 on Sept 1, 1998. Words such as tailspin and panic were common in the financial section of newspapers and the chatter among market players as people scrambled to take action.
Without integrated policies to help them tackle the rising cost of living, the sandwich class faces a bleak 2015
LAU (not her full name) is a real estate agent earning just under RM100,000 per year, which puts her at the upper end of the middle class.
But as a 40-year-old single supporting her 65-year-old widowed mother and putting her son through primary school, she is also feeling the squeeze as part of the sandwich class.
“If I can pull through and pay the bills, that is a good month already,” she says. “I can’t even dare to think about retirement, my son’s further education or any emergency.”
The only two words in her dictionary, she says, “are ‘keep going’. I have to be healthy so that I can continue working.”
Bank Negara Malaysia is likely to cut its overnight policy rate (OPR) by 25 basis points in 2015, as the fall in the oil prices would cushion the pressure on inflation, according to UBS.
The central bank last increased its OPR in July 2014 to 3.25%, after keeping it at 3% since 2011.
At its last Monetary Policy Committee meeting in September 2014, it decided to maintain the rate.
UBS's Singapore-based senior economist, Asean and India, Edward Teather, said inflation was unlikely to be high in Malaysia, estimating it to be 3.9% next year. This, he said, was well below the government's estimation of 4.5%.