JP Morgan Asia’s downgrade of Malaysia’s status to underweight is the latest bad news for Malaysia and potent testimony that the Prime Minister, Datuk Seri Najib Razak has gained no respite for Malaysia or for himself on the 1MDB global scandal despite the landslide Barisan Nasional victory in Sarawak state general election on Saturday.
The equity research team cited concern about Malaysian banks, which also account for about 30 percent of the iShares MSCI Malaysia ETF (EWM), as one of the main reasons for the downgrade.
It said: “Negative outlook on financials driven by increasing credit costs due to declining loan and deposit growth. Banks are grappling with rising non-performing loans (expected to peak at 3.1 percent in 2018).”
The iShares MSCI Malaysia ETF had fallen 7.7 percent in the second quarter, which makes it the second worst performing market in Asia after Taiwan.
In the past fortnight, while Najib has led the campaign in the Sarawak state elections to rain money throughout the state, Malaysia has not ceased to be at the receiving end of adverse international developments and references, like being named number two by The Economist in its second index of crony capitalism, just behind Russia which clinched the crony capitalism crown.
The Economist’s ranking for Malaysia is against the backdrop of the global fraud investigations into the RM50 billion 1MDB scandal, which had already gained for the country a string of infamous world rankings – like the international website, foreignpolicy.com’s ranking for host country for the third “world corruption scandal of 2015” and TIME magazine’s citation of Malaysia as the second worst example of global corruption in March.
The landslide Barisan Nasional victory in the Sarawak state general elections have not checked the velocity of Malaysia hurtling down the slippery slope towards a failed and a rogue state, with the widening global web of international fraud and money laundering investigations implicating more and more international institutions and personalities.
Will this issue be the top agenda of Parliament when it reconvenes on Monday on 16th May or will Parliament “sleep-walk” for the eight parliamentary sittings as if the first global scandal does not exist in Malaysia and that it was the whole wide world which is hallucinating about the 1MDB scandal and its adverse effects?
The Prime Minister should present a White Paper on the 1MDB scandal, taking into account the report of the Public Accounts Committee on the 1MDB, stating the government’s position on the nation’s first global scandal, and to set aside at least three days for debate on the Government White Paper on 1MDB.