Investment Opportunity in Malaysia Market during COVID 2020 Crisis.

I have been storing some capital to invest during this recession. During the last recession, I am still studying. Being a student, there is not much I can do during that time, and at the same time I’ve missed out on the super growth stage of property in Malaysia during the 2012–2014 time as well. Starting to work in 2016, the market has been growing to a mature stage and rumors about the 10 years cycle of 2008 crisis have been circulating for quite some time. Being worried, I have decided not to invest in the stock market, but only hand picked auction properties which I personally understand 100% to generate handsome income on short term rental (aka Airbnb). I will talk more about this in another article.

As a start, what I will write in this article will generally be the starting steps on investing during crisis time, in the upcoming articles, I will write more specifically on a particular stock listed on KLSE.

This crisis is different from the previous crisis, for a short summary, 2008 is more towards the subprime mortgage market in the United States, and it developed into an international banking crisis with the collapse of the investment bank Lehman Brothers on September 15, 2008 (quote from Wikipedia). At the end of 2009 and early 2010, we saw another Europe debt financial crisis. Put it simply, European countries are not able to pay back their debt, hence the drop in credibility, the currency hence the economy.

The main difference this time compared to other previous crisis, you are not allowed to work. No one knows exactly when this will end, and each country has its own timeline to resume the economy step by step. This situation is worsening by the oil price drop due to super low demand resulted from halted economy activities, and bad news is keep coming in. There are no studies conducted in Malaysia to know exactly how long companies in Malaysia can survive with their reserve, but personally, from my circle of contact, there are proven cases on business with workforce 50–100 has been closed down.

Get back to the topic of investment, we need to understand that such a strong impact on the Malaysian economy is not going to balance back in a short amount of time. 2008 and 2010 crisis each take at least 100 days to start the process of recovery, and the 2008 crisis alone takes 7 years to get back to the level in the year 2007. So if you ask me should we invest now? My answer is a “No”, but we have to continue monitoring the situation. In Malaysia, the condition is getting better, up until today, we already have a few days of 2 digits growth in new cases, but at the same time, our neighboring country is succumbing deeper into the corona trouble.

So the steps that I take can be differentiated into 2 directions

1. Stock Market Investment: I started a spreadsheet for stock analysis, and add in good stock for studies, monitoring the price change every day. The reason why I did not want to invest in is due to the IDSS restriction will be lift-off starting in May, and I expect another drop in companies share as beside a few rare types of companies (pharma and glove manufacturer), I believe their financial report will not be good for Q1 — Q3 2020, and the share price has not yet stabilized. What we can do now is to register a CDS account to get ready for trading activities, and study as thorough as you can on the company which you want to invest. This is where upcoming articles will be based, which is on the analysis and study on each of the stock that I have a preference for.
2. Property Investment: Inline with the business that I am building, I will continue to look for property to invest in. The rumors on the dropping of property prices is less likely to be true. This is due to the high cost of material and land when the developer bought it. Unless this MCO extended so long that the developer will not be able to sustain, the topmost situation is the buyer can enjoy certain benefits in buying a new property, maybe some taxes will be waived etc. However, second-hand properties and auction property might be your ideal market for property right now. The reason due to businessman who need cash for their own cash flow might cut short on their profit (note that they only reduce their profit, they did not suffer loss) of long invested property, and less competition on auction properties.

This article has been quite long-winded, therefore I’ll cut it short here. Any question please post in the comment below and I will try my best to answer.