Malaysia's Banks Performing and Unaffected by Eurozone Crisis

The recent heavy sell down on the Malaysia stock market and causing the FBM KLCI to tumbles in the past 2 weeks are already picking up. 

Firstly, the main cause is the Eurozone debt crisis which involve Greece, Spain and Portugal, but up to date the International Monetary Fund (IMF) and the European Union (EU) had already bailout them by providing loans. 

Secondly, it was the huge quarter losses of plantation conglomerate Sime Darby. Up to now, Sime Darby share price had already slump down 12% in 2 weeks. The CEO of Sime Darby had also been removed. 

Thirdly,  as we know if the manufacturing sector is suffering a meltdown in demand from Europe, then this will indirectly affect the banks lending prospects, and this was not the problem, as the manufacturing sector in Malaysia is on a pick up trend. Furthermore, Malaysian banks also have no exposure to any of Europe’s papers or business interest.

Although interest rate hikes totalling 75 basis points in 2010, but those bankers are still confident on the loan growth and will be stronger than previous year. If not the Bank Negara will not raise the interest rates. And the inflation are not in pressure.

Thus, Malaysia Banks are fundamentally good and performing and are not in a worrying trend.

European Union and International Monetary Fund pledged US$1 trillion defend Euro

The European Union (EU) and the International Monetary Fund (IMF) pledged roughly US$1 trillion on Monday to defend the falling euro, to prevent the common currency from devalued and collapse.

Most Central banks around the world joined the coordinated effort to prevent Europe's debt crisis from derailing the global economic recovery.

The initiative was under the three-year plan, the European Commission (EU's governing body) will make Euros 60 billion ($75 billion) available while countries from the 16-nation eurozone would promise backing for Euros 440 billion ($570 billion).

Furthermore, the IMF would contribute an additional sum of at least half of the EU's total contribution, or Euros 250 billion.

EU Commissioner Olli Rehn says they will defend the Euro whatever it takes and necessary to be after meeting with those EU's Ministers.