What a difficult
year 2016
By the time you are reading this, the year 2016 would have just passed
by more than two weeks although memories are still very fresh of what a
difficult year it was for most rakyats and of course investors of Bursa
Malaysia.
For
one, the majority of most stocks closed near its 52-week low or new 52-week low
in 2016. Only a marginally small group managed to closed near its 52-week high.
For long term investors, the declining stocks prices could only mean a major
erosion of paper wealth in their profit and loss account.
It
would be even more bitter to swallow especially for those who invested most or
major portion of their cash savings in stocks rather than putting in fixed
deposit. For those who practised proper asset allocation in investing, the loss
is not that much. As Warren Buffet advised : Never put all your eggs in one
basket. In fact I like to add in that it is advisable NOT to put the major
portion of your eggs in one basket too!
Why
did the majority of stocks prices declined to such new 52-week low or near its
52-week low? One must understand that it is always the profits earned that
determines the direction of share price. This is the prime mover in my opinion.
Most
companies reported lower profits or even loss as at the third quarter of 2016.
It was no surprise to me because the economy as a whole was not going well in
many quarters.
So
when most companies and businesses are not doing well in this subdued economy
time, less profits set out chain of an unfortunate dominoes effect of getting
less take home pay and thus spending less to cope with rising cost of goods and
services.
It
is really a double edge sword for almost the whole segment of business and the
rakyats. To illustrate how bad businesses are, here are some real life
situations I personally experienced or shared by my closed friends.
Cosmetics
counters are almost eerily deserted most of the times. The next time you go to
the mall, try to observe the dire quiet situations of the cosmetics counters.
These counters are normally located together in a big space. But it has been
many months since customers started to disappear.
Even
the cosmetics sales consultants started to call or Whatsapp their regular
disappearing customers to inform about any promotions or sales going on. During
the good days, you won't hear from them at all. Why? They were busy
entertaining hoards of customers. Even regular customers must wait for their
turns to be served.
A
leading supermarket in Penang has seen its cosmetics counters section becoming
smaller due to less counters still operating as some have closed down.
At
supermarkets, I have noticed that there are now more cases of fruits/essentials
placed back after being chosen, packed, weighed and gummed with a price
sticker. Obviously the customers must have thought the price was within his/her
comfortable range. Only after knowing the price and feeling expensive, decided
not to buy and put it back.
This
cases are confirmed as I personally spoke to one official of a leading supermarkets
who said they are also fed up with this situations happening commonly in a
daily basis. It is giving them extra work, and using up more plastics.
Several
leading malls in Penang has seen more empty shop lots these days than years
back. And some have been empty since last year.
A
good indication of how companies have cut down on expenses is the current
Chinese New Year red packets given out. During the good times, red packets
packed in 10 were freely given out. But this year, it is not easy to ask for
free red packets as most companies have ordered less and hence only given out
to those who make some purchases or their regular customers. Even then, the red
packets come in 5 or 6 only.
Another
clear sign of the slowing economy is the drought of advertisements in The Star.
The Star is getting thinner by each days. There are instances where on certain
days, there was only one colour advertisement in the first half of the paper.
Unlike those days The Star was brimmed with so many colour advertisements
fighting for prominent pages even though those who wanted their advertisements
on preferred pages must pay extra loading for it.
Admist
all these subdued spending, the rakyats are faced with another in the form of inflations. Prices of may
essentials have risen since the late last year.
Many
people are lamenting about the expensive prices of so many things. And there are not much most of us can do
other than to spend less and get less or spend more to get the same.
Life
indeed will even be tougher in 2017.
