On the surface, the “Red Shirt”, a movement of ultra-nationalistic Malays led by Datuk Seri Jamal Md Yunus, has virtually nothing to do with Deutsche Bank, Europe’s largest Global Systemically Important Bank (GSIB).
The “Red Shirts”, a counter reactionary movement was formed as a result of Malay angst at the Berseh demonstrations, an annual affair in which thousands of mostly Non-Malay “Yellow” shirted protestors descend onto Kuala Lumpur. In recent years, social media has played up images of these protestors mocking images of the Prime Minister, Dato Seri Najib Tun Razak, which has caused consternation among the majority Malays, who view this as an affront to their leader.
The Rembau Times is unafraid to say that the Bersih strategy is a failed strategy. It only draws participation from Non-Malays and further accentuates the racial polarisation in the country. In order for the Opposition to win, they have to first come up with a Malay led policy, or if not, a “sell approach” that shows the benefits of an Opposition led Government rather than confront the current Government endlessly and without gaining any strategic advantage.
Neither do we condone the “Red Shirt” movement. This movement is adopting increasingly hostile and violent tactics, the latest incident in Sabak Bernam saw two Berseh supporting motorcyclists physically and verbally assaulted by a much larger group of “Red Shirts.”
The Prime Minister has been silent on this. This is unsurprising as Datuk Seri Jamal enjoys a close relationship with Sri Perdana and was recently seen amongst the UMNO Hoi-Poi during the occasion celebrating Najib’s 40 years in politics.
However, the risk is that the national conversation gets dragged about the “Red Shirts” versus the “Yellow shirts”, akin to the situation that engulfed Thailand a few years back. Here is where, The Rembau Times feels that there will be a new colour for the country to deal with – the Blue of Deutsche Bank.
Literally crossing the wires as our article goes to print is news that the bank has failed to reach a deal with US Justice Department with regards to the fines over the banks actions in the lead up to the 2008 Global Financial crisis. This may be seized upon by Hedge Funds to launch a speculative attack against the bank that could result in a deep selloff in US Equities over the next week or so.
We have always argued that the risk to Dato Seri Najib likes more in the economic side rather than in any politically led issue. The key risk facing Dato Seri Najib is a collapse of the Ringgit beyond RM 4.80 to the US Dollar, something that seems likely should there be another round of stock market volatility followed by the markets view that the oil situation is grossly oversupplied.
While the oil situation is temporarily helped by the supply disruptions due to Hurricane Matthew, concerns are beginning to emerge about the OPEC “cut”. After all, Saudi Aramco has decided to widen its discount for sale of its key products into China, a move that analysts see as trying to retain market share from competitors like Iran and Iraq.
But if the situation involving Deutsche does take a turn for the worse this week, expect investors to flee from risky assets into safe havens. That means selling down foreign holdings of Ringgit bonds, which may take the Ringgit a little bit closer to the all-important RM 4.80 psychological mark, a development that the “Red Shirts” can do nothing about.