KIFAC 2019 - Part 4
6 years ago
Monday, March 30, 2009
Every Cloud Has A Silver Lining
In difficult times, the main challenge is survival and to maintain liquidity. Bad times don’t last forever. Often such times make better people. If dark clouds are forming, be prepared with an umbrella. It does not mean you have to stay indoor during the rain. It is your choice. In the economic rain, many can still find new fortune and success. So be ready to chase after the opportunities that many others may miss out due to complacency, lack of preparedness and courage to brave the economic storm!
Thursday, March 26, 2009
Village For Sale
Sheep dot green hills. Pheasants hop across country lanes. Quaint cottages sit next to a tiny stone church. Neighbours who have known each other since birth greet strangers warmly.
And for at least 23 million pounds (about $32 million), this leafy, nostalgic slice of England could be yours.
The village of Linkenholt's 21 cottages, grand manor house, lush green cricket pitch and accompanying pavilion are part of an estate that also encompasses 1,500 acres (600 hectares) of farmland and another 425 acres (170 hectares) of woods. The only piece of property not for sale is St. Peter's, built on the site of a 12th century church. According to the estate agent – "that is owned by God."
The 40 or so residents, many of whom have lived here all their lives, hope any new owner will keep the estate together and resist the urge to parcel off the land located in Hampshire only 75 miles (120 kilometers) southwest of London.
It's not the first time the estate has gone up for sale. It was bought for 2,000 pounds in 1629 and sold about 60 years later for 12,000 pounds - a kingly sum in those times.
The estate remained in the same hands until the 19th century. Roland Dudley bought it in the 1920s. Herbert Blagrave took ownership in the 1960s - and after he died without heirs, his charitable trust became the owner. The trust is trying to diversify its interests, which is why it has chosen to sell. Despite the challenging economy, Linkenholt is expected to generate interests. It is a unique purchase as there isn't really anything like this on the market.
I am definitely interested as the other instruments like FD, unit trust and shares are not sexy at the moment. However the asking price was way too steep. Like it or not have to give it a pass.
Perhaps the political frogs can retire happily ever after over there. Perhaps the few high profile missing individuals can be found there. Turn it into a Malaysia village. Dot it with pomelo, durian and angsana trees. The cricket pitch is useless because chances are the only cricket the new owners know is the insect, so just tear it up and build condominiums!
If the condominiums are not selling well, run to the authorities for bailout. Then make another round of money by selling the land to the authorities for 200%. The authorities need the land to build a sports academy to produce world beaters. They have discovered that our sportsmen were constantly ‘frozen’ on big stage tournaments because they did not acclimatize well with the weather!
That’s not the end. Get the contracts to build the academy, to supply materials and services, to maintain the infrastructure and the list goes on and on…..
Majulah Sukan Untuk Negara.
And for at least 23 million pounds (about $32 million), this leafy, nostalgic slice of England could be yours.
The village of Linkenholt's 21 cottages, grand manor house, lush green cricket pitch and accompanying pavilion are part of an estate that also encompasses 1,500 acres (600 hectares) of farmland and another 425 acres (170 hectares) of woods. The only piece of property not for sale is St. Peter's, built on the site of a 12th century church. According to the estate agent – "that is owned by God."
The 40 or so residents, many of whom have lived here all their lives, hope any new owner will keep the estate together and resist the urge to parcel off the land located in Hampshire only 75 miles (120 kilometers) southwest of London.
It's not the first time the estate has gone up for sale. It was bought for 2,000 pounds in 1629 and sold about 60 years later for 12,000 pounds - a kingly sum in those times.
The estate remained in the same hands until the 19th century. Roland Dudley bought it in the 1920s. Herbert Blagrave took ownership in the 1960s - and after he died without heirs, his charitable trust became the owner. The trust is trying to diversify its interests, which is why it has chosen to sell. Despite the challenging economy, Linkenholt is expected to generate interests. It is a unique purchase as there isn't really anything like this on the market.
I am definitely interested as the other instruments like FD, unit trust and shares are not sexy at the moment. However the asking price was way too steep. Like it or not have to give it a pass.
Perhaps the political frogs can retire happily ever after over there. Perhaps the few high profile missing individuals can be found there. Turn it into a Malaysia village. Dot it with pomelo, durian and angsana trees. The cricket pitch is useless because chances are the only cricket the new owners know is the insect, so just tear it up and build condominiums!
If the condominiums are not selling well, run to the authorities for bailout. Then make another round of money by selling the land to the authorities for 200%. The authorities need the land to build a sports academy to produce world beaters. They have discovered that our sportsmen were constantly ‘frozen’ on big stage tournaments because they did not acclimatize well with the weather!
That’s not the end. Get the contracts to build the academy, to supply materials and services, to maintain the infrastructure and the list goes on and on…..
Majulah Sukan Untuk Negara.
Wednesday, March 25, 2009
Right Time To Invest?
The outlook of the investment industry remains uncertain amid continued risk aversion, volatility and flickering signs of hope in capital markets, industry players said.
Sales may improve this year as equity markets locally and abroad were starting to look attractive due to cheap valuations. Although sales had started to slowly pick up since early this year, it may be impacted severely if the market continues to fall to lower levels.
According to Federation of Malaysian Unit Trust Managers, the number of unit trust agents exiting the industry last year is less than 10%. The decline was much lower compared with other agency-related industries. Most consultants are in for the long haul and understand that the recent market volatility is temporary. Despite the poor investor sentiment, there had not been any panic selling of unit trusts.
Now is the right time to invest. In the current market where uncertainty prevailed, it was best to accumulate assets using the method of dollar-cost averaging, whereby a fixed amount of investment is regularly made regardless of how the market is performing.
As for investors who prefer to invest in one lump sum, they can invest based on the principle of asset allocation. Their money is divided into three portions, namely aggressive or equity-based funds, moderate-risk funds or lower-risk segments such as bonds or money market funds.
Last week, Amanah Saham Nasional Bhd (ASN) announced an income distribution of 6.25 sen per unit for Amanah Saham Malaysia unit holders. The dividend announcement was for the financial year ending March 31, 2009 (FY09). The dividend was the lowest ever declared by ASN. However it is more attractive than Fixed Deposit rate of 2%.
Sales may improve this year as equity markets locally and abroad were starting to look attractive due to cheap valuations. Although sales had started to slowly pick up since early this year, it may be impacted severely if the market continues to fall to lower levels.
According to Federation of Malaysian Unit Trust Managers, the number of unit trust agents exiting the industry last year is less than 10%. The decline was much lower compared with other agency-related industries. Most consultants are in for the long haul and understand that the recent market volatility is temporary. Despite the poor investor sentiment, there had not been any panic selling of unit trusts.
Now is the right time to invest. In the current market where uncertainty prevailed, it was best to accumulate assets using the method of dollar-cost averaging, whereby a fixed amount of investment is regularly made regardless of how the market is performing.
As for investors who prefer to invest in one lump sum, they can invest based on the principle of asset allocation. Their money is divided into three portions, namely aggressive or equity-based funds, moderate-risk funds or lower-risk segments such as bonds or money market funds.
Last week, Amanah Saham Nasional Bhd (ASN) announced an income distribution of 6.25 sen per unit for Amanah Saham Malaysia unit holders. The dividend announcement was for the financial year ending March 31, 2009 (FY09). The dividend was the lowest ever declared by ASN. However it is more attractive than Fixed Deposit rate of 2%.
Tuesday, March 24, 2009
Difficult To Sustain Above 5%
Employees Provident Fund (EPF) contributors may have to be contented with lower returns in the coming years as the fund struggles to boost income amid steep falls in interest rates and a weak equity market.
Analysts said given the fund’s size and strict mandate, it would be very difficult to sustain payouts of above 5% in the coming years. The fund has already hinted that this year’s payout would be less than that for 2008.
In the near term, weak equity markets will continue to hurt EPF but in the longer term, the performance will also be determined by the returns it gets from investing in low-risk assets such as government bonds. EPF had allocated a quarter of its RM342bil investment funds for higher yielding government papers. But as these higher yielding notes expire, the fund must purchase new issues which will now come with lower returns.
Malaysian Government Securities (MGS) debt papers maturing in three and five years are currently yielding less than 4%. In comparison, MGS five-year notes yielded more than 5% a decade ago and above 7% during the 1997/98 Asian financial crisis.
Another big chunk of EPF holdings is in highly rated corporate bonds and low-risk guaranteed loans. However, the global economic turmoil has cut the supply of new bonds coming into the market. Cheaper lending rates had also reduced interest income from loans given out.
EPF was able to fork out steady dividends of above 5% between 2004 and 2007 was mainly due to gains from investments in equities. However current market scenario had eroded the value of EPF’s shareholdings, forcing it to make a provision of RM4.69bil to account for the lower value of its shares, both domestically and abroad.
The KL Composite Index fell 40% in 2008. The economic slowdown has also dragged down corporate profits. This, in turn, has impaired their ability to pay out dividends to shareholders, further reducing the return on investments for EPF.
The EPF has stakes in more than 100 companies listed on Bursa Malaysia, as well as smaller stakes in a number of big listed firms overseas. Income from equities accounted for 35%, or RM6.67bil, of EPF’s total gross investment income last year.
Just how bad EPF’s dividend payouts will be affected by the current market situation remains to be seen. It is worth noting that under the law, EPF has to maintain a dividend rate of at least 2.5% annually. The dividend must come from income generated from its investments.
Analysts said given the fund’s size and strict mandate, it would be very difficult to sustain payouts of above 5% in the coming years. The fund has already hinted that this year’s payout would be less than that for 2008.
In the near term, weak equity markets will continue to hurt EPF but in the longer term, the performance will also be determined by the returns it gets from investing in low-risk assets such as government bonds. EPF had allocated a quarter of its RM342bil investment funds for higher yielding government papers. But as these higher yielding notes expire, the fund must purchase new issues which will now come with lower returns.
Malaysian Government Securities (MGS) debt papers maturing in three and five years are currently yielding less than 4%. In comparison, MGS five-year notes yielded more than 5% a decade ago and above 7% during the 1997/98 Asian financial crisis.
Another big chunk of EPF holdings is in highly rated corporate bonds and low-risk guaranteed loans. However, the global economic turmoil has cut the supply of new bonds coming into the market. Cheaper lending rates had also reduced interest income from loans given out.
EPF was able to fork out steady dividends of above 5% between 2004 and 2007 was mainly due to gains from investments in equities. However current market scenario had eroded the value of EPF’s shareholdings, forcing it to make a provision of RM4.69bil to account for the lower value of its shares, both domestically and abroad.
The KL Composite Index fell 40% in 2008. The economic slowdown has also dragged down corporate profits. This, in turn, has impaired their ability to pay out dividends to shareholders, further reducing the return on investments for EPF.
The EPF has stakes in more than 100 companies listed on Bursa Malaysia, as well as smaller stakes in a number of big listed firms overseas. Income from equities accounted for 35%, or RM6.67bil, of EPF’s total gross investment income last year.
Just how bad EPF’s dividend payouts will be affected by the current market situation remains to be seen. It is worth noting that under the law, EPF has to maintain a dividend rate of at least 2.5% annually. The dividend must come from income generated from its investments.
Monday, March 23, 2009
Investment - Was It All Worth It?
CIMB group CEO Datuk Seri Nazir Razak said “Investors should diversify their portfolios and preserve their capital under the current downbeat and uncertain economic climate. Look out for companies that are well managed. At times like this, the risk-reward equation is greatly amplified, so invest in companies with astute leadership that is well-aligned with shareholder value creation; the right managers can make highly profitable and transformative acquisitions or diversifications.”
He also cautioned investors to ensure that their asset management companies had high integrity and able to withstand temptations to be less transparent and ethical in the face of adversity.
Hmm.. Well managed companies, astute leadership, well-aligned with shareholder value creation, high integrity, transparent and ethical – love all these words.
Unfortunately we are not living in a perfect world! Thus the selection is pretty uncomplicated as there is only a handful of choices right here right now!
Definite no-no to those which are closely linked with the political parties or his big brother! These companies are the exact opposite. Worst still, they are probably managed by some Little Napoleons or some sons in law!
Perhaps, it is time to discard our investor’s cap (FD is only paying a miserable 2%, lower than inflation rate) and put on our spender’s cap!
He also cautioned investors to ensure that their asset management companies had high integrity and able to withstand temptations to be less transparent and ethical in the face of adversity.
Hmm.. Well managed companies, astute leadership, well-aligned with shareholder value creation, high integrity, transparent and ethical – love all these words.
Unfortunately we are not living in a perfect world! Thus the selection is pretty uncomplicated as there is only a handful of choices right here right now!
Definite no-no to those which are closely linked with the political parties or his big brother! These companies are the exact opposite. Worst still, they are probably managed by some Little Napoleons or some sons in law!
Perhaps, it is time to discard our investor’s cap (FD is only paying a miserable 2%, lower than inflation rate) and put on our spender’s cap!
Subscribe to:
Posts (Atom)
