Tuesday, October 30, 2007

Maybank’s capital guaranteed fund targets Asian equities

TheEdge

KUALA LUMPUR: Malayan Banking Bhd (Maybank) has targeted RM300 million for its newly launched ASEQ Capital Guaranteed fund, the 13th in its investment-linked capital guaranteed series, which invests in Asian equities.

Maybank said yesterday the fund, underwritten by Mayban Life Assurance Bhd, was a single premium investment-linked plan that combined insurance and investments in top performing Asian equities. The plan is open to those aged 18 to 70 years.

Maybank head of consumer banking Spencer Lee said ASEQ Capital Guaranteed “is designed for investors who seek stability and uncapped potential returns via access to a propriety index, which consists of stocks that have potential and showing strong price and earnings momentum”.

The fund also provided several benefits such as affordability, savings and protection to investors, he said.

Lee expects the investment strategy to generate an average potential return of 6.7% per year.

If the underlying investments performed well, the returns would be paid upon maturity, he said.

The minimum entry level for ASEQ Capital Guaranteed was RM15,000 with an investment period of three years and 11 months.

During the offer period, he said the investor would receive free units for investment amounts above RM50,000 per policy with a value-added protection insurance policy providing coverage of up to 125% of the single premium.

“There is considerable risk in directly investing in Asian equities because it requires high capital, infrastructure to access the markets and expertise. With ASEQ Capital Guaranteed, investors are shielded from capital loss if investment is held till maturity,” he said.

Lee said the fund would assist investors to invest in US dollar-denominated equity derivatives on the propriety index, which consisted of 30 to 50 equally weighted stocks from 11 selected countries in the Asia-Pacific.

They include Australia, Singapore, Hong Kong, China, South Korea, Taiwan, Malaysia, Thailand, the Philippines, Indonesia and Pakistan.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Thursday, October 25, 2007

Alliance Investment taps global emerging funds

TheEdge

KUALA LUMPUR: Alliance Investment Management Bhd (AIMB) has launched the Alliance Advantage GEM Treasures Fund to provide an option for Malaysians seeking more diversified investments.

AIMB, a member of the Alliance Financial Group, had teamed up with the HSBC Group to launch the feeder fund which seeks long-term returns from capital growth and income by investing in equities of global emerging markets and global bonds.

The fund would tap into the HSBC Investments Funds GEM Treasures Fund, which was sub-managed by Sinopia Asset Management, a unit of the HSBC Group.

Equity investments will be split among Latin America, Eastern Europe, Asia, Africa and the Middle East; and fixed income instruments from around the world.

Alliance Financial Group chief executive officer Datuk Bridget Lai said the partnership reflected the group’s ability to bring to the market innovative and value-added products that meet specific lifestyle and investment needs of Malaysians.

She said 400 million units priced at 50 sen each was offered from yesterday until Nov 12. HSBC Bank Malaysia Bhd is the exclusive distributor of the units.

The fund will be measured against a composite benchmark consisting of 70% MSCI Emerging Markets Free Index in US dollar un-hedged and 30% JP Morgan Government Bond Index in US dollar, currency hedged.

It will invest 95% of its net asset value (NAV) in HSBC Investment Funds GEM Treasures Fund and up to a maximum of 5% would be in liquid assets to meet redemptions.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

TA Investment increases fund size of TA ABN AMRO Utilities

TheEdge

KUALA LUMPUR: TA Investment Management Bhd (TAIM) has increased the approved fund size for its TA ABN AMRO Utilities Fund (TAUF) by 50% to 300 million units, due to over whelming response to its target fund size of RM70 million.

TAIM said in a statement yesterday that the increase was in response to the public’s demand for more defensive types of investments against the backdrop of recent global market volatility.

TAIM’s chief executive officer Simon Chow said: “The response to this product has exceeded our expectations, surpassing our initial target fund size of RM70 million.”

TAUF was first launched on Aug 15, 2007 as Malaysia’s first unit trust that invests in utility equities globally, giving its investors a 1.96% return on their capital in 1.5 months as of Sept 28.

The fund is a feeder fund that invests in the ABN AMRO Funds – Utilities Fund, which has delivered a simple average annual return of 26% for the past three years as of Sept 28.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Wednesday, October 24, 2007

Maybank launches Islamic fund, focusing on copper, wheat

TheEdge

KUALA LUMPUR: Malayan Banking Bhd launched its first structured Islamic deposit product which would invest in two underlying commodities — copper and wheat — while guaranteeing an annual payment of 2.45% over the four-year tenure.

The proposed RM300 million close-ended fund — STRIDE-i — would invest in copper futures on the London Metal Exchange (LME) and wheat futures on the Chicago Board of Trade (CBOT) respectively.

Maybank’s executive vice president and Islamic banking head Ibrahim Hassan said yesterday STRIDE-i offered total capital protection on the principal investment and guaranteed annual payment of 2.45% over four years or a return of 9.8% at maturity date.

“On a best-case scenario, the syariah-compliant fund would deliver potential upside earnings of up to 39.6%,” he said at the launch of the fund. The initial offer period for the deposit will close on Nov 4.

He said the potential upside was achievable, as the commodities had relatively low risks, due to limited supply and increasing demand for consumption that would drive the prices up.

Maybank would invest in the futures markets of LME and CBOT over a four-year period, Ibrahim said, adding that demand for these commodities would be driven by China and India’s economic and population growth.

“For copper, these two countries have overtaken the US as the largest copper consumer since 2002. They are expected to absorb 41% of the world’s copper supply in 2009, from 36% in 2006.

“For wheat, China and India are already consuming more than they produce especially since they need to satisfy the appetite of 2.4 billion people for noodles, dumplings, bread, pastries and all sorts of cookies. Today, these two nations are estimated to consume as much as 39% of the world’s wheat supply,” Ibrahim said.

STRIDE-i is opened to local individuals aged 18 and above and institutional investors. Minimum initial investment is RM50,000 while the subsequent investment is in multiple of RM50,000 and above. Investors will be issued a negotiable Islamic debt certificate, redeemable at face value on the maturity date. There will be no exit fees, annual management fees or service charges imposed upon investors.

The new fund would also enable Maybank to market at least RM600 million in via syariah-compliant wealth management products for its fiscal 2008 as well as offering these products to regional customers, starting with Singapore early next year.

Ibrahim said Maybank would also offer more structured deposit products investing in different underlying assets.

“In addition to structured deposit products, we will also explore other platforms for syariah-compliant offerings; among them, private investment funds, managed portfolios, exchange-traded funds, restricted investment scheme and others. We plan to launch another such products by the end of this financial year,” he said.


Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

AmInvestment launches climate change fund

BusinessTimes

AMINVESTMENT Bank Group has launched the RM300 million AmGlobal Climate Change Fund which will ultimately buy stocks globally, that will benefit from producing cleaner or more efficient energy.

The fund invests at least 95 per cent in Schroder International Selection Fund Global Climate Change Equity, which is managed by global asset management company Schroder Investment Management Ltd.

Due to increasing awareness and pressure from the governments as well as the public on global climate changes, corporations in every industry are investing big to alleviate the long-term impact, AmInvestment Bank Bhd managing director T.C. Kok said.

"Corporations which mitigate and adapt early to the climate changes will gain and benefit over the long run. Investors, too, can gain from this opportunity by investing in this fund," he said during the fund launch in Kuala Lumpur yesterday.

The fund will buy shares in US' General Electric, which has a large number of businesses positively exposed to climate changes with US$900 million (US$1 = RM3.38) already invested in research and development for climate change projects.

It will also invest in shares of Koninklijke Phillips Electronics of Netherlands, which is a leader in making energy-efficient lightbulbs.

Other stocks include Japan's electronics firm Sharp and car companies Toyota Motor and Honda Motor. The bulk of the assets will be put into European and US companies, which generally lead in this area.

"What we have identified here is an emerging, long-term trend. The early bird investors will benefit," chief executive officer of AmInvestment's funds management division Datin Maznah Mahbob said.

She said Schroder in London has two climate change scientists, who also work in several European committees that help formulate policies on climate changes, advising the fund managers.

This is one main area that sets this fund apart from other investment funds in Malaysia which also focus on the climate change theme, she said.

The investment scope of this fund is also broader compared to existing funds with a similar theme in the market, she added.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Good response to Prudential’s new fund

TheStar

KUALA LUMPUR: Prudential Fund Management Bhd, a unit of Britain-based Prudential plc, has sold nearly half of the 800 million units of its PRU 08 Capital Protected Asian Infrastructure Fund.

The fund has been offered for sale at 25 sen per unit since Oct 16. It is a two-year closed-end capital protected fund that offers investors eight opportunities (based on four quarters to a year) to cash out early.

A tenth of the capital raised would be used in an over-the-counter swap contract with investment bank Merrill Lynch International Bank Ltd offering exposure linked to the performance of three Asian infrastructure-based companies.

The remainder would be invested in ringgit-denominated money market instruments or fixed income securities.

The offer period ends on Nov 14.

Prudential's launch of PRU 08 capital protected Asian Infrastruture Fund. From Left to Right: PFMB Chief Officer Retail Marketing & Distribution Paul Khoo, PFMB CEO Mark Toh

Retail marketing and distribution chief officer Paul Khoo said the fund would allow investors to cash out every quarter based on a potential payout of 2% per quarter, depending on the equity markets' performance, or reap a potential 16% payout should the fund run its entire lifespan.

“This is the first time we're offering this type of structured fund in the country. Other countries where it is popular are Singapore and South Korea,” he told reporters at the fund launch yesterday.

The fund would be invested in stocks of South Korea's Hyundai Heavy Industries Co Ltd, Japan's Komatsu Ltd and Singapore Airlines Ltd.

Hyundai Heavy Industries is involved in shipbuilding, Komatsu manufactures mining and construction equipment while Singapore's flagship carrier provides passenger and cargo transportation as well as airport management.

Khoo said Prudential Fund Management picked the three companies given Asia's strong economic growth.

The three stocks, he added, were the top picks based on the 300 stocks the company had researched on, and also selected on their consensus-wide ratings.

“The need for the flow of raw material due to the economic growth in China and India necessitates the use of transportation and heavy machinery to extract or move the raw material,” he said.

He added that the Asia-Pacific region needed another RM3.5 trillion in infrastructure development.

Meanwhile, Khoo said two more funds would be rolled out this year, of which one had been approved by the Securities Commission.

He said the company had raised RM600mil from the six funds launched this year.

“We'll be launching at least six funds next year, with a mixture of offshore and structured funds plus Islamic funds,” Khoo said, adding that there were many growth opportunities for Islamic funds.


Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Tuesday, October 23, 2007

Public Bank to launch China fund

TheStar

KUALA LUMPUR: Public Bank will today launch its first China fund, PB China Pacific Equity Fund.

The new fund will invest mainly in China stocks and the balance in North Asian markets such as Japan, South Korea and Taiwan.

Chairman Tan Sri Teh Hong Piow said in a statement the fund offered investors an opportunity to tap the solid growth prospects in China.

The bank said a minimum of 50% and up to 98% of the fund's net asset value (NAV) would be invested in China stocks listed on the China, Hong Kong, United States, Singapore and other approved markets.

The issue price is 25 sen per unit during the 21-day initial offer period to Nov 12. The minimum initial investment is RM1,000. – Bernama


Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Malaysia's inflation may remain high in Sept: Economists

BusinessTimes

INFLATION will probably remain high in September as festivities placed price pressures on food necessities in Malaysia.

Economists polled by the Business Times are expecting inflation to average 1.96 per cent year-on-year.

The August consumer price index (CPI) rose to a six-month high of 1.9 per cent year-on-year on the back of a weaker ringgit and higher food and cigarette prices.

The Statistics Department will release the details of the CPI for September on Wednesday."Inflation readings have managed to stay at about 1.5 per cent for several months, thanks largely to the strong currency as well as the high base last year," remarked DBS Bank economist Irvin Seah.

The base effect (from last year's hike on pump prices for petrol) has finally come off but the price ceilings on some basic necessities have put the lid on price pressures during the Ramadan festive season.

Full year average inflation should remain relatively modest at 2.1 per cent, he added, within the comfort zone of the central bank.

"However, crude oil prices hit a new record high of US$85.80/bb (brent) on October 18 and that certainly raise the risk of the authority hiking pump prices in order to reduce the burden of its oil subsidies."

If oil prices continue to remain high or edge even higher in the next four to six months, the chance is high that the government may once again hike pump prices as was done on February 28.

"With inflationary risks on the upside, the central bank is most likely to keep the key benchmark rate at 3.50 per cent in the forthcoming meeting on October 30 while allowing the expansionary fiscal policy to keep growth on track.

Citi Asia-Pacific economics and market analysis director Dr Chua Hak Bin expects inflation to continue to climb further.

"Inflation will likely continue climbing, possibly rising more sharply next year on likely fuel subsidy cuts and transport fare hikes," he said, adding that average inflation could rise by some 0.5 to one per cent next year because of possible hikes in petrol pump and electricity prices.

"Toll and transport fares will also likely be raised next year. "Toll rates may be raised by about 10 per cent on January 1 although the government is deciding whether to absorb part of the toll increase. "The impact on the CPI is about 0.1-0.2 percentage points."

September is expected to see an increase, mostly attributed to higher prices of meat products during the festive season.

There was also possibly some shortage of food and pharmaceutical items arising from the alert over China food items although the stronger ringgit may have however helped to curb imported inflation.


Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

EPF to make changes for better savings

BusinessTimes

CHANGES will be made to the Employees Provident Fund scheme structure to enable its 11.4 million members to have a healthier level of savings upon retirement.

These changes, to be implemented in phases between November this year and January 2013, will also give members greater choices and flexibility to manage their EPF savings.

EPF chief executive officer Datuk Azlan Zainol said key among the changes is the introduction of basic savings, with members required to set aside a certain amount in their Account 1 progressively at various age levels.

This would ensure that members would have accumulated at least RM120,000 when they turn 55 to cover their basic retirement needs.

That sum would enable a retiree to live on RM500 a month over a 20-year period until he or she is 75 years old, which is the average life expectancy of Malaysians.

Azlan said changes such as these were necessary as the average retirement savings for EPF members currently is inadequate.

“With Malaysians having a longer lifespan aswell as inflation, escalating medical costs and a weakening extended family system, many members may find themselves with insufficient funds if the issue of adequacy of savings is not addressed now,” he said at a briefing yesterday.

Last year, the average savings of an active member at age 54 was only RM114,402, and for an inactive member it was RM21,478.

Azlan noted that a survey done three years ago showed that 98 per cent of EPF members tend to withdraw all their money when they turn 55.

And of these, it was found that 80 per cent would exhaust those savings in three years.

To discourage lump-sum withdrawals, the EPF will soon give members over the age of 55 the option of making ad-hoc withdrawals.

As ofNovember, they can withdraw a minimum of RM2,000 at any time, at intervals of at least 30 days.

“We may make it even more flexible in future and allow withdrawals of RM1,000 a day, for example,” Azlan said.

It will also soon be mandatory for employees aged 55 years and above to contribute to the EPF.

However, the statutory contribution rate will be halved to promote employability of this group.

From November, EPF plans to allow members of any age whose total savings have exceeded RM1 million to withdraw an amount in excess of RM1 million at any time to invest on their own.

According to Azlan, there are about 4,700 members with savings of more than RM1 million.

Another major change that will be enforced — although only in January 2013 —is that members must have RM120,000 in Account 1 at age 55 to be able to withdraw their savings in Account 2.

This rule will affect members who are currently 45 years old, Azlan noted.

Among other changes that will be implemented are:

• allowing members to use savings in excess of the “basic sum”in Account 1 for approved investment products (next February)
• allowing members to withdraw savings from Account 2 to purchase critical illness insurance policy for themselves and immediate members (next June)
• allowing children to top up parents’ savings in Account 1.
Spouses too can do this for each other (next June)
• making it mandatory for big companies (more than 1,000 staff) to contribute via electronic mode. (next June)

Azlan said the changes come under the EPF’s Beyond Savings initiative.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

OSK-UOB eyes 15pc return for Triple A fund

BusinessTimes

OSK-UOB Unit Trust Management Bhd expects its latest fund, the OSK-UOB Asia Active Allocation (Triple A fund), to reap a potential return of 13 per cent to 15 per cent per annum within a three- to five-year time frame.

"The Triple-A fund aims to provide investors with long-term capital appreciation and current income through investments in securities of Asia's large and small companies and fixed incomes securities," its executive director and chief executive officer Ho Seng Yee said at the launch in Kuala Lumpur yesterday.

The company expects sales for the new fund to hit between RM150 million and RM200 million within the initial offer period beginning today to November 12 2007.

The approved fund size stands at 800 million units of 50 sen per unit, with minimum investment of RM1,000.

Ho said the fund will apply an active asset allocation that can adapt to market conditions, to optimise returns.

"Different asset classes respond in a different manner as the economy goes through its various stages of expansion and contraction. As such, by adopting a portfolio diversification strategy that covers both Asian equities and Asian fixed income, the Triple-A fund is poised to actively manage the volatility for stable long-term returns," Ho said.

The fund is exclusively distributed by United Overseas Bank (Malaysia) Bhd, while the external investment manager is UOB Asset Management Ltd, Singapore (UOBAM).

Depending on investment conditions and opportunities, UOBAM will invest 20 per cent to 60 per cent of the fund's net asset value in the securities of Asian large companies and, or up to 40 per cent in Asian small companies and, or 20 per cent to 60 per cent in fixed incomes securities or money market instrument.

OSK-UOB is planning to launch another one or two funds before the end of this year to boost its asset size to RM3.5 to RM4 billion, said Ho.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Higher EPF dividend

BusinessTimes

THE Employees Provident Fund, Malaysia’s biggest pension fund, will be able to pay higher dividends to its members for this year.

The fund, which manages RM315 billion, paid a dividend of 5.15 per cent for last year. It paid five per cent for 2005.

It has raised dividends for four consecutive years but its chief executive officer Datuk Azlan Zainol declined to say how much the payout will be for this year.

“We ’re confident this year we’ll be paying a dividend slightly more than last year,”he said.

This is because the EPF’s income this year was better, boosted by investments on the equity market. The stock market has gained by more than 20 per cent so far this year “Our equity investment has done very well this year,”he said.

Although the bulk of EPF’s investments are in safe investments like government and corporate bonds, about a fifth are invested in the stock market, which provides better returns.

It also has close to US$2 billion invested abroad, Azlan said.

Last year, about 70 per cent of EPF’s assets were put into government and corporate bonds, its annual report showed.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Monday, October 22, 2007

Unit trust industry getting more robust

TheStar

THE unit trust industry expanded further during the first five months of the year with the launch of new funds and an increase in the number of units in circulation.

The growth was attributed to sustained investor interest in unit trusts as a viable investment instrument.

During the period, 45 new funds were launched to reach a total of 435 funds as at end-May (end-2006: 392 funds).

Units in circulation rose 8.7% to 167.4 billion (end-December, 2006: 10.5%; 154.1 billion). The Islamic unit trust segment continued to expand with 12 new funds bringing the total to 106 as at end-May 2007 (end-2006: 95 funds).

The net asset value (NAV) of the unit trust industry rose 18% to RM143.7bil and accounted for 13.5% of the market capitalisation of Bursa Malaysia (end-2006: 23.6%; RM121.8bil; 14.4%).

The number of new unit trust funds launched that invested in foreign markets and funds already investing abroad reached 128 funds as of end-May, with investment totalling RM10.8bil.

There has been positive response to the Government's efforts to promote the development of Real Estate Investment Trusts (REITs) in the capital market. The first half of 2007 saw four new REITs listed on Bursa Malaysia bringing the total to 13 REITs.

Market capitalisation of REITs rose strongly by 73.5% to RM4.98bil as at end-June (end-2006: RM2.87bil), reflecting growing investor interest in REITs as an investment instrument to access the property market.

The development of exchange-traded funds (ETFs) has, however, been slow in the initial period, with only two listed ETFs as at end-July.

More ETFs are expected to be listed in the near future, following the call to Government-linked investment companies to participate in ETFs by selling a portion of their portfolios in exchange for units in the ETFs. A committee was set up in April to oversee the success of this exercise.

The derivatives market traded more actively during January-July 2007, with turnover increasing nearly twofold to 3.7 million contracts (January-July 2006: 2 million contracts).

Investor interest was concentrated on the KL Composite Index (KLCI) and crude palm oil (CPO) futures, with trading of the two derivatives accounting for 95.6% of total turnover.

Trading in KLCI futures doubled to 1.8 million contracts (January-July 2006: 904,573 contracts). Market buying of KLCI futures was underpinned by the stronger performance of the underlying KLCI, which posted fresh highs several times in 2007.

The CPO futures market remained active, with robust growth of 88.5% to 1.7 million contracts (January-July 2006: 918,805 contracts).

The strong turnover of CPO futures was attributed to the worldwide decline in edible oilseed production, rising demand for Malaysian CPO and market expectation of growing demand for palm oil-based biodiesel.

These developments exerted upward pressure on CPO prices, with the benchmark 3-month CPO futures averaging RM2,199 per tonne during January-July (January-July 2006: RM1,467 per tonne).

Monetary policy in 2008 would continue to be directed at sustaining the growth momentum with price stability.

Economic growth in 2008 is expected to be supported by robust domestic demand and a favourable external environment.

Inflation is projected to remain relatively benign. There are, however, risks and uncertainties to the inflation outlook, given the sustained high global prices of energy, commodities and food.

The challenge for monetary policy would be to respond pre-emptively to any signs of pressures or imbalances emerging in the economy.

The outlook for the capital market remains positive on the back of sustained domestic economic conditions and a favourable external sector.

Corporate debt issuance is likely to be driven by new investment activity, mergers and acquisitions and the implementation of projects under Ninth Malaysia Plan, including Iskandar Development Region, the Northern Corridor Economic Region and other economic corridors.

International competition in Islamic finance is likely to intensify, and Malaysia would continue to build on the Malaysian International Islamic Financial Centre MIFC initiative to further accelerate the growth of Islamic finance.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Friday, October 12, 2007

China plans to launch REITs on Shanghai bourse

BusinessTimes

BEIJING: China plans to launch real estate investment trusts (REITs) on the Shanghai Stock Exchange as part of a move to provide more financial products to investors, a senior official said yesterday.

Zhu Congjiu, general manager of the Shanghai Stock Exchange, did not specify when the REITs would come to market.

But he told a financial forum that his office was planning to launch some REIT products to let more investors reap gains from China's soaring property prices.

REITs are a cross between bonds and equities, with regular dividends and capital appreciation gains. They invest in real estate directly, either through properties or mortgages, and can be sold like stocks on major exchanges.

"There is huge potential for REITs in a big and rapidly developing country like China," Zhu said.
He also said his office would consider opening an international board for foreign firms to sell shares in China.

"Some institutions have suggested we open such a board and there is also great demand for it. We will actively study it and launch it when the conditions are ripe," he said. - Reuters

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Public Bank expects stronger economic growth next year

BusinessTimes

MALAYSIA'S economic growth in 2008 is expected to surpass the six per cent forecast this year despite growing external uncertainties, says Public Bank Bhd.

"From the high and rising growth in the leading indicators, it is not unreasonable to expect a higher Gross Domestic Product (GDP) growth in 2008 compared with that of 2007," the bank said in its economic review for October.

To gauge the prospects of the economy in 2008, Public Bank used the Leading Index, a composite index consisting of several key economic variables provided by the Statistics Department.

These variables include money supply, Bursa Malaysia Industrial Index and total trade with major trading partners.

The Leading Index from January 2006 to June 2007 rose consistently from 138.5 (January 2006) to 153 (July 2007). In the first seven months of this year, it rose by four per cent from 147.1 in January to 153 (July).

"The increasing trend and higher growth of the Leading Index in 2007 indicates that the Malaysian economy will continue to remain strong and healthy in 2008," it said.

The outlook for 2008 is challenged by risks arising from high global oil prices, high global inflationary pressures and deceleration in the US economy while issues related to the crisis in the US sub-prime housing markets have yet to be resolved.

To gauge any signs of an economic slowdown, the bank used the Coincident Index to Lagging Index ratio to provide clues to the likely direction of the economy.

The increasing trend and steady growth in the Leading Index and the ratio of the Coincident Index to Lagging Index in 2007 indicates that the economy will continue to remain strong and healthy in 2008.

The average ratio of the Coincident Index to Lagging Index between January and July 2007 rose to 0.85 from 0.77.

"The high ratios indicate that the Malaysian economy will remain on an expansionary mode with GDP growth likely to be higher in 2008 than that of 2007," said Public Bank.

In the first half of this year, the economy recorded a 5.6 per cent growth, supported by a stronger pick-up in domestic demand. Private consumption was strong due to increases in income, strong and sustained prices for primary commodities and stable and low interest rates.

Public investment has risen as well with the implementation of high-impact development projects under the Ninth Malaysia Plan, while private investment was boosted partly by the higher capacity utilisation in the manufacturing sector.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

CIMB-Principal to focus on organic expansion

BusinessTimes

CIMB-Principal Asset Management Bhd said it is unlikely to embark on the acquisition trail amid a growing Asian unit trust industry, but instead would focus on organic growth.

"Our primary plan is to grow organically, particularly in Asia where the (unit trust) industry is still young," said Principal Financial Group president cum chief operating officer Larry D. Zimpleman.

"Acquisitions tend to happen once the industry matures," he added.

He was speaking to reporters after the launch of CIMB-Principal's first one-stop unit trust investment centre at The Curve shopping complex in Petaling Jaya yesterday.

A crowded and matured unit trust sector may render organic strategies unsuitable as it is a slower way of expanding in a competitive market, compared with buying out rivals.

CIMB-Principal, which manages over 60 unit trust funds worth a collective US$4.8 billion (RM16.18 billion), is a joint venture between Malaysian financial services entity CIMB Group, and US-based Principal Financial.

The company aims to grow the funds under its stewardship by up to 35 per cent per year as it rolls out more products, surpassing Malaysia's unit trust sector's estimated 25 per cent growth.

CIMB-Principal, also has operations in Indonesia and Singapore. It has an agency force of some 4,000 people.

On how the volatility in the global equity market relates to the local market, Zimpleman said based on the global equities' estimated long-term annual appreciation of between eight per cent and nine per cent, the Kuala Lumpur Composite Index is expected to post yearly upsides of more than 12 per cent.

"Given the faster growth of the Malaysian economy in Southeast Asia, my guess would be that the number is probably more than the 10 to 12 per cent category for the Malaysian market," he said.

To woo more unit trust buyers, CIMB-Principal will initially set up five one-stop investment centres known as the "Unit Trust Investment Corner" within five CIMB Bank branches.

Besides the centre at The Curve, the other four investment premises will be located in Serdang, Taman Tun Dr Ismail, Pusat Bandar Damansara, and Jalan Tun Perak.


Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Long-term outlook good

TheStar

PETALING JAYA: The Principal Financial Group remains optimistic on the long-term growth potential of the Malaysian economy and maintains that this will be reflected in the local equity market.

President Larry D. Zimpleman said: “We are very optimistic on the long term potential of the local economy, and hence the equity market. We expect to see a more than 10%-12% annual growth for the local bourse.”

He said the leading financial services group was also optimistic on the global markets.

“The Federal Reserve is likely to cut the Fed fund rate by another 25 basis points when it meets again in about three weeks. It will definitely have a positive impact on the markets here. But, in the long term, it is the economy that will determine (the performance of the equity markets),” he said after the launch of CIMB-Principal Asset Management’s first unit trust investment corner at CIMB Bank branch at The Curve yesterday.

CIMB-Principal is a joint venture between CIMB Group and The Principal Financial Group, a Fortune 500 company.

On plans to buy other asset funds in Malaysia, Zimpleman said: “We have ongoing conversations here with our partner CIMB but there's no active discussion at this point.”

He also said the company was not considering any acquisitions at the moment as it believed organic growth was the best strategy for its business in Malaysia.

CIMB-Principal's investment corner is a new branch concept to give higher visibility to its range of investment products.

According to CIMB Bank Bhd head, consumer sales and distribution Sulaiman Tahir, the concept will initially be launched at five branches in the Klang Valley, including outlets in Taman Tun Dr Ismail and Pusat Bandar Damansara.

Meanwhile, CIMB-Principal director J. Campbell Tupling said the funds management company currently had about US$4.8bil assets under management and more than 60 products.

“We are looking at a 30%-35% annual growth in terms of funds managed, ahead of the local unit trust industry which is growing at about 20-25%,” he said.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Wednesday, October 10, 2007

AmInvestment’s RM5.6m income distribution

TheEdge

KUALA LUMPUR: AmInvestment Bank Group’s funds management division (FMD) has declared income distribution totalling RM5.6 million for three AmMutual funds — namely AmBond, AmBon Islam and AmIttikal — for 6,773 unit holders.

The interim income distribution of 2 sen per unit for AmBond for the mid-year ending Sept 30, 2007, a yield of 1.9% for six months investment return based on the net asset value (NAV) per unit of RM1.0579 as at March 30, 2007 or an annualised distribution yield of 3.8%.

AmBond is a medium to long-term bond fund that aims to provide investors with a stream of income.

Unit holders of AmBon Islam will receive final income distribution of 2.5 sen per unit, bringing the total income distribution to 5 sen per unit for the year ending 30 Sept 2007.

The total distribution was a yield of 4.8% investment return based on the NAV per unit of RM1.0337 as at Sept 29, 2006. The fund is a medium to long-term Islamic bond fund.

AmIttikal, an Islamic equity fund, announced final income distribution of 1.5 sen per unit for the year ending Sept 30 2007 recorded a total income distribution of 3 sen per unit for the year.

The distribution represented a yield of 6.5% investment return. AmIttikal is designed as a medium to long-term investment with an objective of producing “halal” income and to a lesser extent capital growth.

As at Aug 31, 2007, all funds have outperformed their respective benchmarks.

AmBond delivered a one year return of 13.58% outperforming its benchmark by 7.62%, AmBon Islam delivered a one year return of 11.45% versus the benchmark figure of 7.54%, translating into an outperformance of 3.91% and AmIttikal delivered a one year return of 34.79% outperforming its benchmark by 27.62%.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Why alternative asset classes slow in attracting funds

TheEdge

KUALA LUMPUR: About 50% of trustees and fund sponsors in Kuala Lumpur and Singapore are concerned that diversification into alternative assets may dilute the expected rate of return, according to a survey by Watson Wyatt Worldwide, a global consulting firm.

Meanwhile, lack of governance was cited by more than 50% of the respondents in Hong Kong as one of the reasons for not considering alternative asset classes.

Watson Wyatt said in a statement that a growing number of new and diverse investment opportunities are now available but funds generally have reservations about shifting away from conventional asset classes.

In the survey, trustees and fund sponsors in Hong Kong, Kuala Lumpur and Singapore were asked to vote on their choice of four asset classes, namely real estate investment trusts (REITs), commodities, hedge funds and infrastructure.

It said the survey results showed that funds were more comfortable with hedge funds followed by REITs.

Watson Wyatt's head of investment consulting for Malaysia Puah Ser Sze said: "Although hedge funds have been growing rapidly over the past three years, trustees and fund sponsors in the region require some time to warm up to new investment opportunities."

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Great lessons to be learnt

TheStar

In this article, we do a case study on the Great Depression of 1929

There are a few similarities between the current economic state in China compared with the US economy in 1929. While China currently dominates the world’s products, industrial goods from the US dominated in 1929.

Lately, as a result of economic overheating, the Chinese government was forced to increase interest rates to curb inflationary pressure and excessive stock market speculation. This scenario is quite similar to the situation in 1929, when the US Federal Reserve increased its discount rate from 3.5% in February 1928 to 6% in August 1929.

The Great Depression in 1929

It all started after World War I. While the British and German economies were much weaker after the war, the US economy was relatively stronger. As a result of less damage caused by the war and rapid technological progress in its industrial production, American industrial goods dominated the world market during the 1920s.

Before the crash in 1929, US gross national product grew at an annual rate of 4.7% and unemployment was at an average of 3.7% from 1922 to 1929.

The fundamental reasons for the rise in stock prices were the increase in productivity and good corporate earnings. Besides, the expansion of loans to brokers was also a crucial feature of the 1920s bull market. This expansion resulted in the creation of an economic bubble.

In addition, the growth in consumer credit accelerated the expansion. As stocks could be bought with just a 10% margin, the easily available credit led to the speculative mania back then.

According to John Kenneth Galbraith in his 1954 classic “The Great Crash in 1929”, the ability to purchase stocks on margin was the biggest culprit in causing excessive speculation. A buyer needed only to provide 10% capital and borrow the rest, while enjoying the full capital gain less the interest on the borrowed funds.

For retailers who lacked sufficient capital to purchase stocks, the massive growth of investment trusts eliminated this obstacle. The investment trust, which served the same function as mutual funds do today, grew from about 40 in 1921 to over 750 in 1929.

The Fed’s tight monetary policy before the crash in 1929 was a consequence of its fears over excessive credit for speculation. This scenario is quite similar to what the China central bank is worrying about now. During 1929, the average price-earnings ratio and price-to-book ratio were 30 times and 4.25 times respectively.

As a result of tightening interest rates, some businesses were in trouble long before the crash. Automobile production tumbled from a peak of 622,000 in March to only 416,000 in September. In July 1929, despite the strong stock market momentum, the effect of interest rate hike on the US economy started to threaten corporate earnings growth and undermine the fundamental value of stocks.

From the low of 63.9 on Aug 24, 1921, the Dow Jones Industrial Average (DJIA) surged almost 500% to 381.2 on Sept 3, 1929. However, it tumbled nearly 90% before bottoming out at 41.22 on July 8, 1932.

There were credit squeezes and liquidity panics during the market crash in September 1929.

The withdrawal of foreign funds and US banks caused further losses to individual investors.

As retailers desperately needed liquidity but were having difficulty in getting new loans, a lot of property foreclosures were undertaken, which resulted in the sharp drop in the price of housing and new buildings. The 1929 crash lasted nearly 12 years.

Conclusion

The current speculative mania in the China and Hong Kong stock markets is quite alarming. While we believe that there may be some correction in the near future, hopefully, it will not turn out to be a major crash.

With the recent interest rate hikes and credit tightening measures, which may have caused some damage to the China economy, coupled with the slowdown in the US economy, we fear this may lead to the beginning of another great depression.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Tuesday, October 9, 2007

Emerging equity funds absorb US$5bil

TheStar

LONDON: Emerging equity funds absorbed US$5.21bil last week, bringing the six-week inflow tally to US$18.9bil as money continues to rotate out of developed market funds, consultancy EPFR Global said late on Friday.

In the first nine months this year, global emerging market funds received net inflows of US$3.3bil, slightly less than in the same period last year while ex-Japan Asia and Latin America saw net inflows of US$9.7bil and US$8.2bil respectively.

In case of Latam, this is four times the net amount received in the first nine months of 2006.
In contrast, funds geared to the United States, Japan and Western Europe all posted net outflows in the January–September period, EPFR data show.

The consultancy said Japanese and European equity funds were hit with sizeable redemptions again last week while global bond funds posted net outflows for the ninth week in a row, losing US$4.58bil in the past nine weeks. – Reuters

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Monday, October 8, 2007

CIMB upbeat on trust fund

TheStar

KUALA LUMPUR: CIMB-Principal Asset Management Bhd expects unit trust fund size to grow to some RM8.5bil by year-end from RM7bil presently, said chief executive Noripah Kamso.

Besides the CIMB-Principal Steady Returns Bond Fund 3 that was launched Monday, the asset management company is expected to launch another four funds, two in Malaysia and two in Indonesia.

The four new funds were "highly likely" going to be offshore equity-based, Noripah said during the press conference after the launch.

The CIMB-Principal Steady Returns Bond Fund 3 is a closed-end fund with fund size of RM150mil.

Noripah said the newly launched fund, which would invest in both local and foreign sovereign bonds, was likely to generate a return of between 5% to 6% per annum.

Executive vice president and head of fixed income Nor Hanifah Hashim said the asset allocation could either take on a defensive (60:40 ratio), or base (50:50), or aggressive (40:60) approach, she said.

The selection criteria included minimum yield of 4% and minimum A rating by RAM or MARC for local bonds, and at least 5.5% yield and BB1- rating by foreign rating agency for foreign bonds, she added.

Nor Hanifah said the foreign bonds might include Australia, New Zealand, Vietnam, Hong Kong, Indonesia, the Philippines, Singapore, Thailand, South Korea, Taiwan and India.

Noripah said aside of the Asian exposure, the newly launched fund also provided lower risks and regular income bi-annually over the fund period, which were ideal for investors who were planning for children's tertiary education, holiday or retirement.

Furthermore, given that they were foreign sovereign bonds issued by the respective government, they were unlikely to be affected by sub-prime issue or credit crunch concern, she added.

The application fee is 1% of net asset value but a fee of up to 1.5% may be levied on any withdrawal made before the fund matures. The fund is open for investment until Nov 21.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

'Tea fund' to reach target soon

BusinessTimes

FUND management company Kumpulan Sentiasa Cemerlang Sdn Bhd (KSC) is aiming for its "tea fund" to be fully subscribed by the end of this month.

The Alternative Investment Fund, which invests in companies that deal with Pu-Er tea, has so far attracted 10 high net worth individuals.

Pu-Er tea, like wine, is the only tea that tastes better as it ages, which means its value increases over time.

"We are looking for high net worth persons with net worth of RM2 million or companies that have net asset value of RM10 million to invest in this fund," said KSC director Choong Khuat Hock.

Speaking to reporters after the launch of the fund in Petaling Jaya on Saturday, he said that the fund, which requires a minimum investment of RM100,000, is open to both local and foreign investors.

The Alternative Investment Fund secured its approval from the Securities Commission last year. It is a closed-end fund with a three-year tenure and a fund size of RM50 million.

"Investor demand for this fund is very good. Today, 10 individuals have expressed their interest and we hope to close this fund by end of this month."

Choong said the size of the Pu-Er tea market in Malaysia is worth some RM100 million and growing, adding that the fund aims at a return of at least 50 per cent in three years.

KSC has appointed one of the country's leading trader in Pu-Er tea, Hai-O Enterprise Bhd, as its advisor. Hai-O also sells the tea, provides storage and issues put option to the fund.

Hai-O for decades now has become one of the largest importers of wines, herbal products, medicine and tea from China.

It recently signed a contract worth RM10 million to buy a warehouse in Klang, with a portion of the space used to store Pu-Er tea.

Hai-O managing director and founder, Tan Kai Hee said the last few years, the company has invested RM10 million in Pu-Er tea which it imports from China, store it for three years before reselling some of it to China with some being sold here and overseas.

Pu-Er tea originates from the Yunnan province in China but due to the sub-tropical climate, its fermentation process takes longer there.

Storing the tea in Malaysia promotes natural fermentation that is better and three times faster.

And depending on its type, origin, age and the brand, Pu-Er tea's price can jump up to 50 per cent per year.

Choong said two key benefits of the fund is that Hai-O has agreed to buy any unsold Pu-Er tea at cost at the end of three years if the fund is unable to sell the tea at higher prices.

"The upside is the bet that Pu-Er tea will continue to command rising demand due to the growing affluence of the Chinese for good healthy tea," he said.

KSC is an independent fund management company founded in 1996 and currently has RM500 million under management in Malaysia and international equities.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Friday, October 5, 2007

US fund manager Capital enters Japan

BusinessTimes

TOKYO: Top US mutual fund manager Capital Group will start offering two types of funds in Japan later this month to tap into Japan's US$13 trillion (US$1 = RM3.42) of household assets. Capital will sell a fund consisting of global equities and another of global equities and bonds through Nomura Holdings Inc, Japan's largest broker, Takashi Takamura, vice president and senior manager at Capital International KK said. Set up in 1986, Capital International has been focusing on the investment advisory business for institutional investors. - Reuters

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Thursday, October 4, 2007

Plans to launch

BusinessTimes

AMANAHRAYA Investment Bank Ltd (AIB) plans to launch a RM1 billion Islamic fund next year that invests in environmentally friendly projects.

The "green" fund, likely to be the world's first such Islamic fund, will be managed together with Asian Finance Bank Bhd (AFB).

"The focus will be on carbon credit type of projects. We're looking at ethanol plants, waste-recycling plants as well as incinerators, both locally and abroad," AIB director Datuk Mohamed Azahari Kamil said.

AIB and AFB have taken the initiative to design the fund in Malaysia, with hopes that it will attract investors from the Middle East, the US and Europe, he said.

AFB chief executive officer Faisal Alshowaikh said there is already one such fund in the making elsewhere in the world.

As such, the AIB-AFB green fund could either be the first or second in the world, depending on when it will be launched.

The two banks intend to have it launched in the first half of 2008.

Azahari and Faisal spoke to reporters yesterday after the two companies signed a pact to develop a US$250 million (RM853 million) Islamic fund that will invest in ships.

The fund, the first of its kind in Malaysia and the region, will be set up by the end of this year, and is expected to generate an internal rate of return of 12-15 per cent.

The banks have already identified six vessels worth about RM615 million to be injected into the syariah-compliant marine fund. It may add another four to the portfolio, said Faisal.

The portfolio, which is fully investor-managed, will comprise ocean-going and coastal vessels, catering for the oil and gas sector and bulk cargo.

"The fund will provide opportunities for institutional and sophisticated retail investors globally to participate and take advantage of the growth in the marine sector," he said.

Middle Eastern investors will be targeted at a planned roadshow.

The financing structure of the fund, which may later be listed either locally or overseas, will be 70 per cent debt and 30 per cent equity, said Azahari.

Penang Port Sdn Bhd chairman Datuk Abdul Latif Abdullah, who has more than 30 years experience in the maritime business, has been appointed chairman of the fund.

AIB and AFB also entered into an Islamic Forward Binding contract yesterday, an Islamic hedging instrument that facilitates futures trading of commodities such as crude palm oil.

"For Amanahraya, this transaction is important in order for us to book in future foreign currency receivables at a favourable exchange rate as part of the hedging mechanism," said AIB chairman Tan Sri Arshad Ayub.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Currency funds post biggest losses in two years

TheStar

NEW YORK: Foreign exchange funds suffered the biggest losses in two years in August as wider currency swings prompted investors to exit bets on the decline of the yen, according to Parker FX Index.

Funds focusing on forex fell 1.54%, the biggest decline since August 2005, according to Parker Global Strategies LLC, which compiles the index that tracks 79 companies in the United States, Canada and the United Kingdom. It followed a 0.58% drop in July, which was the first since February.

The yen appreciated 2.4% against the US dollar and rose 2.78% against the euro in August as the collapse of the US subprime mortgage market prompted investors to dump riskier assets financed through so-called carry-trades. In the transactions, investors borrow in Japan, where interest rates are the lowest among developed nations, to buy higher yielding assets in other countries.

“As carry-trades unwound and the yen appreciated, many investors who were short on the yen got hit hard,'' said Justin Snyder, an analyst at Stamford, Connecticut-based Parker.

The Japanese currency strengthened to 111.61 per dollar on Aug 17, the most since June 2006. It traded at 115.72 per dollar at 5:13pm in New York. It traded at 163.82 per euro.

Japan's key borrowing rate is 0.5%, compared with 4% in the 13-nation euro zone. The US Federal Reserve cut its key borrowing costs by a half percentage point to 4.75% last month.

Forty-four of the 79 funds reported losses. Those suffering the biggest losses dropped 16.9% in August, according to Parker.

Systematic funds, which tend to trade based on computer models, lost 2.27% during the month. So-called discretionary traders, which usually make decisions based on economic fundamentals, gained 0.25%.

“Models got overwhelmed with a spike in volatility,'' Snyder said.

Volatility among the seven most traded currencies, such as dollar, euro and yen, jumped 23.7% in August, the biggest advance since December 1996, according to JPMorgan Volatility Index.

KMJ Capital, based in Crystal Lake, Illinois, posted the biggest jump, gaining 14.07%. The ECU Managed Currency Program in London rose 8.95%, Parker said. – Bloomberg

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Customising portfolio of investment

TheStar

Today's article explains the importance of having an investment plan and ways to devise an appropriate investment portfolio

EVERY investor aspires to earn the highest possible returns but this approach often ignores the need for an investor to first accept the volatility risk that comes with earning high returns.

It is best for investors, before making an investment, to ask themselves how much volatility they are able to withstand and work backwards to obtain a reasonable level of expected returns based on their risk appetite. If investors want higher returns, they should be prepared to take on greater volatility risk.

To better manage their expectations, investors first need to understand their behaviour towards volatility. This can be achieved by answering the following questions: the extent of losses one can bear in the short term before an investment earns a return; the time one has to stay invested; the need for the investment to provide immediate liquidity; familiarity with the investment and financial markets; available time for managing and learning about investments; and the expectations on returns.

Why is this important? Understanding oneself is a prerequisite to devising a personal investment plan and portfolio. Having a customised investment plan keeps the end objective of investing in focus.

It also helps counter pressure to go after what is hot in the market and avoid panic when markets suddenly turn downwards.

Aligning investment plans to risk profile

An investor can be generally classified into one of three risk behaviour profiles: aggressive, balanced and conservative.

An aggressive investor generally has the highest tolerance of volatility. He would, therefore, be comfortable staying invested in an instrument that may be making losses in the short term, but which could perform well in the longer run.

A conservative investor prefers minimal or no exposure to volatility and would be uncomfortable with short-term negative returns.

The profile of a balanced investor is between that of an aggressive and a conservative.
Once an investor has ascertained his risk behaviour profile, he can determine how much to invest in equities and fixed income or capital protected type of investments by adopting the “Strategic Asset Allocation” strategy. This tool forms the basis of allocating assets based on an investor’s risk profile independent of market condition.

An investor can maximise returns in the short to medium term by varying the allocation to each asset class, depending on the equity market environment. This can be done using the “Tactical Asset Allocation” strategy.

As the strategy requires active management of the portfolio, a great deal of insight and conjecture about the economy, financial markets and investments, investors are advised to work with financial advisers.

The next step is to select investment products in each asset class with attention to understanding the respective return, volatility and correlation profile with other investments.
As covered in the previous article, a superior portfolio is one that maximises return for a given level of volatility risk. That involves diversifying into various investments that have low or negative correlation to one another.

Given the current uncertain outlook for equities, investors should focus on investments that have less volatility in returns and low correlation to equity returns.

Examples of the former include fixed-income securities, under-researched growth stocks and structured products. And for the latter, commodities and foreign exchange.

Rebalancing portfolio

The final but often neglected or forgotten part to investing is to periodically re-balance the investment portfolio. Re-balancing involves buying and selling investments in the portfolio to bring the asset allocation for each asset class back to either the Strategic or the Tactical level.

Re-balancing automatically results in cutting back on performing investments and adding to under-performing investments, provided the case for investing in the latter is still valid.

Investing should involve proper planning, knowing one’s behaviour towards volatility and understanding the reasons for changes made in portfolio, because failure to do so could lead to unfulfilled expectation on investing.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Wednesday, October 3, 2007

BNM seen to maintain OPR in near term

TheEdge

KUALA LUMPUR: Bank Negara Malaysia (BNM) is unlikely in the near term to follow in the footsteps of the US Federal Reserve to reduce interest rates after the US central bank cut its benchmark fed fund rate by 50 basis points (bps) or 0.5% from 5.25% to 4.75% last week, according to CIMB Economics Research.

“We do not see any compelling reasons for BNM to cut interest rates given the balance of risk between economic growth and inflation,” it said in its research report recently.

Its chief economist Lee Heng Guie expected BNM to keep the overnight policy rate (OPR) unchanged at 3.5% for the rest of the year as long as domestic demand continued to expand at a healthy pace.

“We expect the OPR to remain stable at 3.5% for the rest of this year and is likely to hold steady in the first half of next year (1H08),” he told The Edge Financial Daily yesterday.

“With real interest rates staying positive amidst rising inflation risks, there is no strong compelling reason for BNM to change its monetary course as long as the economic growth and domestic demand expand at a healthy pace,” he said.

CIMB Research expects real gross domestic product (GDP) to grow by 5.8% this year and 6.3% next year.

On whether the interest rate differential will narrow further by year-end, Lee said that the interest rate differential had been in the US’s favour for more than a year, with the current yield gap between Malaysia’s and US’s interest rates continuing to stay wide at 125 bps.

“The yield gap is likely to narrow as we expect the Fed to cut rates further,” he said.

CIMB Research expects the growth in the consumer price index (CPI) to come in between 2% and 2.3% in the September to December period, mainly due to the low base.

“Although this trend is within our expectation, we would caution that higher food prices during the festive demand could push CPI growth higher in the months ahead. Nevertheless, we maintain our view that inflation will average at 2% in 2007 (3.6% in 2006),” it said in its report.

On the issue that possible adjustment in gas prices could fuel concern over inflationary pressures, it said it was likely that part of it, if not all, would be passed on to consumers should the government grant Petroliam Nasional Bhd’s (Petronas) request for an increase in gas charges.

It said a 20% increase in gas prices could result in consumer price inflation being nudged up by 0.1% to 0.2% points on a year-on-year (y-o-y) basis, assuming a direct pass-through to consumers.

Meanwhile, Aseambankers Equity Research also expected BNM to keep the OPR at 3.5% until the end of 2008. Commenting on rising world crude oil prices and inflationary risks in Malaysia, its economist Suhaimi Ilias expected inflation creeping up from 2.1% this year to 2.6% next year.

He said that the monthly inflation rate had already picked up for two straight months in July and August, and expected it to breach 2% y-o-y from September onwards, mainly from upward pressures on food prices due to seasonal demand during the string of festivities until Chinese New Year early next year.

“At the same time, we see the risk of the government resuming the gradual cut in fuel subsidies in 2H08, taking cue from the lower Budget 2008 allocation for subsidies to RM10.2 billion from RM12.2 billion in 2007 amid the environment of higher crude oil prices,” he said.

“However, we believe that BNM is comfortable with the inflation rate between 2% to 3%, given that our 2007-2008 inflation rate forecast is below the long-term average of 3.8% per annum,” he said.

Suhaimi also did not expect BNM to react to the Fed’s interest rate cut due to inflationary pressures, and on grounds that the government was confident of the economy sustaining real GDP growth of between 6% and 6.5% in the 2007–2008 period.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Morgan Stanley raises RM1.5b for fund

BusinessTimes

TOKYO: US investment bank Morgan Stanley said yesterday that its Asia private equity group has raised about US$1.5 billion (US$1 = RM3.40) to invest in the region's companies. Morgan Stanley Private Equity Asia (MSPE Asia), a part of the firm's global private equity group within the merchant banking division, will manage the fund.

"The new fund will allow clients and investors, as well as the firm, to capitalise on growth opportunities in Asia through direct investments," Hans Schuettler, chief executive of Morgan Stanley Asia, said in a statement. -Reuters

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Public Mutual Increases Public Far-East Property & Resorts Fund Size To 3.375 Billion Units

PublicMutual

Public Bank’s wholly-owned subsidiary, Public Mutual announced that the company has increased the fund size of its recently launched Public Far-East Property & Resorts Fund (PFEPRF) to 3.375 billion units due to the strong demand from investors.

Chief Executive Officer Yeoh Kim Hong said this is the second time the company has increased the fund size of PFEPRF. “The fund received good response from investors as it enables them to invest in a dynamic and diversified manner across the different types of properties and across multiple markets and economies in the Asia Pacific region,” she explained.

PFEPRF which was launched in July 2007, is an equity fund that seeks to achieve capital growth over the medium- to long-term period by investing in companies that are principally engaged in property investment and development, hotel and resorts development and investment, and real estate investment trusts (REITs) in domestic and regional markets.

“Up to 80% of the fund’s net asset value (NAV) can be invested in selected regional markets which include Japan, Australia, Hong Kong, China, Singapore, Taiwan, Philippines, Thailand, New Zealand, Indonesia, South Korea and other approved markets,” she said.

Yeoh added that the fund is suitable for investors with moderate risk-reward temperament who wish to participate in the long-term growth potential of real estate investments in the region. She also added that property stocks and REITs in the region are expected to offer promising returns over the medium- to long-term period due to resilient GDP growth, rising disposable income, high savings rate and stable interest rate in the region.

“Easier foreign ownership rules in some countries have encouraged foreign buying of properties which have further propelled property prices. In Singapore, for example, foreign share of real estate purchase has increased from 9.9% in 1999 - 2001 to 28% in 2006. As for Malaysia, the recent relaxation of foreign real estate ownership rules is a positive driver for the local property market,” she continued.

PFEPRF is distributed by Public Mutual’s unit trust consultants.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

RM27.5m payout from 5 Pacific Mutual funds

BusinessTimes

PACIFIC Mutual Fund Bhd, the unit trust arm of PacificMas Bhd, will distribute RM27.52 million from five of its funds for financial year ended September 30 2007, benefiting some 16,000 account holders.

The five are Pacific Premier Fund, Pacific Income Fund, Pacific Focus18 Fund, Pacific Cash, and Pacific S&P Global STARS Fund.

Pacific Mutual general manager for business development and marketing Gary Gan said these account holders currently hold 800 million units of the total combined fund size of the five funds.

In a statement, Pacific Premier announced an income distribution of six sen per unit, while Pacific Income, Pacific Focus18, Pacific Cash and Pacific Global STARS declared an income distribution of four sen per unit, five sen per unit, 1.5 sen per unit, and three sen per unit respectively.

Based on the net asset value per unit of the respective funds, the income contribution for Pacific Premier, Pacific Income, Pacific Focus18, Pacific Cash and Pacific S&P Global STARS translate to 6.67 per cent, 6.48 per cent, 6.92 per cent, 2.90 per cent and 5.54 per cent distribution yield respectively.

In terms of locally-oriented equity funds, Gan said the distribution for Pacific Premier, Pacific Income and Pacific Focus18 reflect their strong performance exceeding benchmarks over the year in review.

Pacific Mutual manages 17 funds, of which five are funds with global exposure. As at end of September 2007, it has over 50,000 accounts under its management worth RM1.8 billion.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Public Mutual offers Southeast Asia fund

BusinessTimes

PUBLIC Mutual Bhd, a wholly-owned unit of Public Bank Bhd, launched a new Southeast Asia equity fund yesterday, giving investors the opportunity to ride on the growth of the region's market.

The Public South-East Asia Select Fund (PSEASF), which will mainly invest in the region's equity markets, can invest up to 70 per cent of its net asset value in regional markets like Indonesia, the Philippines, Singapore, Thailand, Vietnam and others.

The equity exposure of the fund will be in the range of 75 per cent to 95 per cent of its net asset value.

"The South-East Asian economies have vast growth prospects. The region continues to be driven by strong export performance from its efficient and flexible manufacturing base, while its relatively young population of 573 million people represents a large and rapidly growing consumer market."

Since 2000, the South-East Asian region has forged ahead to expand its nominal gross domestic product at a robust pace of averaging 9 per cent annually," Public Mutual chairman Tan Sri Dr Teh Hong Piow said in a statement yesterday.

According to Teh, the region's real GDP growth is projected to range from 4.5 per cent to 8.4 per cent in 2007/2008, and is confident that consumer spending in the region will grow as the region's residents aspire to achieve a more comfortable lifestyle.

The fund, which Teh said is suitable for aggressive investors, has an issue price of 25 sen a unit during the 21-day initial offer period - that will end on October 22. During the offer period, a special promotional service charge of 5.45 per cent of net asset value per unit is extended to the purchase of units of PSEASF by investors.


Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

ING mulls making Malaysia centre for Islamic funds

BusinessTimes

ING Funds Bhd is gearing itself to play a leading role in developing and marketing Islamic funds for the group in the Asia-Pacific.

Chief executive officer Steven Ong said ING Investment Management (IIM), an investment manager with US$535 billion (RM1.8 trillion) assets under management, is considering investing more resources to make Malaysia its centre for the issuing of global syariah-compliant funds.

Once the plan is in place, ING Malaysia will launch syariah-compliant funds, not only locally but also market them throughout the region, Ong said.

"For syariah-compliant funds, we want to position ourselves as the development hub for ING Asia Pacific," Ong told reporters after launching the company's latest fund, ING Baraka Commodities Capital Protected in Kuala Lumpur yesterday.

IIM has 13 locations with another due to start operations in Dubai.

"Malaysia is in very good position to support the rest of the ING's affiliate offices in the region. We are in the planning stage and looking at it seriously. The regional office has to approve the setting up. Obviously, we have to bring in more fund managers," he said.

"We can expect to start next year in the first quarter," Ong added.

ING Funds was launched in 2004, and has achieved this year's target of RM2 billion assets under management as at end of last month.

The fund manager is planning to offer at least one or two more Syariah-compliant funds next year.

Meanwhile, its latest fund offers exposure to two main board commodity sectors within the Dow Jones Islamic Market World Index (DJIMWI), namely basic materials (ranging from metals, chemicals to forestry) and oil and gas (reliable energy source).

The fund was designed to provide investors capital protection on their initial investment and potential aggressive capital growth through an actively managed commodity index.

The index, known as SGAM (Societe Generale Asset Management) Al Baraka Commodity Index, consists of top 30 global equities in the basic materials and oil and gas sectors selected from the DJIMWI.

The fund has an approved fund size of 200 million units and will be on offer for 45 days from October 2 to November 15 2007, with a minimum initial investment of RM5,000.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

OSK-UOB Declared Distributions for its Funds

TheStar

KUALA LUMPUR: OSK-UOB Unit Trust Management Bhd has declared gross distributions for the Smart Treasure Fund, Smart Balanced Fund and Smart Income Fund for the financial year ended Sept 30. In a statement, it said the Smart Treasure Fund unitholders would get 8.5415 sen per unit. “This is equivalent to a yield of 7.96% based on the net asset value (NAV) for financial year ended Sept 30,” it said. – Bernama

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Sunway City plans RM3bil REIT Gross distribution for two funds

TheStar

KUALA LUMPUR: Sunway City Bhd plans to set up the country’s biggest real estate investment trust (REIT) worth RM3bil in the second half of next year.

“We will be evaluating our options next month” on where the REIT should be listed, group financial controller Koong Wai Seng said in a phone interview.

Money raised from the REIT would be used to fund the acquisition of more land, he said.
Sunway City would sell properties including two of its hotels, a shopping mall, a university campus and houses to the REIT. – Bloomberg


Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Foreign funds eyeing MAS

TheStar

PETALING JAYA: Foreign funds may be eyeing Malaysian Airline System Bhd's (MAS) shares as the company gears up for record profits for the financial year ending Dec 31.

Shares in MAS surged 78 sen, or 17%, to a month high of RM5.30 yesterday on speculation that foreign funds were buying the stock.

It was the day's second biggest gainer.

Chief executive officer Datuk Idris Jala told Bloomberg via e-mail yesterday that fund managers had shown confidence and expressed interest in MAS after seeing the results of the company's successful turnaround.

A MAS investor relations officer told the news agency the company had held presentations to investors in New York, Hong Kong and London over the past two weeks.

“We believe there is foreign interest in the stock as MAS has just completed a roadshow around the world,” OSK Investment Bank senior analyst Chris Eng told StarBiz.

Investors could also have been drawn to the stock as selling pressure on MAS eased ahead of today's exclusion date for its rights issue.

Eng said MAS had hedged some 60% of its fuel requirements for this year and 18% for 2008.
“Their hedge for 2007 is at West Texas Intermediate US$60 per barrel, which should cushion them from recent high oil prices,” he said.

He added that OSK was maintaining its “buy” call on MAS although the run up in its share price had eroded the potential upside to its fair value.

The stock's bullish performance yesterday was also underpinned by a CIMB Research report, which maintained an “outperform” call on MAS but with an upward revision in target price to RM13 from RM8.40 previously.

CIMB said yield improvements on the underlying seat (excluding surcharges) were expected to play a key role in buffering MAS from higher jet fuel costs.

“Restructuring of yield and inventory management have led to strong enhancements in booking data yields.

“Based on first half 2007 data, MAS claims to have improved yields by 5% to 18% year-on-year across various geographies,” it added.

The brokerage said MAS' ability to pass on surcharges was improving as load factors rose above 75% on increased tourist arrivals and higher sales.

“If it continues to succeed in boosting demand and raising its load factor, MAS will be in a better competitive position to pass on higher fuel costs via revised surcharges,” it said.

It added that the share price catalyst for MAS would be a set of strong second half results.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Tuesday, October 2, 2007

Riding on ASEAN's Growth Potential

PublicMutual

The South-East Asian region has forged ahead to grow at a robust pace in recent years. With a combined population base of 573 million people, the region’s economies have vast growth prospects given their strong manufacturing base, growing savings rates, favourable demographics and large consumer market. In addition, the South-East Asian region is strategically located between the emerging giants of China and India.

Grouped together under the Association of South-East Asian Nations (ASEAN) comprising Singapore, Indonesia, Thailand, Philippines, Malaysia, Myanmar, Vietnam, Laos, Brunei and Cambodia, ASEAN is among the fastest growing regions in the world with nominal Gross Domestic Product (GDP) growth averaging 9% annually since 2000.

In per capita GDP terms, ASEAN residents have enjoyed a nominal growth of 6.8% per annum over the past six years, exceeding the average global per capita GDP growth of 5.4% per annum over the same period.

Factors contributing to ASEAN’s economic growth

There are several factors contributing to the success of ASEAN economies.

First, these economies have benefited from significant investments from Japanese, European and American multinational corporations in the past 25 years. As a result, the ASEAN economies have developed into globally competitive manufacturers of electronics, machinery, chemical, textiles and clothing products.

Second, exports, which account for 63% of the region’s combined GDP in 2006, have been a major source of growth for the ASEAN economies. Singapore and Malaysia are among the most export-driven economies with exports contributing 206% and 125% to their GDPs respectively. ASEAN’s export prowess is attributable to the relatively low cost of labour, competitive currencies and high skills base which have enabled ASEAN exporters to move up the value-added chain in manufacturing.

Third, ASEAN nations have benefited from increased trading activities with China. Total trade between the six largest ASEAN nations and China rose sharply from 5.2% of GDP in 2000 to 14.5% of GDP in 2006. The Chinese market has also overtaken the U.S. market as the final destination for Asia’s electronics exports in recent years.

Lastly, thanks to high household savings, ASEAN economies enjoy high national savings rates with the savings to GDP ratio ranging from 26.6% to 46.2%.

Growth prospects for ASEAN

The total value of ASEAN’s GDP is estimated at US$1 trillion and accounts for about 11% of the Far-East region’s aggregate nominal GDP in 2006. This is a commendable achievement given the large contributions from the region’s economic giants of China, Japan, Taiwan and Korea.

ASEAN has excellent opportunities for further economic growth given the relatively low base of the region’s per capita income, favourable demographics and large and growing population, which exceeds a quarter of the Far-East region’s combined population.

In addition, the relatively low ratio of domestic demand to GDP coupled with high savings rates suggests that consumer spending in ASEAN is poised to grow rapidly in tandem with higher
disposable incomes and robust economic growth in the years ahead. GDP growth for ASEAN economies is expected to range from 4.5% to 8.4% in 2007/2008.

Propelled by a booming property market and construction of two key integrated resorts, the region’s most developed economy Singapore is expected to enjoy resilient GDP growth of about 6% in 2007/2008. Across the causeway, Malaysia’s GDP growth is projected to sustain at 5.8% to 6.0% in 2007/2008 on the back of fiscal stimulus from the 9th Malaysian Plan and robust consumer spending.

Indonesia’s projected growth of 5.6% to 6% in 2007/2008 is expected to be supported by increased public and private expenditures in an environment of declining interest rates.

Resilient domestic demand will help the Thai economy to grow at 4.5% to 4.8% in 2007/2008. Driven by stronger industrial expansion, buoyant consumer spending and investment, Vietnam's GDP growth is set to expand at above 8% in 2007/2008.

ASEAN currencies are underpinned by strong trade surpluses, manageable inflationary pressures and sustained economic growth. The Thai baht has outperformed its South-East Asian peers with a year-to-date gain of 9.9% against the U.S. dollar. Other ASEAN currencies such as the Singapore dollar are supported by stable inflationary pressures and resilient economic growth.

Outlook for ASEAN stockmarkets

In the past four years, ASEAN equity markets have trended up following a rebound in global economic growth and the end of the SARS epidemic in 2003. From 2004 to 31 August 2007, the Vietnam, Indonesia and Philippines markets registered superb total returns of 447%, 217.2% and 133.3% respectively. The Indonesian and Vietnam stockmarkets have continued to outperform this year with returns of about 21% respectively up to 31 August 2007.

Supported by reasonable valuations, stable or declining interest rates and sustained earnings growth amidst an environment of high domestic liquidity, the ASEAN markets offer attractive returns for medium-to long-term investors.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.

Monday, October 1, 2007

CIMB sees RM150m from its climate-themed fund

TheEdge

KUALA LUMPUR: CIMB-Principal Asset Management Bhd yesterday launched the CIMB-Principal Climate Change Equity Fund, the country’s first climate-themed fund, to tap into investment opportunities arising from climate change.

CIMB-Principal Asset Management Bhd chief executive Noripah Kamso (pic) said the fund would feed into the Deutsche Asset Management (Asia) Ltd’s DWS Invest Climate Change fund, which has invested about 46% in Europe and 41% in North America, and 5% in Japan.

The fund invests in sectors such as industrial, utilities, materials, consumer, consumer discretionary, information technology, financial and energy. The investments are spread out into themes such as 54% clean technology, 17% energy efficiencies, 24% adaptation and by sector (56% industrial, 9% IT, 8% materials and 11% utilities).

“The companies you are investing in are at infancy stage, so infant that the trend towards climate protection will rise, resulting in tremendous growth potential in these companies.

“I am confident that the 300 million units will be taken up within the offer period,” she said at the launch of the fund here yesterday.

As the CIMB-Principal Climate Change Equity Fund is regarded as a long-term thematic fund, Noripah said that investors should keep the investment for a minimum of five years to get the optimum upside of the investment.

With a minimum of RM1,000 investment. CIMB hopes to raise RM150 million by offering 300 million units at 50 sen each. This initial offer ends on Oct 17. CIMB has also commited to pledge RM1 for every RM1,000 investment to some organisations.

“We have not identified the organisations but will target those with tax exemption,” said Noripah, adding that CIMB will decide on the amount and organisations at the end of six months after its launch.

Disclaimer: Reading materials in this site are obtained from its respective website and it is for information purposes only. It is not Malaysia Unit Trusts - administrator view and it is not to be used against Malaysia Unit Trusts - administrator.