Friday, October 31, 2008

Market slump takes RM21b toll on unit trust funds


Despite the slump, the percentage of the net asset value had grown to represent 19.31per cent of Bursa Malaysia Securities' market capitalisation

THE sharp falls in the equities market have cut the total value of unit trust funds by RM21 billion in the first nine months of the year.

The value dropped 12 per cent to RM148 billion from RM169 as at December 31 2007.

However, Federation of Malaysian Unit Trust Managers (FMUTM) president Tunku Datuk Ya'acob Tunku Abdullah said the percentage of the current net asset value (NAV) had grown to represent 19.31 per cent of Bursa Malaysia Securities' market capitalisation.

At the end of last year, the percentage was 15.32 per cent. This means that the price reduction for shares held by the funds was not as great as the overall market's.

A total value of RM335.61 billion in market capitalisation had been wiped out from the local bourse between December 2007 to September 2008.

"Our benchmark (for the NAV percentage) will be 20 per cent by year-end," he told reporters after his welcoming note at the annual convention of unit trust consultants in Kuala Lumpur yesterday.

Based on the Morningstar Fund table as at October 17 2008, the Malaysian equity funds posted losses of 29.36 per cent compared to global equity funds which saw losses of 40.07 per cent over a year.

Tunku Ya'acob said there would not be a slowdown in fund launches but a change in the type of new funds is anticipated.

"We will see more aggressive-type funds such as distress asset funds, which will pick up cheap assets. However, subscription to the funds may be affected," he said.

Conventional funds launched for the first nine months of 2008 had increased by 40 to 407 compared to funds launched in 2007. Islamic-based funds have also risen by 16 to 144.

While the redemption rate of funds has increased slightly, the level remains low due to strong saving habits practised by Malaysians, said Tunku Ya'acob.

FMUTM technical chairman Tan Keah Huat said unit trust investors should continue investing especially when prices are weak to enjoy the upside when markets recover.

He expects an increase in net inflows for existing funds since purchasing more units at a lower price will lower the average price paid for all units.

On FMUTM's ongoing initiative, it has appointed Mesdaq-listed Rexit Bhd to develop an e-Unit Trust system, which will shorten investors' application process for unit trust purchases using EPF (Employees Provident Fund) savings.

"The manual process takes roughly two weeks and with this automation system, it should not take longer than six days," said Tunku Ya'acob.

The system should be in place by the first quarter of 2009.

FMUTM will also introduce a fund volatility factor early next year for all funds with a three-year record and above.

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 22, 2008

Great Depression versus now


As much as there are similarities between the two crises, the damage caused by the current turmoil is likely to be less severe given the swift actions of central banks.

AS a result of the recent financial tsunami, some experts have started to ponder whether we are headed for a depression.

The current credit crunch and the meltdown in some financial institutions were quite similar to what happened during the Great Depression in the 1930s.

In this article we will analyse the reasons behind the 1929 Wall St crash, which kickstarted the Great Depression and compare it to the current situation to identify any signs that a depression is approaching.

Milton Friedman, the leading advocate of monetarism, argued that every great depression had been accompanied or preceded by a monetary collapse.

According to Ben Bernanke, the US Fed chairman, the main reason behind the Great Crash of 1929 was due to the tight monetary policies adopted during that period.

He said the high interest rates back then caused the US economy to fall into a recession that led to the great market crash in October 1929.

As the US dollar was backed by gold, the acute selling of dollars for gold resulted in a run on the dollar.

The Fed continued to increase interest rates in an effort to preserve the value of US dollar.

As a result, high interest rates caused bankruptcies for many companies.

At the peak of the Great Depression, the US unemployment rate hit 25%

To rub salt into the wound, massive withdrawals of cash by panicky depositors were the last straw that brought about the total collapse of financial institutions.

In that period, bank deposits were uninsured and the collapse of the banks caused depositors to lose their savings.

And due to the economic uncertainties, the surviving banks were reluctant to give out new loans.

Another culprit in the 1929 crash was margin financing which caused excessive speculation in the stock market.

Investors needed only to put up 10% capital and borrow the rest from the bank to invest in the stock market.

The collapse of stock prices led to margin calls and further selldowns.

Coming back to the 2008 crash, the banking and credit-market crisis was mainly due to the property boom and subprime bust.

The collapse of subprime loans sparked the credit crunch, which dragged some financial institutions into trouble.

As a result of the securitisation and the creation of innovative financial products like collateralised-debt obligations and credit-default swaps, the collapse of one financial institution had a domino effect, leading to the collapse of other financial institutions.

Now, the pertinent question is whether we are in a long bear market and heading for a depression.

We believe a depression like the one in 1929 may not happen exactly the way it did before.

Given the fast actions taken by central banks around the world, the damage caused by this crisis will be less severe than the one in 1929.

Central banks around the world have been putting in concerted efforts to make sure the global economy will not fall into a depression.

The rescue packages being implemented throughout the world will help stabilise the financial system.

We believe the reduction of interest rates and the increase in money supply will help cushion the impact of the credit crunch.

Besides, deposits placed with most financial institutions are guaranteed by central banks.

Even though the US unemployment rate may rise to 10% from 6.1% currently, it is still far below the peak of 25% hit during the Great Depression.

In the 1929 crash, the Dow Jones Industrial Average took about three years to reach bottom in July 1932 from its peak in September 1929.

From the peak to the trough the Dow lost about 90%.

The Great Depression in the US started in August 1929 and ended only in March 1933.

The stock market started to recover eight months before the US economy ended its depression.

At present, the Dow has already dropped for a year from its peak in October 2007, currently down about 37.5% against its peak of 14,164 points on Oct 9, 2007.

In view of the possible economic recession in most developed countries, we think the Dow will drop further from current levels.

Nevertheless, we believe it will recover much faster and the magnitude of the fall will be far less severe than the one in 1929.

Lastly, we believe the stock market will eventually recover.

At this point, to be more prudent, we may take a “wait and see” approach until things stabilise.

> Ooi Kok Hwa is an investment adviser licensed by Securities Commission and the managing partner of MRR Consulting

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 20, 2008

Recession risks


The malfunction in the financial systems of the US and Europe is affecting the entire economic system, including international trade as evidenced by the collapse in shipping rates. The validity of their government policies will determine the duration of the crisis.

SUDDENLY, the danger of desolation in the US economy has become the consensus view.

Economists and fund managers there are in unison now in their opinions the US economy would be in deep recession. Just a couple of months ago, much of the opinion was that a recovery was in sight by the middle of next year.

Quite abruptly, hardly anyone now is offering a view of the time to recovery.

Economists are stumped, as financial potholes keep popping up. In “normal” years, economists could forecast economic growth rates to within a decimal point.

At inflection points, however, economists are behind the curve in their forecasts as the business landscape changes too fast.

There is also disagreement as to what’s a recession. The most common definition is a period of at least two consecutive quarters of negative economic growth, which implies it would extend over a period of at least six months.

Economists defend that definition — dubbed a technical recession — as the most apt expression of a contraction of the overall economy. That means it might not be depicted as a recession if the economy does not register two consecutive quarters of negative growth.

The man-in-the-street, scorched in the stock or job market, may disagree with that.

Others may escape unscathed. It’s not always everybody’s recession. Some sectors, for instance, may continue to expand. In the financial crisis of 1998 in Malaysia, for instance, plantations and electronics enjoyed bumper profits.

This, however, looks like a broad-based recession in the US, impairing housing, banking, autos and consumer spending. It also threatens to be the first global recession of this century.

Everyone is watching when and to what extent this would impact on this country.

Data in the fourth quarter or next year, if not earlier, may define the degree of that impact.

In the corporate sector, a 50% decline in economic growth from 6% to 3% would feel like a recession. That’s because companies planted up capacities for 6% economic growth, and a lower growth of 3% could cause their revenue to decline 10% that would result in earnings declining 20% or more.

Currently, forecasts for Malaysia’s growth for 2009 range from about 3.4% to 1% by Macquarie which compared it to the experience of 2001.

In 2000, Malaysia’s economic growth for 2001 was forecast at about 6% but due to the Sept 11 terrorist attack in New York, the actual growth was 0.4%.

Policy risks

At this time of change — not what Barack Obama had in mind — the economic policies set out by governments are critical. They would either shorten and moderate the downturn, or prolong and deepen it.

Policy errors in the aftermath of the 1929 stock market crash infamously led to a long and deep depression.

This is the hour of government leaders. After years when the business sector in the US and Europe was deregulated, it became in effect unregulated, and government leaders now have to steer their economies away from the abyss.

So far, governments in the US and Europe have gone out on a limb to save their banking sector, injecting fresh capital and guaranteeing all deposits. That raises the risks of their sovereign debt and high inflation in later years.

“But what else can they do? If the banking system fails, there’ll be no economy,” a fund manager said.

Last week, Globex, a small Russian retail bank, disallowed withdrawals by depositors after a run on the bank.

It’s surprising the regulators allowed that, as it can lead to a nation-wide loss of confidence — it could be due to the government’s lack of experience in a market economy.

External risks

Asia is again experiencing the outflow of foreign equity funds. While foreign portfolio funds are a destabilising force, no country rejects the foreign funds.

Perhaps, that’s because foreign portfolio funds can destabilise stock markets, but not the banking system or the currency, unless there is massive speculation or manipulation of the currency.

External borrowings are a more potent destabilising force as shown in the current exposure of Iceland and South Korea.

Both countries have huge amounts of external borrowings, surprising in the case of South Korea, considering a similar experience in 1997. In Iceland, even consumer loans were taken in foreign currencies.

A sharp turn in the credit cycle led to questions as to whether they can rollover their foreign debts that were largely taken by their banks.

That uncertainty caused the Iceland krona to plunge 40% and the Korean won 30% since July.

It is to Bank Negara’s credit that the banking system and currency are relatively stable. In the banking system, the loan/deposit ratio is about 75%, which is very healthy.

In the west, the financial system is gradually being patched up, with UBS of Switzerland among the last big banks being rescued by its government last week, and the benchmark London interest rate for loans in dollars making its first weekly decline since July, according to Bloomberg.

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Friday, October 17, 2008

Morgan Stanley: Some hedge funds may fail


MORGAN Stanley Chief Executive Officer John Mack said tumbling markets may drive some hedge funds out of business.

“Some of my friends in that community say that by year-end, you’ll see the number of firms in the hedge-fund area shrink, I’ve heard as large as 30 per cent,” Mack, 63, told CNBC yesterday.

As the industry shrinks, “we need to resize our prime brokerage business.”

Morgan Stanley’s prime brokerage business, which lost clients last month after Lehman Brothers Holdings Inc filed for bankruptcy, is winning back some of those clients since gaining a US$9 billion investment from Mitsubishi UFJ Financial Group Inc, Mack said.

“Funds that took some of their money, in some cases all their money, are coming back,” he said. “Without question those people who pulled out are coming back.”

Mack, who lobbied last month to have regulators restrict short selling because he thought the practice was hurting his company’s stock, said he supports it in principle.

A three-week ban on short selling imposed by the Securities and Exchange Commission expired earlier this month.

“I believe in short-selling, I believe in it today, it’s a way that people can express their view on a company,” he said.

He said that in “extreme circumstances” the practice has exacerbated problems in the financial system and “it’s prudent to have some kind of controls.”

More De-Leveraging Ahead

Morgan Stanley, which became the fifth-biggest US bank holding company, is reducing its ratio of assets to equity, known as leverage, as securities ranging from mortgage debt to corporate loans to stocks drop in value.

The firm’s leverage ratio, currently slightly below 20 times, will drop into the “mid-teens,” Mack said in yesterday’s interview.

“There’s more de-leveraging to be done” Mack said of the broader financial community. “People are scared, and when they’re scared they want to go to cash, they want to de- leverage, and they’re doing that.”

Mack said the current financial system crisis is the worst he’s seen. “I’ve never seen anything like this or anything close to this,” he said. “I think we’re in for a rocky road for a while.” - Bloomberg

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Fund managers focusing on balance sheets for investments


Leverage is an important factor for investors

PETALING JAYA: Fund managers and investors are focusing on balance sheets more than before as earnings growth prospects dim and borrowing risks in companies are magnified.

While investors have always considered balance sheet strength, levels of leverage have become the most important factor to watch for many of them.

While leverage among some of the banks in the West had reached levels of fragility - gearing levels of investment banks were as high as 30 times - banks in this country do not have leverage anywhere near those levels.

As Aberdeen Asset Management Sdn Bhd managing director Gerald Ambrose put it: “Banks here have been lending to customers who can afford to repay their loans.”

Gerald Ambrose

The concerns over the possibility of a global recession have led investors to place primacy in the balance sheet for assurance the companies would survive tough business conditions.

Companies that had issued bonds for working capital and that have to be renewed every five years, might be vulnerable in the cautious lending environment.

This is especially so for companies with balance sheets that are heavily loaded with debt.

The companies that were particularly susceptible would be those in the middle of their capital expenditure (capex) cycle, where the planting up was not completed, said CIMB-Principal Asset Management’s chief investment officer Raymond Tang.

Such companies would be those that have high capex requirements by the nature of their industry.

Trading companies, even though they do not have much capex, could also face cashflow problems. Difficulties could be encountered if their customers stretched the credit period from 90 days to 180 days, he added.

Companies that trade on cash payment terms will not encounter such problems faced by companies that trade on credit terms.

Sectors that trade on cash terms include gaming. Consumer companies with strong cashflow, such as tobacco and beer producers, would have similar attributes, he said.

In the property sector, Ambrose said, companies with weak balance sheets might not be able to hold on to their land bank.

Aberdeen takes large, concentrated positions in a small number of companies.

In the property sector, the asset management company had invested in SP Setia Bhd which had many sources of cashflow from its projects and served a broad market.

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 16, 2008

Asian markets fragile, but worst may be over for now


HONG KONG: Concerted action by governments globally to shore up the financial system may have signalled the worst is over for emerging Asia's most battered markets for now, but they are likely to remain volatile given still fragile investor sentiment, a Reuters poll shows.

The poll forecasts gains for South Korean and Indian equities by the end of the year, but it sees little upside for their currencies as weaker trade flows and the countries' respective current account deficits will weigh.

India's benchmark stock index, which has plunged more than 43% so far this year, is poised to recover more than 15% by the end of 2008 from Tuesday's closing level to reach 13,250, according to the poll.

"The valuations are extremely compelling at this point of time," said Rajen Shah, chief investment officer of Angel Broking in Mumbai.

"We see Sensex scaling to 21,000 over three years. Our exports to GDP ratio is relatively lower than countries like China, which implies the global turmoil could impact it less in relative terms," Shah said.

Analysts forecast a 10% gain for South Korea's stock market between Tuesday's close and the end of the year, taking the benchmark Kospi to 1,500 points.

That's well off last year's all-time high of 2,085 points.

Asian equities have picked up this week after European governments pledged bank guarantees and equity stakes in banks at the weekend and the United States followed suit on Tuesday.

While heavy selling in recent weeks offers the chance to scoop up Asian blue chips at reasonable prices, investors will continue to fret about the broader economic impact of the US-led global credit crisis, and a possible global recession, analysts said. "Slower global growth will impact exports across the region," said Patrick Bennett, foreign exchange strategist at Societe Generale in Hong Kong.

The prospect of weakening economic growth next year means there won't be much of a recovery in Asian currencies, if any. The poll forecast the Indian rupee - which hit a record low of 49.3 last week - would be at 47.63 by the end of December. That would be within Tuesday's trading range of 48.09 to 47.59.

The South Korean won, which was trading at 1,233 to the dollar early on Wednesday, is forecast at 1,200 by year-end.

Weakening demand in Western markets for Asian goods is already destroying the idea that Asia can "decouple" from an economic downturn in Europe and the United States. Goldman Sachs this week slashed its forecasts for GDP growth in Asia ex-Japan to 7.6% for this year and 6.7% in 2009, from 7.8% and 7.2% respectively.

While those are growth rates Western nations can only dream of, Asia's financial markets, and fund flows, will be influenced by reduced American and European spending and earning power, analysts say.

Indonesia's large domestic sector offers its economy some protection from a possible global economic slump but it will not be immune. Analysts said their forecasts for Indonesia's equity market had gone out the window as the outlook was too uncertain given the markets large foreign shareholdings and highly volatile foreign fund flows.

"We are concerned that earnings forecasts are way too high, so that raises some concerns," said Tim Rocks, equity strategist at Macquarie in Hong Kong. "Indonesia is not one of our favourite markets." - Reuters

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CIMB-Principal: Stay invested


Malaysian investors should take a long-term view of between three and five years and take advantage of the current cheap valuations, says CIMB-Principal CEO

THE global financial crisis may have wiped out trillion dollars worth of assets, but this should not deter local investors from investing in the stock market, said CIMB-Principal Asset Management Bhd chief executive officer Datuk Noripah Kamso.

She said investors should take a long-term view of between three and five years and take advantage of the current cheap valuations.

"And when they invest, they must do so through a regular savings plan and do not invest in one lump sum," she said at a media briefing on how to invest in difficult markets in Kuala Lumpur yesterday.

"Stay invested and do not try to time the market," she said, adding that the global recession will pass and market will rebound.

Chief investment officer Raymond Tang said if investors save slowly in capital market funds, they will get the returns.

"Buy when there is blood in the street," he said.

Tang said some US$1.8 trillion (RM6.32 trillion) worth of assets have been marked down worldwide by the US subprime crisis.

"In Asia, in the short term, there will be secondary effects but countries with strong domestic demand such as China and India will be able to withstand this," Tang said.

He said there is a lot of liquidity in the system now in Asia although banks are becoming more cautious in lending, but the slowdown may only be for the next six months or so.

"There will still be some growth as inflation is not going to be as bad in the months to come. Malaysian corporates are also in a better gearing position than they were 10 years ago and it is time that we should stop overly relying on the US market."

CIMB-Principal Asset Management, in trying to encourage the investing public to take advantage of the current situation to invest defensively, has put together eight core funds from over 70 funds it manages, into what it calls Flagship Funds.

The funds, said Noripah, have consistent long-term risk-adjusted returns and are widely diversified across different sectors and asset classes.

The funds are four conventional ones namely CIMB-Principal Equity Fund, CIMB-Principal Equity Growth and Income Fund, CIMB-Principal Balanced Fund and CIMB-Principal Bond Fund.

The other four are Islamic funds, namely CIMB Islamic Dali Equity Growth Fund, CIMB Islamic Dali Equity Fund, CIMB Islamic Balanced Fund and CIMB Islamic Balanced Growth Fund.

Out of the eight funds, three are invested up to 50 per cent in the Asia Pacific markets, excluding Japan.

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Hong Kong to tighten rules on fund managers


HONG KONG: Hong Kong said yesterday it would tighten regulation on fund managers to better protect investors and is considering a protection fund for insurance policy holders in the wake of the global financial crisis.

Chief executive Donald Tsang, in his annual policy address, said the territory would review the code on unit trusts and the disclosure of information by mutual fund distributors to investors.

The government was also considering establishing a protection fund for insurance policyholders and intends to set up an independent insurance authority to promote stability in the insurance industry.

“Risk management has become more important than ever to our financial system,” Tsang said in his speech to legislators, referring to the global financial crisis which he said would have a much bigger impact than the Asian financial crisis a decade ago.

Hong Kong’s financial infrastructure was more robust than 10 years ago, he said.

Thousands of Hong Kong investors, however, recently suffered losses on credit-linked notes, known as mini-bonds, issued by collapsed US investment bank Lehman Brothers. They are seeking compensation from banks that sold the bonds, but the government has said the investors are unlikely to get back all their money.

Guy Ellis, a partner at accountancy PricewaterhouseCoopers, said he welcomed Tsang’s announcement to tighten regulation on mutual fund sales and protect insurance policyholders.

“These are good things to do at this time,” Ellis said. “Whether they will indeed protect investors remains to be seen. We don’t have the details of what he is proposing. But any measures to protect investors against inappropriate products is a concept one would support.”

The Hong Kong Monetary Authority has eased credit conditions for local banks as a result of the global credit crisis. On Tuesday, it also announced it would guarantee all customer bank deposits for two years and set up a fund to provide standby capital to local banks, if necessary. €” Reuters

Tsang said the HKMA would strengthen supervision of liquidity risk management for authorised institutions, and revise the methodology for calculating capital adequacy ratios in accordance with the Bank for International Settlements’ latest guidelines.

The central bank would also strengthen stress tests, capital planning and management of off-balance sheet exposures, he said.

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Tuesday, October 14, 2008

Funds investing in Greater China badly hit


PETALING JAYA: Local funds investing in equities in China, Hong Kong and Taiwan were worse hit compared with those investing in local assets over the past one year, in view of a sharper plunge in the China stock market amid global financial turmoil.

The credit crisis stemming from the US has caused a global sell-down and China’s stock markets were the worst hit in Asia year-to-date. This year alone, the Shanghai stock market has fallen about 62%.

Over the past one year, China’s Shanghai Composite Index plunged 65.3%, Shenzhen Composite Index slipped 65.5%, Hong Kong’s Hang Seng Index lost 48.2% and Taiwan Taiex Index fell 46.8%.

In comparison, the Kuala Lumpur Composite Index posted a relatively lower decline of 32.2% from a year ago.

Once a high-flier in the emerging markets, China did not see its performance this year as rosy as it was before. Global investors who were attracted to China’s growth story poured funds into the country only to see their funds’ net asset value (NAV) depleting.

To name a few, the NAV of Public Mutual Bhd’s Public China Select Fund fell 36% over a six-month period to 13.32 sen per unit on Oct 8 from 20.82 sen per unit on April 8. ING China Access Fund fell 34.2% to 33 sen per unit from 50.16 sen per unit over the same period, and Public China Ittikal Fund’s NAV declined by 31.2% to 14.8 sen per unit.

According to data by Lipper Fund, local funds investing in Greater China’s equities saw an average negative return of 38.38% over a one year period up to Sept 26, while those investing in Malaysian equities charted an average negative return of 19.4%.

While unit trust funds did not fare well overall, a fund manager told The Edge Financial Daily that investors should allow themselves a longer investment horizon to see the real return.

“Unless you are willing to take losses, there is no point selling the units now. Perhaps the only thing to do now is to be patient and wait and see,” he said.

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Monday, October 6, 2008

Pacific Mutual announces payouts for 5 funds


PACIFIC Mutual Fund Bhd has announced an income distribution of between 0.4 sen and 6.0 sen per unit for five of its funds for the financial year ended September 30 2008.

"Despite the slowing global economic growth and heightened volatility of equity markets over the past year, consistent and stable performance over time has always been the hallmark of Pacific Mutual's investment style."

"We are again pleased to be able to offer consistent payouts to our investors who continue to stay with us in these trying times," Pacific Mutual Business Development and Marketing general manager Gary Gan said in a statement on Friday.

"These latest fund distribution payouts would reach over 16,000 account holders who currently hold a combined 1.23 billion units in all these funds." he said.

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RHB Bank to step up wealth management ops


KUALA LUMPUR: RHB Bank Bhd aims to step up its wealth management business by the financial year ending Dec 31, 2008, as customers look to protect and grow their money in the uncertain financial environment.

The bank’s head of retail, Renzo Viegas, said: “We are building the infrastructure and should be ready to do something quite actively by year-end.

“We’re also in the process of hiring a team, defining who our ‘infinity customers’ — high net worth individuals — will be, conducting risk profiling and assessing investment appetite.”

The bank, part of RHB Capital Bhd’s banking group, aimed to grow its existing wealth management business to between four and five times its current size, Viegas told The Edge Financial Daily.

He said in the current climate of unattractive investment returns, customers wanted to protect their money, while still looking for upside.

“I think the wealth management business will drive growth in our financial year ending Dec 31, 2009 (FY09),” he said.

Meanwhile, Viegas said with the softening economy, RHB Bank’s retail operations, which included consumer banking, small and medium-sized enterprise banking, insurance, and finance, would focus on taking market share, expecting to increase the market share of most of its products by between one and two percentage points in FY09.

The bank currently had between 6.5% and 8% market share for most of its products, he added.

He said for example, the bank’s market share of credit cards was under 7%, mortgages in the high 6%, its SME trade business 13%.

Viegas added in the first eight months of FY08, the bank had doubled the volume of home loans it approved and accepted by customers to RM3.3 billion and RM2.6 billion, respectively, against RM1.6 billion and RM1.2 billion in the same period last year.

Meanwhile, RHB Bank’s credit card loans growth was expected to remain at between 15% and 16%, he said.

He said while customers were looking to manage their cash flow and reduce debt burdens due to the current economic environment, the bank had yet to see customers’ repayment of loans negatively affected.

The bank was, however, monitoring this situation closely and expected repayment patterns to depend on the country’s fourth quarter 2008 and first quarter 2009 economic statistics.

Consumer and commercial deposits, meanwhile, were expected to grow by up to 4% and 10%, respectively, totalling RM1.6 billion, this year, he said.

Going forward, Viegas expected the bank’s growth to continue to be driven by its product offerings, and its bancassurance business, while also seeking growth through alternate banking channels.

RHB Bank was expected to enter into strategic tie-ups with two or three banking and non-banking parties by year-end in an effort to step up sales, he said.

On possible mergers and acquisitions, he said the RHB banking group would perform them at the right price, and was on the lookout for targets internationally, particularly in Asean. It currently has operations in Singapore, Thailand and Brunei.

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MAAKL Mutual declares distributions for 2 funds


KUALA LUMPUR: MAAKL Mutual Bhd has declared gross dividends of three sen per unit for MAAKL Al-Fauzan and one sen per unit for MAAKL Pacific Fund for the financial year ending Sept 30, 2008.

In a statement, MAAKL Mutual said the gross distributions represented gross distribution yields of 8.95% and 3.8%, respectively, based on the average net asset value per unit from Oct 1, 2007 to Sept 18, 2008.

MAAKL Mutual executive director and chief executive officer, Wong Boon Choy, said: “This is the third gross distribution declared for MAAKL Pacific Fund and the second declared for MAAKL Al-Fauzan since the funds’ inception in June 2005 and September 2005 respectively.”

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