Showing posts from November, 2011

5 Things to Consider before Marriage

Do you noticed that many people are getting married lately? How many wedding invitations have you received this year? Or, are you planning to form your own family now? Yes. I had 4 wedding dinners to attend to next month. Good month indeed?

During good times, many couples decided to tied their knot as they feel that their situation became better, especially financially. Not only Government may consider to hold general election, love birds are joining the bandwagon due to the feel good factor. When consumer confidence is rising, people tends to spend and hold events or celebrations. All of this involves money. Marriage, depending on how grand you want it to be, can be very costly. What an interesting topic to discuss here!!!
First, I must congratulates those love birds. But, we must be realistic that there is some issues that must be dealt with differently before and after marriage. What are they?
What kind of Lifestyle? Too simplified ones lifestyle, it viewed as toning down our social st…

Why GOLD is a different asset class?

Today, gold is becoming an ever important asset class in the world. Banks nationwide is offering investors the opportunity to invest in gold, whether it is for capital preservation or capital gain. How well you diversify without investing in gold? This is the question being asked by those already investing in gold, and most of them already making profit out of it. But, is it really so different? Is it really a must have asset class?

History of Gold Gold has been used for numerous monetary functions long long time ago, especially in China. Ancient people used gold as a form of currency and storage of wealth. By using gold as a medium to which paper currency was pegged, most modern international monetary systems were created since then.
What drives up Gold price?

The modern gold rush scenario happened since 2008 global financial crisis, driven by extremely low deposits rate on cash, very volatile equity markets and surging inflation. Negative real value of money is the key factor why many p…

A False Choice

It's President Obama's favorite expression -- "a false choice" -- but it seems like the right expression for what pundits are describing as the Eurozone's only alternatives at this point: issue eurobonds or face chaotic default. But, are these really the only choices?

What about a workout -- Argentina style? Why won't that work? A debt workout would likely be a win-win for the Eurozone debtors and their creditors.

The market has already set the stage for such a workout for Greece, whose outstanding debt is now trading at a fraction of its originally issued value. Why not go the rest of the way by offering creditors repayment with a substantial haircut? That would then set the stage for similar "workouts" across Europe.

This would reduce Eurozone debt, force creditors to absorb some of the impact of their poor investment decisions, and avoid the austerity measures that can only lead to political upheaval.

No need to abandon the Euro. All that is nee…

New IPO: Pavilion REIT

Are you bored of the current small market capitalization of REITs in Malaysia? I think Sunway REIT (the largest REIT right now) is by far sitting there very lonely without anyone closer to it. Come 7th December 2011, we will witnessed a new contender - Pavilion REIT, to challenge the title. Although it may started-off in 2nd place, the new REIT may grows to clinch the first place from SunREIT. Below is some info taken from RHB Research report on the IPO;

Pavilion REIT (PavREIT) has an asset size of RM3.5bn, just after the largest MREIT - Sunway REIT’s RM4.5bn. PavREIT has two assets – Pavilion KL Mall which is worth RM3.4bn and Pavilion Tower (office) RM128m.
The Prime Asset
Pavilion Mall is one of the only four premium retail malls in KL. It is designed to complement the malls along Jalan Bukit Bintang, developing the street to a key shopping destination in the region. Located at the “Golden Triangle”, which is the business, shopping, entertainment and tourism district, the mall enjoys …

Sequestration is a Better Solution

The Super Committee, at best, would have ended up with a variety of tricks that would not reduce the burgeoning size of government, so we should all celebrate the failure of the Super Committee. Bring on sequestration. The US cannot afford it's current path and whatever reduces the size of the mountain is a plus. We should resist any and all efforts to restore any of the cuts that are mandated under sequestration.

Time to include entitlements in the sequestration.

Why The Young Have a "European" Future

Young people in America face much less opportunity than their parents. Why? Corporate greed?

Is greed something new that just burst on the scenes in the past ten years or so and has squashed the hopes of our young folks? Is greed the reason that young folks increasingly can't find jobs and are forced to take the European way -- live at home with your parents until you are in your late 30s? So, if no one is greedy, then jobs will magically appear and all will be well? Is that the thinking of the OWS crowd?

For starters, absent greed, there would be no jobs. Someone has to be greedy enough to want to make a profit and thus hire employees. The more profit they want to make, the more they have to expand their business and the more employees they will have to hire. Greed creates jobs. The absence of greed means there is no motive to hire anyone.

Those who push the "greed" thesis believe that an economy is a fixed pie that is available for everyone to take a slice and th…

Property prices to Come Down after BNM's latest guidelines? (Nov 2011)

Like it or not, Bank Negara Malaysia announced that effective 1 Jan 2012, financial institutions must make appropriate enquiries into a prospective borrower's income after statutory eductions for tax and EPF, and consider all debt obligations, in assessing affordability.
Aimed at promoting prudent, responsible and transparent retail financing practices, the new guidelines require financial institutions to make assessments of a borrower's ability to afford financing facilities based on a prudent debt service ratio as inputs to their credit decisions.

On top of that, a new guideline was stipulated that the maximum tenure for vehicle financing should not exceed 9 years, with immediate effect (18 November 2011). Right now, there are only 2 banks which offers vehicle financing up to 11 years, and less than 2% of car buyers now opted for tenures beyond 9 years. The changes was neglect-able.
Are you an Informed Borrower? The guidelines additionally hope to ensure that consumers are treat…

Key Highlights of BNM 3Q11 Report

Titled as "ECONOMIC AND FINANCIAL DEVELOPMENTS IN MALAYSIA IN THE THIRD QUARTER OF 2011", Bank Negara Malaysia (BNM) review some interesting facts on the status of our economy and the market outlook going forward. The announcement was chaired by Central Bank's governor to address the media after the closing of Bursa Malaysia.

Growth improved in the third quarter
Despite the challenging environment, Malaysian economy registered a higher growth of 5.8% (2Q11: 4.3%), due to stronger domestic demand. The robust  domestic demand was driven by an expansion in both household and business spending as well as higher public sector expenditure. Manufacturing sector recording a significantly better performance supported by firm regional  demand for resource-based products, coupled with the normalisation in supply chain disruptions arising from the Japan natural disaster.
The headline inflation rate, as measured by the change in the Consumer Price Index (CPI), rose to 3.4% on an annual …

5 Reasons Why Malaysians Overspend to stay TrenDy?

This is a timely posts to answer the "hot-debate" on TheStar article saying that "Malaysians spend to stay trendy". How much does a young adults earning? Being trendy is very costly because all the luxury brands are expensive. How about techno-trendy? How are you going to chase after the fast changing technology gadgets? Please take note that you are still a young adults, new to workforce, and have a long way to go in the future. Without saving, how are you going to live?

No wonder 60% of Malaysians young adults were in debts, and they overspend by average 15% of their salary. Example, Eric earn RM2,500 and he spend RM2,875. After cracking our head, Finance Malaysia comes with the following 5 Reasons to explain the main contributing factors:
1. Lacks of Self Discipline.

Before blaming other, we did better to blame ourselves for all the overspending stuffs. Self-discipline is an issue for young adults nowadays. They tend to spend on what they "wants" instead …

New Fund: PB Growth Sequel Fund

Public Bank is launching a new fund, PB Growth Sequel Fund (PBGSQF) on 15 November 2011. PBGSQF is an equity fund that invests in a diversified portfolio of primarily Malaysian equities to achieve capital growth over the medium- to long-term period. PBGSQF is managed by Public Bank’s wholly-owned subsidiary, Public Mutual.

Fund Specific Benefits PBGSQF provides investors the opportunity to participate in the medium- to long term growth potential of the equity market through investments in a diversified portfolio of  index-linked companies, blue chip stocks and companies with healthy growth prospects that are listed on Bursa Securities.
PBGSQF will invest in companies with reasonable earnings growth prospect over the medium- to long-term to maximize the growth potential of the fund. Some of the sectors that the fund would focus on include financial, communications, industrial and consumer sectors.
What is the Asset Allocation?
To achieve increased diversification, PBGSQF may invest up to 30…

OWS: Gimme, Gimme

Occupy Wall Street is not about a political argument really. It is simply the idea that some folks are entitled and others are not. The protestors are "demanding" various things that they claim are theirs by right -- mostly they want things other people have worked hard to obtain.

Instead of putting their shoulder to the wheel and working to accomplish things in life, the protestors want others -- the rich, they say -- to fund them. College graduates after four years of fun frequenting the local bar scene on government (taxpayer) loan funding, now, with sociology degree in hand, want high paying jobs for which they have no qualifications.

None of this is really about politics. This is merely the anthem of the entitlement -- give me what others have because I am me and I am entitled. Not much else going on.

People with real responsibilities do not have time for this. They are busy out working hard either at their job or they are working hard looking for a job. Only the en…

What About the US?

With Europe heading for massive defaults and economic contraction, what is the future for the US?

Weakness in Europe will not be a plus, but more fundamental problems await the US. Our debt situation is worse than the situation currently plaguing the Eurozone. Yes, our situation is worse.

The various "states" of Europe have unsustainable levels of debt, just as most of the larger states in the US have unsustainable levels of debt (Illinois, California, New York, New Jersey, etc.). But Europe does not have a federal debt problem. The Eurozone does not issue it's own debt. The US does. So, the US has sovereign debt at two levels -- the federal level and the state level, while the Eurozone has sovereign debt only at the "state" level.

No amount of cuts and tax increases will have any impact whatever on the dynamics of US debt. Thus, the current discussion about the Supercommittee is largely irrelevant. (Democrats have pretty much admitted that by listing as $…

Budget 2012: Another interesting debate --- RPGT

Property prices had been skyrocketing since 2009, creating more millionaires in Malaysia. The key factors behind the increasing properties prices were low interest-rate environment, attractive housing loan packages and ample of liquidity in financial system. These had prompt investors ,and general public too, to invest into properties searching for better return among all the investment instruments. Oppss... Favorable Real Property Gain Tax (RPGT) is one of the factor too.

While creating millionaires, many middle and low income groups are facing difficulties to come out the higher capital required to purchase their homes. Genuine buyers, who are first-time house buyers, were being forced to delay their buying and ended up renting. This will resulted in widening wealth gaps between Malaysians. As such, government had proposed to increase the quantum of RPGT to counter the potential socioeconomic backlash. (see attachment)
Curbing speculations?
Traditionally, there are two important tools …

Goodbye Italy

Look at the numbers: $ 2.6 Trillion national debt which amounts to 120 percent of GDP. Nearly 15 percent of that debt comes due within the next twelve months. Yields on 10 year bonds now north of 7 percent. That's Italy.

The Italian political leader Berlusconi has resigned, joining his pal Papandreou. It's over for Italy. All that is left to speculate about is when Italy will recognize the necessity to do a planned workout -- commonly known as a (partial) default.

Before this is over, the leadership in Germany, France, and Spain will also step down, either voluntarily or by action of the voters.

This game has only one end. Either these countries sit down with their bondholders and work out a partial default plan or total chaos will be the end result when they simply can no longer sell debt at all and can't pay their day to day bills.

The unreality of the approach of European leaders is almost comic, except for the tragic implications that their foolishness may lead to.


Failed PPSMI: What is the impact to our Economy?

Yes. Another U-turn from our government. This is called my beloved Malaysia. But, this time it involve our students (innocent future voters) who had to bear the uncertainties between studying Science and Maths in English and Bahasa Malaysia (BM). The new education policy was mooted by then Prime Minister Tun Dr. Mahathir in 2003 in order to raise our competitiveness especially in Science matters.

However, everything can be changed and the government said that it had abolished the teaching of Science and Maths in English (PPSMI) citing poor command of English language deter students from excelling in these two subjects. And, the education ministries said that they already consulted all the schools nationwide, and concluded that majority of them doesn't want to continue with PPSMI for the benefits of students.
Why PPSMI failed in Malaysia?
I would said that the only reason is the lack of commitment from Government. If there is not enough qualified English educated teachers, train them …

Greek Political Turmoil

According to the news media, what Greek politicians do next will determine whether or not the current Euro crisis can be "resolved." Not really.

The main significance of the past week of Greek political back and forth is that political leaders throughout Europe are in trouble -- big trouble.

Countries forced into austerity measures will, in the end, replace their political leadership. That process is already under way in Greece and Spain and is surfacing in Italy as well.

Countries who are putting their taxpayers on the line to support the bailout of the profligate countries will also soon begin the process of replacing their political leaders -- Germany and France.

Neither side of this grand scheme, the bailors or the bailees, have the support of their voters. Why is this a surprise? The effort to bail out the sovereign debt problems of Greece, Spain, Italy (Portugal, Ireland) is a "lose-lose" policy and voters can see clearly that it is not in their interest, no…

Corzine Bets and Loses

John Corzine, former Senator and Governor of New Jersey and former Chairman of Goldman Sachs, stepped down today as Chairman of MFGlobal, as MFGlobal remained in the headlines for its bankruptcy filing two days ago. Corzine presided over the firm as it made huge bets on European sovereign debt, thinking that the worst of that crisis had passed. Unfortunately for Corzine and MFGlobal, the worst of the crisis is yet to come and MFGlobal and its leader are no more.

To Corzine's credit, he has always espoused the view that sovereign debt problems are imaginary and not real problems. He never had much interest in measures that might tame the growth in US national debt or the debt problems in New Jersey. So, at least, Corzine is consistent.

The blind spot that poisoned Corzine's reign at MFGlobal is the same blindspot that pervades current attitudes on the US's national debt (and the obligations of a number of state governments). These huge debt loads are not sustainable, bli…

The Unraveling of a Dumb Idea

The proposed "deal" that has been crafted by France and Germany for the EU to "save" the Euro is one of the most absurd plans that has ever been concocted. It should be obvious that neither the bailors nor the bailees are going to go along with this (even if their leaders continue to pursue such foolishness).

It's time to say: "we're broke" and be done with all of this obfuscation. None of the deals make any sense and none will survive past the self-congratulatory posturing deal-announcements of Merkel and Sarcozy. Give it up.

It isn't clear on the basis of the data that the sovereign debt of France and Germany has any real hope of survival, much less the southern periphery of Europe. (Is the US really in a position to "bail out" Illinois, California and New York, when the inevitable time of their impending defaults arrive?).

The problem is not "confidence" or "liquidity." When your house is burning to the groun…

Greeks Should Vote No

Why should the Greeks agree to the bailout terms of the EU? If I were a Greek citizen, I would vote no. There is simply no way that generations of Greeks should buy in to austerity to support bad decisions by Greek bondholders. Default is the right answer -- for everyone -- not just for Greece.

If Greece defaults, and that doesn't necessarily mean leaving the Euro (any more than when Illinois defaults, which it will, that it means Illinois will leave the US dollar zone), then and only then can Greece, on its own, begin to correct the absurd government policies that have wrecked their economy. They have to reach this realization on their own. It cannot be forced from outside.

Greece is just the first gong in a series of bells that will ring of default through the Western world. No one, no one, can afford the economic policies that Europe has adopted over the past half century. Why the present US administration wants to emulate this disastrous course is not clear.

The idea tha…