Showing posts from August, 2012

Can Malaysia Trust 'Mat Rempit'?

First of all, Happy Merdeka to all Malaysians. Yup, we love peace and prosperity as mentioned by our beloved prime minister. 55th years of independence would not come true without unity of people from various races. No doubt, we Malaysians are from various background. Yet, we have come together, good or bad, to shape our nation until what we already achieve today. Anyway, Finance Malaysia hopes our nation can transform itself by realizing the 2020 vision "Developed Nation".

Just when everyone was celebrating today, I came across one news titled "Mat Rempit to help fight crime" and my writing instinct once again being activated. Fighting crime by collaborating with Mat Rempit? This is the first reaction I believed many readers would asked!!!
Don't we know that Mat Rempit were those who rides their motorcycle dangerously? Don't we know that Mat Rempit were those riders that endangered the life of other road users? And, I really don't know how and why our gove…

What's wrong with Malaysia in terms of GDP per Capita? (2012)

Addressing the issue, which Finance Malaysia thinks was critical at a time of globalization heats up, Malaysia needs to formulate and take action immediately without much hesitation. But, before we jump into action, we need to know the root of the problem. Right?
Exactly, we must find out the reason why we left behind other countries in terms of GDP per capita, which refers to the country's gross domestic products at purchasing power parity (PPP) per capita. According to Wikipedia, it was the value of all final goods and services produced within a country in a given year divided by the average population for the same year.

Why not using nominal GDP to measure national wealth? Comparison of national wealth are also frequently made on the basis of nominal GDP, which does not reflect differences in the cost of living. Using a PPP basis is arguably more useful when comparing generalized differences in living standards on the whole between nations because PPP takes into account the relati…

New Fund: AmGlobal Sukuk

After AmMutual's asia pacific dividend fund early this month, AmIslamic also don't want to lag behind its sister company by introducing AmGlobal Sukuk. The Fund aims to provide capital appreciation by investing primarily in Sukuk both locally and globally.

To achieve the investment objective, the Fund will undertake active management to enhance and optimize returns from investing in sovereign, quasi-sovereign and corporate Sukuk. The sectorial weightings may be adjusted to maximize the performance. There is no minimum rating for a Sukuk purchased or held by the Fund.
What's so special about this Sukuk Fund?

Value-add of the Fund is derived from active tactical duration management, yield curve positioning and credit spread arbitrage. Credit spread arbitrage and yield curve positioning is part of relative value approach that involves analysis of general economic and market conditions and the use of models to analyze and compare expected returns as well as the assumed risks. The…

GM and Fannie & Freddie and Spain

The taxpayer stepped up to the plate in the fall of 2008 to underwrite General Motors and FNMA and FMAC requiring a commitment of $ 250 billion plus.  We are now approaching round two.  Government Motors, as most people now call GM, is rapidly on a glide path to another bankruptcy, which will cost taxpayers approximately $ 50 billion and require, at a minimum, another $ 25 billion to protect the unions' juicy benefits.  Fannie Mae and Freddie Mac have an unlimited lifeline and their losses, now over $ 200 billion, are essentially unlimited.  But both GM and FNMA and FMAC have created many more millionaires as government-appointed bureaucrats, lawyers and accountants feast at the taxpayer's expense.  This is what happens when the government gets involved.

Europe has its own version of this.  Propping up banks in Spain, France and Germany has simply made matters worse in the Eurozone and has weakened, not strengthened, the banks.

GM and Fannie and Freddie and the European banks sh…

Free Markets or Bureaucratic Dictatorship

Much of the political debate today is simply a question of whether one thinks capitalism is a good idea or not.  Many westerners seem to believe that the profit motive is fundamentally evil. Defenders of free enterprise are often thought to be morally suspect.  This is where the real struggle is being waged in today's politics.

The discussion about Bain Capital brings into sharp focus the debate on the merits of capitalism.  Should people risk their own capital to make money or should, instead, the government take people's wealth and 'make investments' with it.  That is what this debate is really all about.

A similar debate about free markets rages about health care.  Should a panel of educated and enlightened people appointed by polticians decide on your health care or should you purchase the health care and the insurance that you need and make such decisions yourself with consultation with health care professionals?  That some people are poor seems to weigh heavy in th…

New Fund: CIMB Islamic Al-Azzam Equity Fund

Launched on the same day with AmMutual new fund, the CIMB Islamic Al-Azzam Equity Fund is an open-ended fund that aims to achieve consistent capital growth over the medium to long term.

The asset allocation strategy for this Fund is as follows: 

between 70% to 98% (both inclusive) of the Fund’s NAV will be invested in Shariah-compliant Malaysian equities; and up to 30% of the Fund’s NAV in other Shariah-compliant investments and Shariah-compliant liquid assets, with at least 2% of the Fund’s NAV to be maintained in Shariah-compliant liquid assets.

For this Fund, the investment into Sukuk must satisfy a minimum credit rating of “A3” or “P2” by RAM or equivalent rating by MARC; “BBB” by S&P or equivalent rating by Moody’s or Fitch. In line with its objective, the investment  strategy and policy of the Fund is to rebalance the portfolio to suit market conditions in order to reduce short-term volatility and provide consistency in capital growth.

More on Investment Strategy...


New Fund: AmAdvantage Asia Pacific ex Japan Dividend

Wanted to diversify your investment portfolio especially on dividend based investments? You may look into this newly launched fund by AmMutual named AmAdvantage Asia Pacific ex-Japan Dividend Fund, a fund managed by AmInvestment Services Berhad.
The Fund is a feeder fund, which will invest into the  HSBC Global Investment Funds  – Asia Pacific ex Japan Equity High Dividend (the “Target Fund”), a sub-fund of the  HSBC Global Investment Funds domiciled in Luxembourg. The Fund seeks to provide income and long term capital growth by investing in the Target Fund which has an investment focus on Asia Pacific ex Japan equities.

The Fund seeks to achieve its investment objective by investing a minimum of 95% of the Fund’s NAV in the distribution share class in the HSBC Global Investment Funds – Asia Pacific ex Japan Equity High Dividend at all times. This implies that the Fund has a passive strategy.
More about the Target Fund

Romney Shows His Serious Side

By picking Paul Ryan, Mitt Romney has elevated the national debate.  Whether one agrees or disagrees with the Ryan budget plan, it is the only serious plan put forth by any elected official in the US.  Ryan is courageous and smart.  This has to change Romney's image with his conservative base.

One wonders if the Democrats will continue to look for irrelevant issues -- Bain, for example, or Romney tax returns for another -- or will the Democrats finally engage on the real issues of our times.

This election will become a true test for the American electorate.  I suspect Americans will rise to the occasion.

Debt Isn't The Only Problem

Even if there was zero sovereign debt in Europe, Europe's economic troubles would not be over.  Unemployment would still be high and the Euro-economy would still be mired in stagnation.  It is very hard to start a business in Europe and hiring workers is just plain stupid.  Since you cannot legally fire employees in most countries in Europe (as a practical matter), there will always be very, very high unemployment across the European plain.  Unemployment is a way of life in Europe and is becoming a way of life in the United States for pretty much the same reason.

It is very expensive in Europe and in the US to hire an employee even if the employee were willing to return every dime of their take home pay back to the employer.  The mandated costs and potential litigation make an employee, especially those of relatively low income, uneconomic.  This fact will be a persistent and continual drain on the economy of the US and Europe.  The antidote for this, according to most politicians,…

Bain, Private Equity and All That

What is the economic role of private equity?  Private equity firms buy or invest in businesses, mostly private businesses, sometimes public companies.  The usual pattern is that a private equity investment helps a fledgling company expand by providing funding and often management expertise.  For public companies, private equity is often the source of turning a poorly run company into an efficiently run business.  With rare exceptions, private equity enhances shareholder value.

Absent private equity, private and public businesses alike are less valuable.  Why?  Because private equity funds are a source of equity capital, a liquidity provider (through the sale of a company to a private equity fund), and an enhancer of value (by providing management and consulting expertise).  Because of the existence of private equity funds, business large and small are more valuable.  More valuable businesses hire people and are the engine of economic growth in a free enterprise economy.

Politicians who …

Buy Bonds -- The New Cure for Government Excess

Markets and politicians are clamoring for the Fed and the ECB to buy sovereign bonds, presumably to make it easier for absurd debt levels to get to even more absurd levels.  Great policy.  It's almost reassuring to see Tim Geithner in support, since he has a perfect record -- he's never been right once regarding economic policy.

So what is the logic behind asking the Fed and ECB to buy sovereign debt?  Basically, to make it easier to sell more of that debt by increasing the demand.  Where will the Fed and ECB get the money to buy the debt?  Ah, that is the question.  How about -- out of thin air!  What we used to call the printing press.  In modern times, the printing press has been replaced by digital creation, but is there any real difference?

So Europe and the US are reduced to hoping that running the printing press to put more money into circulation will rescue their stagnant economies.  Let regulatory overkill, oppressive taxation, and massive government bureaucracy continu…

Christie Delivers

New Jersey Governor Chris Christie, with bi-partisan support, has delivered once more for the average citizen in New Jersey.  Yesterday Christie signed a law that finally begins to put some accountability into the public schools in New Jersey by requiring annual reviews for public school teachers and makes it easier to remove incompetent teachers.  Naturally the unions fought this reform, preferring incompetence and unaccountability to a successful future for New Jersey children.  Together with Scott Walker of Wisconsin and Bobby Jindahl of Louisiana, Christie has shown what can be done when you try -- even in states that are normally heavily Democratic.

Contrast the leadership of Christie, Walker and Jindahl with that of McDonnell and others who take no political risks to help the average citizen.  McDonnell's conservatism seems to stop at the church door.  He actively opposed having employees contribute to their own retirement during his first year in office, a position exactly o…

Waiting on the ECB

Markets are focusing on the ECB this morning, wondering if Draghi really has some plan to resolve the European insolvency crisis.  One thing for certain: whatever plan Draghi can produce will not involve any government expenditure reductions or government revenue increases anywhere in the Eurozone.  Absent either of these two measures, sovereign debt in Europe will only continue to move catastrophically higher.

Shifting the deck chairs on the Titanic is the Draghi model, one supposes.  Having the ECB buy Spanish or Italian debt may spur a one day market rally, but cannot possibly put a dent in the real crisis.  In fact, it only makes matters worse by encouraging the political forces in Spain and Italy to continue to avoid real reform in the vain hope that somehow, somewhere things will improve.  They won't.

The solution to the problems in Europe is obvious:  reform.  But, reform is not on the table -- never has been.  The left is so addicted to entitlement and bureaucracy, both in E…

How To Destroy Opportunity

Senator Jim Webb of Virginia and others have introduced a bill in Congress to raise the minimum wage from the current $ 7.25 to $ 9.80.  Why stop there?  Why don't they cut to the chase and raise the minimum wage to $ 20 per hour?  After all, people need more money don't they?  In fact, I would think that $ 100 per hour would solve all of our problems.  At $ 100 per hour, we would no longer have to worry about problems like poverty or inadequate income.

We should probably look into other things like guaranteed paid three month leaves of absence for all employees.  Put that on top of guaranteed health care.  How about free transportation to and from the office?  A day care center free for the children of employees?  There must be some more things that we can mandate.  This is very progressive thinking!

Great ideas!  Way to go Jim Webb!!