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 status. In contrast, we should not spend lavishly just to show off our social status. The question here is, how simplified or comfortable your lifestyle should be after getting married? Discuss with you partner now.

I think that we should practiced the so called "gratitude", by spending and living in a more discipline way, instead of by emotion. If you and your partner differs in the way of living, troubles may set in. By being thankful for what we already have, we would not need to satisfy our material wants or even develop any. This help us save money in the process. Then, we can utilized the money saved for other better purposes, such as investments.

Time allocation?

Now, you're not alone anymore. You have another person waiting for you to come back home everyday. Many people think that by buying expensive gifts, they can fulfill their love towards their partner. But, does it what they really want? Why do your partner marry you at the first place? Gifts or Loves?

If gifts, that's not true love. What if another guy giving her a better and more expensive gifts one day? On the other hand, if the answer is love (I hope this is the answer most of the time), how are you going to enhance the longevity of love? Utilize your energy towards quality time and enhancing relationships with loved ones. Not every kind of enjoyment requires money to be spent. All we need is a change of attitude towards wastage and ensuring money grows out of money. I think this would be a better and long-lasting relationship. Since young, our teachers taught us that time is priceless. Still remember?

Women are more brave after marriage?

Emm... Maybe because married women have another person to rely on, they tend to be "more brave" financially. Example, they may not care much about their job because there is always another job waiting - housewife. If there is anything financial crisis, they can tap into the other's income. And most of the time, men are reluctant to discuss their financial standings with his loved one. But, what if he lose his job? It is important to be honest to each other about one another financial situation to avoid any unfortunate surprises relating to money.

Does child a happy gift or burden?

A child is a wonderful addition to the family. Planned or unexpected, a pregnancy requires additional budget which a married couple must be prepared for. Did you figure out how much is the additional costs involved? Regular medical checkups, surgical fees, baby items and baby sitter need to be prepared. Even if you don't eat, your child still need to. Then, how about baby's education, insurance, savings account and other needs? If you already planned for it, a child is actually a happy addition to a family.

Marriage debt?

Many people resorted to seek help from financial institutions. Personal loan is one of the most common way to finance a marriage event. Because of "face", many new couple borrow from banks and pay installments after that. Meaning, they are in debt (or more debts) because of marriage. Does it worth it? I don't know because love can be blind sometime. Agreed?

Anyway, I do not encourage anyone to take out a loan for this supposedly happy marriage. Delay or postpone the once in a lifetime event until you and your partner is ready (unless unexpected pregnancy occurs). At the end of the day, realistically speaking, there is an old saying that goes: "You can't live on love alone, you need money to survive". With this, I end writing here and Finance Malaysia wishes all of you have a wonderful and blissful marriage.

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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 people rushing to gold since then. And of course, the wealth generated by India and China sparked the demand for gold too. Both Indians and Chinese are buying gold as a status they long-been dreaming of.

More people are flocking to Gold

Because of the bad loss-making experience in equity investments during 2008 financial crisis, investors exited the capital markets and were holding record amounts of cash then. However, the low yields on cash and other safer instruments left investors searching for better yield elsewhere. Low volatility, safe asset class, and storage of wealth naturally makes gold investment popular. This is when "Gold rush" sets in, with or without your attention. Yes, we're in the midst of gold rush currently and could persist for few years more.

Emerging Markets is the main drivers

In 2010, 54% of total global demand for gold were for the purposes of making jewelry. Who are these rich people? Yup, Asians were the regular jewelry supporters. Indian demand alone was responsible for around 1/3 of total global demand. This trend is expected to continue as more Indians make their way into the middle class and have the ability to spend their income on gold jewelry.

Following closely was Chinese, whom is beginning to display a trend that could see it overtake the ultimate title in the near future. Traditionally, Chinese cannot runaway from buying gold during Chinese New Year, marriages, new born or even birthdays. This reasons ensure the sustainability of Chinese demand for gold. In total, 40% of global jewelry demand is contributed by Indians and Chinese.

China is the largest gold producing country?

Despite record high gold prices, total mine production was fairly unchanged and remain below levels seen earlier in the decade. This was due to rising production costs and tighter legislation in certain gold producing countries. The latest was in Peru, where protesters were staging a rally for past few days against environment damaged resulted from gold mining activities there.

South Africa, once the largest gold producing country, was overtaken by China since 2007. Hence, China is going to dominate both demand and supply of gold and is expected to continue its pattern of growth going forward.

US and Western Central Banks are largest gold holders?

To re-balance currency reserves, liquidation of gold by central banks globally was a routine procedure. Despite the fact that most western central banks are, for all effects and purposes, over-allocated to gold, annual sales trends began to gradually slow as the effects of financial crisis is not over yet. Obviously, European Central Banks (ECB), have been very hesitant to sell gold from their external reserves back into the marketplace because they view gold as a currency proxy and a way to diversify their holdings. European, from banks to people, prefer to hold gold rather than currency at risk of continue devaluation.

Meanwhile, Emerging countries with particularly small gold holdings as a percentage of reserves currently are diversifying from US dollars. Instead, emerging economies are regular buyers of gold now. As these economies continue its speed to grow bigger, a paradigm shift appears to be unavoidable.

The above factors explained why gold is a different asset class. We cannot simply read the historical trends and using technical analysis tools to predict the gold price directions. Yet, we invest into gold to protect and create wealth, amid the looming economy crisis.

Osnutet är bäst…

Osvuret är kanske bäst men faktum är att jag den senaste tiden fått känslan av att vara tillbaka i finanskrisen gryning, 2007-2008. Bl.a. känns det som att risken för en stor finansinstitutkollaps, t.ex. en bankkollaps eller försäkringsbolagskonkurs, ökat signifikant den senaste tiden.

Varför då? Jo av det enkla skälet att, från min synvinkel i alla fall, alldeles för lite har gjorts för att komma till rätta med de problem som orsakade krisen, samtidigt som finansmarknaderna samt institutionerna börjat anpasa sig till detta. Vilka problem är det jag pratar om? Jo framförallt är det bonuskulturen i finanssektorn som tillåtits fortleva nästan oförändrad. Och som en konsekvens av detta tror jag bankerna etc. fortsätter ta för mkt risk. MF Global är ett exempel på detta, Dexia likaså. Detta, tillsammans med det inkompetenta handläggandet av euro-krisen och de därpå följande kraftiga marknadsreaktionerna den senaste tiden, tror jag är en farlig kombination. Det kan också vara värt att notera likheterna mellan spreadexplosionen 2007 (för corporate credits) och spreadexplosionen 2011 (för europeiska sovereigns).

Medan de flesta väntar sig att en kollaps av en europeisk stats finanser skulle kunna leda till en eller flera bankkollapser tror jag faktiskt det omvända skulle kunna inträffa. En plötslig ”flash collapse” i ett betydande finansinstitut, som t.ex. skulle kunna orsakas av politikernas ”sabotage” av credit default swap marknaden för sovereigns, och medföljande svårighter för banker att hedga sig mot t.ex. Grekland eller Spanien, skulle kunna leda till att euro-problemet så att säga snabbspolas fram till bristningsgränsen!

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April 2009: Lituaiska är ett roligt språk! Bilden ovan tog jag i Vilnius 2009 och jag tog den förstås för att belysa de roliga namnen i Lituaen som nästan alla verkar bygga på att man lägger til –as i slutet av ett mer eller mindre !! traditionellt indoeuropeiskt ord. Vem hade kunnat ana att denna lilla bank två år senare skulle kunna få effekter på Saab i Trollhättan i Sverige?

November 2011: Snoras i ”konkurs” ==> Snoras förre ägare efterlyst internationellt ==> Snoras förre ägare visar sig också vara långivare till Saab ==> Snoras ägare arresterad i London (i natt…) ==>Litauens riksgäld kräver ev. Saab på pengar för att betala tillbaks pengar som förskingrats i Snoras, ev. av denne man ==>......

Heresy in the shadow of the City: Max Keiser sacrifices the sacred cows of finance

London banks were on high alert last week as Max Keiser – the dark lord of financial hellraising – arrived in London to do what he does best: Sacrifice the sacred cows of finance orthodoxy. It’s fitting that he chose to do so in a pub down an alley in London Bridge – The south bank has long been a place of covert speakeasies where villains, pirates and heretics might slag off the king and preach rebellion among the drunken rabble. The event was a fundraiser in aid of Resonance FM, London's alternative arts radio station. Needless to say, it was awesome, and yes, I was drunken rabble.

DARK LORD RAP: MAX RAGES AGAINST THE MACHINE

Max Keiser is in intriguing guy. I don’t claim to know his background in any depth, but the quoted back story says he was 1) initially a stockbroker, 2) then an entrepreneur that started the Hollywood Stock Exchange, (a platform for buying and selling film rights, later sold to the huge brokerage Cantor Fitzgerald) and 3) an entertainer that carved out a media career in fiery financial commentary. For those who haven't seen Max in action, he's one of the most outspoken critics of banking practice. He cuts a compelling figure, using a background in the financial industry as a platform from which to advance ideas that are serious no-go areas in mainstream finance chat… stuff like questioning the entire basis of modern monetary systems and advocating that senior bankers should be burnt at the stake. 

If this stuff was coming from the standard academic commentator, it would probably sound crap, but Max has made an artform out of passionate advocacy of deeply heretical points of view. Where some people would sound preachy and self-righteous, Max just sounds indignant, pissed off, and funny to boot. He has what many critical academics lack – an opportunistic flair and a talent for entertainment. It’s very seldom that someone can make stand-up comedy out of financial commentary, whilst simultaneously making you deeply question things. He’s both a joker with a mischievous flame and an underdog hyena who cares about injustice. He doesn't claim to be pure, and the fact that he’s been out and tried the system gives him clout.

Financial terrorists

MY MATE LLOYD

Max is certainly controversial. In fact, he's pure leveraged controversy. He likes to refer to senior bankers as 'financial terrorists'. He shoots political correctness in the head with disturbing stories of financial rape and epic incompetence. He told us about 'the suicide trader', a concept he's been dreaming up as the basis for a potential upcoming production: The story goes that there's this trader in the World Trade Centre, watching the planes coming and deciding to stay in his chair betting against aeroplane stocks instead of trying to escape. Methinks that could cause a stir...

Karma-banking

OUTLAWS: STACY HERBERT & MAX

I met a hedge fund manager a few months ago who knows and loves Max. This probably supports my point, made in a recent Guardian article, that some of the best hedge fund managers are those that do not give a flying f**k about what they’re supposed to think. Max himself has dabbled in some interesting hedge fund ideas. Back in the early 2000s he started Karmabanque. Although it’s suggested that Karmabanque was a  hedge-fund in and of itself, Max has characterised it as a ‘broker of dissent’ – a middleman between hedge funds looking to bet against companies, and activists looking to target companies with campaigns. I haven't been able to drill down into the exact structure of Karmabanque and how effective it was, but it's a thought-provoking idea: Betting against companies with poor social and environmental records and then making them targets of activism to drive down their share prices. Some would call that idea 'market-manipulation'. Others would call it sweet justice, a scheme in the spirit of Robin Hood and other underdog rogues (see Greenpeace article). Theoretically speaking, money made in the process could be steered back into doing something positive, like investing in renewable energy, but in the end it seems Karmabanque was shelved. It now provides an interesting model to consider when designing any future activist hedge funds.

Calling the emperor's new clothes: Buy silver, crash JP Morgan

More recently Max has become known for his 'Buy silver, crash JP Morgan' campaign. Max believes that JP Morgan is deeply exposed to a huge naked short position in silver. If it is true, it means JP Morgan is seriously vulnerable to the price of silver going up too much. He reckons that if enough people try buy silver to force the price up, JP Morgan would be forced to try cover its short position (i.e. reverse it's bet against silver), leading to a runaway 'short-squeeze' (in which they scramble to buy silver to get out of their trading position and in so doing cause the price to skyrocket even more) causing JP Morgan to go bankrupt. Here is the dramatised version:

It’s an interesting theory, and not one that I know enough about to have any particular view on it. Max seems pretty sure of himself though, and the campaign goes on. In any case, he advocates the possession of precious metals as a much better alternative to fiat currencies, which he thinks are all going to shit. 

Time will tell if Max is right or wrong, but regardless of what you think of his ideas, it’s great to a have an original voice of dissent challenging orthodoxy. I'm always a supporter of muckrakers that keep the system on its toes, and after an hour or so of standing there listening to him I was cheering like a maniac and thinking ‘ah shit Max, you’re cool, can I come talk to you?’ Then he was swamped with fans and I decided against doing that. Maybe I'll meet him one day and we can compare notes.

Financial Psychogeography: Suitpossum joins forces with CurioCity London

It’s a pleasure to announce that I will be syndicating out blog-posts to the website of the great new London-focused magazine CurioCity. CurioCity was started by Matthew Lloyd and Henry Elliot in early 2010, originally as an informal handmade pamphlet to distribute to friends and family. Back then, a group of us wrote articles and put together the first issue in Henry’s lounge in Kennington. It’s come a long way since then, and the first professionally printed version is now being stocked in iconic London outlets such as Foyles and Rough Trade. The website has now been set up to provide a regular flow of high quality pieces centered on London, suggesting ideas for experiences that are fun, educational, and that encourage a deeper engagement with the city.

Urban adventures in financial landscapes

My main focus is going to be ‘Financial Psychogeography’. ‘Psychogeography’ is a word that means different things to different people, but I’m taking it to refer to:

1. the exploration of cityscapes with the deliberate intent to break down oppressive or hegemonic ideas embodied in, or implied by, the physical space
2. and in the process seeking to reinvent or replace those ideas with unorthodox visions and alternative viewpoints… or something like that

Psycho-geography is about trying to identify the subconscious mental programmes that get installed in us by our physical environment. It’s also about creativity. It’s about trying to hack those programmes and reconfiguring the codes of mental DNA that condition how you perceive something. A greater awareness of physical space allows one to take mental control of it, and to re-enchant the cityscape with new perceptions. So basically it's an excuse for me to wonder around financial landscapes and reflect on them, considering what they might teach me about the world, how they might affect the way I think, and then maybe how the dominant ideas they impart can be challenged. This might be an epic waste of time, but if nothing else, it should provide a couple of fun outings and opportunities to embarrass myself.

Thus far, I've got two pieces up:

• Financial Landscapes: Fusing Canary Wharf with the real economy
• How to get good coffee in Berkeley Square

A brief history of psycho-geography

WHERE IT ALL BEGAN

If you look up the Wikipedia article about psycho-geography, you get some background history which says that psycho-geography was something developed by the Lettrist International, who broke away from some other group (also called the Lettrists) in France. It was spearheaded by a guy called Guy Debord, coming out with classic quotes like ‘the most urgent exercise of liberty is the destruction of idols’. Guy later wrote ‘The Society of the Spectacle’, a classic piece of ‘fuck-you authorities’ literature. By all accounts he and his mates were something like the French equivalent of Jack Kerouac and Alan Ginsberg, promoting a type of avant garde Marxism-meets-art sensibility, getting involved in the May 1968 wildcat strikes, and inspiring a generation of Gaulloises adverts and films like The Dreamers. Certainly, psycho-geography does bring to mind intense French students sitting around in cafes chain-smoking and fiercely debating the nature of the world. At its worst, it’s a load of pretentious bullshit, but if it’s done right with a bit of tongue in cheek, it can be a lot of fun. If it’s done really right, it can be transformational. Later generations of psycho-geographers like Iain Sinclairand Will Self have done a lot to bring to life the hidden codes of landscapes, and hopefully I can do the same in CurioCity.

Here is some footage of the launch party. I’m playing guitar in that.

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 massive catchment of population. It has an NLA of 1.33m sqf.

Since it commenced its operations in late 2007, occupancy has consistently stayed above 96%, with a 3-year CAGR of 4% in average rental rate. With such a short operating history, the mall has recorded 31m visits in 2010, comparable to Suria KLCC’s 40m footfalls. Over the longer term, Pavilion Mall is poised to enjoy higher number of visits as it will sit near to the upcoming MRT station, which is less than 300m away. The covered skybridge currently under construction that connects Pavilion Mall and KL Convention Centre which in turn adjoins Suria KLCC and the Petronas Twin Towers, will also pull in more shopper traffic between the two tourist spots.

The Pavilion Tower (NLA of 167k sqf) is an office tower connected to Pavilion Mall. It currently has an occupancy rate of 41.4% (expected to achieve 80% by year end), housing Malton roup, Mrail International, Clever Eagle and Aker Engineering (from 1st July). As the office tower only contributes about 2% to total rental income, coupled with the oversupply of office space in KL city centre, we are neutral on this commercial asset.

Future Growth Potential

Three other retail assets can potentially be injected in future for growth. PavREIT has been granted rights of first refusals (ROFR) by its sponsor and a 3rd party to purchase fahrenheit88, Pavilion Mall extension and an upcoming community mall in USJ Subang. These assets are estimated to have a combined value of about RM1.5-2bn. We believe the injection of assets will take 2-3 years, as only farenheit88 is still in the early stage of operation, and the other two malls will only be completed in three years’ time.

How to Value?

We benchmark PavREIT against KLCCP. Although KLCCP includes non-retail assets such as office towers and hotel apart from Suria KLCC, all these assets are of Grade A class. To reflect its prime status, we value PavREIT at a target yield of 5%, which is close to the average yield of 4.72% for KLCCP over the past 5 years (we gross up to exclude the impact of corporate tax – as REITs do not have corporate tax component). This translates to a fair value of RM1.14, based on our FY12 DPU estimate.

Source: RHB Research report

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 treated fairly in the sales, marketing and administration of financing facilities. As such, financial institutions are required to provide consumers with specific information on the following:

• total repayment amount
• total interest cost as well
• impact of an increase in the financing rate

The BIGgest Impact will be on Property sector?

Since that the banks are required to assess the affordability of borrowers based on net income, many people may not have the capital needed to pay for down payment. Although automobile industry will be affected, the biggest victim will be on property sector. This is because property purchasing needs more capital outlay.

On top of that, the value of property went up so high currently where the market value does not match the seller's asking price. To meet the short-fall, buyers are forced to fill-in with cash. This had already slowing down property prices lately. But, after the new guideline, would it be worst? Definitely.

The numbers of affordable buyers will became lesser. Hence, demand for property will be softened. What if supply more than demand? Simple economic theory told us that prices have to come down in order to strike a balance. I think this is true and will materialize next year.

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  basis in the third quarter (2Q 11: 3.3%). The increase in consumer prices was largely the result of higher prices in the food and non-alcoholic beverages category.

Current  account recorded a larger surplus of RM26.6 billion, equivalent to 12.5% of GNI due to a higher goods surplus and lower income deficits. As at 31 October 2011, International Reserves position had increased to RM429.1 billion, equivalent  to USD134.8 billion, sufficient to finance 9.9 months of retained imports and is 4.1 times the short-term external debt.

Monetary policy is supportive of economic activity

The Overnight Policy Rate (OPR) was  left unchanged at 3.00% in the third quarter of 2011, following a 25 basis points increase in May. The stance of monetary policy is consistent with the assessment of heightened uncertainties arising from global developments that have created greater downside risks to growth.

The ringgit depreciated against the US dollar in the third quarter, in line with other regional currencies. The depreciation, mostly in September 2011, reflected mounting concerns over the European sovereign debt crisis and the sustainability of global economic recovery, which led to higher risk aversion and prompted some investors to unwind holdings of emerging market assets.

Please click here to read the full BNM report.

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 of what they "needs". Example, they prefer to buy an iPad rather than a computer for work. No doubt iPad is more convenient, but its functionality is somewhat limited if compare to a laptop. Why not choosing a laptop which is more comfortable to work and better eye-sight?

2. Friends.

We all know friends is important in our life. Without friends, we feel lonely. But, does it mean that we need to stay trendy just to get more friends and avoid being alone? True friends do not care about what brand are you using. True relationship does not build on "trends", that's why it didn't follow the fast changing trends and bonding strongly till the end. Those friends who care too much on trends may one day left you, once you're "expired".

3. Parents.

Yes. Sometimes we have to blame our parents for feeding us all the best things since young. These had instill the "trendy" elements into our behavior, habit, and mindset without ourselves knowing it. When these "infected" young adults join the workforce with low starting salary, parents close the water tap, everything comes back to reality. So, these young adults keeps feeding themselves with credits and overspend. Blame your parents!

4. Social.

We can't deny that the social circle we are in right now is very materialistic. They emphasis on brand names, items that may boost their image or reputation or status, and things that appeared "cool" and "glamorous". We should change the perception of live now. Trends is not everything. Cash-rich is "cooler" than trend-rich.

5. Facebook.

Interesting, right? Because of the power of Facebook, we can view a lot of photos and get attracted by the way other people spend and enjoy. Example, glamour vacation, expensive gifts, latest smartphone, promotion... In order to encourage consumers to make instant decision, promoters set a timeline on their campaign or special limited-time offers. At the same time, many people wanted to show-off their stuffs thanks to Facebook.

Year End Sales is around the corner, Good Luck, Spenders!!!

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% of its net asset value (NAV) in selected foreign markets which include Singapore, Taiwan, South Korea, Japan, Hong Kong, China, Thailand, Indonesia, Philippines, Luxembourg and other permitted markets. 

The equity exposure of PBGSQF will generally range from 70% to 98% of its NAV. PBGSQF is suitable for investors who wish to participate in the medium to long-term growth potential of companies listed on Bursa Securities.

What else should I know?

The Fund may also invest in equity linked Participation Notes for selected regional stocks listed on the Luxembourg Stock Exchange. Equity linked Participation Notes are instruments designed to track designated securities. The movement of these notes are similar to the underlying shares listed in their respective markets. These Notes are issued by international foreign broking houses for investment by investors who are not able to invest directly in the underlying foreign shares.

Other than that, the Fund may also invest in:

• listed warrants and options (if any) to enhance its returns.
• unlisted equities with attractive potential returns, particularly in companies that are expected to seek listing on the Bursa Securities or selected regional markets within a time frame of two years.
• collective investment schemes both in the domestic or selected regional markets.
• fixed income securities such as sovereign bonds, corporate debt and money market instruments to generate returns.

Source: Public Mutual

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 available to government to curb excessive properties speculations and they are interest rate and RPGT. Since 2008 global financial crisis, central banks globally including Malaysia had slashed their interest rate to all time low in order to spur economic activities.

Picture taken from Business Times

On top of that, RPGT stayed low at a flat 5% for properties sold within 5 years. "5% only?" you may ask. Yes, and this is a contributing factor on why properties prices remain elevated.

Is it enough?

However, economists are saying that the latest announcement made on RPGT was relatively "too soft" in contain the problem. Anyway, this is a good news though for property speculators or investors as 10% RPGT within 2 years can be easily absorbed. Then, how much is enough?

     

     Genuine buyers said: "Higher is better".

     Property developers said: "Current rate is enough".

Finance Malaysia reckons that 10% is definitely not enough. The marginal increments looks like government is only "entertain" the perception of general public, while protecting property developers, we think. As such, we are suggesting a higher rate as below:

By imposing a higher RPGT, that could possibly boosted government tax revenue, thus lowering down the over-optimism budget deficit target. Why don't government implement that way?

Quando c'era lui!

“Få verkar idag tro att eurosamarbetet står inför så svåra utmaningar att vissa länder kommer att fundera på att lämna euron. Det gör dock jag. Jag tror vissa länder (Italien, Spanien, Grekland, Irland?) kommer att få mycket mer problem än andra (Tyskland, Finland?) och att det åtminstone kommer göra att vi snart kommer att få se rubriker i tidningarna likt ”Italien tvingas kanske ge upp euron!”. I värsta fall kanske ordet ”kanske” utelämas i rubrikerna.....”

Vad är det för speciellt med detta lilla stycke, kanske ni undrar. Jo det som gör det en aning mer intressant än de liknande passager ni ser i standardmedia för tillfället är att jag skrev det här på High on Finance för i princip exakt tre (3) år sedan, den 19 nov 2008! Se Valutor under press! Sedan dess har jag väntat på att vi ska se en rubrik likt den jag highlightat ovan.

Tyvärr hade jag helt rätt i min bedömning av framtiden och i tisdagens (1 nov 2011) Göteborgsposten “Grekland skapar euroångest” stod till slut att läsa följande: “Nobelpristagaren Paul Krugman förutspår i en krönika i The New York Times ett kommande sammanbrott i eurosamarbetet. Nu funderar Krugman över hur slutakten i det europeiska dramat kommer att se ut. Han spår att stigande italienska räntor kommer att innebära att kunderna i stor skala börjar tar ut pengar ur bankerna, bland annat av oro för att Italien ska tvingas lämna euron.”

Jag har fortfarande åsikter om Italien, Grekland och resten av Europa och de är högst pessimistiska. Till dessa hör att italienska räntor om 6.5%, vilket är nivån idag, faktiskt känns ganska rimliga. När jag skrev bloggen ovan låg räntan under 1%! Om Italien verkligen lämnar Eurosamarbetet eller inte är förstås omöjligt att svara på, även jag undviker numer att förutsäga den typen av binära händelser av tveksam definierbarhet, men skäl till varför hela kontinentaleuropas framtid ser blek ut får jag återkomma till när jag har tid och lust. Nu ska jag istället försöka mejsla ut tradingsignaler som indikerar när aktier i Italien (N.B., inte Grekland) är köpvärda igen! Köptillfället kan komma snarare än man anar då problemen i Italien knappast stavas Ferrari, De Cecco eller Perugina……

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Ps. Håll tummarna för att krisen inte gör att uttrycket i titeln på denna blogg börjar användas i en utsträckning som gör att t.o.m. läsare av finansbloggar i Sverige förstår vad det egentligen anspelar på..... :)

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 or hire them. If the students are not capable, train them or even make the subject compulsory to pass. If we believes that the PPSMI is crucial for our nation to excel, we must not give up after merely few years of trying. Instead, we should find the solutions to the problems we faced. Every changes on policies will be difficult at the beginning, no need to mention education policies. I believe the 54 years old government should know this better.

What is the impact to our economy?

1. Credibility of the government had lost. How would foreign countries looking at us? At first, they're happy by the move, but settled with disappointment now.
2. Most of the Foreign Direct Investment (FDI) that pouring into R&D and science related industries were westerners. Like it or not, their preferred language is English simply because it is the original language of innovation.
3. Poor commanding of English language is one of the main reason why Malaysia losing out to SIngapore in attracting multi-national companies. We can't deny this. Otherwise, we will continue to lose out.

To end this post, let's understand the following statements by Dr. M:

“You never know, the people who are calling for both subjects to be taught in Bahasa Malaysia may be sending their children to English schools”

Fun things to do in London's Financial Heartlands: Fusing Canary Wharf with the Real Economy

The financial sector is frequently contrasted to the ‘real economy’. The ‘real economy’ is seen to involve the production of goods and (non-financial) services, while the financial sector is seen to act as a facilitator of, and gatekeeper to, investment flows into those industries. Banks and funds are in the business of predicting which businesses to back, steering debt and equity based on future perceptions of the real economy. The financial sector runs ahead of, or parallel to, the real economy. In some conceptions, it isn't connected to the real economy at all.

The usefulness and accuracy of the traditional distinction can certainly be questioned, but if ever there was a place in the world where the distinction made visual sense at least, it would be London. London is one of the few cities where the financial sector can literally be seen from a distance, most notably in the stark concrete and glass of Canary Wharf. London is also home to many decaying remnants of the old manufacturing economy, with monuments such as the Battersea Power Station a testament to both abandonment by the financial sector, but also attempts to re-connect to financial flows through regeneration proposals.

Visual mediums often tell stories a lot more effectively than words and pundits do. That’s why I'm an enthusiastic supporter of financial visualisations and infographics. A walk along the South Bank of the Thames though, offers some interesting opportunities to experience the visual divide between the financial sector and real economy directly, especially as one approaches Canary Wharf. Arranging the views to tell a story, and then capturing those stories on camera is a worthwhile way to spend a Sunday afternoon.

The abandoned pub

Here’s a simple scene that I found quite poignant. The pub was abandoned and boarded up, with the towers of finance looming behind. I don’t know exactly what one would want to read into it, but to me it could highlight the stark divide between an old English working-class docklands culture, and a new international financial culture gradually pushing it out.

The construction yard

This was one of my favourities: A construction yard just past Greenwich on the Thames Path. If you find it on a Sunday you can climb over the broken fence and play in the rubble. Again, there are a number of stories to be told. The construction site could be seen as a product of the financial sector - only existing through the provision of capital - or as the real underlying activity that the financial sector relies on to survive. Perhaps this rubble is a future financial centre. I personally just liked the visual contrast.

The spontaneous garden

Here’s a fun one. If you pay attention along the way, you can find fresh wild tomatoes growing in the industrial zone approaching the O2 arena on the Thames Path. The interpretations are endless. The financial sector connection to the farming industry? Small scale organics vs. large scale synthetics? The ancient agricultural roots of society holding out like a renegade against the ultra-modern world of derivatives and virtual food speculation?

The barbed-wire fence

A visual arrangement need not be literal. This just looked really cool to me, but maybe it could be seen as a play on entry into the financial sector. Is the financial sector guarded by barbed wire and a giant river moat? Not if I have my way about it.

The reclaimed pier

This old pier has been transformed into a mini ecological sanctuary to be used by nesting river birds: We arrived here as the sun was setting, but I’d like to read into it a message of future sustainability in finance and  the creative use of the old to make a new dawn. Damn, I got to get out my notebook now and write poetry...

Just do it

It’s going to take a lot more than arranging images to build financial sustainability, but it’s an interesting exercise in the mean time, and a potentially thought-provoking one. There are hundreds of opportunities for this. How about starting at Stave Hill in the Rotherhithe Eco-Park, a great place to juxtapose the green with the blue-grey of global finance. I’m sure there’s a photographer out there who can do this a bit better than my HTC mobile phone camera can. Anyone want to collaborate? Please do send photos of your docklands journeys, along with possible interpretations, and I can put them up.

The Thames Path area between Deptford and North Greenwich and is also a hotbed for graffiti artists. It would be great to use the site for the development of financial graffiti - a living exhibition reflecting on the huge skyscrapers across the river. I’d personally like to stencil a QR code on one of the walls (p.s. these codes require a  smartphone barcode-scanner app to read). I kind of had this one in mind...

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