Monday, March 26, 2012

All you need to know about DORMANT account

In general, banks define dormant account (sometimes referred as inactive) when an account does not have any transaction (deposit or withdrawal) for a continuous period of at least 12 months. When your account becomes dormant, the bank would send you a notice letter to the registered mailing address to remind you to activate your account. You may be required to withdrawal or deposit some money over the counter to re-activate your account.

What are the charges?

In addition, should your account balances be RM10 or less, the bank would also inform you of its intention to close the account. The bank will send you a 2nd reminder when it does not receive any response from you (i.e. for activation of account or objection to the closure) within 3 months after the 1st notice. If there is still no response after 2 notices, the bank may proceed to close the account and absorb the balances as service fee.

For account with balances of more than RM10, the account will usually be charged with a dormant account service fee typically at RM10 per annum, until the balances are exhausted or up to 7 years whichever is earlier. Please refer to the tables below on fees and charges imposed by major banks in Malaysia on Saving account.




Unclaimed moneys
When your account remains dormant for a period of 7 years, the account will be classified as unclaimed moneys. Under the Unclaimed Moneys Act (1965), the balances will be transferred to the Government. You may recover your unclaimed moneys from the Registrar of Unclaimed Moneys by submitting form UMA-7 and the required supporting documents at any Registrar offices nationwide. There is no time limit for you to claim your money back.

Contact details of the Registrar are as follows:


Pendaftar Wang Tidak Dituntut
Jabatan Akauntan Negara Malaysia

Bahagian Pengurusan Amanah dan Sekuriti
Menara Maybank, 100 Jalan Tun Perak,

50050 Kuala Lumpur
Tel : 03-2034 1850
Website : www.anm.gov.my

Source: Banking Info

Thursday, March 22, 2012

Summary of 2011 Bank Negara Malaysia Annual Report

The global economy grew at a more moderate pace in 2011 after the strong rebound in 2010. The growth momentum was weighed down by continued structural weaknesses and fiscal issues in the advanced economies, geopolitical developments in the Middle East and North Africa region and the disruptive impact of natural disasters on global manufacturing production. These developments reverberated onto international financial markets and contributed to heightened market volatility throughout the year.


Despite the less favourable external environment, emerging economies continued to record firm domestic-driven economic growth. At the same time, emerging economies faced increasing challenges from volatile capital flows and rising inflationary pressures. Amidst this environment, the Malaysian economy continued to grow steadily underpinned by the expansion in domestic activity and firm regional demand.

The Malaysian Economy in 2011
The Malaysian economy recorded a steady pace of growth of 5.1% in 2011 (2010: 7.2%), despite the challenging international economic environment. Growth was lower in the first half of the year, particularly in the second quarter, as the economy was affected by the overall weakness in the advanced economies and the disruptions in the global manufacturing supply chain arising from the natural disaster in Japan. Although the global economic environment became increasingly more challenging and uncertain in the second half-year, Malaysia’s economic growth improved due to stronger domestic demand.




Outlook for the Malaysian Economy in 2012

  • Malaysia’s economy is projected to experience a steady pace of growth of 4 – 5% in 2012
  • Domestic demand to remain resilient
  • 2012 Budget expected to provide support to private consumption
  • Upward revision of public sector wages and one-off financial assistance to low and middle-income groups
  • Ongoing implementation of projects under ETP
  • Higher capital expenditure by both the Federal Government and the non-financial public enterprises
  • Implementation of the Special Stimulus Package through Private Financing Initiative


Labour market conditions are expected to soften in 2012 amid the slower economic activity. The unemployment rate is projected to increase to 3.2% of the labour force in 2012. Headline inflation is expected to moderate in 2012, averaging between 2.5 – 3.0%. The lower inflation projection reflects the moderation in global commodity prices and a more modest growth in domestic demand.

Source: BNM report

Tuesday, March 20, 2012

New Fund: Public Strategic SmallCap Fund and Public Enterprises Bond Fund

Public Mutual today launched two new funds, namely Public Strategic SmallCap Fund (PSSCF) and Public Enterprises Bond Fund (PENTBF), and categorized as equity growth and bond fund respectively.


Public Strategic SmallCap Fund seeks to achieve capital appreciation over the medium to long term period through investments primarily in companies with small market capitalization, by investing in stocks with market capitalization of up to RM1.25bn at the point of purchase. The fund may also invest in companies which at the point of purchase form the bottom 15% of the cumulative market capitalization of the market which the stock is listed on, although the fund will focus its investments in the domestic market.

Funds' key data were shown at the end of this post...


To achieve increased diversification, the fund may invest up to 30% of its NAV in selected foreign markets if the returns are assessed to be promising. The fund generally maintains equity exposures within a range of 70% to 98% against its NAV, while balance in fixed income securities and liquid assets.


On the other hand, Public Enterprises Bond Fund seeks to provide annual income through investments in fixed income securities and money market instruments, by investing at least 75% of its NAV in sovereign bonds and corporate bonds issued by entities with total assets exceeding RM3bn at the point of purchase. To achieve diversification, the fund may invest up to 30% of its NAV in foreign fixed income securities.

What would be the credit ratings?
The bonds invested must have minimum credit rating of BBB for long-term instruments and P1 for short-term instruments as rated by local or foreign rating agency, at the point of purchase.

PENTBF Specific Benefits 
The fund allows the investor access to the bond market, which is usually inaccessible to the average investor as the standard transaction block amounts to RM5bn. Through this bond fund, it may potentially produce returns that are generally higher than fixed deposits.


Source: Public Mutual and Funds' prospectus

Saturday, March 17, 2012

Arthneeti, March 2012 Issue

Arthneeti, March 2012 Issue

Dear Readers,                                                                                                    
March,2012 Issue

Q4 has been good so far for Indian Capital market. We have observed upward movement of Sensex.In this issue, we have covered Indian economy growth in comparison to global growth, Euro crisis austerity measures and introduction of new acronym 'CIVETS'. 
We have covered interview of  Mr. Janak Desai, Country Head -Wholesale Banking & Treasury, ING VYSYA BANK for his views on the Banking Sector, rising amount of NPAs.


Click here to download the full pdf version.

Friday, March 16, 2012

Grekiska CDSer triggade, tack och lov!

Härom dagen bestämde sig ISDA för att Grekiska ”sovereign” credit default swaps (CDS) ska triggas! D.v.s. Grekland har alltså officiellt defaultat! Det är en mycket trevlig nyhet som ska läggas till de många andra positiva signaler vi sett den senaste tiden. Det betyder mycket för CDS marknaden och jag tror också det gör en del för statsobligationsmarknaden mer generellt. Medan det är uppenbart att CDS marknaden hade skadats om ISDA inte hade likställt greklands betalningsinställelse med en default är det kanske mindre uppenbart att sydeuropeiska länders lånemöjligheter förbättrats på samma gång. Jag tror dock fler (läs pensionsfonder, försäkringsbolag etc.) kommer känna sig bekväma med möjligheten att hedga sig med CDSer nu när man vet att det hela fungerar som det är tänkt och det kommer att göra det lättare för Portugal etc. att låna pengar på obligationsmarknaden. För mig är detta en bra nyhet!

Denna nyhet, tillsammans med en del andra, gör att det på kort sikt ser fortsatt bra ut på marknaderna. Tyvärr så ligger staternas monumentala och för mig oväntade förmåga att lägga sig i marknaderna som en blytung slöja över hela finansmarknaden på längre sikt. Vem hade t.ex. räknat med att staterna skulle invertera kapitalstrukturen i bolag och statsupplåning till den grad vi sett i Irland, Portugal etc. Följ trenden (uppåt) men var vaksam på längre sikt!

Tuesday, March 13, 2012

Of Toast & the Precautionary Principle: Commodity speculation revisited

Globalisation can lead to surreal situations. For example, several weeks ago I got a call from a Kenyan guy called Karim Ajania, who's based in San Francisco, and who runs a website for a Mozambican forestry project called Mezimbite. You'd think the website would be focused on, well, Mozambican forestry, but it features contributions on a variety of topics from some pre-eminent global economists, including Sir Partha Dasgupta and Oxford's Paul Collier. Karim told me that he'd managed to get respected Harvard professor and former economic advisor to Bill Clinton, Jeff Frankel, to write him a short blog on commodity speculation. Karim wanted me to write a reply.

Karim had seen a previous article I'd written on food speculation, where I'd suggested that excessive involvement of financial players in agricultural futures markets could distort prices of real food, potentially leading to negative impacts on the welfare of the world's most vulnerable people. My views ran counter to those of Jeff Frankel, who suggested that commodity speculation probably wasn't a major problem, and that most economists didn't see much reason to be concerned. Jeff's argument, like many economists, rested on the assertion that, in general, speculators make markets more efficient.

It's not so much that I disagree with all his points, but I took exception to which points he emphasised over others. He seemed to gloss over much of the ongoing academic debate. He admitted that speculation could be a problem, whilst nevertheless implying that it isn't. If Jeff were an armchair commentator I’d be happy to let his casual approach fly, but given that he’s an internationally respected academic who’s opinions are likely to hold more weight than the average person, I felt the position that speculation 'probably isn't a problem' wasn't satisfactory. So, I wrote a piece as a counterpoint to his.



If you're interested in the details, please go take a look at the article. It's quite long (around 2000 words) but contains, if nothing else, some rhetorical flourishes and useful links. If you want the summarised version though, I make an argument in three parts:
  1. On the techical side, I challenge Jeff's characterisation of the nature of speculation and how it operates. I think he's defined it too narrowly, failing to address some serious new elements of markets (including the activities of index funds and high-frequency trading).
  2. On the socio-epistemological side (is that  even a word?), I challenge the idea that there is academic 'consensus' on the issue of speculation, pointing out that a) there isn't academic consensus, b) that certain politicians try to claim that there's consensus for political reasons, and c) that even if there was consensus, that would not be reason to not be concerned for the future (indeed, I point out that there was apparent 'consensus' in the early 2000s that securitised mortgage products were a force for good).
  3. On the philosophical side, I assert the fundamental necessity of applying the precautionary principle to the commodity speculation debate. In a nutshell this means that society should be cautious of activities that have the theoretical potential to negatively impact welfare, regardless of whether there is definitive 'proof' that the activity is dangerous. Many financial pundits often focus on how it is not yet 'proven' that speculation is unsafe, when really the burden of proof should be on the financial sector to prove that it is safe. Using the example of the financial crisis again, the inability to 'prove' in 2002 that securitised products were dangerous, looks in hindsight to be a pretty weak reason to have gone ahead with rampant securitisation.

I don't think Jeff would necessarily disagree with these points, and to be fair, he's a busy guy with lots of global macroeconomic issues he's more focused one. I suspect though, that if he got time to respond he'd assert the necessity for regulators to keep a close watch on the issue.

Still, the idea that the burden of proof should rest on regulators is problematic, and my point about the precautionary principle is echoed by CFTC (the US derivatives market regulator) commissioner Bart Chilton (see video below). He's got a lilting twang and hair that puts him somewhere between a cowboy and a surfer, but his message is a deeply serious one:  The potential effects of high frequency traders (the 'cheetahs') and index fund investors (the 'massive passives') needs to proactively investigated. It's not good enough for financial professionals to say 'this is too complicated for you guys to understand, just trust us'.



    Bart is not the only one expressing concern. NGOs have been concerned for a long time, but mainstream commentators are increasingly taking concerns about commodity speculation to heart. Hedge funds (see comments at 10:20 in the video), CTAs (see comments at 13:07 on the video) and physical commodity traders are all suggesting financial involvement in agricultual trading could be problematic, albeit using cautious language to do so. The text-book economics answers used to theoretically reason away questions about speculation using assumptions of market rationality are being challenged.

    A toast to the futures
    On a slightly lighter note, Karim also asked me for a quote on the absurdity of the English toast rack for another Mezimbite article written by Thomas Thwaites. Thomas started something called the Toaster Project, drilling down into the commodity foundations of all the goods we use in everyday life, smelting his own iron ore in a microwave to make a toaster. The article generated 104 comments. Take a look at comment 19 (and the subsequent comments) - it's truly unbelievable, and has also led to me being invited to Claridges Hotel for a free breakfast, to test whether the commenter's claims are accurate.

    ANCIENT WISDOM
    I'll put a photo up about that once I've gone, but in all seriousness, regardless of whether you like you toast cold or hot, this issue of speculation needs to be taken seriously. Bread embodies lots of price elements. The cost of a loaf is subject to a startling array of factors, from deeply imbedded cultural reflexes of ritual and taste, to the price of natural gas (which is the raw material for ammonia-based fertilisers that farmers use on their fields), and the price of oil, from which petroleum is obtained, which is used to fuel the vehicles that transport loaves of bread from factories to cities.

    And maybe, thousands of kilometers away in huge cities like New York, Chicago and London, traders, computers and pension funds entering into bets on the price of wheat, oil and natural gas via derivatives contracts, might, through their actions, be tweaking those elements that constitute the price of a piece of bread in a toaster. It's one thing taking unchecked risks on property prices (aka. the financial crisis), but it's another taking unchecked risks on the foundations of human welfare. I reckon the precautionary principle should apply especially strongly here.

    Monday, March 12, 2012

    If Greece wants my money then I want their islands! – Part IV

    Two years ago I suggested that Greece should sell some of their islands to pay off their debt, If Greece wants my money then I want their islands! Two weeks later there was a lot of discussion in Germany when two CDU MPs in the German parliament suggested exactly the same thing, Griechenland soll Inseln verkaufen.

    A lot of people has interpreted the suggestion as unfair and insulting. To them, I just say; read today’s newspaper!! Today it was revealed that the Greek government is selling (a small) part of Corfu, the Greek island where Poseidon fell in love with Korkyra.......

    Why All of Us Must Care about 1Care Malaysia?

    Heard about 1Care Malaysia healthcare plan? If no, then you must read this article thoroughly word by word. Because the the proposed healthcare system will drastically change the way we seek for treatment in the future. The main issue was "Is it viable to implement 1Care?".



    Well, the intention is good for our community. The plan had a very beautiful definition as below:



    But...

    Concern is always there whenever Government want to implement something and that thing is managed solely by Government. Experience? Got (bad experience). Money? Got, but already drained somewhere (normally). You can't prevent Malaysians from worrying, especially when 1Care touches each and everyone of us for life.

    What are the concerns?
    1. Each person in different sector have different risk level. How to determine the amount of contributions of each contributor?

    2. Subsequently, how to determine the benefits package each individual entitled to? If the benefits was based on the amount of contribution, then, our existing insurance system already functioning very well now.

    3. Then, you can say that it was community-rated, not risk-rated. That's mean rich are subsidizing the poor, economically active to passive system. But, doesn't rich already pay taxes to government to subsidize them currently?

    4. Level of services of hospitals and choices of hospitals. Can we seek treatment at any hospital, be it general or private hospitals? If not, it will again limit our choice.

    5. Choice? Emm. The proposed 1Care is being made compulsory to all employees and employers to contribute (except government servants). Wait!!! Does this mean that private sector is subsidizing public sector?

    6. A government agency was being set up to manage the pool of money collected from all of us. OMG!!! We are talking billions of ringgit per year. It's a huge huge huge amount which could bought over CIMB bank!!!

    Once 1Care was implemented, the following sector will suffer:

    1. Private sector. If the said 10% mandatory contribution by each employee is true, most salary based person will switch to personal loan, I think.

    2. Retailers will suffer badly from less disposable income after the mandatory deduction of salary. No more 25% drop in car sales anymore. It's probably 90%.

    3. Property market will slump. Don't forget that our loan applications now is based on net salary, which means deducting your 11% EPF + 10% 1Care + Socso + Tax. How much left?

    4. Private healthcare system. Private hospitals have to lobby smartly to get involved in 1Care system to remain in business. Monopoly game means you have to "pay" more? Good Luck.

    5. Private insurance companies and its agents. A big chunk of their medical policies will be terminated and a big chunk of premiums will flow to the new set up government agency. Thousands of agents will struggle to survive.


    Then, why Government proposing 1Care Malaysia? Emm. I got many input from friends and professionals and below could be the 3 reasons behind 1Care:
    1. Diversifying the problems of public healthcare system to private healthcare, so that private healthcare was forced to collaborate.

    2. Reducing Government's burden, thus reducing budget deficit, by imposing mandatory contribution from everyone. For us, it's just like another form of income tax.

    3. Hijacking the lucrative insurance business which was dominated by foreign companies (etc. Great Eastern, Allianz, AIA, Prudential, ING...) especially on medical policies. With 1Care, it could effectively grab the market share from them, entrusting government agency as the undisputed largest insurance company in Malaysia.

    Finance Malaysia blog is just voicing out the concerns of general public for betterment of Malaysia going forward. Readers were welcome to give comment or feedback. Thanks.

    Monday, March 5, 2012

    RHBRI: 4Q11 Earnings Review and Market Strategy


    In tandem with the moderating economic growth trend, corporate earnings remained weak in 4Q 2011Of the 113 reported earnings that we cover, 55 of the results (48.7% of the total) were within our expectations, 33 below projections (29.2% of the total) and 25 above forecasts (22.1%) (see Table 1). Against the consensus numbers, 44.2% of the reported earnings were within expectations, 38.1% below and 17.7% above projections (see Table 2). Sequentially, net EPS for the FBM KLCI stocks under our coverage weakened back to +1.7% qoq and +2.8% yoy in the 4Q, from +8.9% qoq and +12.4% yoy in the previous quarter (see Chart 1).



    However, the downgrade to upgrade ratio has improved significantly to 1.07 times, from 1.65 times in the previous quarter. Overall, 2011 has been a year where Corporate Malaysia suffered from slowing sales and falling utilisation rates. This, coupled with the trend of higher costs, resulted in falling margins for many companies under our coverage. Consequently, normalised net EPS growth for the FBM KLCI stocks under our coverage slowed sharply from 20.9% in 2010 to +4.7% in 2011. The sharp slowdown in EPS growth, however, partly reflected the higher base effect as well as the plunge in Tenaga’s earnings arising from the gas curtailment issue. Excluding Tenaga, our 2011’s normalised net EPS for the FBM KLCI stocks has slowed down less significantly to +10.1%, from +21.2% in 2010.


    Businesses Turning More Upbeat

    What’s worth highlighting is that Corporate Malaysia are becoming less pessimistic and expect their business prospects to be stable with prospects of it turning up gradually as the year progresses. Likewise, we expect almost all sectors to record flat or improved earnings in 1Q 2012, with the exception of transport and semiconductor sectors. In our view, earnings of the transportation companies will still likely to be weighed down by slower economic growth and rising fuel costs. Whilst we also expect the semiconductor industry to suffer weak earnings in the 1Q, its outlook should improve from 2Q as cost rationalisation and stronger chip sales will likely translate into a significant improvement in earnings thereafter.

    Meanwhile, we have seen more aggressive inventory write-down by companies, particularly amongst the steel product manufacturers. At the same time, banks could have also made pre-emptive provisions for loan impairment. Consequently, barring unforeseen circumstances, the downside risk to corporate earnings may not be as significant moving forward and analysts have turned less pessimistic in their assumptions for earnings projections.


    Earnings Revised Up

    Overall, we have adjusted some of the assumptions, translating to an upward revision in our 2012’s normalised net EPS growth for the FBM KLCI stocks under our coverage to +12.3% (see Table 3), from +10.3% previously (as reflected in our 2012 Market Outlook & Strategy Report dated 16 December, 2011). Excluding Tenaga, our 2012’s normalised net EPS for the FBM KLCl stocks has also been revised up to 8.8%, from 7.8% two months ago. The upward revisions in earnings were more significant in the oil & gas, consumer and utilities sectors (see Table 4). Similarly, our 2013 earnings estimate for the KLCI benchmark has been tweaked up slightly to 7.9% (+7.0% ex-Tenaga), from +7.3% (+5.5% ex-Tenaga) previously.



    General Election Will Create Volatility,
    Not Likely To Be A Game Changer

    On the local front, a key event that will have significant bearing to the equity market is the impending general election. There are strong market expectations that the country’s general election (due in March 2013) will be held any time soon. Given what happened during the previous general elections on 8 March 2008 where the ruling coalition, Barisan Nasional (BN), lost two-thirds majority, there are fears that if BN were to lose a simple majority, the local bourse could suffer a major temporary setback. This is on account of uncertainty in the continuity of the country’s economic policies that could slow down the implementation of the economic Transformation Programme (ETP). We, however, believe that the likelihood of this happening is low.


    Market Strategy :
    Buy On Dips With Increasing Focus On Recovery Sectors

    Whilst not all the external risk factors have gone away and the impending general election locally could also create uncertainty for the local bourse, the global economic recession risk is receding. Consequently, we are turning more positive on the market. Nevertheless, as fundamentals are just starting to improve, earnings will still need to play catch up for stocks with rich valuations before the market can scale new heights.

    Consequently, the risk of a market pullback and consolidation in the near term is still high although we believe that any volatility in the market would provide opportunity for investors to accumulate fundamentally-robust stocks on weakness. We are also turning more positive on cyclical sectors that are poised for recovery, although investors’ risk perceptions can still change very quickly should situation turn out to be worse than expected. As a result, we would still recommend investors to hold some defensive stocks that have strong cash flows to pay sustainable dividends. A list of our top picks is reflected in table below, which includes “buy on weakness” tactical holdings.



    Source: RHB Research Institute report

    Thursday, March 1, 2012

    OSK's March 2012 Outlook and Strategy


    While Malaysia remained a laggard compared to the rally in developed markets, the global rally that had started in January finally dragged the local bourse kicking and screaming up during February with a rally of more than 3%. Globally, markets continued to rise despite the patchy fundamental landscape. Thus, while we had anticipated a potential rally in the 1st half of February, our expected market retraction in the 2nd half failed to materialize.




    Top Gainers for February were dividend plays such as Carlsberg or companies with corporate activities such as Hartalega with its bonus issue or potential targets such as RHB Cap and MBSB. Smaller plantation companies such as TH Plantations and RImbunan Sawit also had a good run.

    On the flip side, companies with poor results such as Maybulk, MAS and KNM got sold down. On a broader sectoral basis, telcos were the dominant play. It was the return of the Big Caps in February as the catch-up played by the KLCI meant that big caps ran up with the inflow of foreign funds.


    KLCI year-end target set at 1,620 pts!!!

    Moving forward, we unveil our KLCI year-end target at 1,620 pts. This is derived from the average of our 2012 and 2013 fair values at 1,466 pts (13.5x PER) and 1,775 pts (15.0x PER) respectively. We still believe that weak fundamentals justify a lower PER than the historical average of 16.6x for the KLCI. While we remain unconvinced of the current rally’s fundamentals and still see a risk of market correction, news flow with regards to large infrastructure investments should help the KLCI post a stronger 2H2012.


    The derivation of our target is as such:
    • There is no change to our 2012 KLCI fair value of 1,466 pts based on 13.5x PER on 2012 numbers
    • We still believe that weak fundamentals justify a low PER for 2012 and that there may be mid-year weakness in global markets
    • We derive our 2013 KLCI fair value of 1,775 pts based on 15.0x PER on 2013 numbers
    • The higher PER of 15.0x is based on 0.5 std dev below the historical average 16.6x PER of the KLCI
    • We are still holding back from applying a historical average PER as we remain concerned on overall global economic fundamentals
    • Nonetheless, the global liquidity fuelling the current rally could continue to drive markets and the news flow with regards to large infrastructure investments should keep the KLCI buoyant in 2013. Hence, we apply a higher PER compared to 2012
    • Our 2012 KLCI year-end target is the average of the 2012 and 2013 fair value which gives a figure of 1,620 pts


    Upgrading market call to NEUTRAL
    Rolling forward our investment outlook horizon and nothing that the year-end target gives some 3.2% upside to the market, we upgrade our call on the market from Sell to NEUTRAL. Given our view that this is a Liquidity-Driven Rally with risk of correction, we recommend investors take a Balanced approach to the market for the remainder of 2012. As the market could still turn south in the middle of the year, we keep some Defensive stocks among our Top 10 Buys. At the same time, the burgeoning news flow on Construction and Oil & Gas means we recommend investors take some positions in these sectors. We, thus, expand our Top Sector calls from Consumer and Telcos to also include Construction, Oil & Gas and Banks.



    Top Buys are a balanced mix
    Our revised 2012 Top Buys represent a balanced mix of Defensive and Cyclical stocks with a range of deep value to reasonable yield plays. Our Top Buys are Maybank, CIMB, Axiata, TM, Gamuda among the Big Caps and Dialog, KPJ, QL, Padini and KimLun among the Mid and Small Caps.



    For March, given the uncertainty remaining in the market, we introduce a balanced Big-Small-Cyclical-Defensive portfolio. As such, we select Maybank, CIMB, Axiata, Gamuda and KPJ as our March top buys.


    Source: Excerpt from OSK Research report