Saturday, February 23, 2013

New Fund: CIMB-Principal Enhanced Opportunity Bond Fund


They say that the only constant in life is 'change'. Well, not always. Hopefully, with this new fund, you will find comfort in its stability. Furthermore, it aims to provide more returns than the current Fixed Deposit rate, and is more stable than equities. Riding on the growth of the Asian countries, investors have the opportunity to diversity their portfolio and increase the returns. This fund is only available until 4 April 2013 !


What is CIMB-Principal Enhanced Opportunity Bond Fund?
It is a close-ended fund that aims to provide investors with total return through investments in a portfolio of debt securities primarily in bonds. The fund seeks to achieve its overall objective by providing total returns consisting of a combination of interest income and capital appreciation


Investment Strategy

Under general market conditions, between 70% to 99% (both inclusive) of the Fund’s net asset value (“NAV”) will be invested in non-ringgit debt securities primarily in bonds (including convertible bonds). Of the 99%, up to 40% of its NAV may be invested in unrated securities and high yield securities respectively while the remainder will be invested in investment grade securities. These investment grade securities are issued or backed by governments, government agencies, supranational organizations, corporate or other issuers. At least 1% of the Fund’s NAV will be maintained in the form of liquid assets such as bank deposits for liquidity purpose.

However, in the event of limited non-ringgit debt securities, the fund manager will have the discretion to invest in the ringgit debt securities primarily in bonds with yield at the prevailing market condition, if the fund manager is of the opinion that by doing so is in the best interest of the Fund.


While the Manager intends to adopt a buy-and-hold strategy for the Fund whereby the securities purchased will be held for the tenure of the Fund or to maturity of the securities,
the Manager reserves the right to deal with the securities in the best interest of the Unit holders in the event of a credit rating downgrade.




The Fund is suitable for investors who have three (3) years investment goals and are not planning to have access to their money in the next three (3) years. It is also suitable for investors who are seeking exposure to investment opportunities in debt securities.




Source: Fund prospectus

Thursday, February 21, 2013

My first crowdfunding campaign! Help me start a school for financial activism

I've taken a leap into the world of crowdfunding this week as I launch my first Indiegogo campaign. I'm aiming to raise seed funding for a London-based School of Financial Activism. Please do click on the link to take a look at the campaign, and if you feel inspired, I'd love for you to contribute to it!



As I've already mentioned in a previous post, I've got a book on the financial system coming out called The Heretic's Guide to Global Finance: Hacking the Future of Money. I want to launch the School of Financial Activism as a way to build on themes I've developed in the book, and to help everyday people grapple with and challenge the financial sector. As a reward for contributing, I'm offering four uber-cool limited edition series of the book, as follows:
  • The Junior Trader series: 100 softcovers, signed and delivered
  • The Hardass Cityboys: 25 hardcovers, one for each of the 25 wards of the City of London, along with a discount voucher for the school of financial activism
  • The Hedge Fund Gamblers: 5 hardcovers, with a special gift, and a voucher for the future courses at the school
  • The Three Hackers: 3 hardcovers with bespoke covers, and a voucher for the future courses at the school
Of course, if you contribute you also get the pleasure of knowing that you've helped me start an awesome educational initiative. If you're hard up for cash, no worries - you can also help out by simply spreading the campaign around on Twitter, Facebook and Email. You can use the following link http://igg.me/at/financialactivism/x/2406554.

I'll keep you posted on how the campaign goes. Please help me make it a success! Please do post suggestions for both the crowdfunding campaign, and the course, in the comments section below. Cheers

Why TUNE INSURANCE is Out of Tune?


Every wonder why we didn't cover the IPO for Tune Ins ? Other than CNY mood, it's because of the unexciting part of this new stock. Why? Please read on...


Tune Ins Holdings Sdn Bhd (TIH) operates 2 core businesses. First, it provides online insurance where insurance products are sold as part of the customer’s online booking process with their partners namely AirAsia, Tune Hotels and AirAsia Expedia. TIH also operates a general insurance business, through 83.26% owned subsidiary - TIMB.



Why invest in Tune Insurance Holdings?

  1. Wide and cost effective distribution channels
  2. Provide ease in buying coverage
  3. Exclusive partnership with AirAsia
  4. Ability to ride on AirAsia’s robust growth
  5. Additional revenue and cost synergies from TIMB
  6. Robust industry prospects


However, some of the above investing reasons had also became the disadvantages of TIH. It's reliant on AirAsia business is too important. TIH's success is very much depends on the success of AirAsia businesses, and because of its relationship with AirAsia, TIH would face difficulties in forging a partnership with other airline.


Meanwhile, for TIH domestic general insurance, stiff competition and the implementation of tighter capital requirement for insurance companies may affect its operations. It's in the industry where size does matter. I don't think TIH can cross-sell it's online clients easily on other general insurance, such as fire and car insurance.


Forecast and Valuation given by TA Securities Research
Going forward, we believe TIH’s gross earned premiums will be closely linked to increase in passengers carried on AirAsia. We estimate AirAsia’s passengers carried to increase at an encouraging pace of around 15% per annum. Tagging a 20% to industry’s targeted PER of 10x, we fairly value TIH at RM1.00.


Fair Value RM 1.00 ???
Hey dude, the IPO price is RM1.35 !!!

Monday, February 11, 2013

ARTHNEETI DECEMBER 2012 ISSUE

Dear Readers,
The government of India has a major problem to tackle this financial year- Fiscal Deficit. It has tried all possible means to reduce the deficit to the acceptable level. Subsidy bill are a major part of government spending in India. So GOI is now determined to reduce the subsidies on diesel. It has now agreed to deregulate the prices of diesel in a gradual manner. So is the case with LPG cylinders. These steps suggest the desperate need of the government to bring its spending below the threshold. Another important step that has been taken is disinvestment of PSUs. 

To read further, click here

Saturday, February 9, 2013

Tools for financial education: Stockmarket Pearltrees

USE PEARLTREES INSTEAD BRO
I've been experimenting with Pearltrees as a tool for financial education. If you've never used Pearltrees before, it's a cool technology for arranging information, sites and other media into organisational trees. I used it in my last post on Goldman Sachs to show how the company is arranged, and this week I've been experimenting with it as a tool to visually represent the FTSE 100 index. The FTSE 100 is an index of the 100 largest publicly-listed companies in the UK, constituting a major chunk of the UK economy. You can explore the Pearltree in the box below, but for greater functionality, go direct to it here.

FTSE 100 and Food Producers / Support Services / Mining in Mega-Indices / (suitpossum)























Click on the various pearls to explore the diagram. Clicking on an individual company launches a pop-up window with information. As you can see, it's a pretty simple and intuitive way to present an otherwise abstract list of companies, allowing you to hone in on the various industry sectors (note how dominant finance and mining companies are in the FTSE), and to get easy access to company wikipedia pages and websites.

Forthcoming attractions
I AM SOOO EXCITED!
I'm going to create more Pearltrees for other major global stockmarket indices. It takes a bit of time to create each one, so I've drawn up a list below of the indices that I want to target, and then as I create the Pearltrees I'll fill the links in.

1) The Dow Jones Industrial: Almost complete here
2) The Hang Seng Index (Hong Kong)
3) The CAC 40 (French)
4) The Dax (German)
5) Sensex 30 (Indian)
6) The IBEX 35 (Spanish)
7) The Nikkei 225 (Japanese)
8) The S&P / TSX 60 (Canadian)
9) Bolsa IPC (Mexican)
10) FTSE/JSE Top40 (South African)
11) CSI 300 (Chinese)
12) Bovespa (Brazilian)

On the other hand, it is possible that I will grow bored of creating Pearltrees out of the world's most powerful companies. Maybe I'll get an intern to do the rest, or a kindly team of volunteers. If you know of any other cool ways of visualising massive stock indices please let me know - Pearltrees has its limitations and I'm interested to find other tools. Hope you find this useful.

Tuesday, February 5, 2013

Sverige har större skulder än Grekland!

Det har varit mycket fokus på Grekland de senaste åren. Katastrof skulle kunna sammanfatta vad de flesta tycker är representativt för situationen i Grekland (inklusive jag själv här på bloggen). Vad färre uppmärksammat är att många andra länder delar ett stort problem med Grekland, nämligen höga aggregerade skuldnivåer. Även Sverige är ett av dessa länder och om man tittar på de totala skulderna i vårt land så är t.o.m. skuldnivån högre än den i Grekland (år 2010)!

Med totala skulden menas alla skulder som hålls av såväl staten, företagen och hushållen i ett land. Denna totala skuldkvot som procent av BNP är i Sverige 340% och i Grekland 262% (2010)! Siffrorna kan hittas i artikeln .... ”The Real Effects of Debt” skriven av erkända forskare vid BIS. Den stora skillnaden mellan Grekland och Sverige är att Grekland har en stor statsskuld (vilket vi ju alla vet) medan Sverige har en stor privat skuld. Medan Grekland har en privat skuldnivå på 130% (icke-finansiella företag plus hushåll) har Sverige en privat skuldnivå på 280% (icke-finansiella företag plus hushåll)! Framförallt är det bolagen som har stora skulder och jag känner att jag måste undersöka närmare vad detta beror på och hur allvarligt det må vara. En avanceradekonomi kan ju troligen klara av högra skuldnivåer än en mindre avancerad ekonomi. Frågan är också vad det skulle innebära om man också tog med banksektorns skulder. Den finansiella sektorn är ju stor i Sverige och med våra avancerade finansmarknader kan man tänka sig att det varit lätt att bygga upp höga skuldnivåer. Jag återkommer om detta men en intressant siffra att hålla i huvudet för den som gillar att måla fan på väggen är 913%. Det är statsskulden i Weimarrepublikens Tyskland i början av 20-talet (enligt Ray Dalio och Bridgewater Associates) strax innan hyperinflationen raderade ut en generations sparande och 200 miljarder mark krävdes för att köpa en brödlimpa. Vi har en bit kvar dit det medger jag....

Om vi återvänder till ”The Real Effects of Debt” så är författarnas huvudtes att tillväxten i en ekonomi påverkas negativt av för höga skuldnivåer och det är tydligt att Sverige ligger över den nivå när detta börjar märkas. Detta är trist och jag delar fullständigt förslaget att avdragsrätten för räntekostnader måste tas bort för att minska skuldsättningen. Denna artificiella subvention av låntagare på bekostnad av aktieinvesterare och sparare har otvivelaktigt spelat en stor roll för den trista situation vi nu befinner oss i.

Summa summarum: Jag är skeptisk till Sverige som destination för investeringar på lång sikt och skuldnivån är ett mycket viktigt skäl till detta. Räkenskapens dagar ligger otvivelaktigt framför oss.

Sunday, February 3, 2013

The Old & New Palm Oil Growers Scheme

Both schemes have been categorized as "share-farming" interest scheme by Securities Commission of Malaysia, yet, both were in the limelight lately due to their contradict directions. The old one (Country Heights Growers Scheme) is wooing investors to terminate it, while the new one (Golden Agro Growers Scheme) is wooing investors to invest.


Why CHGS was in HOT water?
CHGS was the 1st oil palm plantation investment scheme in Malaysia. Launched in 2007, it guaranteed a 8% return annually for first 3 years, and subsequently it is projected to distribute the returns of over 11% per year throughout a period of 20 years. However, voluntary early termination of the scheme was proposed recently, citing that CHGS was unable to reach its full potential because of poor fresh fruit bunches (FFB) yield. Various factors were given such as unpredictable weather conditions, incursions of wild elephants into the estate, poor soil fertility, shortage of key personnel and manual workers, and uncompromising terrain.


How Good is GAGS?
On the other hand, the new GAGS guaranteed 7% return yearly for first 5 years. Subsequently, investors will enjoy 100% of the net profit of the plantation until 20 years maturity. Investors were told that margins associated with the palm oil industry have always been good traditionally. So, in the event of falling CPO prices, it still can make money if the estate was managed well and efficiently. A mill was also planned to be set up in 4 to 5 years to avoid uncertainties of refusal by external millers.


Are they related?
Although Finance Malaysia opines that both schemes were not related, but the timing of it is somewhat makes us curious. Is it really so coincidence? It was like giving the existing investors of CHGS the chance to switch over their investments to GAGS. Both schemes are very much similar, but with different people managing them which is the key determining factors for its success or failure. Anyway, Finance Malaysia doubt the success of the new GAGS which don't have proven track record and was planted in Sarawak where peat soil may increase the cost of planting. The problems faced by CHGS may reoccurred on GAGS in the future. Estate management plays an important part in such scheme.