Investing with the big picture in mind
Posted on November 6, 2010, Saturday
YOU don’t have to be an expert to get started, but it helps to know the basics before you set a plan for investing. Since the whole idea of investing can be overwhelming and intimidating for anyone who has never done it, try taking small steps.
Here are some basic Do’s
•Do:
•Get some financial education.
•Invest some time, then money.
•Read books and newspapers.
Attend seminars.
Get together with other like-minded people to learn about investment choices including the stock market, property or even a business.
You might also consider hiring a professional, like a financial planner to go through your current financial situation and goals, and work out a detailed financial plan for you. Besides giving you a professional perspective of your financial health, a good financial planner will know the kind of products in the market that will suit you.
But professional help doesn’t come cheap. So the best option would be to get a recommendation from neutral or independent sources such as the Financial Planning Association of Malaysia (FPAM) or the Securities Commission Malaysia before settling on a planner.
Always remember the three important principles of investing:
1. Investment Goals
What is the purpose of your investment? Is it to achieve high dividend yields or a consistent income yield? Once you’ve determined your short-term and long-term objectives, you can identify suitable investments, the level of risk you can tolerate, and what your expectations are.
2. Know your risk tolerance
High returns come with equally high risk. Realise your ability and willingness to lose some or all of your original investment in exchange for greater potential returns.
If you’re an aggressive investor, or one with a high-risk tolerance, a well-diversified equity fund should take up the majority of your portfolio. If you can take on only a moderate degree of risk, then perhaps a hybrid investment plan such as a 50:50 investment portfolio in a moderate risk fund with significant cash savings in a bank account is your calling.
3. Time horizon
Decide on how long you intend to invest and what stage of your life you’re at. If you are saving up for your daughter’s education in which you will need it in the near future such as within five years, then, you would likely to take on less risk because of a shorter time horizon. Also, maintain at least six month’s income in an easily accessible deposit account or put your money in liquid investments such as unit trust funds. This will allow you to have access to your money in the event of emergencies.
Here are two examples* to give you a general idea:
Scenario 1:
Sharon decides to start investing a sum of RM500 monthly, in an investment vehicle that will yield her an average of eight per cent per annum over the next 30 years till retirement. At the end of 30 years, the total sum of her investment would have amounted to RM750,000.
Scenario 2:
If Sharon decides to start investing five years later, a sum of RM500 monthly, in a similar investment vehicle that will yield her an average of eight per cent per annum over a period of 25 years till retirement, her total nest egg would have only amounted to RM478,000 due to the loss of an additional five years in compounded growth.
* Source: Investment Calculator from HwangDBS Investment Management corporate website www.hdbsim.com.my/tools/general-investment
This article is brought to you by HwangDBS Investment Management, your Asian Financial Specialists; we believe you deserve to live the life you want.
http://www.theborneopost.com/?p=73323
Tuesday, 7 December 2010
QL is estimated to need about RM 250 million per annum for FY 2011 to FY 2012 to finance its expansion plans
QL Resources to increase production capacity
Posted on November 5, 2010, Friday
KUCHING: QL Resources Bhd’s (QL Resources) recent proposal to undertake a private placement, share split and issuance of free warrants was aimed at increasing its production capacity in its existing poultry farms in Malaysia.
According to Kenanga Investment Bank Bhd (Kenanga Research), the proposed placement of 20,827,920 shares of RM0.50 each to third-party investors was expected to be completed prior to the proposed share split and free warrants issue, to be completed by the first quarter of 2011.
Assuming a five per cent discount from the five-day weighted average market price of RM5.26, the proposed placement was expected to raise gross proceeds of up to approximately RM104 million.
The research house stated that about 70 per cent of the proceeds from the private placement would go to increasing its production capacity in existing poultry farms in the country apart from developing poultry farms in Indonesia and Vietnam.
In addition, the proceeds would be utilised for QL Resources’ plantation development and oil mill construction in its 20,000-hectare plantation in Indonesia apart from development of its biomass renewable energy projects in Tawau, Sabah.
The group’s proposed share split would entail the subdivision of one existing ordinary share of RM0.50 into two shares held by entitled shareholders to increase affordability of its shares and encourage retail participation.
With regards to the group’s proposed free warrants, the research firm said it would be issued free to existing shareholders on the basis of one free warrant for every 20 existing QL Resources shares after the private placement and share split.
RHB Research Institute Sdn Bhd (RHB Research) in its research report said that it had previously highlighted the group to do a corporate exercise to raise capital as it had estimated a need for about RM250 million per annum for the financial years 2011 to 2012 (FY11 to FY12) to finance its expansion plans.
The research firm sustained a positive view on this move, stating that it would enable the group to lower its net gearing at 54 per cent by the third quarter of FY2011 against a current approximation of 60 per cent.
Posted on November 5, 2010, Friday
KUCHING: QL Resources Bhd’s (QL Resources) recent proposal to undertake a private placement, share split and issuance of free warrants was aimed at increasing its production capacity in its existing poultry farms in Malaysia.
According to Kenanga Investment Bank Bhd (Kenanga Research), the proposed placement of 20,827,920 shares of RM0.50 each to third-party investors was expected to be completed prior to the proposed share split and free warrants issue, to be completed by the first quarter of 2011.
Assuming a five per cent discount from the five-day weighted average market price of RM5.26, the proposed placement was expected to raise gross proceeds of up to approximately RM104 million.
The research house stated that about 70 per cent of the proceeds from the private placement would go to increasing its production capacity in existing poultry farms in the country apart from developing poultry farms in Indonesia and Vietnam.
In addition, the proceeds would be utilised for QL Resources’ plantation development and oil mill construction in its 20,000-hectare plantation in Indonesia apart from development of its biomass renewable energy projects in Tawau, Sabah.
The group’s proposed share split would entail the subdivision of one existing ordinary share of RM0.50 into two shares held by entitled shareholders to increase affordability of its shares and encourage retail participation.
With regards to the group’s proposed free warrants, the research firm said it would be issued free to existing shareholders on the basis of one free warrant for every 20 existing QL Resources shares after the private placement and share split.
RHB Research Institute Sdn Bhd (RHB Research) in its research report said that it had previously highlighted the group to do a corporate exercise to raise capital as it had estimated a need for about RM250 million per annum for the financial years 2011 to 2012 (FY11 to FY12) to finance its expansion plans.
The research firm sustained a positive view on this move, stating that it would enable the group to lower its net gearing at 54 per cent by the third quarter of FY2011 against a current approximation of 60 per cent.
Budget 2011 boost for Economic Transformation Programme
Budget 2011 boost for Economic Transformation Programme
Posted on October 17, 2010, Sunday
PUTRAJAYA: Pemandu has received the necessary allocations to carry out the implementation of its Government Transformation Programme (GTP) and Economic Transformation Programme (ETP) initiative in 2011.
“The budget allocations clearly demonstrated the Government’s commitment to ETP. This will enable us to put up the eight per cent public funding required to catalyse the 92 per cent private sector investment.
“As the ETP is co-created by the private sector from the ground up through a 1,000-person workshop and 500-person nine-week lab, we now need the private sector to deliver on its promise,” said Senator Datuk Sri Idris Jala, Minister in the Prime Minister’s Department and chief executive officer of Pemandu.
“The estimated growths of 10.2 per cent and 6.3 per cent for private sector investments and private consumption respectively are aligned with the ETP’s strategy for a private sector-led and a more private consumption-driven economic expansion,” he added.
The ETP initiatives covered in the 2011 Budget include:
http://www.theborneopost.com/?p=69175
Posted on October 17, 2010, Sunday
PUTRAJAYA: Pemandu has received the necessary allocations to carry out the implementation of its Government Transformation Programme (GTP) and Economic Transformation Programme (ETP) initiative in 2011.
“The budget allocations clearly demonstrated the Government’s commitment to ETP. This will enable us to put up the eight per cent public funding required to catalyse the 92 per cent private sector investment.
“As the ETP is co-created by the private sector from the ground up through a 1,000-person workshop and 500-person nine-week lab, we now need the private sector to deliver on its promise,” said Senator Datuk Sri Idris Jala, Minister in the Prime Minister’s Department and chief executive officer of Pemandu.
“The estimated growths of 10.2 per cent and 6.3 per cent for private sector investments and private consumption respectively are aligned with the ETP’s strategy for a private sector-led and a more private consumption-driven economic expansion,” he added.
The ETP initiatives covered in the 2011 Budget include:
- the Mass Rapid Transit (MRT) in Greater Kuala Lumpur/Klang Valley
- measures to revitalise the domestic capital market
- the launch of a Private Pension Fund
- RM857 million allocation for local Electrical and Electronics sector
- RM146 million allocation for the Oil, Gas and Energy industry
- RM3.8 billion allocation to increase productivity and generate higher returns in the agriculture sector
- RM85 million allocation for infrastructure facilities to facilitate construction of hotels and resorts in remote areas, and RM100 million allocation to further support the tourism industry
- the RM3 billion eco-nature resort in Sabah
- the abolishment of existing import duty of between five to 30 per cent on approximately 300 goods
- RM297 million allocation to support palm oil replanting activities
- RM127m allocation to support domestic oleo derivatives companies and RM23.3m to expand downstream palm oil industries
- The set-up of the Wage Consultation Council to determine the rate and mechanism of the minimum wage policy
- Allocation for Wholesale and Retail sector activities such as Tukar, Pakar and automotive workshop transformation.
http://www.theborneopost.com/?p=69175
Bursa M’sia delists 192 companies from 2005
Bursa M’sia delists 192 companies from 2005
Posted on October 13, 2010, Wednesday
KUALA LUMPUR: A total of 192 public companies have been delisted from Bursa Malaysia from 2005 till end of August this year, the Dewan Rakyat was informed.
Deputy Finance Minister, Datuk Dr Awang Adek Hussein, said a total of 203 public companies were also listed on the stock exchange during the same period.
He said 74 companies or 38 per cent of the 192 companies were delisted following privatisation process.
“Out of the 74 companies, 50 were off the list after take over offer and scheme arrangement, 12 following scheme payment and reduction in selected capital in line with the Companies Act. Another three companies were delisted following the sale of assets resulting from a merger where the assets had been transferred while another nine companies opted for voluntary delisting,” he said.
The minister said this when replying to a question from William Leong Jee Keen (PKR-Selayang) at the Dewan Rakyat sitting here.
Leong wanted to know the number of public companies listed on Bursa Malaysia through an initial public offer (IPO) and the number of companies that took private from 2005 till 2010 and the reasons behind the move.
Awang Adek said there were many other reasons for a company to seek delisting including the wish of the main shareholder to expand the company’s business direction without any obstruction from other shareholders.
A low share price that is not reflective of the actual asset value of the said share is another reason.
“It happens also when the company sells its assets and has no core business activity and both the main shareholder and the company’s management have no plans to start on a new core business,” he said.
Awang Adek also said that there had been a 15 per cent increase in the stock exchange’s Composite Index, rising from 1,272 points last year to 1,484 points todate.
“A rise of 15 per cent within a year is a good achievement. With the impending listing of several new companies including two subsidiary companies of Petronas on the local bourse, it should provide for some new activity and inspiration in the market,” he added. — Bernama
Posted on October 13, 2010, Wednesday
KUALA LUMPUR: A total of 192 public companies have been delisted from Bursa Malaysia from 2005 till end of August this year, the Dewan Rakyat was informed.
Deputy Finance Minister, Datuk Dr Awang Adek Hussein, said a total of 203 public companies were also listed on the stock exchange during the same period.
He said 74 companies or 38 per cent of the 192 companies were delisted following privatisation process.
“Out of the 74 companies, 50 were off the list after take over offer and scheme arrangement, 12 following scheme payment and reduction in selected capital in line with the Companies Act. Another three companies were delisted following the sale of assets resulting from a merger where the assets had been transferred while another nine companies opted for voluntary delisting,” he said.
The minister said this when replying to a question from William Leong Jee Keen (PKR-Selayang) at the Dewan Rakyat sitting here.
Leong wanted to know the number of public companies listed on Bursa Malaysia through an initial public offer (IPO) and the number of companies that took private from 2005 till 2010 and the reasons behind the move.
Awang Adek said there were many other reasons for a company to seek delisting including the wish of the main shareholder to expand the company’s business direction without any obstruction from other shareholders.
A low share price that is not reflective of the actual asset value of the said share is another reason.
“It happens also when the company sells its assets and has no core business activity and both the main shareholder and the company’s management have no plans to start on a new core business,” he said.
Awang Adek also said that there had been a 15 per cent increase in the stock exchange’s Composite Index, rising from 1,272 points last year to 1,484 points todate.
“A rise of 15 per cent within a year is a good achievement. With the impending listing of several new companies including two subsidiary companies of Petronas on the local bourse, it should provide for some new activity and inspiration in the market,” he added. — Bernama
Poh Kong Holdings Berhad
Date announced 12-Jun-10
Quarter 31/10/2010 Qtr 1 FYE 31/07/2011
STOCK POHKONG C0DE 5080
Price $ 0.47 Curr. PE (ttm) 5.90 Curr. DY 2.98%
LFY Div 1.40 DPO ratio 18%
ROE 10.2% PBT Margin 9.0% PAT Margin 6.4%
Rec. qRev 169451 q-q % chg 28% y-y% chq 11%
Rec qPbt 15191 q-q % chg 58% y-y% chq 11%
Rec. qEps 2.65 q-q % chg 39% y-y% chq 10%
ttm-Eps 7.96 q-q % chg 3% y-y% chq 17%
Using VERY CONSERVATIVE ESTIMATES:
EPS GR 5% Avg.H PE 6.00 Avg. L PE 5.20
Forecast High Pr 0.61 Forecast Low Pr 0.38 Recent Severe Low Pr 0.38
Current price is at Middle 1/3 of valuation zone.
RISK: Upside 61% Downside 39%
One Year Appreciation Potential 6% Avg. yield 4%
Avg. Total Annual Potential Return (over next 5 years) 10%
CPE/SPE 1.05 P/NTA 0.60 NTA 0.78 SPE 5.60 Rational Pr 0.45
Decision:
Already Owned: Buy Hold Sell Filed Review (future acq): Filed Discard: Filed
Guide: Valuation zones Lower 1/3 Buy Mid. 1/3 Maybe Upper 1/3 Sell
Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr
Stock Data: Recent Stock Performance:
Current Price (11/19/2010): .49
(Figures in Malaysian Ringgits)
1 Week 10.2% 13 Weeks 11.5%
4 Weeks 19.8% 52 Weeks 16.9%
Poh Kong Holdings Berhad Key Data:
Ticker: POH KONG Country: MALAYSIA
Exchanges: KUL Major Industry: Apparel & Textiles
Sub Industry: Apparel Manufacturers
2010 Sales 561,242,000
(Year Ending Jan 2011).
Employees: 1,047
Currency: Malaysian Ringgits Market Cap: 199,020,720
Fiscal Yr Ends: July Shares Outstanding: 410,352,000
Share Type: Ordinary Closely Held Shares: N/A
Day's Range: 0.46 - 0.47
52wk Range: 0.35 - 0.51
Volume: 273,000
Friday, 3 December 2010
Top 5 Things to Do to Make Money Investing Stocks
You can read all the investing books from Amazon.com Inc (Nasdaq: AMZN, stock), attend all the seminars you can afford and ask a million investing questions because Warren Buffett is your neighbor next-door but you can never duplicate and apply all the teaching in your way of investing. So let’s start with the top 5 things you should do to make money investing stocks or trading option (in no particular order):
First Thing to Do
You Should Study the Companies’ Fundamentals
Second Thing to Do
You Should Do Technical Analysis
Third Thing to Do
You Should Read the Pulse of the Market
Fourth Thing to Do
You Should Know When to Lock Your Profit
Fifth Thing to Do
You Should Minimize Your Emotion
Read more here.
First Thing to Do
You Should Study the Companies’ Fundamentals
Second Thing to Do
You Should Do Technical Analysis
Third Thing to Do
You Should Read the Pulse of the Market
Fourth Thing to Do
You Should Know When to Lock Your Profit
Fifth Thing to Do
You Should Minimize Your Emotion
Read more here.
Petronas Gas surges on LNG project
Petronas Gas surges on LNG project
Written by Joseph Chin
Thursday, 02 December 2010 09:21
KUALA LUMPUR: Shares of PETRONAS GAS BHD [] advanced in early trade on Thursday, Dec 2 after it secured a proposed liquefied natural gas (LNG) regasification project from its parent, Petroliam Nasional Bhd.
At 9.18am, PetGas was up 22 sen to RM11.36. There were 5,700 shares done.
The FBM KLCI jumped 11.91 points to 1,497.33. Turnover was 95.33 million shares valued at RM102.61 million. There were 304 gainers, 41 losers and 96 stocks unchanged.
PetGas announced on Wednesday the projects would be in Sungai Udang port, Melaka and would include two floating storage units (FSUs) to receive and store LNG; an island jetty and regasification units to regasify LNG; and subsea and onshore pipelines to transport the regasified LNG to the Peninsular Gas Utilisation pipeline network.
http://www.theedgemalaysia.com/business-news/177973-petronas-gas-surges-on-lng-project.html
Written by Joseph Chin
Thursday, 02 December 2010 09:21
KUALA LUMPUR: Shares of PETRONAS GAS BHD [] advanced in early trade on Thursday, Dec 2 after it secured a proposed liquefied natural gas (LNG) regasification project from its parent, Petroliam Nasional Bhd.
At 9.18am, PetGas was up 22 sen to RM11.36. There were 5,700 shares done.
The FBM KLCI jumped 11.91 points to 1,497.33. Turnover was 95.33 million shares valued at RM102.61 million. There were 304 gainers, 41 losers and 96 stocks unchanged.
PetGas announced on Wednesday the projects would be in Sungai Udang port, Melaka and would include two floating storage units (FSUs) to receive and store LNG; an island jetty and regasification units to regasify LNG; and subsea and onshore pipelines to transport the regasified LNG to the Peninsular Gas Utilisation pipeline network.
http://www.theedgemalaysia.com/business-news/177973-petronas-gas-surges-on-lng-project.html
Thursday, 2 December 2010
The Ketuanan issue
Dr Wan Azizah struck at Umno’s soft spot — Kim Quek
December 02, 2010
DEC 2 — PKR President Datuk Seri Dr Wan Azizah Wan Ismail seemed to have struck at the Achilles’ heel of Umno when she officially condemned “Ketuanan Melayu” (Malay the master race) as the fraudulent ideology that has propped up Umno all these years.
Delivering her policy speech during the party’s annual congress on November 27, she said that the Malay supremacy concept was used by Umno’s elites to deceive the Malay masses for self enrichment and for maintaining their political power. As a result, the majority of Malays and Bumiputera have remained poor and neglected despite 53 years of Umno rule.
Calling the Malays to discard this ideology, she said: “The concept of Malay supremacy must be left behind so that our children will grow up with the vision of a dignified race.”
By any democratic standard, Dr Wan Azizah’s clarion call to abandon racism must be applauded as the voice of reason that is in consonance with fundamental values embraced by every member of the world community.
After all, isn’t it true that the last country practising institutionalised racism — South Africa — had given up its racist policy twenty years ago? Though Malaysia has largely escaped the kind of world condemnation accorded former apartheid South Africa, thanks to the Barisan Nasional government’s skilful image polishing, nevertheless, endemic racism remains a plague that has sabotaged national integration and thwarted economic growth.
Ketuanan Melayu indefensible
Perhaps aware that “Ketuanan Melayu” is indefensible in the eyes of the world, Umno was at a loss as to how to respond to Dr Wan Azizah’s unexpected frontal assault.
To keep silent would be to acquiesce to Dr Wan Azizah’s assertion and that would spell trouble — big trouble. For it is through inciting the primordial instinct of race that Umno hopes to scrape through the coming national election. So, how could Umno give up “Ketuanan Melayu”?
On the other hand, to defend the ideology would be to invite worldwide ridicule and condemnation. And that would not be pretty, keeping in mind that with the myriad of modern communication gadgets instantly transmitting news and messages, international backlash could be swift and unpalatable.
So, after a short interval to recover from Dr Wan Azizah’s surprise initiative, responses began to drip in from Umno’s top leaders, but these are either evasive or irrelevant, and none has dared to take Wan Azizal head on.
Deputy Umno President and Deputy Prime Minister Tan Sri Muhyiddin Yassin described Dr Wan Azizah’s assertion as an attempt “to salvage a sinking ship”, and to regain public support after a divisive party election. What about the Ketuanan issue? Not a word of rebuttal.
Umno Vice President and Defence Minister Datuk Seri Zahid Hamidi said Dr Wan Azizah was “only trying to divert public attention from the party’s serious problems.” He said PKR wanted to please the Chinese and Indians to gain their support for the next general election. Again, he avoided touching the Ketuanan issue.
Not unexpectedly, the dirty job of savage counter-offensive was left to Umno’s ultra racist wing Perkasa. Its youth leader Arman Azha Abu Hanifah attacked Azizah as “political prostitute”. He said that she and other PKR Malay leaders owed their professional achievement to “Ketuanan Melayu” policy and that they had now betrayed the race for the sake of gaining Chinese and Indian support.
Interestingly, Arman’s bad manner and insensitive blast at other Malay leaders seem to justify Dr Wan Azizah’s advocacy to abandon the “Ketuanan” mentality so as to regain dignity for the race. It is not only abhorrent conduct to call a respected national leader “prostitute”, but his inference that Malays are not capable of achieving success unless they are propped up by racial favouritism is outright humiliating to the race. In fact, Arman’s crass outburst has unwittingly made him the best poster boy of the ill fruits that “Ketuanan Melayu” has borne.
However, the icing of the cake in this episode is undoubtedly the novel theory put up by the vociferous Umno Cabinet member Datuk Seri Nazri Aziz to deflect Dr Wan Azizah’s criticism. He said “Ketuanan Melayu” is not about the Malay race, but about the Malay Sultans. He said the word was coined to protect the sovereignty of the Malay Rulers, not to emphasise racial supremacy.
Glaring evidence of racism
While Nazri may consider himself ingenious in coming out with this new interpretation to escape the “Ketuanan” trap, it sure holds no water. The bedrock of Umno’s hegemony is its racial ideology which has captivated its core supporters, and “Ketuanan Melayu” has been coined to symbolise Malay supremacy. It is through the indoctrination and implementation of this ideology that Umno has been able to win election after election; and Umno is not about to give it up for whatever reason.
Read more...
http://www.themalaysianinsider.com/breakingviews/article/dr-wan-azizah-struck-at-umnos-soft-spot-kim-quek/
December 02, 2010
DEC 2 — PKR President Datuk Seri Dr Wan Azizah Wan Ismail seemed to have struck at the Achilles’ heel of Umno when she officially condemned “Ketuanan Melayu” (Malay the master race) as the fraudulent ideology that has propped up Umno all these years.
Delivering her policy speech during the party’s annual congress on November 27, she said that the Malay supremacy concept was used by Umno’s elites to deceive the Malay masses for self enrichment and for maintaining their political power. As a result, the majority of Malays and Bumiputera have remained poor and neglected despite 53 years of Umno rule.
Calling the Malays to discard this ideology, she said: “The concept of Malay supremacy must be left behind so that our children will grow up with the vision of a dignified race.”
By any democratic standard, Dr Wan Azizah’s clarion call to abandon racism must be applauded as the voice of reason that is in consonance with fundamental values embraced by every member of the world community.
After all, isn’t it true that the last country practising institutionalised racism — South Africa — had given up its racist policy twenty years ago? Though Malaysia has largely escaped the kind of world condemnation accorded former apartheid South Africa, thanks to the Barisan Nasional government’s skilful image polishing, nevertheless, endemic racism remains a plague that has sabotaged national integration and thwarted economic growth.
Ketuanan Melayu indefensible
Perhaps aware that “Ketuanan Melayu” is indefensible in the eyes of the world, Umno was at a loss as to how to respond to Dr Wan Azizah’s unexpected frontal assault.
To keep silent would be to acquiesce to Dr Wan Azizah’s assertion and that would spell trouble — big trouble. For it is through inciting the primordial instinct of race that Umno hopes to scrape through the coming national election. So, how could Umno give up “Ketuanan Melayu”?
On the other hand, to defend the ideology would be to invite worldwide ridicule and condemnation. And that would not be pretty, keeping in mind that with the myriad of modern communication gadgets instantly transmitting news and messages, international backlash could be swift and unpalatable.
So, after a short interval to recover from Dr Wan Azizah’s surprise initiative, responses began to drip in from Umno’s top leaders, but these are either evasive or irrelevant, and none has dared to take Wan Azizal head on.
Deputy Umno President and Deputy Prime Minister Tan Sri Muhyiddin Yassin described Dr Wan Azizah’s assertion as an attempt “to salvage a sinking ship”, and to regain public support after a divisive party election. What about the Ketuanan issue? Not a word of rebuttal.
Umno Vice President and Defence Minister Datuk Seri Zahid Hamidi said Dr Wan Azizah was “only trying to divert public attention from the party’s serious problems.” He said PKR wanted to please the Chinese and Indians to gain their support for the next general election. Again, he avoided touching the Ketuanan issue.
Not unexpectedly, the dirty job of savage counter-offensive was left to Umno’s ultra racist wing Perkasa. Its youth leader Arman Azha Abu Hanifah attacked Azizah as “political prostitute”. He said that she and other PKR Malay leaders owed their professional achievement to “Ketuanan Melayu” policy and that they had now betrayed the race for the sake of gaining Chinese and Indian support.
Interestingly, Arman’s bad manner and insensitive blast at other Malay leaders seem to justify Dr Wan Azizah’s advocacy to abandon the “Ketuanan” mentality so as to regain dignity for the race. It is not only abhorrent conduct to call a respected national leader “prostitute”, but his inference that Malays are not capable of achieving success unless they are propped up by racial favouritism is outright humiliating to the race. In fact, Arman’s crass outburst has unwittingly made him the best poster boy of the ill fruits that “Ketuanan Melayu” has borne.
However, the icing of the cake in this episode is undoubtedly the novel theory put up by the vociferous Umno Cabinet member Datuk Seri Nazri Aziz to deflect Dr Wan Azizah’s criticism. He said “Ketuanan Melayu” is not about the Malay race, but about the Malay Sultans. He said the word was coined to protect the sovereignty of the Malay Rulers, not to emphasise racial supremacy.
Glaring evidence of racism
While Nazri may consider himself ingenious in coming out with this new interpretation to escape the “Ketuanan” trap, it sure holds no water. The bedrock of Umno’s hegemony is its racial ideology which has captivated its core supporters, and “Ketuanan Melayu” has been coined to symbolise Malay supremacy. It is through the indoctrination and implementation of this ideology that Umno has been able to win election after election; and Umno is not about to give it up for whatever reason.
Read more...
http://www.themalaysianinsider.com/breakingviews/article/dr-wan-azizah-struck-at-umnos-soft-spot-kim-quek/
I'll die in debt, say one in three in UK
Nine out of 10 people have run up unsecured debt and many fear they will never be able to pay back what they owe, a survey has claimed.
5:40PM GMT 30 Nov 2010
Around 89pc of people aged between 18 and 35 said they owed money on a credit card, loan or overdraft, the research showed.
A third of people admitted they did not think they would ever be debt-free, 54pc of whom said they would always need to borrow money in order to fund the lifestyle they wanted.
One in five of these people also claimed they were not worried about the possibility of their debts being passed on to their next of kin if they died before they were repaid.
Just over half who owed money said they did not feel in control of their debt, with 8pc admitting they had needed to ask for help with repayments from a friend or family member. Eight out of 10 people also told the research for discount website MyVoucherCodes.co.uk that they thought it was too easy to borrow money through their bank or on credit cards.
Farhad Farhadi, MyVoucherCodes.co.uk's personal finance expert, said: "The majority of British adults owe money in some way, shape or form, but to see that almost a third think they'll never be free from debt is quite alarming.
"When borrowing money from any source, how you are going to repay it should always be in the back of your mind.
"A lot of people don't really think about the consequences of borrowing money and it can be easy to get complacent, but keeping it all under control should be a priority from the off. Only borrow what you really think you can afford to pay back."
MyVoucherCodes.co.uk questioned 1,722 people aged between 18 and 35 during November.
http://www.telegraph.co.uk/finance/personalfinance/borrowing/8171236/Ill-die-in-debt-say-one-in-three.html
5:40PM GMT 30 Nov 2010
Around 89pc of people aged between 18 and 35 said they owed money on a credit card, loan or overdraft, the research showed.
A third of people admitted they did not think they would ever be debt-free, 54pc of whom said they would always need to borrow money in order to fund the lifestyle they wanted.
One in five of these people also claimed they were not worried about the possibility of their debts being passed on to their next of kin if they died before they were repaid.
Just over half who owed money said they did not feel in control of their debt, with 8pc admitting they had needed to ask for help with repayments from a friend or family member. Eight out of 10 people also told the research for discount website MyVoucherCodes.co.uk that they thought it was too easy to borrow money through their bank or on credit cards.
Farhad Farhadi, MyVoucherCodes.co.uk's personal finance expert, said: "The majority of British adults owe money in some way, shape or form, but to see that almost a third think they'll never be free from debt is quite alarming.
"When borrowing money from any source, how you are going to repay it should always be in the back of your mind.
"A lot of people don't really think about the consequences of borrowing money and it can be easy to get complacent, but keeping it all under control should be a priority from the off. Only borrow what you really think you can afford to pay back."
MyVoucherCodes.co.uk questioned 1,722 people aged between 18 and 35 during November.
http://www.telegraph.co.uk/finance/personalfinance/borrowing/8171236/Ill-die-in-debt-say-one-in-three.html
Well-managed companies set to gain
Tuesday November 30, 2010
Well-managed companies set to gain
By Teoh Kok Lin
ASIA'S stock valuations are not expensive especially if you pick the right companies to invest for the long term. I sensed lately that there is a growing concern when I speak to investors about Asia's or Malaysia's stock markets.
The fact that Malaysia's stock market index is now hovering near its all-time high of 1,516 points (set in January 2008) is one big cause of uneasiness for some; while EU financial problems and lukewarm US economic data have put a damper on sentiments for others. Some anxiety is not surprising; fresh in many investors' minds are the 2008 global stock market crash, the rebound of 2009 and very volatile markets throughout.
Unnerving investors
Volatile stock markets can be unnerving for investors; since 2008, major stock market indices such as in China, Hong Kong and the United States have experienced gains or losses of up to 3% to 5% a day such huge daily swings are no longer unusual or unexpected.
It is therefore understandable that some investors feel that stock markets (in Malaysia or elsewhere) are due for a big fall, either because stock prices are already too high and/or Western economies have too many unresolved problems. Even a double-dip global stock market crash continues to be bandied about with gusto.
I like to share some of my views on these doubts, especially with regards to Asia's stock market prospects. First of all, are stock prices too high? Asia's stock market indices today (including Malaysia) are still attractively priced and not close to the excessive levels seen in the late 2007/early 2008 market highs (See table). Hence I believe Asia stock prices in general are not expensive yet.
The current Asia bull market rally also means some stock markets will keep hitting new highs, and bull markets can last for many years (for example, the US S&P 500 Index rallied from 295 points in 1990 to 1,232 points in 2000, a continuous bull run for more than nine years, as compared to the current bull run in Asia of about two years).
Second, Asia today is experiencing a major shift in the world's economic centre of power from the West to the East. In this decade, Asia is likely to continue with its rapid economic growth while the West repairs it debt-laden economies.
Growth in Asia will be fuelled by the three big populous and increasingly rich nations of China, India and Indonesia where latent demand for consumer goods is built on a base of almost three billion increasingly wealthier consumers.
According to a World Bank report, China has 32 cars per 1,000 population while India (10 cars) and Indonesia (76 cars) has equally low car ownerships when compared to the United States (819 cars) or Australia (653 cars). For the next 10 years, I would hazard a guess that major car companies will likely sell more cars in Asia than in the United States every year.
On a similar vein, while there may be short-term negative sentiment in China's property sector, I believe that the underlying Chinese demand for housing will be very strong for many more years to come due mostly to increasing wealth (nominal per capita GDP rose from about US$1,000 in 2000 to US$3,735 in 2009 and likely to grow richer) and rapid urbanisation (2.7% annual rate of change) in a country with 1.3 billion population.
This decade, therefore, will offer tremendous opportunities for many established as well as entrepreneurial Asian companies to prosper.
Accurate information
Third, when one invests in stocks, it is the company's business that you invest in. Accurate and timely information regarding a company its business and management is important in order to separate the well-managed from the not-so-well managed companies.
After any stock market downturns, good companies will almost always rebound strongly; something that was quite evident during the 2009 stock market rally. It may be stating the obvious but picking the right stock (or well-managed company) will most likely determine whether one is investing successfully or not.
Finally, as long as the macroeconomic trend is favourable for Asian economies, it also represents fantastic business opportunities for well-managed Asian companies. As Warren Buffett says: If a business does well, the stock eventually follows.
Investing for the long term in companies that will reap the benefits of Asia's high economic growth for many years will likely reap handsome rewards no matter whether there is short-term market volatility, downturns or corrections. In that sense, I am very optimistic for Asian equities this decade.
The writer is the founder and chief investment officer of Singular Asset Management Sdn Bhd.
http://biz.thestar.com.my/news/story.asp?file=/2010/11/30/business/7523425&sec=business
Well-managed companies set to gain
By Teoh Kok Lin
ASIA'S stock valuations are not expensive especially if you pick the right companies to invest for the long term. I sensed lately that there is a growing concern when I speak to investors about Asia's or Malaysia's stock markets.
The fact that Malaysia's stock market index is now hovering near its all-time high of 1,516 points (set in January 2008) is one big cause of uneasiness for some; while EU financial problems and lukewarm US economic data have put a damper on sentiments for others. Some anxiety is not surprising; fresh in many investors' minds are the 2008 global stock market crash, the rebound of 2009 and very volatile markets throughout.
Unnerving investors
Volatile stock markets can be unnerving for investors; since 2008, major stock market indices such as in China, Hong Kong and the United States have experienced gains or losses of up to 3% to 5% a day such huge daily swings are no longer unusual or unexpected.
It is therefore understandable that some investors feel that stock markets (in Malaysia or elsewhere) are due for a big fall, either because stock prices are already too high and/or Western economies have too many unresolved problems. Even a double-dip global stock market crash continues to be bandied about with gusto.
I like to share some of my views on these doubts, especially with regards to Asia's stock market prospects. First of all, are stock prices too high? Asia's stock market indices today (including Malaysia) are still attractively priced and not close to the excessive levels seen in the late 2007/early 2008 market highs (See table). Hence I believe Asia stock prices in general are not expensive yet.
The current Asia bull market rally also means some stock markets will keep hitting new highs, and bull markets can last for many years (for example, the US S&P 500 Index rallied from 295 points in 1990 to 1,232 points in 2000, a continuous bull run for more than nine years, as compared to the current bull run in Asia of about two years).
Second, Asia today is experiencing a major shift in the world's economic centre of power from the West to the East. In this decade, Asia is likely to continue with its rapid economic growth while the West repairs it debt-laden economies.
Growth in Asia will be fuelled by the three big populous and increasingly rich nations of China, India and Indonesia where latent demand for consumer goods is built on a base of almost three billion increasingly wealthier consumers.
According to a World Bank report, China has 32 cars per 1,000 population while India (10 cars) and Indonesia (76 cars) has equally low car ownerships when compared to the United States (819 cars) or Australia (653 cars). For the next 10 years, I would hazard a guess that major car companies will likely sell more cars in Asia than in the United States every year.
On a similar vein, while there may be short-term negative sentiment in China's property sector, I believe that the underlying Chinese demand for housing will be very strong for many more years to come due mostly to increasing wealth (nominal per capita GDP rose from about US$1,000 in 2000 to US$3,735 in 2009 and likely to grow richer) and rapid urbanisation (2.7% annual rate of change) in a country with 1.3 billion population.
This decade, therefore, will offer tremendous opportunities for many established as well as entrepreneurial Asian companies to prosper.
Accurate information
Third, when one invests in stocks, it is the company's business that you invest in. Accurate and timely information regarding a company its business and management is important in order to separate the well-managed from the not-so-well managed companies.
After any stock market downturns, good companies will almost always rebound strongly; something that was quite evident during the 2009 stock market rally. It may be stating the obvious but picking the right stock (or well-managed company) will most likely determine whether one is investing successfully or not.
Finally, as long as the macroeconomic trend is favourable for Asian economies, it also represents fantastic business opportunities for well-managed Asian companies. As Warren Buffett says: If a business does well, the stock eventually follows.
Investing for the long term in companies that will reap the benefits of Asia's high economic growth for many years will likely reap handsome rewards no matter whether there is short-term market volatility, downturns or corrections. In that sense, I am very optimistic for Asian equities this decade.
The writer is the founder and chief investment officer of Singular Asset Management Sdn Bhd.
http://biz.thestar.com.my/news/story.asp?file=/2010/11/30/business/7523425&sec=business
Wednesday, 1 December 2010
Reflections on Volume
Big volume without further upside equals distribution
Big volume without further downside equals accumulation
Volume tends to peak at turning points
Volume often precedes price movement
Volume is a relative study
Big volume without further downside equals accumulation
Volume tends to peak at turning points
Volume often precedes price movement
Volume is a relative study
Politicians should embrace 'Ketuanan Rakyat' and focus on their services to the public, helping ALL the people.
‘Ketuanan Melayu’ not in Constitution, says Prof Khoo
November 30, 2010
KUALA LUMPUR, Nov 30 — The terminology “Ketuanan Melayu” or Malay Supremacy need not be debated because it does not exist in the country’s constitution, said history expert, Prof Emeritus Tan Sri Dr Khoo Kay Kim.
He said that from the historical aspect, only the Rulers’ Supremacy was stated in the constitution where the people must show their loyalty to the Rulers.
“In the past, ‘Malay Supremacy’ was never mentioned within the Malay community. In history, such things are incorrect. What is stated in the Constitution is only the Rulers’ Supremacy, where you show loyalty to the state where you reside in.
“The Malays obtained the special privileges because they are the subjects of the Ruler. The position of the Malays is given special consideration and need not be disputed,” he said when contacted by Bernama, here tonight.
He was asked to comment on the statement by Parti Keadilan Rakyat (PKR) president Datin Seri Dr Wan Azizah Wan Ismail on the Malay Supremacy in her policy speech at the 7th National Congress of the party on Sunday.
Dr Wan Azizah called for the abolition of the concept of Malay Supremacy to enable Malaysian children to grown up with the vision of a ‘race of integrity’ or ‘Malay of Integrity’.
Khoo said the terminology ‘Malay Supremacy’ was only raised by politicians purely for political purposes, and he observed that politicians were now frequently raising issues that could lead to racial confrontations.
“Politicians should focus on their services to the public, helping the people. They should not encourage the people to quarrel,” he said.
Meanwhile, the Director of the Institute of Ethnic Studies, Universiti Kebangsaan Malaysia (UKM), Prof Datuk Dr Shamsul Amri Baharuddin shared Khoo’s opinion that the term Malay Supremacy was coined by politicians in portraying the political and economic position of the Malays.
Questioning Dr Wan Azizah’s motive in raising the issue, he said the statement by the wife of PKR de facto leader, Datuk Seri Anwar Ibrahim, was merely a political gimmick and purely to cover up the crisis faced by the party currently.
“I don’t know why the issue was raised. What I notice is “Anwar’s Supremacy” in the PKR. It is Anwar’s Supremacy that must be abolished. The Malay Supremacy is merely to demolish Anwar’s Supremacy. In my opinion, the concept (Malay Supremacy) does not exist,” he said.
He said Dr Wan Azizah should re-examine what was meant by the term supremacy and should not question the special privileges of the Malays which had been enshrined ever since the era of the Malay Sultanate.
Shamsul Amri said that looking from the economic aspect, the Chinese community dominated 70 per cent of the economy while the Malays had only 30 per cent and there was no such thing as the Malays dominating in all aspects.
“If we look at it, the 70 per cent should be the supreme group. So, what does the Malay Supremacy show? What does supremacy mean? She (Dr Wan Azizah) herself is not clear on the meaning of supremacy,” he said.
Dr Shamsul Amri said politicians should be thinking about issues that were relevant for discussion instead of raising issues that could bring about negative developments between the races. — Bernama
http://www.themalaysianinsider.com/malaysia/article/ketuanan-melayu-not-in-constitution-says-kay-kim/
November 30, 2010
KUALA LUMPUR, Nov 30 — The terminology “Ketuanan Melayu” or Malay Supremacy need not be debated because it does not exist in the country’s constitution, said history expert, Prof Emeritus Tan Sri Dr Khoo Kay Kim.
He said that from the historical aspect, only the Rulers’ Supremacy was stated in the constitution where the people must show their loyalty to the Rulers.
“In the past, ‘Malay Supremacy’ was never mentioned within the Malay community. In history, such things are incorrect. What is stated in the Constitution is only the Rulers’ Supremacy, where you show loyalty to the state where you reside in.
“The Malays obtained the special privileges because they are the subjects of the Ruler. The position of the Malays is given special consideration and need not be disputed,” he said when contacted by Bernama, here tonight.
He was asked to comment on the statement by Parti Keadilan Rakyat (PKR) president Datin Seri Dr Wan Azizah Wan Ismail on the Malay Supremacy in her policy speech at the 7th National Congress of the party on Sunday.
Dr Wan Azizah called for the abolition of the concept of Malay Supremacy to enable Malaysian children to grown up with the vision of a ‘race of integrity’ or ‘Malay of Integrity’.
Khoo said the terminology ‘Malay Supremacy’ was only raised by politicians purely for political purposes, and he observed that politicians were now frequently raising issues that could lead to racial confrontations.
“Politicians should focus on their services to the public, helping the people. They should not encourage the people to quarrel,” he said.
Meanwhile, the Director of the Institute of Ethnic Studies, Universiti Kebangsaan Malaysia (UKM), Prof Datuk Dr Shamsul Amri Baharuddin shared Khoo’s opinion that the term Malay Supremacy was coined by politicians in portraying the political and economic position of the Malays.
Questioning Dr Wan Azizah’s motive in raising the issue, he said the statement by the wife of PKR de facto leader, Datuk Seri Anwar Ibrahim, was merely a political gimmick and purely to cover up the crisis faced by the party currently.
“I don’t know why the issue was raised. What I notice is “Anwar’s Supremacy” in the PKR. It is Anwar’s Supremacy that must be abolished. The Malay Supremacy is merely to demolish Anwar’s Supremacy. In my opinion, the concept (Malay Supremacy) does not exist,” he said.
He said Dr Wan Azizah should re-examine what was meant by the term supremacy and should not question the special privileges of the Malays which had been enshrined ever since the era of the Malay Sultanate.
Shamsul Amri said that looking from the economic aspect, the Chinese community dominated 70 per cent of the economy while the Malays had only 30 per cent and there was no such thing as the Malays dominating in all aspects.
“If we look at it, the 70 per cent should be the supreme group. So, what does the Malay Supremacy show? What does supremacy mean? She (Dr Wan Azizah) herself is not clear on the meaning of supremacy,” he said.
Dr Shamsul Amri said politicians should be thinking about issues that were relevant for discussion instead of raising issues that could bring about negative developments between the races. — Bernama
http://www.themalaysianinsider.com/malaysia/article/ketuanan-melayu-not-in-constitution-says-kay-kim/
Upscale Americans Investing Abroad
WEALTH MATTERS
Buy American? Upscale Investors Look Abroad
By PAUL SULLIVAN
Published: November 19, 2010
Well-heeled American investors have been doing something lately that they resisted for decades — becoming more like their European, Asian and Latin American counterparts and substantially diversifying their portfolios outside their home country.
“I’ve never seen a period in which clients have expressed such an interest in nondollar investments,” said Kent Lucken, managing director at Citi Private Bank. “People are spreading their chips around more prudently and I think more wisely.”
What is different is how directly these investors are going into non-American markets. They are not content with buying international equities or going into an international bond fund. They are looking to invest directly in Chinese private equity, Indian real estate, Brazilian equities denominated in reals and Australian government bonds. They are also opening cash accounts in multiple currencies.
“International clients understand the need to diversify currencies, but this is something new to U.S. clients,” said David Frame, global head of alternative investment at J. P. Morgan Private Bank.
The people putting as much as 40 percent of their portfolios into nondollar investments are quite wealthy. But consider it this way: What can investors of more modest means learn from what the wealthiest people in the country — with the best research and advice at their disposal — are doing with large portions of their fortunes?
UPSIDE Investors who lived through the 1990s will remember the crises in Asia, Mexico and Russia that shook global capital markets. Investing internationally has always carried risks and it is by no means without perils today.
But many investors see a different trade-off, one based as much on a stagnant or declining United States as on certain international markets that are growing, if not booming.
“When you make an investment in nondollar currencies, you’re making two investments at once,” said Tony Roth, head of investment strategies at UBS Wealth Management. “You’re betting the dollar will go down, but you’re also buying another investment. You need to be compensated for that source of risk.”
He cited the example of buying a one-year Australian government bond, yielding 5.25 percent. He said he believed that the American dollar was going to lose value and the Australian dollar was going to gain it. That’s Part 1. Part 2 is that the Australian government is stable, so an investor can count on receiving that 5 percent annual return. The alternative is less than half of a percent if invested in United States Treasuries.
“I’m going to receive a return,” he said, “that more than compensates me for the marginal risk I’m taking.”
But there are far more risky investments. And the ones that are less liquid — infrastructure in China, say, or a private equity fund in Brazil — carry more uncertainty. But like their equivalents in the United States, they provide a higher return, in theory.
Mr. Frame said clients were investing in Asian infrastructure and Asian private equity by pooling their money with other investors. “There is a lot going on when a country is growing and developing that is hard to address through the public markets,” he said.
While there’s an obvious "pull" to international investments, there is also a bit of a "push" out of the United States: investors who are making their portfolios more international are doing so because they believe that the role of the United States in the global economy is shrinking.
Mr. Roth said the United States contributed 40 percent of global gross domestic product 15 years ago and now contributed 21 percent. He predicted that that figure would fall to 12 percent in another 15 years. Going along with this is the shrinking market capitalization of American stocks compared with global stocks.
“We have the U.S. experiencing flat to 2 percent G.D.P. growth, but you have Brazil, India and China with substantially higher rates,” Mr. Lucken said. “Equity investors are investing abroad to capture higher returns and invest ahead of higher growth rates.”
DOWNSIDE The biggest risk is uncertainty, followed by a lack of knowledge. No one knows exactly what is going to happen, and there are always investors who rush in too quickly without fully understanding the risks.
Those risks run the gamut from income inequality that could create unrest, to legal systems that have not been tested by foreign investors, to managers abroad without established track records.
There is also the unforeseen. “I witnessed firsthand the collapse of the Soviet Union,” said Mr. Lucken, a former foreign service officer. “That speaks to the unique political risks in smaller developing countries.”
Also, South Korea and Brazil, which are now darlings of investors, were shaken by crises in the 1990s. “The history of success has been relatively short — the past 10, 12 years,” said Christopher J. Wolfe, chief investment officer for the private banking and investment group at Merrill Lynch.
But Mr. Wolfe said clients were investing across all asset classes when they invested internationally and that gave them greater diversification. It is also a big change from the time when “it used to be U.S. stocks and non-U.S. stocks,” he said.
Like all big changes, there are going to be fits and starts. But after what investors lived through over the last three years at home, some are willing to chance it.
http://www.nytimes.com/2010/11/20/your-money/20wealth.html?ref=wealth_matters
Buy American? Upscale Investors Look Abroad
By PAUL SULLIVAN
Published: November 19, 2010
Well-heeled American investors have been doing something lately that they resisted for decades — becoming more like their European, Asian and Latin American counterparts and substantially diversifying their portfolios outside their home country.
There are two reasons for this. The financial crisis and the slow recovery showed them that the United States was not immune to devastating crashes of the kind that wealthy people in emerging markets have tried to hedge against by investing abroad. And second, American investors are worried that their portfolios are going to suffer for the foreseeable future, given the size of the United States’ budget deficit, the weakness of the dollar and the uncertainty over the stock market.
“I’ve never seen a period in which clients have expressed such an interest in nondollar investments,” said Kent Lucken, managing director at Citi Private Bank. “People are spreading their chips around more prudently and I think more wisely.”
What is different is how directly these investors are going into non-American markets. They are not content with buying international equities or going into an international bond fund. They are looking to invest directly in Chinese private equity, Indian real estate, Brazilian equities denominated in reals and Australian government bonds. They are also opening cash accounts in multiple currencies.
“International clients understand the need to diversify currencies, but this is something new to U.S. clients,” said David Frame, global head of alternative investment at J. P. Morgan Private Bank.
The people putting as much as 40 percent of their portfolios into nondollar investments are quite wealthy. But consider it this way: What can investors of more modest means learn from what the wealthiest people in the country — with the best research and advice at their disposal — are doing with large portions of their fortunes?
UPSIDE Investors who lived through the 1990s will remember the crises in Asia, Mexico and Russia that shook global capital markets. Investing internationally has always carried risks and it is by no means without perils today.
But many investors see a different trade-off, one based as much on a stagnant or declining United States as on certain international markets that are growing, if not booming.
“When you make an investment in nondollar currencies, you’re making two investments at once,” said Tony Roth, head of investment strategies at UBS Wealth Management. “You’re betting the dollar will go down, but you’re also buying another investment. You need to be compensated for that source of risk.”
He cited the example of buying a one-year Australian government bond, yielding 5.25 percent. He said he believed that the American dollar was going to lose value and the Australian dollar was going to gain it. That’s Part 1. Part 2 is that the Australian government is stable, so an investor can count on receiving that 5 percent annual return. The alternative is less than half of a percent if invested in United States Treasuries.
“I’m going to receive a return,” he said, “that more than compensates me for the marginal risk I’m taking.”
But there are far more risky investments. And the ones that are less liquid — infrastructure in China, say, or a private equity fund in Brazil — carry more uncertainty. But like their equivalents in the United States, they provide a higher return, in theory.
Mr. Frame said clients were investing in Asian infrastructure and Asian private equity by pooling their money with other investors. “There is a lot going on when a country is growing and developing that is hard to address through the public markets,” he said.
While there’s an obvious "pull" to international investments, there is also a bit of a "push" out of the United States: investors who are making their portfolios more international are doing so because they believe that the role of the United States in the global economy is shrinking.
Mr. Roth said the United States contributed 40 percent of global gross domestic product 15 years ago and now contributed 21 percent. He predicted that that figure would fall to 12 percent in another 15 years. Going along with this is the shrinking market capitalization of American stocks compared with global stocks.
“We have the U.S. experiencing flat to 2 percent G.D.P. growth, but you have Brazil, India and China with substantially higher rates,” Mr. Lucken said. “Equity investors are investing abroad to capture higher returns and invest ahead of higher growth rates.”
DOWNSIDE The biggest risk is uncertainty, followed by a lack of knowledge. No one knows exactly what is going to happen, and there are always investors who rush in too quickly without fully understanding the risks.
Those risks run the gamut from income inequality that could create unrest, to legal systems that have not been tested by foreign investors, to managers abroad without established track records.
There is also the unforeseen. “I witnessed firsthand the collapse of the Soviet Union,” said Mr. Lucken, a former foreign service officer. “That speaks to the unique political risks in smaller developing countries.”
Also, South Korea and Brazil, which are now darlings of investors, were shaken by crises in the 1990s. “The history of success has been relatively short — the past 10, 12 years,” said Christopher J. Wolfe, chief investment officer for the private banking and investment group at Merrill Lynch.
But Mr. Wolfe said clients were investing across all asset classes when they invested internationally and that gave them greater diversification. It is also a big change from the time when “it used to be U.S. stocks and non-U.S. stocks,” he said.
Like all big changes, there are going to be fits and starts. But after what investors lived through over the last three years at home, some are willing to chance it.
http://www.nytimes.com/2010/11/20/your-money/20wealth.html?ref=wealth_matters
Hunting for Returns Abroad
Are overseas investments worth the risk? Which ones can be part of the mix for a prudent investor?
Wealth Matters
Paul Sullivan writes about strategies that the wealthy use to manage their money and their overall well-being.
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