Wednesday, August 12, 2015

KLCI: 1500 Coming Next!

KLCI 1500 level in the making! 

YES, if fail to breakout from 168x in short term.

I expect a rebound from this level 161x as technically is oversold. 
Recommended to sell stocks upon rebounding/reaching 168x-1700. 
Watch for any breakout or failure is recommended before any buy entry.

Overall short term market is bearish as for now... :-(

Good Luck!

Thursday, August 06, 2015

Ringgit Fighting A Double Edged Sword

KUALA LUMPUR: Declining oil prices coupled with China's struggling economy have largely contributed to the depreciation of the ringgit, economists said. 

Malaysian Rating Corp Bhd chief economist Nor Zahidi Alias said the crude oil price, which dipped to US$50 per barrel recently, did not augur well for the Malaysian economy. 

"Declining oil prices sparks speculation of lower government revenue, hence larger-than-initially anticipated budget deficits," he told Bernama. 

Lower oil prices have also exerted pressure on Malaysia's external trade which has recorded a negative growth in the first five months of this year, he said. 

This would in turn, trims the country's current account surplus and triggers concerns over the possibility of "twin deficits", he said. 

"Malaysia's gross domestic product growth for 2015 may also be adversely affected if oil prices remain low throughout the year, inducing additional capital outflows, especially if portfolio investors become less sanguine about the prospects of corporate earnings," he added. 

As for China, Zahidi said the sluggish economic condition would have a negative impact as it might dampen demands, resulting in a decline in imports from the country with 1.4 billion people. 

China remains Malaysia's largest trading partner with total trade of RM85.83 billion for the period January-May 2015 and hence, Malaysia's economy could still feel the heat of the slowdown, he said. 

Echoing the sentiment, Kenanga Research economist Wan Suhaimie Saidie said the bias for the ringgit was still on the downside in the short- to medium-term.

"We expect the ringgit's volatility to subside and stabilise around RM3.65-RM3.75 by year-end," he said, adding that the adverse impact of the Goods and Services Tax (GST) is expected to stabilise by year-end. 

On the external front, he said the global economy, led by the US, is expected to improve by year-end, with the start of the US Federal Reserve's rate hike, while the European Union and China' economy stabilise. 

Another analyst said there should be more efforts directed at further enhancing the economic fundamentals and diversifying into non-oil based revenues. 

"Although the implementation of the GST is a good start, there should be more efforts (directed) towards this," said the analyst who requested anonymity.

He said it would take at least one year for a country to gain the full benefit of any new tax regime such as the GST. 

Malaysia implemented the GST at the rate of 6% on April 1, joining 159 other countries, in the quest to provide a more transparent and systematic tax system. 

Prime Minister Datuk Seri Najib Razak, had on June 6, said that the slumping oil prices could have sent Malaysia into an economic crisis had the GST not been imposed. 

He said the new tax regime helped broaden the country's revenue stream to avoid a high reliance on oil revenues. 

A chief economist from research firm, who also wishes to stay anonymous, said the government should also instill more confidence in the market following recent changes in the country's political climate. 

Asli Centre Public Policy Studies chairman Tan Sri Ramon Navaratnam said the present political problems should not detract the government from paying greater attention and showing greater political will by taking the "bull by the horns". 

The government should regain the people and investors' confidence, he said.


Tuesday, July 28, 2015

S&P Reaffirms Malaysia's "A-" Rating, Stable Outlook

PETALING JAYA: Standard & Poor's Ratings Services (S&P) has reaffirmed Malaysia's long-term foreign currency sovereign credit rating at "A-", with a stable outlook, reflecting the country's country's strong external position and considerable monetary flexibility.

This comes a month after Fitch Ratings upgraded Malaysia's outlook to stable and maintained its credit rating at "A-" and just days after BNP Paribas had criticised Fitch on its Malaysia centric assessments. BNP Paribas had said that Malaysia is at risk of a "multi-notch downgrade" in sovereign credit rating due to the country's credit position.

S&P however stressed that the rating is based on the assumption that the political implications of 1Malaysia Development Bhd (1MDB) investigations will not interfere with sound policymaking. It believes that corruption allegations involving 1MDB will not impede current policy flexibility and responsiveness.

"We view Malaysia as having a high degree of monetary flexibility. The central bank's track record in controlling inflation indicates strong monetary flexibility that helps absorb major economic shocks," it said, adding that Malaysia has a deep domestic bond market, compared with its peers', which reduces its reliance on external financing.

S&P said the ratings are also underpinned by Malaysia's strong external position, a result of years of current account surpluses.

"We believe this position can withstand a slowdown in the oil and gas sector over the next two years. Likewise, external indicators are likely to remain unchanged, given our assumption of continued healthy trade surpluses," it noted.

It estimates average annual increase in general government debt at 2.9% of GDP over 2015-2018 versus an average of 6% over 2009 to 2012, and the country's budget deficit to narrow toward a balance by 2020.

S&P said the government's measures to cut petroleum subsidies and introduce goods and services tax (GST) will ease its debt burden.

S&P said Malaysia's general government fiscal position also carries contingent risks from its public enterprises and financial sector, which include guarantees on debts and letters of support.

"Within our forecast horizon, we do not believe such contingent liabilities will materialise significantly," it opined.

S&P said Malaysia's public enterprises have diverse financial profiles--some with strong free cash flows and sizeable liquid assets that, in the past, have been used to support other parts of the public sector.

Although the high household debt levels pose some risks, it believes that is somewhat contained by a banking sector that is well capitalized and has a good regulatory record.

"Our bank industry country risk assessment for Malaysia is "4", with "1" being the strongest assessment and "10" the weakest," it added.

S&P said Malaysia's capital market exposure to sudden funds outflow due to a sharp rise in holdings of ringgit-denominated Malaysia government securities to 28% as at end-2014 by non-residents, is contained by its expectation of continued sound policymaking, floating exchange rate, high foreign exchange reserves, the presence of large domestic institutional investors, and the deep local capital market.

For 2015, it expects a weaker ringgit to boost exports of manufactured goods, and partly offset the impact of lower oil prices on Malaysia's energy exports.

"We project Malaysia's average annual growth in real GDP per capita will be just under 4% over 2015-2018. We expect exports of manufactured goods and growth in private consumption and investment to drive this expansion," it said.

Meanwhile, secretary general of Treasury Tan Sri Mohd Irwan Serigar Abdullah said in a statement yesterday that the reaffirmation of Malaysia's A- sovereign credit rating by Fitch and S&P is a testament to the government's continuous effort in ensuring sound macroeconomic fundamentals and its commitment to strengthening public finances.

He stated that S&P has expressed confidence in Malaysia's responsive and effective policy making.

"In this regard, S&P believes that issues surrounding 1MDB will not hinder the government's resolve to pursue economic and fiscal reforms," he added.


Tuesday, July 14, 2015

Malaysia Ranked 6th In Global Foreign Investors’ Destination Attractiveness Index

KUALA LUMPUR: Malaysia is in sixth position in this year’s Baseline Profitability Index (BPI), climbing five spots from 11th place achieved in 2014. 

The BPI is a ranking of destinations of attractiveness for foreign investors, published by the Foreign Policy Magazine. 

Among ASEAN countries, only Malaysia and Singapore featured in the top 10, while Indonesia was ranked 12th, Vietnam (23), Philippines (30) and Thailand at the 38th position.

In a statement today, Malaysia Investment Development Authority (MIDA) said the ranking, which covered 110 countries across six continents, reaffirmed that Malaysia was an attractive profit centre in this region for investors. 

“The index sends a clear message that Malaysia provides a friendly business environment that makes it an attractive place to invest. 

“This ranking is based not only on historical conditions but also on expectations about conditions prevailing over the next five years,” it said. 

Chief Executive Officer, Datuk Azman Mahmud, said this endorsement dissolved lingering misperceptions and attested the country’s improving economic fundamentals and the government’s prudent, proactive and pragmatic policies to restructure and diversify the economy. 

“The ranking is a reflection of the continuous improvement in the delivery of public services and overall efficiency of the government machinery,” he said. 

The BPI uses a holistic approach based on eight factors that will affect the ultimate success of a foreign investment. 

These factors cover economic growth, financial stability, physical security, corruption, expropriation by government, exploitation by local partners, capital controls, and exchange rates. 

Its also incorporates changes made by the World Bank in its measurement of gross domestic product such as the revised method to compare living standards across countries.


Saturday, January 17, 2015

Are You Financially Prepared For 2015?

LET’S face it – the year 2015 promises a lot of uncertainties.

The upcoming implementation of the goods and service tax (GST) has been widely discussed from many angles. But to what extent will it affect us financially? No one can really be sure yet.

According to the Malaysian Institute of Economic Research, the economic outlook for 2015 will likely be mixed due to the fall in crude oil prices.

As it is, the rising living costs and removal of fuel subsidies have caused much concern among urbanites. On top of that, there is much speculation about the stock market performance this year. Could another global financial crisis be around the corner?

With all these factors to consider, the big question we need to ask ourselves is: Are we financially prepared for 2015?

Firstly, let’s skip that entire information overload.

The key to emerging from 2015 financially sound is to focus on one’s personal financial situation. Refrain from paying too much attention to the areas outside your personal influence as it may derail you from what actually matters. Instead, focus your attention on areas within your personal influence and aim to make a difference there.

By following these nine guidelines, you should be able to get your personal finances on track and withstand any unpredictability that the year brings with it.

Nine money optimisation guidelines

1. Start saving effectively. There are two methods of saving. One is where you spend off your monthly expenses and save what is remaining. As you may have guessed, this is an ineffective way to save.

More so, with the implementation of GST and the ensuing higher inflation rate expected in 2015, monthly household and personal expenses are bound to increase substantially – possibly leaving little to no savings.

A more effective approach is to save first and then spend the balance. Set a goal and force yourself to put aside a portion of your income to reach that goal before using the remainder for your expenses.

2. Actively look for suitable investment opportunities. The best return on investment (ROI) is one that beats the inflation rate. However, as long as you put your money into something that is performing better than the current rate, you are already optimising your money.

Set a bar for your ROI. For example, if you are looking to invest money from a fixed deposit, logically, your goal should be to look for something at least with higher returns than the fixed deposit.

On a more cautionary note, the investment environment for 2015 is expected to continue being volatile and unpredictable. Therefore, avoid high-risk investment deals such as small-cap shares, speculative properties and high risk unit trust funds. Look for opportunities that have a medium to low risk factor to avoid serious losses to your capital.

3. Compare and analyse investment options. Make apple-to-apple comparisons with other similar investment funds. If another fund is doing better than your current one, don’t hesitate to jump ship. Optimising your money is about tapping into the best returns possible (while minimising your risks).

4. Cut your losses and move on. Unless you are very lucky with your decisions, you are bound to come across an investment that may lose money. When this happens, it is essential to cut your losses and move on to something that is better performing.

Many tend to wait it out, hoping that the market will rebound, only to end up suffering from bigger losses, and losing out on the opportunity to optimise their money further.

5. Keep a cash reserve of at least six months of your expenses and monthly commitments. For retirees, put aside a cash reserve of at least three years. Cash reserves are important to grant you a holding power over your investments. Say, for example, you happen to buy into a solid investment at the wrong time, just before it takes a steep plunge. Without a cash reserve, you would have no choice but to sell out at a big loss should you be in dire need of money. But if you have holding power, you would be able to hold your investment and sell it off at a high profit – at best – or at a smaller loss – at worst.

6. Diversify your investments. Don’t put all your eggs into one basket. This may sound like a no-brainer, but you’d be surprised. It is almost human nature to put all your trust and money into one proven market. However, doing so opens you up to a big risk. What happens if that one market takes a sudden hit? All your work of optimising your money thus far would go down the drain.

Diversify your money and risk factors across other investments such as bonds, stocks, real estate, cash and commodities. That way, if one risk factor translates to reality, not all your investments would suffer the blow.

This strategy is especially important when the investment environment is highly volatile and unpredictable. Six months ago, no one would have predicted that crude oil prices could drop below US$50 and cause chaos to the financial world.

7. Always invest prudently and calculate your risks. Does your investment guarantee the return of your capital? Does the government regulate it? If it is a foreign government, is it stable? Is there a trustee in place to hold your investment? Do you know what percentage of your investment the trustee holds? All these are matters you should investigate and probe into before entrusting your money into an investment.

8. Minimise your insurance premiums. With the numerous insurance plans and even more convincing agents out there, we could very well be putting more cash than we should into insurance. As a rule of thumb, the total insurance premiums you pay in a year should not exceed 15% of your gross annual income.

9. Contain your mortgage interest cost. Mortgage interest rates are hard to predict, and could affect your finances drastically if left unnoticed. Housing loan interest rates are expected to increase in 2015. You can counter the impact by opting for a fixed interest rate loan. While the interest rate would be slightly higher, it will remain secure throughout your repayment, which will be beneficial toward your long-term financial planning.

When interest rates do rise, you can choose to pay a higher monthly instalment to ensure that your loan can be paid off within the original period. This, however, should be a carefully-considered decision as it could affect your cash flow and your money optimisation. Alternatively, consider using your liquid investments that are earning lower investment returns than the prevailing interest rate to pay off your mortgage.

To conclude, I would like to reiterate that the above pointers act as a general guideline for the upcoming year. While it is advisable to follow the financial recommendations mentioned here, everyone has different lifestyles and financial goals that they want to achieve.

No cost is too small to overlook. A small mistake now could affect your finances significantly during your retirement years.

To ensure you reach your financial goals smoothly, it is advisable to develop a tailor-made and holistic financial plan to help you optimise your money and meet your financial goals.

With that, I wish you all the best for your money optimisation in 2015!

Yap Ming Hui ( is a best-selling author, TV personality, columnist and coach on money optimisation. He heads Whitman Independent Advisors, a licensed independent financial advisory firm.