New Fund: AmConsumer Select - Capital Protected

AmInvestment Bank is launching a new capital-protected fund and it is optimistic of a good take-up rate for this RM100mil new fund. According to its CEO, the launch of the fund is timely in view of the current macroeconomic uncertainties. Since it is capital protected, the fund offers a safe haven for risk-averse investors looking to hedge against the uncertainty in the global market, she adds.

The Fund is a close-ended fund which aims to provide regular income with an investment horizon of 2.5 years (30 months) whilst providing capital protection on Maturity Date. The Fund seeks to achieve its objective by investing in ZNIDs and/or MGS and an over-the-counter option linked to the price movement of a basket of five (5) consumer related stocks.

For the purpose of the Fund, consumer related stocks refer to stocks of companies that produce products/services that are consumed by individuals. Selection of consumer related stocks is based on fundamental strength of the companies through internal research and brands that the Manager considers to be widely known among investors.

The Strategy...

Generally, the Fund will adopt a two-fold strategy to achieve its objective, i.e.

1. Capital protection* from fixed income portion
   At the Fund’s commencement, a minimum of 85% of the Fund’s NAV will be invested in 2.5-year ZNIDs and/or MGS with shorter or similar maturity tenure to the Fund’s maturity, which upon maturity of the Fund will achieve an amount equivalent to 100% of investor’s initial capital (which includes entry charge payable by investors). A maximum of 5% of the Fund’s NAV will be maintained in cash and/or money market instruments for liquidity purposes.
   
   
   
2. Fund’s return from option portion
   At the Fund’s commencement, up to 10% of the Fund’s NAV will be used to purchase a 2.5-year USD denominated option with an option counter-party, which is a financial institution carrying a minimum long-term rating of “A” by S&P or the equivalent rating by any other global rating agency. The option provides exposure which is linked to the price movement of a basket of five (5) consumer related stocks.

At the end of each quarter, if the closing price of each of the stock is at or above its respective initial level on any day within the quarter, the option counter-party pays a conditional coupon. The income distribution (if any) will however be paid half yearly to investors.

The basket of five (5) consumer related stocks (indicative selection only) currently identified as

follows:

If the Coupon Payout Condition is met at any quarter, the coupon payout from the option

counterparty is calculated as follows:

Coupon (RM) = (Notional Amount / USD/RMInitial) x coupon rate (settled in USD) x

USD/RMEnd

• “USD/RMInitial” refers to the USD/RM exchange rate for the determination of the Notional Amount in USD as at Commencement Date.
• “USD/RMEnd” refers to the actual USD/RM exchange rate for conversion of the coupon (received by the Fund) from USD to RM.

* Investors are advised that the Fund is not a guaranteed fund. Capital protection is provided through investments in ZNIDs and/or MGS and not by a guarantee. Consequently, the return of capital is SUBJECT TO the credit/default risk of the issuers of the ZNIDs and/or MGS and may result in losses.

Source: AmMutual

IPO: Gas Malaysia

Gas Malaysia Berhad (GMB) was established to sell, market and distribute natural gas and Liquefied Petroleum Gas (LPG). GMB is also responsible for the construction and operation of the Natural Gas Distribution System (NGDS), which is a system comprising 1,800km of gas pipelines and stations within Peninsular Malaysia owned by GMB. NGDS is connected to the Peninsular Gas Utilisation (PGU), which is the gas transmission pipeline across Peninsular Malaysia owned and operated by PGB.

GMB’s core business to sell, market and distribute natural gas to industrial, commercial and residential customers in Peninsular Malaysia via NGDS. In other words, GMB purchases natural gas from PGB and sells to GMB’s own customers at a profit margin. There are currently two players in Peninsular Malaysia’s natural gas distribution industry, comprising GMB and PGB. However, both serve different sets of customers, whereby GMB’s customer base consists of users that initially consume less than 2 MMScfd, whereas PGB supplies to PETRONAS customers consuming more than 2 MMScfd. Customers that initially consume less than 2MMScfd but subsequently increase their consumption exceeding 2MMScfd will remain as GMB’s customers.

Like a toll road?

Looking at it from a slightly different perspective, GMB’s business can be compared to that of PLUS i.e. a toll road operator. Basically, consider GMB’s pipeline infrastructure as a highway, while the “toll” is GMB’s absolute gross margins, i.e RM2.02-2.25, while the “cars” represent the volume of natural gas supplied to GMB’s customers. We believe this comparison is fair, as GMB does not bear the risk of volatile natural gas prices as it buys and sells natural gas at regulated prices. As such, further growth in GMB’s sales volume would further improve its economies of scale given that other costs are largely fixed administrative costs.

In February 2012, GMB signed a New Gas Supply Agreement (NGSA) with Petronas whereby effective from 1 January 2013, the maximum limit for GMB to supply to its customers individually will increase from 2 MMScfd to 5 MMScfd. The NGSA has a 10-year tenure with an option to extend for an additional 5 years. In addition, GMB also supplies LPG to consumers in Peninsular Malaysia.

Strong cash pile, 100% dividend payout for FY12. Management indicated that it will spend RM140-RM150m in FY12 for the expansion of GMB’s Natural Gas Distribution System and RM40m p.a. in both FY13 and FY14 for maintenance purposes. We think that it is possible for CAPEX to be funded internally, judging from the group’s huge cash pile of RM327m and retained earnings of RM360m as of Dec 2011. Besides, GMB is also committed to paying out 100% of its FY12 net earnings as dividends and it is targeting a minimum payout ratio of 75% from FY13 onwards.

Source: TA Securities, OSK Research, RHB Research Institute

Euro 2012 Football Championship: Poland's Economy Scores

It's football season again. This round we have EURO 2012 Championship which will kick off on 8th June 2012. Are you ready? Before that, let us look at the championship from financial perspective. Don't care who will win the championship, Poland already emerged as the winner financially. Why?

The UEFA European Football Championship has taken place every 4 years since 1960. For the first time in history, Poland and Ukraine have scored the chance to co-host the Euro 2012 Football Championship. Despite high set-up costs for the two emerging economies, both countries are likely to experience long-term economic benefits.

The Statistic and Requirements:

• Estimated 670,000 football fans will pack into the new stadiums
• Around 1.5million spectators at fan zones only
• Minimum requirement capacity of 30,000 to 50,000 spectators for infrastructure and modern stadiums
• Sufficient parking possibilities, hospitality facilities, luxury hotels and training facilities was needed
• Required transportation infrastructure linking the host cities must be modern, well developed and meet UEFA's high quality expectations

Challenging Requirements Boost Economic Growth

As a result of the increased government spending, Poland's unemployment rate has improved significantly. In addition to modernization costs, safety costs of almost USD 1 billion will push the total bill for the event to over USD 10 billion in Poland's case. The majority of the modernization bill has been allocated to motorway construction to connect the hosting cities and surrounding countries.

Poland to Benefits from Euro 2012

The investment spending of over USD 10 billion will be beneficial for Poland, as long as the increase in GDP directly or indirectly allocated to the football championship tops the costs. Four main sources of possible additional income exist:

1. Extra spending by tourists and local population during the event
2. Extra spending generated after the event as a result of tourists visiting the host countries and cities
3. Benefits resulting from the upgrade of the various infrastructure programs
4. Benefits resulting from presenting the country and its economy in a positive light

Based on outcomes of earlier football championships, a study commissioned by the UEFA estimated extra spending during the event at around USD 300 million and USD 250 million thereafter. However, it is likely that, for emerging countries such as Poland, the benefits of major sporting events are much greater than for developed countries. While the publicity from major sport events is the same for developed and emerging economies, the marginal profit is expected to vary substantially. Developed economies are already well known as holiday and business destinations when hosting such events, but emerging countries may attract many more investors and tourists.

Long-Term Benefits for the Equity Market

Since very few major sporting events have been hosted by emerging market countries, the possible impact on the economy and on the stock market is difficult to estimate. However, it is likely that in addition to the attractive fundamentals of emerging markets such as high growth, low debt and favorable demographics, the access presented to a wide range of potential investors and tourists could give the country's economic development a significant boost and result in sustainable long-term growth perspectives. Poland and the Ukraine are likely very much aware of the possible long-term opportunities arising from hosting the UEFA European Football Championship this year and aim to create history together by hosting this major event.

Source: Credit Suisse

Why All of Us Must Care about 1Care Malaysia?

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

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

But...

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

What are the concerns?

1. Each person in different sector have different risk level. How to determine the amount of contributions of each contributor?
   
   
2. Subsequently, how to determine the benefits package each individual entitled to? If the benefits was based on the amount of contribution, then, our existing insurance system already functioning very well now.
   
   
3. Then, you can say that it was community-rated, not risk-rated. That's mean rich are subsidizing the poor, economically active to passive system. But, doesn't rich already pay taxes to government to subsidize them currently?
   
   
4. Level of services of hospitals and choices of hospitals. Can we seek treatment at any hospital, be it general or private hospitals? If not, it will again limit our choice.
   
   
5. Choice? Emm. The proposed 1Care is being made compulsory to all employees and employers to contribute (except government servants). Wait!!! Does this mean that private sector is subsidizing public sector?
   
   
6. A government agency was being set up to manage the pool of money collected from all of us. OMG!!! We are talking billions of ringgit per year. It's a huge huge huge amount which could bought over CIMB bank!!!

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

1. Private sector. If the said 10% mandatory contribution by each employee is true, most salary based person will switch to personal loan, I think.
   
   
2. Retailers will suffer badly from less disposable income after the mandatory deduction of salary. No more 25% drop in car sales anymore. It's probably 90%.
   
   
3. Property market will slump. Don't forget that our loan applications now is based on net salary, which means deducting your 11% EPF + 10% 1Care + Socso + Tax. How much left?
   
   
4. Private healthcare system. Private hospitals have to lobby smartly to get involved in 1Care system to remain in business. Monopoly game means you have to "pay" more? Good Luck.
   
   
5. Private insurance companies and its agents. A big chunk of their medical policies will be terminated and a big chunk of premiums will flow to the new set up government agency. Thousands of agents will struggle to survive.

Then, why Government proposing 1Care Malaysia? Emm. I got many input from friends and professionals and below could be the 3 reasons behind 1Care:

1. Diversifying the problems of public healthcare system to private healthcare, so that private healthcare was forced to collaborate.
   
   
2. Reducing Government's burden, thus reducing budget deficit, by imposing mandatory contribution from everyone. For us, it's just like another form of income tax.
   
   
3. Hijacking the lucrative insurance business which was dominated by foreign companies (etc. Great Eastern, Allianz, AIA, Prudential, ING...) especially on medical policies. With 1Care, it could effectively grab the market share from them, entrusting government agency as the undisputed largest insurance company in Malaysia.

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

The Longest Wait For A Food Stall In Ipoh

I probably never did write much about this food stall because its already soooo damn hard to get food here. Normally I have to wait 30 minutes at least. Well, thanks to the CNY holidays, its more like 1 hour for my bowl of curry mee (Ipoh style).

Is this the most sought after hawker food stall in Ipoh, probably. Why, its got this silly combination of chicken, mee, meehoon, its distinctive curry soup base, barbecue pork, a bit of pork parts, the crunchy siew yoke ... all topped with its stupefyingly good curry oil mix. Its all in the curry oil mix.


A HK entrepreneur  bought the sole rights to sell the same stuff in HK for an undisclosed sum, its still doing roaring business in HK. I think they still ship the curry oil mix over.


If you are there, you gotta take a look at their menu ... its damn original.

Still, one hour is still worth the wait. Don't know what it is, its intoxicating, spicy and pretty hot, plus addictive ... but damn slow service man!!!

Restoran Xin Quan Fang[新泉芳咖哩面茶餐室]

Add. 174 Jln. Sultan Iskandar Shah, 30300, Ipoh.

contact no. 016-5314193

Interviewing International Super Model Amber Chia

Finance Malaysia is very pleased to be able to interview Malaysia's Super Model Amber Chia, who had already making a name for herself in Modeling. When given the chance to interview, Amber Chia had always been Finance Malaysia's mind. In fact, Amber is an icon of the industry nowadays. She even forays into international scene, bringing Malaysia's image with her.

Amber's Story

From her small town roots in East Malaysia to her domination of the local modeling scene, Amber Chia embodies the classic fairy tale rise to fame. After moving to Kuala Lumpur at the early age of 17, Amber was quickly able to make a name for herself within the local modeling scene. Her charming personality and distinct look hastily ensured her place amongst the countries elite. Amber proved her international appeal by securing a contract with Guess Watches International in 2004 and has since used this as a platform to propel herself into other mediums such as movies and television. (AmberChia.com)

The Lovely Interview...

1. Being a Model, TV Host and Actress, which one do you think that is the most challenging task for you? And, why?
• Basically, everything new to me sometime would be challenging. If you really want me to select, I would say being a model. Why? This is because modeling is the first task that I faced the world, be it on the stage, in front of TV and camera. In fact, being a model had gained me different experiences which could then be useful for being a TV host and actress. Yes, modeling is my answer.
  
2. You had ventured into business and started Amber Creations and AmberChia Academy. What drives you to become a businesswoman?
• I am not young anymore. Haha. I wanted to plan for my future too. I love this entertainment industry, and before venturing into business, I had been in this industry for 14 years. I started Amber Creations (event management company) and AmberChia Academy, and these are not new to me either. These businesses closely related to what I am practicing all this while. And, this is the best of me.
  
   
  
• AmberChia Academy was set up with the aim of grooming the next top super model. I am very passionate about it, and hopes to nurture ones talent just like Amber Chia did.
  
3. The following questions touched on your personal money matters. What is your view on Insurance
• For me, insurance is something compulsory, it's not optional. My insurance plans includes everything ranging life, medical, accidental and retirement. You must be mindful of your loved ones when something unfortunate event happens to you. Insurance is very important to us, especially if a family was set up.
  
4. How about Investment?
• On investment, I had started planning, and started my baby education fund. I am investing in properties. As usual, location location location is the most important rule in property investing. All of my investment is in Malaysia. I don't invest in overseas because I only did what I knew best. For me, I am not confident in overseas investing.
  
5. Any words for our readers?
• Dear readers, we must save money for our future. We should save, invest and spend on essential items. Do not overspend. Learn and enhanced our skills and knowledge in personal money management is crucial. Good luck.

Finance Malaysia takes this opportunity to thanks Amber for her time spent on this interview, and wishes her good luck in her career and businesses. We hope that this article could inspire Malaysians to excel further in their future.

Still not enough on Amber Chia?

Click here

Personal Income Tax: Child Relief

When we are having children, it's a gift from God. And, Malaysia is a blessed place to live, a place where no earthquake and volcano. Although we once hit by tsunami, but it brings minimal effect to us. Thank God.

In line with the effort to increase Malaysian workforce, in achieving self-sustainable economy with strong domestic consumption, Government has laid out several tax relief especially meant for child. Dubbed as one of the "major investment" of a family, raising up a child could easily cost a family few hundred thousands (if not millions). Let's take a look at some of the tax advantages of having a child.

Child Tax Relief

Married couple can claim child relief of maintaining any child. The children can be their own child, step child, or legally adopted child. Then, there are subdivided into 4 different categories.

Source: IRB, Finance Malaysia Blog

Generally, parents can claim tax relief of RM1,000 per unmarried child per year, until he or she turns 18. An unmarried child who is over 18 and continuing full-time education at a secondary school, he or she entitles the parent to a RM1,000 tax relief.

Meanwhile, parent may claim a tax relief of RM4,000 once the child is 18 and above, and pursuing full-time tertiary education (diplomas and above qualifications) locally or overseas. The said tertiary education must be a program and in Higher Education Institute that is accredited by related Government authorities.

For those unfortunate Disabled child, the tax relief is RM5,000 per year as long as he/she is unmarried. Other than that, an additional relief of RM4,000 will be granted if the disabled child pursues a full-time tertiary education just as an ordinary child mentioned earlier.

Frequently Asked Questions

1. Is there a limit to the number of child entitled for child relief?
• There is NO limit to the number of child, but please take note that relief will only be given to unmarried child.
  
2. Can husband and wife claim for the same child relief?
• NO. Instead, the child relief should be claimed by either spouse who has the highest taxable income in order to minimize the tax payable. It should never be divided between husband or wife.

Source: IRB