Why Do Hedge Funds Earn So Much?

Hedge Funds are major players in the modern financial system and hedge fund managers earn substantial sums of money. The Rational Irrationality Blog over at the The New Yorker has two posts which provide a variety of explanations as to why hedge funds earn so much - click here and here.  

Should MAS Went into Bankruptcy? (May 2014)

This is really a multi-billion ringgit question. Since MH370 flew to the great Indian ocean, the share price of MAS also went that deep down under. It has fallen to as low as RM0.15 on 19th May 2014, the lowest level in at least 10 years. It was the most actively traded penny stocks in Bursa Malaysia for past few days.

What should be the best solution for MAS ?

The plunge that day was due to reports saying that Prime Minister is exploring the possibility of letting MAS to file for bankruptcy. Would it be a wise move? Let's us look at a few more alternative ways to rescue MAS financially.

1. MAS to raise capital via private debts, be it issuing new shares or bonds.
   Easy to issue, but who is going to subscribe for it? In order to make it attractive enough, the bond paper must be backed by government and offering above than average yield. Higher yield means higher financing cost for MAS.
   
   
2. MAS to sold off its assets.
   After various rounds of turnaround plans, what assets still left other than those airplanes? Some more, were those assets have such significant value attached to it... still?
   
   
3. Borrow money from financial institutions.
   Here, I really have to pity those banks whom already borrowed money to MAS. If not because of this "government-linked company" status, I believe they won't borrow at all without a favorable interest charged.
   
   
4. MAS sold down its equity stakes, or being privatized.
   As a national carrier, partnering with another foreign carrier? You must be joking... Unless, it was being privatized and government ceased as shareholder. But, once government letting go his hands, would anyone interested to take over MAS?
   
   
5. Government continue pumping in money.
   Well, this is in fact the most common way seen in Malaysia. Being a GLC, MAS has this privilege since it was being incorporated. But, rakyat already started to voice their concern on how government spend money, especially on those consistent loss-making companies. It was like continue throwing money into Indian ocean once again.

Moreover, the business of MAS already dropped 60% since the missing of MH370. Coupled with a total net debt of around RM7 billion, how long can MAS survive? If government wants to preserved the national icon status, they must ready to pump in another few billion ringgit without money-back guaranteed.

In our opinion, filing for bankruptcy is indeed a wiser move for all parties (other than banks), sorry to say that. This is the only fastest way to clear all the current bad debts and start all over again for MAS. If Japanese airline JAL can done it successfully few years back and making profit now, why not MAS ?

YA2013 Special Tax Relief ?

I know I know. This may sound too late for you, but I'm sure there are many of you out there are last-minute taxpayers. Even said so, for those of you already filed for your 2013 personal income recently, do you realized that there is this "Special Relief" ?

Example to show the stated "Special Relief" under tax summary page

What's that?

Am I entitle for it?

This special relief is given to those with chargeable income of less than RM96,000. This works out to be RM8,000 average monthly income. If you're earning less than that, for sure you're entitle for this special relief.

How much is that?

It was fixed at RM2,000 special relief to all qualified tax payers.

Happy e-filing ( I hope the system won't down...)

New Fund: CIMB-Principal Global Multi Asset Income Fund

Are you looking for a fund that's truly diversified? Look no further. With this new fund, it offers income from a range of different asset classes comprising of global equities and global fixed income securities.

Furthermore...

You will be investing in a fund which is designed to take advantage of yield opportunities in whichever geography or sector they arise. That's why it's truly diversified and you can even ride on the recovery of US and European markets.

How this fund works?

In order to achieve the objective, the fund will invest at least 95% of the money into Schroder International Selection Fund Global Multi-Asset Income (the Target fund).

So, by investing into this fund, investors are expected to:-

• aims to receive income and potential capital growth over medium-to-long term
• captures income opportunities from global equities and bonds
• unconstrained approach with an active asset allocation strategy and flexibility across asset classes
• Gain from an income seeking risk solution using active risk management with 5%-10% p.a. target volatility

Click here to download the fund prospectus.

NEW Base Rate: Good or Bad ?

When Bank Negara Malaysia (BNM) announcing that the new Base Rate will replace the current Base Lending Rate (BLR) starting 2015, many people doesn't know what's that. Is it a good thing or is it just another gimmick to increase the lending rate?

Here, Finance Malaysia Blog hope to answer some of the queries posted by our followers...

First, let us figure out why BNM wanted to change the reference rate. It was being told that the objective is to promote better transparency, pricing discipline and efficiency among financial players.

Second, how was the new Base Rate being determined?

Third, good or bad ?

In fact, it was a good thing to retail borrowers since the new Base Rate would be partially determined by efficiency of financial institutions. Finance Malaysia opines that those big banks will have a better pricing power compared to smaller banks, because their cost of funding is usually lower via current/saving account (CASA). That's the cheapest cost of funding for any banks, other than Fixed Deposit.

Would it affect the existing loan borrowers?

This is the question most of us concerned about. But, BNM said the new Base Rate "should not" have an effective impact on existing loan borrowers. Of course, it was different story if the borrowers refinance their existing loan, either it's personal loan or housing loan.

New Fund: HWANG SELECT JAPAN QUANTUM

Did you missed out on the bull run of Japan market last year? Can't find any pure Japan fund in local unit trust funds? You no need to wait anymore with HwangIM launching the 1st Japan Fund in the market for investors to get exposure to pure Japanese market.

The Hwang Select Japan Quantum Fund is an equity fund that seeks to provide capital appreciation over the medium to long term period. It invests in undervalued Japanese companies with growth potential.

3 Reasons Why this Fund ?

1. Growth Opportunities from the Return of the Samurai, with "Abenomics"
   
   
   
   
   
   
   
   
2. Catalysts (Improving Business Environment and Employment Rate, Tokyo Olympics 2020)
   
   
   
   
   
   
   
   
3. Strength and Knowledge of NIKKO AM

After in  sleeping mode for more than 2 decades, Japan is waking up again to become ultimate rising sun country of the world. If you think that Japan's future is still promising for the next few years, you may consider to diversify into this fund.

Source: HwangIM

Click here to download prospectus

The Edge-Lipper Fund Awards 2014: Who's the BEST among all?

For unit trust industry, The Edge-Lipper Fund Awards was an annual event to showcase their best performing funds. It was like Oscar Awards for unit trust fund houses. This year there were a total of 47 awards presented. Who is the BEST ?

Let's refer to below table:

And the BEST Group Awards goes to...

Congratulations to Amanah Mutual Berhad !!!