ETP update: 10 Key Achievements (Nov 2012)

Below is the 10 key achievements highlighted by CEO of Pemandu, that demonstrates the positive inroads of the ETP:

1. Projects will be implemented within the 12 focused National Key Economic Areas (NKEA) and also implement 51 Strategic Reform Initiatives (SRI) to ensure competitiveness will flourish.
   
2. Whilst Malaysia's GNI per capita was only US$6,700 in 2009, it grew dramatically by 45% in 2011. (Target is US$15,000 by 2020)
   
   
3. GDP grew by 5.3% year-to-date. This is significant, considering Singapore's growth of only 1.3% while neighboring countries recorded the following GDP growth:
• Thailand 3.0%
• South Korea 1.6%
• Taiwan 1.0%
• Hong Kong 1.3%
  
4. Economy continues to grow to reach new GDP and GNI records in 2011, with Government achieved its highest revenue in history with RM185 billion in 2011, allowing the Government to implement many programmes, including those under GTP such as BRIM1 and BRIM2.
   
5. Private investment continues to achieve robust growth. As of Sept 2012, private investment grew by 25.5% yoy, reaching a new record of RM112.2 billion.
   
   
   
6. Domestic private consumption continues healthy growth of 8.2% year to date, an evidence of growing disposable income by Malaysians.
   
7. FTSE Bursa Malaysia KLCI market capitalization scaled new historic high on 1st Nov of 1,675.69 points, with market capital Rm1.46 trillion.
   
   
   
8. Consistent delivery of fiscal deficit reduction from 6.6% of GDP in 2009, 5.6% in 2010, 4.8% in 2011 and further reductions are planned in 2013 and beyond. Debt ceiling was capped at 55% of GDP.
   
   
   
9. Recognition of Malaysia's tremendous progress by external parties such as World Bank (ranking in Doing Business), AT Kearney's FDI confidence index, IMD World Competitiveness Yearbook, WEF Global Competitiveness and CNN ranked KL as 4th best shopping cities.
   
10. Achievements against the KPI were at 123% in 2011 and 94% this year

Source: etp.pemandu.gov.my (summarized by Finance Malaysia blog for ease of reading)

EPF Flexible Age 55 Withdrawal

As all of us know, Employees Provident Funds (EPF) is meant for our retirement savings which helps us go through our golden years. However, statistic shows that most of the contributors opted for full withdrawals at age 55 and finished it all within a period of 10 years.

In addressing this issue and encouraging contributors to keep their savings longer, EPF has launched a campaign to promote awareness on their "Flexible Age 55 Withdrawal Scheme". How flexible is it? If you're one of the to-be-retiree, then this post more than relevant to you. Read on and share this with other contributors if you think that this might be useful for them.

How does "EPF Flexible Age 55 Withdrawal Scheme" works?

By opting the scheme, contributors could withdraw part of their savings at any one time or make monthly withdrawals or a combination of both options. This is how flexible it is where you can vary the frequency and withdrawal amount anytime. In other words, withdraw only when you need it, otherwise, just left it with EPF to continue accumulate with compounding dividends for a longer period.

To elaborate further, the eligible combination withdrawal method are as follows:

1. Withdrawal of a partial amount of your savings & retain the balance in your EPF account
2. Withdrawal of a partial amount of your savings & transfer the balance for monthly payments
3. Withdrawal of a partial amount of your savings & transfer a partial amount for monthly payments while maintaining the balance in your EPF account;
4. Transfer your entire savings amount for monthly payments.

Members can submit the application within 6 months before age 55, according to the date of birth. However, payment will be made within 5 working days after reaching the age of 55.

Withdrawal Amount Eligibility

Minimum withdrawal amount for partial withdrawal is Rm2,000. Meanwhile, let's have a look at Monthly Payment Withdrawal as below:

• You may choose monthly payments with the minimum amount of RM250.00 per month for a minimum period of 12 months.
• The minimum amount that can be transferred as monthly payments is RM3,000.00.
• You need to determine the total monthly payment amount, the amount per month, the number of months and the payment commencement month.
• The EPF will transfer the total withdrawn amount into a special account. Crediting will be made into your bank account every month according to the amount and number of months applied.
• Payments will be made on the 25th of every month.
• The number of months for the monthly payments do not go beyond your age of 75 years.
• You may cancel this withdrawal any time.

Is it very troublesome?

In order to opt for the said withdrawals, you would need to prepare the following documents only:

• MyKad
• For payment via direct crediting to member’s bank account:
• Bank passbook or Saving/Current account statement
• Owns an account with the panel bank appointed by EPF
• The bank account must still be active
• Your identification number matches with the bank’s record
• Payment is made in Ringgit Malaysia
• Otherwise, payment will be made via banker’s cheque

Should you have any enquiry or require additional information regarding this withdrawal, kindly contact:

• Any EPF Office nearest to you;
• The EPF Call Management Centre (CMC) at: 03-8922 6000
• Customer Feedback: http://enquiry.kwsp.gov.my

Source: EPF website

What is US "Fiscal Cliff" actually?

When everyone thought that US and the world will be better if Obama won his presidential re-election again, world equities markets today declines with US being the most serious market by dropping more than 2%. What's the reason? Answer: Fiscal Cliff ?

Hmmm... Then, what is fiscal cliff actually which many of us on the street do not even heard about this new term before. No worry, Finance Malaysia blog did his homework over here. Share this out if you like.

Understanding Fiscal Cliff...

The US fiscal cliff refers to the effect of a series of enacted legislation which, if unchanged, will result in tax increases, spending cuts, and a corresponding reduction in the budget deficit. With Obama retaining the presidency, it sends the signal that it's US government policies will pretty much stay the same as previous 4 years. Ben Bernanke will stay as Fed chairman, which also meaning that the open-ended liquidity and bond buying programs will continue, fueling risk taking appetite of equity and fixed income markets for the foreseeable future.

Budget deficits, projected through 2022. The "CBO Baseline" shows the effects of the fiscal cliff under current law. The "Alternative Scenario" represents what would happen if Congress extends the Bush tax cuts and repeals the Budget Control Act-mandated spending reductions beyond the end of 2012.

However, Obama has to resume his duties in a very likely divided congress, with Republicans controlling the House and Democrats controlling the Senate. With this political deadlock and the looming "Fiscal Cliff", that's the reason why US market sink this morning.

Good or Bad?

If you understand it, the so called "Fiscal Cliff" is not something bad, in which its purpose is to reduce budget deficit of US. What investors worried was the measures being taken will slow the already slow growth rate of US economy, subsequently the world economies including Asia. But, without the intention of reducing budget deficit of US, would you be more confident? Of course NOT, because US would never able to not walk out from the brushes. Right?

By now, you should be able to understand the term. Meanwhile, some analysts have argued that "fiscal slope" or "fiscal hill" would be more appropriate because while the cumulative economic effect over all would be substantial, it would not be felt immediately but rather gradually as the weeks and months went by. Hahaha...

Launching of Association of Financial Advisers (AFA)

31^stOct 2012 would be a historic day for Malaysia financial planning industry with the launching of newly formed Association of Financial Advisers (AFA) at Lanai Kijang, Bank Negara Malaysia. From now onwards, AFA will effectively represent all the Licensed Financial Advisers and Corporate Unit Trust Advisers (CUTA) Firms. The association is approved by Registrar of Societies on the 16th August 2012 with the support from Bank Negara Malaysia.

In conjunction with its launching, AFA also held its inaugural financial advisers conference titled “Charting New Frontier – FA the Future”. During the conference, audiences were empowered with up to date practices by Bank Negara and Securities Commission. Then, an interesting forum on the Future of Malaysia Financial Advisers Industry was discussed with everyone attentions. How we benchmark ourselves with other countries? We heard some success stories from Singapore and Hong Kong.

It was a successful milestone event for financial planners and CUTAs judging by the numbers of financial practitioners who attend the event. Product manufacturers, such as insurance and unit trust companies, started to realize the potential influences of financial planners and CUTAs in distributing their products and services. This signifies the bright future of financial planning industry moving forward, in line with the Capital Master Plan 2 by Securities Commission of Malaysia. There is no better time to be a licensed financial planner now.

This is a guest post contributed by Alex Yeoh, a licensed financial planner with VKA Wealth Planners. Finance Malaysia is glad to have Alex's input on financial planning matters. You may contact him via alexyeoh@vka.com.my

New Fund: AmTactical Bond

Still remember one fund called AmDynamic Bond fund? If yes, you definitely knew the superb performance of that bond fund, which had became the flagship fund for AmMutual for past years. However, it was sad that, since few months ago, no more subscription was being allowed for AmDynamic Bond fund because it has reached the maximum limit set by regulators. In other words, too hot the demand for that fund. Then how?

Because of that reason, AmMutual is proud to launch another new fund, AmTactical Bond fund, which was managed by using the same strategy, but with a little bit more flexibility. The Fund aims to provide income and to a lesser extent capital appreciation by investing primarily in bonds.

How Flexible is it?

The Fund seeks to achieve its objective by investing primarily in sovereign, quasi-sovereign and corporate bonds including convertible bonds. There is NO minimum rating for a security purchased or held by the Fund.

To construct the portfolio of the Fund, the Investment Manager will analyse the general economic and market conditions. The Investment Manager will also analyse and compare securities in terms of expected returns against assumed risk by analyzing credit rating and duration of the securities, where the Investment Manager will select securities that will deliver better returns for a given level of risk. In addition, the Investment Manager may also consider securities with a more favorable or improving credit or industry outlook that provide potential capital appreciation. The Fund’s investment is subject to active tactical duration management, where duration of the Fund will be monitored and modified according to interest rate outlook without any portfolio maturity limitation.

Asset Allocation

• 70% - 98% invested in bonds;
• 0% - 28% invested in other permitted investments; and
• a minimum of 2% will be invested in Liquid Assets.

AmTactical Bond is suitable for investors who:

• are willing to assume risks associated with investing in securities with long duration (i.e. there will be no portfolio maturity limitation) and low credit ratings (i.e. there will be no minimum rating for the securities purchased or held by the Fund); and
• have an investment horizon of more than three (3) years.

Click here to download the prospectus

Source: AmMutual

New IPO: Astro Malaysia Holdings

The Return of a Pay TV Giant!!! Astro Malaysia Holdings (AMH) is poised to list on Bursa's Main Market on 19th Oct with a market cap of RM15.6bil. The largest pay-TV operator in Malaysia has a de factor monopoly, commanding a 99% market share. Are you excited, again?

Background

AMH is the leading media entertainment group in Malaysia with 3,100,000 customers and one of the largest in South East Asia. It is primarily engaged in the creation, aggregation and distribution of content over multiple delivery platforms including TV, radio, publications and digital media within Malaysia.

What's the different from the then delisted entity?

Recall that Astro All Asia Networks (AAAN) was the one taken private in 2010 by its single largest shareholder Astro Holdisngs SB. Meanwhile, AMH is effectively the domestic media business arm of previously-listed AAAN.

How good was Astro Malaysia Holdings?

• A monopoly in the pay TV segment with 99% market share
• A capital intensive industry, creates a high barrier for new entrants
• A buffet of content with presently 156 channels of which 68 are home grown channels. The increase in broadcasting capacity to 180SD and 102 HD channels with the launch of Measat-3B in 2014 will help boost ARPU and subscriber base.
• Multi platform content distribution would enable the group to reach out to more customers

After the good things, let's have a look at some potential risk that AMH may face:

• The group is subject to extensive regulation with its license subject to renewal;
• The group’s exclusive satellite rights would end in 2017;
• Its business is dependent on its infrastructure namely MEASAT-3 and MEASAT-3A and the launch of MEASAT-3B in 2014. Any failure to its existing satellites or delay in launching MEASAT 3B would interrupt its business operations;
• Competition from incumbent IPTV player such as Hypp TV and the highly anticipated Asian Broadcasting Network could erode its market share. However we foresee this as a longer term threat.
• Escalating rate of subscriber churn rate may decrease the group’s profitability given the presence of illegal set up boxes in the market such as skybox;
• Unable to source or procure content at reasonable rates.
• Its IPTV and OTT services may be affected by disruptions, delays and other difficulties from third-party network and broadband service providers just to list a few.
• Exposure to foreign currency risk since the purchases of setup boxes, international content cost and transponders lease payments are mainly denominated in USD would impact its operations.

Then, how attractive is the pricing? Is it expensive? Based on different valuation method, below is the fair value given by various research houses:

Source: Various including research report from TA and OSK.

New Fund: TA Total Return Fixed Income Fund

Just another new fund from TA Investment Management (TAIM)? Think again... In fact, this is the first bond fund launched by TAIM and it will take on the other bond funds in the market with a "Wow" effect. Why? Believe me, you gonna put this fund into your radar of unit trust investment. And, you will know why after reading this post.

The TA Total Return Fixed Income Fund is a feeder fund which invests a minimum of 95% of its NAV into the PIMCO Funds: Global Investors Series plc - Total Return Bond Fund (SGD Hedged) and the balance in liquid assets. What? PIMCO !!! Yup, it's the leading global investment management firm, especially on fixed income investment.

5 Reasons Why you should invest into this Fund?

1. Total Return Strategies, Global Diversification & Flexibility
   It aims to maximize the total return, consistent with preservation of capital and prudent investment management by investing 2/3 of its assets in a diversified portfolio of fixed income instruments of varying maturities.
   
   
2. Higher Potential Returns at Lower Risk
   The core bond investment fund is broadly diversified to include all fixed income asset classes. Target fund is 90%-100% invested in investment grade bonds.
   
   
3. Proven Consistent Track Record
   The Target fund has recorded consistent and positive annual returns since launch, even amid the prolonged crises across the globe.
   
   
4. High Recognition
   Superbly high ratings have been assigned by independent investment research providers, such as Morningstar, Lipper and S&P.
   
   
5. Expert Management --- PIMCO
   Once again, it was managed by PIMCO, has been investing money on behalf of a wide range clients including over 70% of Fortune 100 companies. PIMCO has a history of long-term performance in both bull and bear markets, with benchmark-like risk.
   

By investing into this fund, now you can leverage on the expertise of PIMCO to diversify your investment portfolio to include fixed income. It's superb track record already spoke for itself, in which we should rest assured with.

Source: Fund prospectus