How US Housing Market fares lately? (30 March 2011)

Indeed, there is a insightful write-up by RHB Research today on the US housing market. People are still very curious about the US housing market, but yet to have the courage to BUY. Herd mentality? And, why US housing market is catching the attention of the world? Oh, thanks to Rich Dad Poor Dad, and the world famous property tycoon, Donald Trump.

In fact, I am wondering how did Donald fares these few years? That's why Donald had teamed up with Robert Kiyosaki to publish a book last year? People stop buying property because they're buying books nowadays?

A Double-Dip in the US Housing Market?... by RHB Research (30 March 2011)

Who would be the winner of POS Malaysia?

It's been awhile since the government announcing its intention to divest its shareholding in Pos Malaysia last year. Through Khazanah Holdings, the government owned 32% stake in Pos. Let's re-look at the news with updated info, and hopefully we can have a better prediction on Pos in the near term.

While waiting for a new strategic partner, Pos has declared a one-off final and special dividend of 17.5sen, which provides a dividend yield of 5.7%. However, OSK is maintaining its fair value for Pos at RM4.12 with a BUY call. It closed at RM3.32 yesterday.

On 29th March 2011, Business Times reported unconfirmed sources said that Khazanah had just shortlisted 3 out of 5 parties bidding for its 32% stake in Pos.

Who are they?

New Fund: HwangDBS Select Dividend Fund

To further leveraging on the signature "Select" series of HwangDBS funds, HwangDBS Investment Management Berhad today added in HwangDBS Select Dividend Fund. Over the years, the Select series of funds have demonstrated strong performance, stability and consistency in meeting their objectives. Through this new fund, investors can access a diversified, yet focused portfolio of quality dividend yielding stocks in Malaysia and Asia-Pacific region.

The fund endeavors to provide a combination of regular income and capital growth over the medium to long term period. To achieve the primary objective of providing regular income, the fund intends to invest in high dividend yielding equities and equities that could potentially experience high dividend pay out growth. The fund's investments will be primarily focused in Malaysian equities with a minimum investment of 70% of the fund's NAV. The fund may also invest up to 30% of its NAV in Asia-Pacific region.

Earth Hour by Switching-Off TNB's Nuclear Plan(t)? (26 March 2011)

In conjunction with Earth Hour today, would you do your part by switching off lights from 8.30pm to 9.30pm? I heard people are talking about earth hour since weeks before, and many shopping malls and hotels are organizing some amazing events during this special dark moment. Actually, the idea of Earth Hour came out as a way to showcase a growing global community's commitment to taking environmental action and protecting the planet we are living in.

And, this year, the one-hour is just like a moment for us to remember the lost lives in Japan earthquake and tsunami disaster, which killed more than 10,000 lives. Of course, the nuclear radiation treat are still looming in Japan, and we really needs to evaluate the effects.

But, isn't nuclear power GREEN?

New Fund: Avenue CARE Fund

On 18th March 2011, Avenue Invest Berhad, a member of the ECM Libra Group, launched the Avenue Canada Australia Resources Economies (CARE) Fund.

CARE fund seeks to achieve capital growth over a medium to long-term period by investing primarily in securities of companies in Australia and Canada. The fund may also invest in equities and equity-related securities, fixed income securities, structured products and money market instruments.

Why Australia and Canada?

Due to their resource-based economies, the manager views Australia and Canada as two of the best-positioned countries in the developed world to benefit from the rapid growth of emerging economies such as China. Both economies have emerged largely unscathed from 2008's global financial crisis and are now buoyed by the resurgence of their resource-based industries.

How to achieve the fund's objective?

New Rules on Credit Cards: NO Credit for LOW Credit?

New Measures on Credit Cards had been announced by Bank Negara Malaysia (BNM) to promote prudent financial management and responsible business practices. Summary on the announcement made:

• For new credit card holders, minimum income eligibility is set at RM24,000 p.a
• For cardholders earning RM36,000 p.a and less, the following would be applicable:
• Cardholders can only hold credit cards from a maximum of 2 issuers
• Affected existing cardholders are given up to the end of 2011 to select their preferred issuers.
• Cardholders will also be given at least 2 years to service their outstanding credit card debt for the credit cards that have been canceled for the purpose of meeting this requirement.

• The maximum credit limit extended to a cardholder shall not exceed 2x their monthly income per issuer.
• For affected existing cardholders, a grace period of 2 years will be given to them to meet with the new requirement.

Example of Credit Cards

How about credit card issuers?

New Fund: RHB Dynamic Oil-Gold Capital Protected Fund

Launched on 11th March 2011, RHB Dynamic Oil-Gold Capital Protected fund is investing in oil and gold, which have the potential to perform in both areas that have great bullish and bearish markets.

This is a 3 years capital protected fund. As usual, it will invests at least 85% of the NAV in zero-coupon negotiable instruments of deposits. Meanwhile, up to 10% of the fund's NAV will invest in an over-the-counter (OTC) option that gave investors returns (if any).

The OTC option will provide exposure to the performance of the Option Strategy, which is an index, maintained by the issuer of the OTC option and is subject to a dynamic risk adjustment linked to the realized volatility of the underlying.

Option Strategy

New Fund: AmAustralia Fund

Looking good on Australia, AmMutual is launching a new fund to capture the potential of Australia. The fund seeks to provide income and long-term capital growth by investing in Australian equities and Australian dollar fixed income securities.

Note: The fund's main focus is on income and to a lesser extent, capital growth.

"Australia's economy is resilient and has posted an impressive positive gross domestic product growth over the last 18 years, even outperforming all other advanced economies during the global financial crisis," said Datin Maznah Mahbob, CEO of Funds Management Division, AmInvestment Bank Group. (Business Times)

Investment Strategy

Post-Japan Disaster: After Timber, it's Glove Sector?

As per our previous posts (How Should Investors trade after the Japanese Disaster?), we wrote about timber counters, and it's proven the right sector investors should look at. And, below is the performance of those mentioned counters.

www.financemalaysia.blogspot.com

All of them outperformed KLCI, which recorded -2.20%. Why WTK outperformed its peers? Simple answer is its cheaper share price and better liquidity. In fact, TaAnn and WTK is the main focus because they export 80-90% of their products to Japan. This puts them in the limelight of stocks investors should look at for the moment.

Why should you look at Glove sector next?

How should investors trade after the Japanese Disaster?

Special edition from Japanese Earthquake on 11/03/2011 (black Friday?).

Duped as Japan's deadliest disaster in more than a century, 10m high tsunami crushing on the coast line, and yet to be confirmed - world's worst nuclear disaster in 25 years. I'm sitting in front of computer screen, reading the news while monitoring the share market that Friday. The more I read, my heart is bumping faster, and the share market is going downhill.

Modified Tsunami picture

In fact, KL is raining for whole day, signaling the bad situations would appeared somewhere, and it materialized in Japan shortly. In the morning session, KL market is rather quite. I asked myself: "Today, traders are still in bed due to the favorable sleeping weather?".

To recap, below is the performances of major market on Friday.

Bloomberg

What should investors do?

And, how should investors trade going forward?

What is Statutory Reserve Requirement (SRR)?

Everyone is buzzing about SRR lately, since Bank Negara Malaysia's statement which stated its intention to raise SRR in the near future. Actually, what is SRR? And, what is the effect of higher SRR imposed? Why BNM using SRR right now? Finance Malaysia hopes to clear everyone's doubt and would appreciate if you can share this out.

What is SRR?

Statury Reserve Requirement is a monetary policy instrument available to Bank Negara Malaysia (BNM) for the purposes of liquidity management. Effectively, banking institutions namely commercial banks, merchant/investment banks and Islamic banks are required to maintain balances in their Statutory Reserve Accounts (SRA) equivalent to a certain proportion of their eligible liabilities (EL), this proportion being the SRR rate.

Why BNM uses the SRR as its "tool"?

My First Home Scheme: Home of Trouble Ahead?

Once again, to address the affordability issues of properties, MyFirst Home Scheme (My1st) was launched by government on 8th March 2011. Thanks for addressing the problem faced by young Malaysians working adults. But, does it really worth to even think about the scheme?

Of course, owning a house at young age is a good start to family planning. In fact, we're living in a society where buying a new house tights closely to starting a family. But, this is not necessary a MUST to everyone of us. We must do proper planning before committing for such a long-term loan with such huge amount. Buying a house is not buying an iPad or iPhone.

Only apartments are likely with less than RM220,000 price tags in Klang Valley now

Highlights of My First Home Scheme...

• For those earning less than RM3,000 monthly
• Working in private sector
• Confirmed employees with a minimum of 6 months in the job
• Joint applications are allowed (both in private sector and are family members)
• 100% loan financing for first house purchasing
• Eligible houses: Between RM100,000 and RM220,000
• Both under construction or completed properties
• Repayment period of up to 30 years
• Monthly loan repayment must be < 1/3 of applicants' monthly gross income
• 25 participating banks / financial institutions

Burning questions to participating banks...

New Fund: PB Asia Pacific Enterprises Fund

Looking good on the long-term growth potential Asia Pacific region, Public Bank is launching its equity fund, the PB Asia Pacific Enterprises Fund on March 8. Managed by Public Mutual, the fund will focus on companies with market capitalization of US$ 1 billion and above in domestic and Asia Pacific, through a diversified portfolio of companies.

By investing in mid-to-large corporations, investors would be better positioned to benefit from the resilient activities in the Asia Pacific region. These type of companies tend to perform better given their leading positions in their respective industries and established market shares, especially during challenging market conditions just as now.

What did Public Mutual's CEO said?

Berjaya Food: Testing Investors' Appetite?

Listing tomorrow (March 8), Berjaya Food (BFood), through its subsidiary Berjaya Roasters, is principally involved in the development and operation of the Kenny Rogers Roasters (KRR) chain of restaurants in Malaysia. All started when Berjaya Group acquired KRR in 1993, and being the exclusive franchisee in Malaysia, operating 52 outlets nationwide.

Kenny Rogers Roasters

What's in BFood mind?

• Open 8-10 outlets per annum
• Emphasizes healthy food targeting increasingly heath conscious consumers

What Analysts say?

New Fund: OSK-UOB Capital Protected Sector Strategy Fund

Yet, another capital protected fund for investors by OSK-UOB unit trust management. Following the pump priming efforts by governments around the world during the financial crisis, the global economies have begun to stabilize and signs of recovery are growing strong. The stimulus packages introduced have benefited broad market sectors to a different extent in each sector at each stage of recovery.

"At each stage of the economic recovery, different market sectors will benefit to a different extent. These 4 sectors which are well diversified are expected to capitalize on the different sectors' play", said Ho Seng Yee, CEO of OSK-UOB.

According to Ho, the fund shares a similar strategy with the OSK-UOB Capital Protected Gold Guru Fund that was launched in 2009 and has registered returns of 29%.

Funds' Allocation & Strategy

How far could Oil price RISES?

As usual, another episodes of tension in the Middle East pushes global oil prices higher, and surpassing $100 per barrel this time. We did seen this kind of scenario before in the Middle East during 1973-74, 1979, and the Iraq war in 1990. Are there any different this time?

Libyan leader Muammar Qaddafi

By Credit Suisse, 

We believe the rise in oil prices is manageable. Each 10% rise in oil prices only takes about 0.1% off global GDP and 0.2% off US growth. With Western wage growth muted, central banks are unlikely to raise rates on account of oil alone.

Our analysts see oil prices below $100 pb this year, supported by the following reason which differs from previous oil crisis:-

OSK Stock Picks for March 2011

By OSK Research,

Despite relatively strong results from a number of Blue Chips in February, the market still retreated and ended up in the red so far in 2011. Selling was largely attributed to concerns arising from political unrest in the Middle East although we continue to see limited risk if this does not spread to Saudi Arabia.

Go out and BUY?

Trading Strategy - Buy on Weakness

OSK continue to advise investors to Buy on Weakness in the current volatile market with focus on Banks, especially those that have been sold down recently as we still see robust loans growth of 8.5%. OSK also advise trading in Oil & Gas, Construction and Property counters as the news flow should remain good although they caution that profits will likely to kick in only in 2H of 2011.

March 2011 Top Buys

FIMM is a Self-Regulating Organization now. What does it mean?

During a speech at The Edge-Lipper Awards 2011 yesterday, Chairman of Securities Commission (SC) Malaysia highlighted that Federation of Investment Managers Malaysia (FIMM) as a Self-Regulatory Organization (SRO).

"I am pleased to note that the Minister of Finance approved the SC's recommendation to recognize FIMM as an SRO, through a notice that was gazetted on 20 January 2011. I have full confidence that FIMM will be able to discharge its role as an SRO effectively in self-regulating its members for the benefit of the industry as well as investors" said SC's chairman.

Tan Sri Zarinah Anwar, Chairman of Securities Commission Malaysia

What is the role of SRO?