4 Components of Economic Growth (August 2011)

So far, equity markets are down anywhere between 10-20% and bond yields in a number of major markets are reaching historic lows. Although it is difficult and nerve racking, investors should understand some of the forces behind what's creating this volatility and how they're likely to play out in the near term.

When will market rebound?

Again, we simply cannot answer that million-dollar question. If I know, I won't be writing this article here telling you all stories and facts. We should have a longer term view, especially during volatile times when fears dominating the marketplace.

So, what are some of the driving forces behind?

Oil & Gas: Why Malaysia is different? (21 Aug 2011)

With oil prices hovering around USD80-85 per barrel currently, what is the outlook for Malaysia oil & gas (O&G) industry? Dubbed as "Black Gold", crude oil is one of investors favorite asset classes, which is highly volatile. Here, we examined the implications of lower oil prices, current scenario of the industry, and sustainability of oil price going forward. Feel free to share this out via our Facebook page (www.facebook.com/financemalaysia).

What drags down oil prices?

New Fund: OSK-UOB Agriculture Fund

With the world population slated to increase, particularly from the emerging markets like India and China, coupled with the increase in per capita income in the developing nations and an improvement in lifestyle, the demand for food, and in turn agricultural commodities, will see an upward rise. Moreover, with rising income, meat consumption is also expected to increase and therefore more grains, wheat and other soft commodities are needed to feed the poultry demand, thus also creating demand for agricultural commodities. 

However, despite the expected increase in demand, supply factors remain constrained due to land and water scarcity caused by urbanisation. Climate has also proven to be very unpredictable in the recent past, with increasing frequency of extreme weather events. This makes the planning and production of crops harder, especially when the supply of agricultural commodities is concentrated in a few countries.

This mismatch in demand and supply factors is expected to move prices of agricultural commodities upwards. OSK-UOB has therefore established this Fund so as to capitalise on this potential price increase in the agricultural commodities sector.

The Cultivating Fund

CLSA Top 5 Picks during volatile times (16 Aug 2011)

After an unexpected AAA rating downgrades and an expected correction, KLCI is coming down from its peak of 1,597 points in early July. CLSA come out with a timely report highlighting 5 stocks which investors should focus on even during volatile times. These stocks have resilient earnings, clear earnings visibility and are supported with dividend yields.

CLSA: YTD major indices performances as at 08 Aug 2011.

Which are the counters?

New Fund: OSK-UOB Taiwan Opportunity Fund

Taiwan has recovered strongly from the global economic downturn with a growth of 10.8% in 2010. According to Global Economic Prospects, January 2011 by World Bank, Taiwan’s gross domestic product is tipped to grow 5% in 2011. Taiwan is a beneficiary of Asia’s growth, in particular that of China’s. Following the liberalization policies of Taiwan’s new administration towards China, Taiwan’s economy has become increasingly linked with China’s.

Foreseeing a significant growth prospects for Taiwan in the next few years, OSK-UOB has therefore established a Fund that is structured to benefit from these potential opportunities through a swap agreement which will provide exposure to Taiwan’s capital markets as represented by the Taiwan Taiex Index (“TWSE”). This Fund will provide investors with an opportunity to participate in the potential benefits from this outlook on the Taiwan economy in the next three years.

About the Fund

US rating cut: Should we buy now? (9 Aug 2011)

To answer that million dollar question, please let us examine the whole situation. First, what actually caused the market to slump? Second, the correction is short or long-term? In the end, it depends on how gut are you as an investor in this sentiment driven market.

What actually caused the market to slump?

Panic selling is my answer. Simple and straight to the point. Investors are so scared that they can't figure out what is going to happen after S&P downgraded US long-time AAA rating. This was the first time US was being downgraded. No previous record for investors to forecasts, so dump first la. Herd mentality is playing a very crucial role now (again).

Short or Long-term correction?

Disaster after US rating downgrade? (8 Aug 2011)

The news that S&P downgrading US credit rating shows that rating agencies are doing their job fairly. Previously, rating agencies were blamed by Greece and Europe countries for downgrading their ratings when Greece facing rising debt issue. Though, US did not spare this round when S&P downgrade US AAA rating to AA+ (one notch lower).

What would be the implications?

Normally, the downgraded currency will slump, sovereign bonds will become less attractive by carrying higher degree of risk, hence pushing up the yields. Does US follow these theory? NO.

Why US is different?

New Fund: Public Islamic Treasure Growth Fund & Public Sukuk Fund

Public Mutual recently launched two local funds. One is an equity growth fund, while another one is a bond fund.

Public Islamic Treasures Growth Fund (PITGF) seeks to achieve capital growth over the medium to long-term period by investing primarily in small and medium sized companies, which comply with Shariah principles.

 

The fund will invest in Shariah-compliant securities with market capitalization of up to RM6 billion at the point of purchase or companies which form the bottom 30% of the cumulative market capitalization of the market which the stock is listed on at the point of purchase. The fund will focus its investments in the domestic market with equity exposure ranging 75% - 98% of its NAV. To achieve increased diversification, the fund may invest in selected foreign markets if the returns are assessed to be promising.

Another SUKUK fund in the selves?