Montana's Strong Reserves And Low Debt Burden Support Its 'AA' GO Debt Rating, S&P Report Says

Montana's 'AA' general obligation (GO) debt rating reflects our opinion of the state's strong economic growth and financial performance in fiscals 2004-2007, historical willingness to respond to weakened revenues with expenditure cuts and new revenue-generating measures, and continued very low debt burden, according to a report published today by Standard & Poor's Ratings Services.


"In our opinion, despite currently softer revenue performance and projections of lower reserve levels, the state is likely to maintain good reserve levels given its history of budgetary conservatism and willingness to make necessary expenditure reductions," said Standard & Poor's credit analyst Paul Dyson. "In addition, the state's economy has been spared the brunt of the national economic downturn, and sources indicate the state will be one of the first in the U.S. to return to peak employment."

Montana's general fund revenues increased by nearly 10% annually to $1.95 billion in 2008 from $1.13 billion in 2002, then declined 11% to an estimated $1.74 billion in 2009. The state recorded five consecutive general fund surpluses totaling $521 million during fiscals 2003-2007. The fiscal 2008 unreserved fund balance fell to $433 million, or 23% of expenditures, and according to state officials is estimated at $383 million, or 22% of expenditures, for fiscal 2009. In perspective, the 2009 biennium budget had a projected ending available fund balance of $125 million, and more current state estimates pegged it at $180 million. However, the state's fund balance performance comfortably exceeded both, totaling $383 million, due to strong revenue growth and successful reversions of appropriations of more than $90 million.

Montana's unemployment rate has consistently been less volatile than and below that of the U.S. and was 6.4% as of October 2009 -- the fourth lowest among the 50 states. Seasonally adjusted payroll employment has lost only 9,600 jobs since December 2007, which makes the state the seventh best for payroll job growth since the recession began. Moreover, according to IHS Global Insight, Montana will return to peak employment during 2010-2011, one of only a few states to rebound that quickly. The state actually added 6,500 jobs in July and August 2009, and year-over-year job losses of just 0.7% put the state fourth lowest in the nation.

Montana is the fourth-largest state in area in the U.S. and has a population of 979,480 as of 2009, up 8% since 2000. Montana's economy is dominated by tourism, agriculture, and mining; lumber and recreation are the major sources of income in the western part of the state, and agriculture in the east. Montana's GO debt totals a very low $183 million, or a very low $187 per capita and 0.6% of personal income.

The report is available to RatingsDirect on the Global Credit Portal subscribers at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to research_request@standardandpoors.com. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided.

Barclays Capital lists iPath Exchange Traded Note on SGX, first-ever ETN in Asia outside Japan

Barclays Capital, the investment banking division of Barclays Bank PLC, and Singapore Exchange Limited (SGX) today announced the listing of the iPath Dow Jones-UBS Commodity Index Total ReturnSM Exchange-Traded Note (ETN) on the SGX. The iPath Dow Jones-UBS Commodity Index Total ReturnSM ETN is the first-ever ETN listed in Asia outside Japan and provides both institutional and retail investors with exposure to a broad range of commodities during the Asian time zone.


iPath ETNs were first launched by Barclays Capital in the US in 2006 and are designed to provide investors with convenient access to the returns of market benchmark indices, less investor fees. The iPath ETNs are senior, unsecured, unsubordinated debt securities linked to the performance of an underlying index.

"We are very excited to bring the iPath ETN platform to investors in Asia. iPath ETNs have been tremendously successful in the US attracting over US$5 billion in market capitalisation with over US$80 billion in volume traded since inception," said Philippe El-Asmar, Head of Investor Solutions at Barclays Capital. "iPath ETNs provide investors with simple, transparent, cost efficient instruments that provide access to difficult-to-reach markets with the ease of trading through an exchange," he added.

Ms Janice Kan, Senior Vice President & Head of Product Development at SGX said, "We are pleased to be the first listing venue for Barclays Capital's iPath ETN platform in Asia. The launch of this new product class broadens our suite of investment offerings and will provide investors with cost-efficient access to the commodities asset class, and eventually, a range of other asset classes. This underpins our efforts in developing SGX as the one-stop investment gateway in Asia."

Peter Hu, Barclays Capital's Head of Investor Solutions in Non Japan Asia said, "We are delighted to be able to provide investors with a new way to invest across different asset classes during Asian trading hours. The iPath Dow Jones-UBS Commodity Index Total ReturnSM ETN we are launching today enables investors to gain exposure to a broad range of underlying commodities with ease via a single, liquid and transparent instrument. We see self-directed investors becoming an increasingly important client segment in Asia and we plan to cater for their varied investment needs by launching many more iPath ETNs in the future."

Accumetrics Closes 2009 with Positive Outlook

New distribution agreements, favorable clinical data, and significant capital financing position the company for continued growth in 2010 Accumetrics, Inc., developer and marketer of the VerifyNow(R) System, the first rapid and easy-to-use diagnostic system for measuring an individual's response to multiple antiplatelet agents, announced that 2009 included a doubling in the number of international and U.S. distribution agreements, as well as positive medical community support, and significant capital financing

that will take the company into 2011.

In 2009, the company continued its commitment to creating a powerful, worldwide distribution network aimed at gaining adoption of its products at end-user levels. Spanning Europe, Latin America and Asia, Accumetrics currently has partnerships with 20 leading international distributors who provide the company with local representation in over 30 countries. Latest additions to the international distribution network include Keller Medical in Germany, ZAO "Schag" in Russia and VSA Alta Complejidad S.A. in Argentina. Accumetrics continued to strengthen its U.S. presence by partnering with 10 cardiovascular specialty distributors to enhance support to the company's growing base of clinicians in the domestic hospital market. Accumetrics has

also partnered with National Distribution & Contracting, Inc. (NDC), the largest organization of independent medical supply distributors in North America, to expand its distribution network in the physician office lab
marketplace.

Increasing evidence of the clinical value of platelet reactivity testing was demonstrated in several presentations of new clinical studies including the POPular study, presented at the American Heart Association Scientific Sessions in November, and a meta-analysis presented at a symposium during the 2009 Transcatheter Cardiovascular Therapeutics (TCT ) Conference. These data also build upon the anticipation of the results of the GRAVITAS trial, which has now completed 80% enrollment.

"2009 has proven to be an outstanding year of growth for Accumetrics," said Timothy I. Still, CEO and President of Accumetrics. "We look at 2010 as a breakthrough year for the company, and are pleased to be in a position to capitalize on the growing clinical acceptance of platelet reactivity testing."

Accumetrics concluded 2009 with $17.1 million in new capital financing, which will fully support the company into 2011. Proceeds will fund a number of key 2010 milestones including expanded claims for existing products, new product development and continued expansion of commercialization efforts. About Accumetrics (www.accumetrics.com)

Accumetrics is committed to advancing medical understanding of platelet function and enhancing quality of care for patients receiving antiplatelet therapies by providing industry-leading and widely accessible diagnostic tests for rapid platelet function assessment.

Accumetrics' VerifyNow System is the first rapid and easy to use platform for measuring an individual's response to multiple antiplatelet agents. Addressing every major antiplatelet drug, including FDA-cleared products for aspirin, P2Y12 inhibitors (e.g. prasugrel (Effient(TM)) and clopidogrel (Plavix(R))), and the GP IIb/IIIa inhibitors (e.g. ReoPro(R) and Integrilin(R)), the VerifyNow System provides a valuable tool to help
physicians make more informed treatment decisions.

The Accumetrics logo and VerifyNow are registered trademarks of Accumetrics, Inc. ReoPro is a registered trademark of Centocor, Inc. Integrilin is a registered trademark of Millennium Pharmaceuticals. Plavix is a registered trademark of sanofi-aventis. Effient is a trademark of Eli Lilly and Company.

Thai bourse lists TLOGIS property fund on December 16

The Stock Exchange of Thailand (SET) will list and trade TPARK Logistics Property Fund in the Property Fund Sector, Property & Construction Group on December 16, using “TLOGIS,” as its trading symbol, revealed SET Chief Market Officer, Issuer & Listing, Vichate Tantiwanich.


TLOGIS is a closed-end fund with an unspecified project life. TLOGIS is THB1,533 million (approx. USD46.21 million) in fund size, consisting of 153.30 million investment units with a par value of THB10.00 per unit. TLOGIS plans to use the funds raised to investment in land, warehouses and cold storage for two projects of Ticon Logistics Park Co., Ltd., which are Ticon Logistics Park in Bangna, Bangkok and Ticon Logistics Park in Wang Noi, Ayudhya.

TLOGIS’s rental space is located near Bangkok’s Suvarnbhumi Airport, and is in an excellent distribution center to serve the North, Central, and Northeast regions. In addition, TLOGIS shall have income guarantee after common area service for seven years and a month.

TLOGIS offered its investment units to the general public at THB10.00 per unit during November 18-25. BBL Asset Management Co., Ltd. was the fund manager. TLOGIS’s dividend payment policy is to pay no less than two times a year, and not less than 90% of net profits, excluding unrealized profit from immovable property.

TLOGIS’ major unitholders are Ticon Industrial Connection PCL, which holds 30.66 million units; the Social Security Office, holding 20 million units, Muang Thai Life Assurance Company Limited, with 10 million units, or 20%, 13.05% and 6.52% , respectively, of issued units.

First automated processing service available for UK funds

Euroclear UK & Ireland and EMXCo are eradicating the time-consuming, inefficient and unnecessarily expensive process of settling UK fund transactions. According to the HM Treasury, the UK funds industry could save GBP 70- 290 million per year by embracing processing automation in place of paper-based fund unit settlement. This potential saving is now a reality. Together, EMXCo and Euroclear have launched a fully electronic and integrated order routing and settlement solution for UK fund transactions - a first for UK fund investors. Clients can expect substantial savings on their current operational processing costs by moving from manual to automated order routing and settlement. A typical distributor settling around 10,000 transactions a month may today expect to pay up to GBP 50,000 per month for administering these settlements and subsequent reconciliations. Under the new automated service, the same distributor doing the same levels of business can expect a monthly bill for all balance reconciliation, transaction management and communication charges of less than GBP 8,000. Clients processing lower volumes of transactions can also expect to make significant savings.


In expectation of deriving meaningful benefits from the new EMX/Euroclear UK & Ireland service, firms such as Brewin Dolphin, Cardale, Charles Stanley, Direct Sharedeal and Rathbones have already signed up during the course of 2009.

Yannic Weber, Chief Executive Officer of EMXCo and Euroclear UK & Ireland, said: "Having worked closely with the 26 members of the UK Fund Liaison Group, representing all segments of the fund industry, we are confident that the end-to-end fund-processing service we are providing fully meets market requirements. What is more, we are live now. And firms active in UK funds are already testing our new processing arrangements. We are eager to share with them the advantages of substantial operational cost savings and protection from counterparty and settlement risks, in accordance with the IMA recommendations for greater use of electronic funds processing."

Peter Fleming, Head of UK Investment Administration at Skandia said: "This fully automated processing solution is great news for the industry and Skandia supports it. EMXCo and Euroclear UK and Ireland are in an ideal position to offer this service which we expect will remove operational risk and improve efficiency."
In addition to cost savings, the new service delivers other important benefits:

Decreased settlement risk and fewer errors in processing and transaction reporting, as manual intervention is eliminated.

Up-to-date fund balances based on processed transactions at Euroclear UK & Ireland which are reconciled with the fund register on a daily basis, in full compliance with FSA rules.
Settlement within four business days, as compared with up to ten days today.

Electronic exchange of key transaction information among all relevant fund market participants, including fund managers, promoters, distributors, third party administrators.

Back-office efficiency gains by settling UK fund transactions with a proven provider of primary and secondary trade services, where market participants already settle their UK equity and bond transactions.

Use of highly resilient infrastructure, with strong user/owner governance and a solid track record of operational stability.

The rationale for Euroclear acquiring EMXCo in 2007 is embodied in this joint initiative. Together, the two organisations are delivering end-to-end, straight-through processing of UK fund transactions, from order routing through to cash and unit settlement, and safekeeping. Initially, funds domiciled in the UK, Channel Islands and Isle of Man are eligible for this service. The coverage of funds is intended to be expanded in the future.

A retail client places an order with its IFA to subscribe to or redeem units in a UK fund.

The IFA routes the order to the EMX Message System via a platform or distributor.

EMXCo routes the order to the fund manager (product provider). The manager confirms the order by sending an electronic contract note to the broker (via EMX).

The settlement instruction can then be sent to Euroclear UK & Ireland, either bilaterally or via the direct input option through the EMX Message System.

Euroclear UK & Ireland processes the instruction (both the cash and unit aspects) and electronically confirms the details of the transaction with the fund manager and its TPA.

Confirmed receipt of the settlement instruction is sent from the fund manager to Euroclear UK & Ireland, which debits and credits the broker’s account, and reports the settled transaction to the IFA, who informs the retail client.

POPULAR LONG-TERM CORPORATE BONDS ARE LICENSED TO SELL

       One result of the past year's financial turmoil has been much greater corporate bond issuance in Thailand.
       Circumstances have been favourable. Banks are more risk averse due to the economic slowdown and have not been actively extending loans. Meanwhile, lower yields and reasonable credit spreads mean that rates are appealing for borrowers. At the same time, very low bank interest rates make bond yields attractive to savers.
       Already this year, corporations have sold more than Bt250 billion in longer-term bonds, not including short-term commercial paper, for an increase of 120 per cent from the same period last year.
       The two main distribution methods for bonds are selling directly to retail investors, or selling to institutional investors such as mutual funds or insurance companies, which in turn distribute them to the general public.
       The current craze for corporate bonds is to sell directly to retail investors.
       On the surface, this appears to be more efficient. However, direct retail sales have major limitations with two key concerns - credit risk and liquidity risk.
       Years ago, retail sales of bonds started out with issuance by the government, or by the very best corporate names. However, it has since evolved into virtually any company selling bonds to the general public, significantly raising the potential credit risk.
       This has several implications:
       Retail bond investors usually have exposure to only a few names and underestimate downside risks, while lack of diversification raises the possible loss should any transaction go bad.
       Retail investors often do not have the resources to monitor and analyse changes in corporate credit risk on an ongoing basis.
       Retail investors may not be knowledgeable enough to demand appropriate pricing to match the risk involved.
       The other key concern is that retail-oriented bond issues usually lack liquidity in the secondary market. Even if savers plan to buy and hold bonds until maturity, unforeseen circumstances could make them change their minds.
       If sales are possible at all, bid-offer spreads are likely to be very large to the small investor. In case of a forced sale, there could also be mark-to-market losses that are difficult for retail investors to hedge, unlike institutional investors that may be implementing yield curve strategies.
       For all these reasons, institutional investors theoretically have many advantages over individuals in buying and managing bonds.
       At the moment, local financial institutions still have room for development. Bond mutual funds tend to be focused on short-term money market debt, rather than on longer-term corporate bonds. There is a lack of activity in the secondary market, while hedging is still not widely used.
       Over time, however, the market should continue to develop. Greater issuance will lend depth to the market. Institutional investors will gain in scale and sophistication. And hedging tools such as interest rate futures and repurchase agreements will become available, or more widely used.
       In the medium term, this would be healthy for the local financial system, and would be better for consumers as well.

BEARISHNESS EXTENDED IN THAI BOND MARKET

       Bearishness persisted in the Thai bond market last month with two- and 10-year government bond yields rising by abo7ut 20 and 40 basis points, respectively.
       A combination of selling by foreigners and a lack of demand from local players drove the sell-off over.
       The primary market has displayed a mixed performance. The Bt13-billion, five-year (LB155A) auction in October returned a moderate bid/cover ratio of just 1.41 times, reflecting soft demand.
       However, the longer-tonor B3-billion, 30-year (LB406A) and B7-billion 20-year (LB24DA) auctions performed better with their bid/cover ratios coming in at 3.38 times and 2 times, respectively.
       The Bank of Thailand's economic report for September - released at the end of October - showed that economic conditions continued to improve from the previous month along with increased private and public spening, as well as a pick-up in external demand.
       The central bank also noted that exports had contracted in year-on-year terms, but at a decelerating rate. Meanwhile, manufacturing production increased, both for domestic and overseas markets.
       However, private investment remained subdued as producers' excess capacity could accommodate the increase in demand.
       Even though we do not expect the Bank of Thailand to hike its policy rate through next year, bond sentiment should remain bearish in the near term.
       Investors are reluctant to add long bond positions at this juncture given that regional central banks have been hawkish, with the Reserve Bank of Australia hiking by another 25 basis points on Tuesday to 3.5 per cent.
       There is a lack of demand for bonds from local investors with most players favouring to keep duration short and exposure limited ahead of year-end.
       Foreign investors have also generally been on the sell-side, paring positions in the local bond market.
       DANNY SUWANAPRUTI is a rates strategist for Standard Chartered Bank in Singapore.

Price rise raises concern

       The International Monetary Fund said yesterday it shared the Hong Kong government's concern that the city could face sharp asset price inflation, as data showed home sale and purchase agreements nearly doubled in October.
       "We share the authorities' concerns that a credit-asset price cycle could take hold, leading to a sharp run-up in prices for certain real and financial assets,"the International Monetary Fund said in an annual report on Hong Kong.
       "While such asset price movements are part of the natural equilibrating mechanism of the Hong Kong economy, there is a risk that prices could become driven more by short-term liquidity conditions,divorced from fundamental forces of supply and demand."
       Government data yesterday showed that sale and purchase agreements, with stamp duty paid, for residential property units in the city soared 97% from a year earlier to 9,300. But they fell 24% from September, indicating the announcement of tighter mortgage lending rules may have dampened sentiment.
       The Washington-based IMF also said it had raised its GDP forecasts for Hong Kong following a recent improvement in the economy. It forecast a 2% decline in GDP this year, against a 3.5% decline previously, and 5%GDP growth in 2010,up from 3.5% previously.
       Hong Kong Chief Executive Donald Tsang warned last month of the risk of a property bubble and said the government could release more land for residential property development.
       "We welcome the consideration that is now being given to increasing the supply of land to the market as one of the possible means to help moderate potential property price surges," the IMF said.
       Property prices have surged by 28%overall this year, and price increases for luxury property have topped 40%, as wealthy mainland Chinese have snapped up luxury apartments. Last month, a luxury flat sold for a world record HK$71,280(US$9,200) per square foot.
       That prompted the central bank, the Hong Kong Monetary Authority, to raise the downpayment to buy luxury property and cap mortgage loans for mass-market property.

Risk-level labelling a must

       Securities regulators have launched new regulations aimed at helping retail investors better understand the potential risks of mutual funds.
       Thirachai Phuvanatnaranubala, the secretary-general of the Securities and Exchange Commission, said the Association of Investment Management Companies have agreed to support the new rules as a means of simplifying information for investors.
       Mr Thirachai said given the growing complexity of the financial markets and fund products, it is vital that investors understand potential risks.
       Under the new rules, asset management companies will help classify the potential risks of a fund in an eight-step scale. Sales agents will be responsible for explaining the potential risks involved of each fund, with investors obliged to sign disclaimers stating that they understand the risk level before making an investment.
       For money-market and fixed-income funds that permit daily redemptions,fund managers must manage investment assets to ensure sufficient liquidity to cope with redemptions. Fund managers must also ensure that investments are in top-quality bonds with suitable durations, and for foreign investments, full hedging against currency risk is required.
       AIMC chairwoman Voravan Tarapoom said the rules were expected to be finalised by the first quarter of 2010.
       "We will have to discuss how to standardise risk-measurement procedures.Each company has a different set of indicators," she said.
       Mrs Voravan, also managing director of BBL Asset Management, said the rules were in line with the basic principle of "know your client", including their risk profile and investment goals.
       "If [fund managers] understand the risk level that investors can accept, then one can make the right recommendations and help reduce any misunderstanding in communications," she said.

A RUN-DOWN OF NEW FUND OFFERINGS, NPAS AND MORTGAGE PACKAGES

       Bank of Ayudhya is rolling out the "Krungsri Tax Saving" campaign, offering up to Bt10,000 in the AYFGOLD Fund and up to Bt2,000 in gift vouchers from Central Department Store or Tesco Lotus when investors buy a minimum of Bt50,000 of Ayudhya Fund Management's longterm equity funds or retirement mutual funds. Moreover, investors are eligible to receive up to Bt1,000 in gift vouchers from Central Department Store or Tesco Lotus when purchasing life insurance and paying a premium of at least Bt50,000.
       Krung Thai Bank will put more than 2,500 nonperforming assets with discounts of up to 35 per cent on sale at its Housing Exhibition, being held from today until Sunday at Central Department Store, Airport Plaza, Chiang Mai. The bank also offers zerointerest mortgages at a 110percent credit line to those who buy its NPAs.
       Ch Karnchang will sell its two and fouryear debentures to the public from October 19 and 21 at Bank of Ayudhya's branches nationwide. The twoyear debentures carry a coupon rate of 5 per cent per annum, while the fouryear ones offer 5.4 per cent for the first two years and 6.2 per cent for the remaining period. The minimum subscription is Bt100,000.
       Bank of Ayudhya is rolling out Krungsri special 10month timedeposit accounts until November 15. It offers an interest rate of 1.6 per cent per annum, payable on a quarterly basis.
       Siam City Bank is rolling out the "Hood Home Good Health" campaign, featuring a free Bt3,500 health checkup voucher from Phyathai Hospital to those who apply for the bank's mortgages with a minimum credit line of Bt1.5 million and win approval by December 31.
       Krung Thai Asset Management is launching an initial public offering of Krung Thai Fixed Income FIF3M1 (KTFF3M1) until October 31. The threemonth fund has a policy to invest in South Korean monetary stabilisation bonds or Korea Treasury Bonds and its investment is fully hedged against foreignexchange risk.
       Meanwhile, the company is reselling unit trusts of the Krung Thai Capital Protection Fixed 6M FUnd 1 (KTFIX6M1) until today. The fund has a policy to invest in local government bonds and banks' deposits. It is expected to provide a return of 0.85 per cent per annum.
       Ayudhya Fund Management is offering the Krungsri Korean Government Bond 9M3 Fund until Monday. The ninemonth fund will invest mainly in monetary stabilisation bonds issued by the Bank of Korea and Korea Treasury Bonds. It is expected to yield a return of 2.1 per cent per annum.
       BBL Asset Management is conducting an IPO of Bualuang Thanasarn Plus 39/09, a fourmonth fund, Bualuang Thanasarn Plus 40/09, a ninemonth fund, and Bualuang Thanasarn Plus 41/09, a 22month fund, until Monday. All funds will invest mainly in foreign debt instruments. The minimum investment is Bt10,000.

CALIFORNIA'S GOVERNOR TO THE RESCUE

       Terminator-turned-governor Arnold Schwarzenegger, who has played the hero in many movies, will now try to rescue California from its dire financial straits.
Schwarzenegger will soon seel Build America Bonds to individuals to raise money.
       California, suffering from record unmployment and the lowest credit rating of any state, plans to borrow US$4.5 billion (Bt151 billion) this week for schools, parks and hospitals after municipal bond yields fell to a 42-year low.
       Bloomberg reports worth of federally subsidised, taxable will sell $3.2 billion worth of federally subsidised, taxable Build America Bonds and $1.3 billion worth of tax-exempt debt, the biggest municipal financing of the week. While yields on 30-year Build America securities that California sold in April fell to 6.68 percent last Thursday, from 7.43 per cent when they were sold, the rate remains 0.53-percent-age-point more than the average US corporate note due in more than 15 years, Bank of America's Merrill Lynch & Co indexes show.
       California is reaping the benefits of the highest returns on tax-exempt debt since 2000 even as it projects a deficit of $38 billion over the next three years. Pacific Investment Management's Bill Gross said the state might lack the "discipline" to plug the gap.
       "I'm not a strong buyer at these levels," said Ken Naehu, who oversees $2.5 billion in bods as head of fixed income at Bel Air Investment Advisers in Los Angeles.
       "Investors should know that the issues and problems with the state's finances have not been resolved."
       California's record 12.2-per-cent unemployment rate in August compared with 7.6 per cent in the same period last year and 5.5 per cent two years earlier. The Labour Department last week reported the nation's unemployment rate reached 9.8 per cent last month.
       Tax revenue has missed Governor Schwarzenegger's Budget Office projections, falling 1.3 per cent from forecasts when the state legislature approved the present spending plan totalling about $85 billion in July.
       California will offer Build America Bonds to individuals today and tomorrow and to institutions on Thursday, said Treasury spokesman Tom Dresslar. The last time it sold long-term securities was April's $6.85 - billion deal.
       The state was among the first to sell Build America Bonds, which are taxable securities.

CONSERVATIVE THAIS PREFER CASH, GOLD DESPITE RECENT GAINS IN STOCK MARKET

       Despite their relatively bullish gains in the local stock markets, Thai investors remain conservative and will plan to more of their capital as cash in the fourth quarter, a new survey shows.
       The ING Group yesterday released data from its quarterly "ING Investor Dashboard Survey" that shows Thai investor sentiment in the third quarter remaining about the same as in the second quarter.
       Thai investors also intend to continue holding lowrisk investments like cash and gold in the fourth quarter.
       In fact, Thai investors intend to hold more cash in the fourth quarter - 63 per cent of investment allocation, compared with 48 per cent in the third and second quarters. However, they will hold almost the same amount of their capital in gold - 13 per cent, up slightly from 12 per cent in the previous two quarters.
       "Investors remain fundamentally conservative and are heavily weighted in lowrisk gold and cash deposits. While we don't see inflation and rising interest rates as major concerns in the near term, inflation may become one of the biggest mediumterm risks globally in the second half of next year as US and global consumption picks up and commodity prices start to increase. We advise investors to move away from cash and gold and take a medium to longterm view and invest in real assets, such as equity and property, to hedge against longerterm expectation of inflation," said Tor Indhavivadhana, senior vice president for mutual funds and investment consulting at ING Funds (Thailand).
       The proportion of Thais investing in funds and/or equities increased to 37 per cent in the third quarter, from 32 per cent in the second quarter.
       However, that is still significantly lower than the 58percent figure in the first quarter, as profittaking occurred after the Stock Exchange of Thailand's dramatic upturn in the third quarter.
       Thai investors continue to be fairly optimistic about the local stock markets and expect them to rise an average of 7.2 per cent in the fourth quarter.
       "Despite the rise of the local stock market in the third quarter, Thailand remains in 'neutral' territory, while most Asian markets have entered the 'optimistic' or 'very optimistic' categories," ING said in its survey result.
       Many are also now invested in growth sectors, including financial services (44 per cent), energy (33 per cent) and technology (17 per cent). They also remain bullish about the local property market and expect residential realestate prices to increase an average of 4.8 per cent in the fourth quarter.
       "While we remain cautious about the pace of recovery in the US, it will exit a technical recession by yearend, and we do expect better returns from the export and commoditiesrelated sectors as the global economy gradually starts to pick up in the fourth quarter and the first half of 2010," said Tor.
       Unlike in the rest of Asia, Thai investors do not see inflation and rising interest rates as potential mediumterm risks. More than half of Thai investors (55 per cent) do not expect inflation to increase next year, while 58 per cent also do not expect interest rates to rise in 2010.
       Given that they expect stable inflation, more investors are taking a conservative investment strategy, with a longer investment horizon and emphasis on capital preservation. Thirtyseven per cent are considerฌing a conservative approach, up from 29 per cent in the second quarter.
       Investor sentiment in Thailand remains neutral, because domestic political issues continue to be a source of uncertainty for Thai investors. Fifty-eight per cent of Thai investors say the present political environment has had a negative effect on their investment or wealthaccumulation plan. Moving forward, about half (49 per cent) of Thai investors are unsure if the political environment will improve in the next quarter.
       Despite concerns about the political environment, Thai investors are seeing a modest improvement in the economy from the government's recent US$12billion (Bt401 billion) stimulus package, as well as a slight improvement on their investment return.
       Forty-three per cent of investors are also seeing a recovery in exports, while 29 per cent see government spending as the key driver of economic recovery in the Kingdom. More Thai investors are also expecting the US economy to improve in the fourth quarter, a sign they may expect exports to pick up in the near term.
       Commenting on the results, Tor said: "While the local stock market reported very strong gains in the third quarter, and overall returns on aggregate investments were positive, political instability and the relatively modest uptick in GDP anticipated from the second round of the government's stimulus package continue to weigh on investor sentiment."

FIDF LIKELY TO SELECT ADVISER FOR SIAM CITY BANK SALE BY END OF MONTH

       The Financial Institutions Development Fund (FIDF) is expected to select a financial adviser for Siam City Bank's share sale by the end of the month, Bank of Thailand Assistant Governor Tongurai Limpiti said yesterday.
       Tongurai, who is also in charge of FIDF management, said four of the 22 firms that had applied for the advisory role met the fund's technical specifications.
       They are Quant Group, Trinity Advisory 2001, Tisco Securities and Phatra Securities.
       The FIDF - the state-owned rescue fund - owns a 47.58-per-cent stake in Siam City Bank (SCIB).
       "We gave technical scores based on strategy, share-offering method and timetable for the share sale. These four companies got the highest scores and we will negotiate with them about pricing later," she said.
       If the FIDF can agree the pricing with the company with the highest score, it is unnecessary to summon other firms to negotiations, she added.
       Thanachart Bank has expressed interest in acquiring SCIB's shares from the FIDF, and has already won shareholders' approval to issue debentures worth up to Bt40 billion to finance the purchase plan and to increase its second-tier capital.
       The Industrial and Commercial Bank of China, which recently signed a deal to buy a 19.26-per-cent stake in ACL Bank from Bangkok Bank for Bt3.25 billion, has also shown interest in buying the FIDF's sizeable stake in SCIB.

KTAM introduces foreign finance fund

       Krung Thai Asset Management (KTAM)has launched a new foreign investment fund focused on the global financial sector.
       The 2-billion-baht KTAM World Financial Services Fund (KT-Finance), on sale from today until Oct 27, will invest at least 80% of its assets in the Fidelity Global Financial Services Fund managed by Fidelity International.
       The Fidelity Global Financial Services Fund invests in equities of banks, nonlife and life insurers, real estate and financial services companies worldwide.At the end of August, the fund had assets of 355 million with a 12-month loss of 12.3% but a 22.4% gain year-to-date.The fund's top-three holdings at the end of August were Deutsche Boerse,Franklin Resources and Mizrahi Tefahot Bank.
       Somchai Boonnamsiri, the managing director of KTAM, said KT-Finance is an attractive option for investors looking to diversify their portfolios to the global financial sector.
       Earnings have begun to recover strongly with the global economy's rebound,with momentum strongest in emerging markets, he said.
       He cited research by UBS projecting return on equity (ROE) for global banks to rise to 11.4% at the end of 2009 from 8.9% at the end of 2008. ROE is projected to reach an average point of 14.6% in 2012.
       The S&P 500 has risen by 50% since its lowest point in March this year but is still 48% lower than the highest point in 2007(near its 1997 level), according to Bloomberg.
       While Thai financials have also seen a sharp rebound in valuations, volatility remains and prospects may lag those of the global market, said Suthayut Chuaphanich, the KTAM equity investment department manager at KTAM.
       He said the SET index, which closed yesterday at 751.86, should trade about 750 through the end of the year, but could rise to 800 depending on foreign fund flows.
       Mr Suthayut said the major question for valuations going forward is whether private investment picks up even as public stimulus programmes - a major driver of this year's economic rebound - begin to taper off in 2010.
       He projects the SET might edge down 10% this year. As stock prices of commodities and the cyclical sector have soared, so investment is expected to be expanded to private investment such as the financial sector and information and communication technologies.
       KTAM has kept its year target for assets under management at 230 billion baht,up from 220 billion now.

German funds may invest as much as C12 billion

       German real-estate mutual funds may invest as much as Euro12 billion (Bt590 billion) in the next two years as cash levels rise and falling prices make properties more affordable, CB Richard Ellis Group said.
       The 47 open-ended funds available to German savers have about Euro7.5 billion of cash or equivalent assets available to spend immediately on real estate, according to a report published by the Los Angeles-based property broker's London research team. That may rise by Euro4.5 billion if debt is included and cash keeps coming in at current levels, it said.
       German savers, attracted by an average annual return of 5 to 6 per cent, poured Euro3.04 billion into the funds in the first eight months of the year, according to the nation's asset-management body, BVI. The funds made about Euro1.65 billion of acquisitions in Europe during the first nine months, taking advantage of two years of falling property values, CB Richard Ellis estimated.
       "Many funds see this as an opportunity to re-enter the markets from which they ahve recently been priced out," Iryna Pylypchuk, an analyst at CB Richard Ellis, said in the report. "Paris can be singled out as one of the markets to attract particularly high levels of interest at the moment."
       Union Investment Real Estate, owned by the country's cooperative banks, said on September 25 that it had bought French investment bank Natixis's headquarters building in Paris for Euro177 million. Two days earlier, Commerz Real said it had paid Euro72 million for the base of PPR SA's books and music retail unit. FNAC.
       Those two asset managers, along with DEKA Immobilien Investment, are the most active, with about Euro6 billion between them to spend, CB Richard Ellis estimates.
       The dunds favour hotels and shopping centres and are also increasing the size of their investments in properties to about Euro100 million in the third quarter from Euro65 million in the first half, the property adviser said.

EX-MOGRAN EXECUTIVE STARTS HEDGE FUND

       Zoe Cruz, ousted as co-president of Morgan Stanley almost two years ago, is preparing to start her own hedge fund, the Wall Street Journal reported.
       Cruz, 54, is hiring employees to help her open Voras Capital Management.
       The fund will invest in distressed assets and take macroeconomic wagers on securities and currencies.
       Once viewed by analysts as a leading candidate to succeed John Mack as Morgan Stanley's chief exeucitve officer, Cruz was ousted in November 2007 after the firm disclosed US$3.7 billion (Bt123 billion) of losses on mortgage-related securities at the unit she ran. She was also Wall Street's highest-paid female executive, earning about $30 million in compensation in 2006.
       She follows other former bond traders such as Deutsche Bank's Boaz Weinstein in starting her own fund.
       Weinstein, a bond trader who lost more than $1 billion last year at Deutsche Bank, no runs Saba Capital Management in New York.
       Cruz plans to start canvassing investor interest in coming weeks.
       The fund intends to start with at least $200 million, thought the exact size has not been set, and it may not start for a number of months.
       Born in Greexe, Cruz received undergraduate and MBA defrees from Harvard University before starting her Morgan Stanley career in 1982 as a bond trader.
       She became a managing director in 1990 and helped run foreign exchange before taking charge of fixed income, commodities and foreign exchange in 2000.
       Under then-CEO Philip Purcell's leadership, Cruz clashed with her then-boss Vikran Pandit, who oversaw institutional securities, according to the book "Blue Blood and Mutiny: The Fight for the Soul of Morgan Stanley" by Patricia Beard.
       Cruz thought Pandit should allow her to take bigger trading rosks to improve revenue, while Pandit thought any blame for the division's underperformance should lie with Cruz.

GPF GETS BACK TO POSITIVE TERRITORY

       The Government Pension Fund's return on investment was 7.8 per cent in the first nine months of the year, with its outlook now dependent on the future pace of economic recovery.
       The return on the GPF's investment portfolio - mainly comprising bonds, equities and property - surged to Bt24.74 billion between January and September, Sathit Limpongpan, chairman of the board of directors, said at a press conference yesterday.
       A recovery in both the world and local economies has contributed to the positive returns, said Sathit, who is also permaฌnent secretary at the Finance Ministry.
       The fund last year lost 5.17 per cent, or Bt16.99 billion, due mainly to the global financial crisis. The loss led to the sacking of its secretarygeneral, Visit Tantisunthorn.
       The 7.8-per-cent return to date this year is close to the annual average return of 7 per cent since the GPF's formation in 1997, said Variya Wongpreecha, acting secretary-general.
       However, should a stockmarket correction take place over the rest of the year, it could have an adverse impact on the return for the full year, said Variya.
       The Stock Exchange of Thailand Index rose 59.36 per cent in the first nine months of the year, rebounding strongly from a sharp drop of 46.6 per cent last year. The main US bourse climbed 12.04 per cent against loss of 34.65 per cent last year, she added.
       With the SET Index rallying to test the 750-point level, many analysts predict the high probability of a market correction.
       "The GPF's return in the short term will depend on volatility. As long as we aim to beat the inflation rate, investment in the stock market is essential for the return to override inflation, " said Variya, referring to the GPF's bad experience last year.
       The GPF will remain cautious on investment, not increasing its equity portfolio, she said.
       The fund's asset allocation as of endSeptember was: Thai fixed income (mainly government bonds) at 69.3 per cent; foreign fixed income at 5.6 per cent; Thai equity at 8.9 per cent; foreign equity at 8.6 per cent; property at 4.1 per cent; and alternative investment at 3.5 per cent.
       Variya said that for the remainder of the year, the return would depend on the state of the global and Thai economies.
       "Economists are still debating whether economic recovery will be Vshaped -picking up sharply - or Wshaped, recovering but slowing down later," she said.
       As its rate of return has become positive, the GPF's 1.17 million members do not need to worry about their own returns this year, according to Variya.
       The GPF allows members who retire from the civil service to leave their money in the fund for longer if they want to offset negative returns in a bad year, she said.
       Responding to a question about the delay in appointing a new secretarygeneral, Sathit said previous candidates identified by the consulting firm were not qualified for the top job.
       The consulting firm must propose a new list of candidates within the next 30 days, he said. The board will then make a final decision.
       To prevent the new secretarygeneral from abusing their authority or using inside information, Sathit said they would be banned from personal investment in stock markets.

NEW PROPERTY FUNDS ON THE CARDS BY YEAR-END

       Assetmanagement companies are gearing up to launch several new property funds during the rest of this year, as their returns of 7-13 per cent, higher than deposit rates, have proved popular.
       The higher returns from property funds also generally beat inflation and have become an attractive alternative for longterm investors. However, experts recommend retail investors consider asset quality, level of professional management and liquidity in unit trust trading before deciding to invest.
       MFC Asset Management will introduce two new property funds worth a combined Bt3 billion. One will invest in office buildings and the other in goodsdistribution centres.
       BT Asset Management will launch a new "freehold" property fund by investing in hotels, which means investors have certain rights to the assets.
       Krung Thai Asset Management will also offer a new property fund investing in hotels and is now negotiating with a hotel operator in Phuket.
       SCB Asset Management (SCBAM) president Jotika Savanananda believes the combined size of property funds will continuously expand, because they are a longterm investment tool offering regular returns to investors.
       SCBAM is now proposing a plan to set up a new property fund of its own. Jotika said the plan consisted of four elements: management of the property assets must be in the bluechip league; the management structure must be free from conflicts of interest; property projects must have high liquidity; and the potential for longterm growth must be high and rentalpricing adjustment flexible in terms of inflation. Thus, management and asset quality are key.
       "We're focusing on good brand when we choose to invest in any asset. The management must be professional, and the return on investment should be inflationproof," Jotika said.
       Moreover, fund managers in general must give advice about which funds are suitable for investors of specific risk profiles.
       For example, a freehold property fund would provide less return per annum but offer an opportunity to gain from the sale of assets at the fund's maturity. But with leasehold property funds, investors would receive higher annual returns but not be able to gain from an asset sale.
       So far, annual returns on freehold property funds listed on the Stock Exchange of Thailand (SET) have been running at 78 per cent and that on leasehold property funds 10-13 per cent.
       Meanwhile, Siam Commercial Bank's Research Department predicts the policy rate will be stable until next year, when it will rise in the second half. Bankdeposit and lending rates will also increase in next year's second quarter after bank lending expands significantly in line with the economic recovery.
       BBL Asset Management senior executive Wasin Wattanaworakijkul said the trend of rising interest rates would not affect propertyfund growth. He believes investors will continue to place a high priority on property funds as a source of assets that provide longterm returns that surpass deposit and inflation rates.
       In November, BBL Asset Management will introduce a Bt1.5billion freehold property fund that invests in rental warehouses, with and expected annual return of 8 per cent.
       Wasin said the warehouse business was expected to expand in line with economic growth, because logisticsrelated industries would pick up.
       The Kingdom has a shortage of warehouses that operate at a high standard, and so the firm has chosen to invest in this kind of asset in the belief this type of business has good potential.
       Siam City Asset Management managing director Teeraphan Jittalarn said his company would soon launch a new property fund that invested in listed property funds or fund of funds. The company is now discussing with the Securities and Exchange Commission whether it is possible to set up such a fund. If so, it would help solve liquidity problems regarding listed property funds.
       Experts suggest considering different factors before investing in different types of property funds.
       For example, for property funds that invest in department stores, investors should consider details of rental areas and the rental contracts of each department store, along with economic conditions, locations and management capabilities.
       For property funds that invest in airports, investors are advised carefully to consider the tourism situation, airport traffic and even airport passenger fees.
       For property funds that invest in hotels, tourism, locations, reputation and management ability should be considered the most.
       For property funds that invest in factories, focus on rental fees, rental contracts, tenants, customer diversity and the overall investment situation.
       For property funds investing in office and residential buildings, apartments and dormitories, take a good look at rental fees, rental contracts and tenant turnover.
       Property funds listing on the SET so far this year include a Bt1.16-billion mutualfund project from the Sala@Sathorn Property Fund (SSPF) from Primavest Asset Management; mutual funds by the MFCStrategic Storage Fund, issued by MFC Asset Management and worth Bt608 million; and the Bt603million 101 Montri Storage Property Fund from BT Asset Management.

       "We're focusing on good brand when we choose to invest in any asset. The management must be professional, and the return on investment should be inflation-proof."

IMF raises 2010 global growth forecast

       The International Monetary Fund has raised its forecast for global growth next year as more than US$2 trillion (Bt67 trillion) in stimulus packages and demand in Asia pull the world out of its worst recession sicne World War II.
       The IMF said the global economy would expand 3.1 per cent in 2010, more than a July forecast of 2.5 per cent. China's economy will grow 9 per cent and India's, 6.4 per cent. That compares with growth of 1.7 per cent in Japan, 1.5 per cent in the US and 0.3 per cent in the euro region.
       Days after world leaders declared that the Group of 20 was now the main forum for steering the global economy, the forecasts show emerging Asian nations powering the return to growth. The IMF, whose members are gathering in Istanbul for next week's annual meeting, warned that the recovery would be "weak by historic standards" and said restoring banks to health was a priority. "The global economy appears to be expanding again, pulled by the strong performance of Asian economies and stabilisation or modest recovery else-where," the IMF said in its semiannual World Economic Outlook.
       Still, the rebound will be Wsluggish, credit constrained and, for quite some time, jobless".
       The world economy will contract 1.1 per cent this year, less than the 1.4 projected in July, the IMF said. Advanced economies, including the US, Germany and Japan, will continue to lead the slump, shrinking 3.4 per cent. As a bloc, emerging economies will expand 1.7 per cent this year.
       With the economy recovering, the key challenge for policy-makers next year will be deciding when to start raising interest rates and unwinding emergency lending to banks, the IMF said. While a premature exit could pose a significant threat to the recovery, waiting too long could stoke asset bubbles in faster-growing emerging economies.
       "The recovery has started," Olivier Blanchard, the IMF's chief economist, said yesterday at t news conference in Istanbul.
       While "financial markets are healing", the figures "should not fool governments into thinking that the crisis is over".
       In the richest nations, conditions can remain accommodative for an extended period, because inflation "is likely to remain subdued as long as output gaps remain wide", the IMF said.
       In some emerging economies, conditions may need to be tightened earlier.

Banks lack capital to restore credit flows for recovery: IMF

       The International Monetary Fund warned yesterday that banks lack the capital to restore credit flows to levels needed to support a recovery from the global financial crisis.
       "We are on the road to recovery, but this does not mean that risks have disappeared," said Jose Vinals, director of the IMF's monetary and capital markets department.
       "If the question is whether banks have enough capital to supply sufficient credit to support recovery, we believe that the answer is 'no'." Vinals said at a news conference on the release of the fund's semi-annual Global Financial Stability Report.
       Banks have yet to recognise about US$1.5 trillion (Bt50 trillion) in losses for the 2007-2010 period, slightly more than the $1.3 trillion in losses written down so far, the IMF said.
       For banks and non-back financial institutions, the global write-downs amount to about $3.4 trillion for the period, compared with about $4 trillion seen six months ago.
       More than 94 per cent of the writedowns would be taken by US and European banks.
       "Extreme systemic risks have abated, but complacency about banking system repair is still a concern," IMF economists wrote in the report.
       Recently bank balance sheets have benefited from capital-raising efforts and positive earnings, with large US banks in particularly gaining from a stock market rally from March lows.
       But the IMF economists voiced serious concerns that credit deterioration would continue to put pressure on banks' balance sheets.
       Vinals explained that the $1.3 trillion in write-downs had been basically on securities losses, which occurred instantly.
       The potential $1.5 trillion in u ndeclared losses will be found in the weakening of the loan book, which takes longer to ascertain.
       "The big loss recognition will come from loans from the credit book," Vinals said.
       The analysis showed that US banks had recognised slightly more losses than have those in the UK and the euro zone. In Europe, the lag was explained by different accounting standards and a lower frequency of financial reporting.
       The United States has been much more successful in raising capital than European banks in recent months, Vinals added.
       But capital conservation remains crucial at this stage of the recovery, he said, particularly after the Group of 20 nations decided at the Pittsburgh summit last week to set new capital requirements for banks.
       "You need to have some muscle as a bank," Vinals said. "Banks need more capital."
       Vinals criticised "lagging" progress in cleansing impaired assets from balance sheets and urged banks step up their efforts to remove "this uncertainty" to get credit flows moving again.
       Banks also face a "wall of maturities" over the next two to three years of an estimated $1.5 trillion in debt, he said.
       And with recovery from the worst global recession since the Great Depression expected to be long and sluggish, bank earnings are likely to be lower in the post-crisis environment.
       "The tightening of bank regulation under way is expected to reduce net revenues and require more costly self-insurance through higher levels of capital and liquidity," the report said.
       The IMF pointed to "growing confidence" that the global economy had turned the corner, which was underpinning the improvements in financial markets.

Malaysia, Saudi Arabia create $2.5bn investment fund

       Malaysia, struggling to reverse investment outflows, said yesterday that it had won a $1.5 billion investment deal from Saudi Arabia and that it expected to strike more deals in coming months.
       The export dependent Southeast Asian country has been hit hard by the global economic downturn and has struggled since the 1998 Asian financial crisis to attract foreign direct investment, losing out to neighbours like Thailand and emerging giant China.
       In 2008, foreign direct investment (FDI) into Malaysia fell by 4% to $8 billion, United Nations data showed,and net flows have been negative since the second quarter of 2008, according to Malaysian central bank figures.
       The Saudi investment is for a planned $2.5 billion fund that will be set up by PetroSaudi International Limited (PSI)and a Malaysian government body called 1Malaysia Development Berhad (1MDB).
       The fund, which will also be financed by a $1 billion Malaysian government bond sale, will invest in petroleum, oil and gas, green energy and real estate.The joint venture will be allowed to invest outside Malaysia but will have to repatriate profits.
       "This will bring a lot of contributions and mega-injections of capital to drive the economic growth of Malaysia, not only in the short term but in the long term," Prime Minister Najib Razak told reporters.
       With global investment flows expected by the UN to slow this year and to recover only slowly next year, Najib said that Malaysia would sign more deals with "capital surplus" countries.
       "We should expect to tap FDI from within Asia, such as China and India,and also the Middle East where they accumulated a lot of surplus with the earlier oil boom," said Lee Heng Guie,head of economic research at Malaysia's CIMB Investment Bank:
       "From a FDI perspective, it's very positive ... It's a time when FDI inflows could be scarce," Lee said.
       News of the deal for which Najib said the Saudis had already transferred their portion of the investment caused the Malaysian ringgit to extend gains to 3.457 per dollar, its highest in nine months, a trader in Kuala Lumpur said.

TAKING LESSONS FROM A YEAR OF ECONOMIC LOSSES

       Early last September, most of us could not imagine how bad things were going to get.
       But the failure of investment bank Lehman Brothers a year ago is seen as the catalyst that sent stocks into a free fall that lasted months and wiped out nest eggs.
       The market appears to have hit bottom in March, with the Dow Jones industrial average rising more than 45 per cent since then.
       We are less afraid to open our 401(k) statements. And many of us are adjusting to the new reality that we will have to work later into our golden years, save more and spend lass.
       This is a good time to reflect on what investment lessons the past year provided. Here are some:
       DIVERSIFICATION WORKS, MOSTLY
       So many asset classes lost ground last year that some people proclaimed diversification dead. But the obituary was premature.
       "We learned last year that diversification doesn't solve all the problems," said David Wyss, chief economist for Standard & Porr's.
       For example, stock markets around the world move more in tandem with our market than they used to, so diversifying among them offered little protection.
       Annually rebalancing your portfolio would not have prevented losses last year, but the exercise may have limited the pain.
       "Rebalancing is absolutely critical to manage your portfolio should be in stocks, bonds or cash, based on when you need the money (and your stomach for risk).
       NEVER BE HANDS OFF
       Target-date retirement funds have been an answer for investors who do not want to make the tough choices. You select a fund with the date closest to you expected retirement, and a professional manager makes the investment decisions for you based on that time frame.
       But as stocks tanked, many older workers suffered steep losses and discovered the funds held more stocks than they realised.
       And we learned that funds with the same date held wildly different stock amounts.
       You do not have to give up on targetdate funds, but it is clear you cannot just pick one by the date.
       You need to look at the fund's mix of stocks and bonds, how that will change over time and whether the strategy fits your appetite for risk.
       KEEP IT SIMPLE
       Even Wall Street firms got burned by investments they did not understant. Avoid complex investments that can disguise high fees or risks, said Bill Reichenstein, an investment professor at Baylor University in Waco, Texas.
       "If you don't know what it is or how it makers those returns or understand the strategy, then get out of it," he said.
       BE SCEPTICAL
       Investors felt so lucky to invest with Bernie Madoff that they never asked questions, such as how he managed to achieve consistently high returns when no one else could.
       Even regulators dropped the ball on Madoff, who pulled off a huge Ponzi scheme and now sits in prison.
       WORK LONGER
       Retirement experts for year have advised workers to delay retirement, because of longer life spans. Workers are now heeding that advice.
       The Employee Benefit Research Institute's annual "Retirement Confidence Survey" released in the spring found 28 per cent of workers in the previous year changed the date they planned to retire.
       Most are postponing retirement because of the weak economy or to make up market losses.
       MAINTAIN LESS DEBT, MORE SAVINGS
       Consumers have long lived beyond their means with the help of easy credit.
       The financial crisis is turning us into savers.
       The personal-savings rate reached 5 per cent in the second quarter, up from 1.8 per cent in the same period two years before.
       And July marked the 10th consecutive month that consumers reduced creditcard debt, the most recent figures show.
       IT IS ONLY ONE YEAR
       Do not assume 2008 is the new norm and that you should change your investment strategy for decades to come based on a singly year, said Stuart Ritter, a financial planner with T Rowe Price Associates in Baltiomre.
       What works one year might not the next.
       BAD THINGS CAN HAPPEN
       You diversified and rebalanced but still took a hit last year from events out of your control.
       "Sometimes you can do all the right things and something bad happens. It doesn't mean what you did was wrong," Ritter said. "That's a lesson for life."

       "Sometimes you can do all the right things and something bad happends. It doesn't mean what you did was wrong. That's a lesson for life."

STOCKS "CLOSE TO SERIOUS OVERVALUATION"

       Stocks will be seriously overvalued if the SET Index reaches 760 points, the Securities Analysts Association warned yesterday, while the market got a downฌgrade from overweight to neutral by MFC Asset Management.
       The SET Index has rallied about 90 per cent from the year's trough at about 380 points and it would have doubled at 760, SAA secretarygenฌeral Sombat Narawuttichai said.
       At that point, it would risk a steep correction from profittaking, he said.
       Even at 700 the SET exceeds its fundamental value based on pricetoearnings (P/E) and discounted cashflow analyses.
       The economy can support the SET at only 630-650, some analysts have said.
       About 40 per cent of all market securities are overvalued, 50 per cent are undervalued and 10 per cent are in line with their fundamentals.
       Thai shares have jumped 61 per cent so far this year, underperforming the Asian region.
       Vietnam's Ho Chi Minh Stock Index has gained 84 per cent, Jakarta Composite Index 81 per cent and India's Sensex 74 per cent.
       Even though the SAA and MFC Asset Management said the SET Index over 700 points is overvalued, Asia Plus Securities CEO Kongkiat Opaswongkarn and ING Funds (Thailand) managing director Maris Tarab recently estimated that shares would reach 800 within this year.
       Sombat said 91 per cent of analysts responding to the SAA's survey were moderately confident in the government's Strong Thailand economic stimulus package, and 9 per cent were highly confident.
       Altogether 23 securities analysts answered the questionnaire after the SAA and analysts met Finance Minister Korn Chatikavanich on September 11.
       About threefourths of the respondents have medium confidence and the others have high confidence.
       Four per cent of the respondents are not confident that the government's investment scheme can go on until 2012 as planned regardless of political changes, 43 per cent have low confidence, 48 per cent have medium confidence and the rest have high confidence.
       The analysts agreed unanimously that construction and building material companies would benefit from the scheme but some stocks were overvalued.
       After meeting with Korn, some analysts started preparing to upgrade the country's 2010 gross domestic product forecast by about 1 percentage point from the SAA's current consensus of 3 per cent.
       Supakorn Soontornkit, senior executive vice president of MFC, told reporters that his company downgraded the stock market as it exceeds his company's base and bestcase scenario for 2009 at 675 and 720 points, respectively.
       "I expect that funds flow will continue and shortterm investors can still pile up on stocks but they must be prudent. The SET Index will not reach the 800 level. However, it will not fall below 700 points," he said.
       MFC forecasts the SET at 680 in the worstcase, 750 in the basecase and 820 in the bestcase scenarios for next year.
       His company recommends investing in three to four-year debt instruments offering coupon rates of 3.54 per cent but avoiding putting money in shorter debt instruฌments as yields are going up.
       It is also slightly overweight on commodities and real estate investment trusts.
       Pichit Akrathit, president of MFC Asset Management, said his company is marketing the I-Emerging 10 Fund until Monday.
       The fund's policy is to invest in equities, debt instruments and deposits in emerging countries worldwide, depending on market conditions.
       MFC plans to launch a property fund investing in an office building in Bangkok as well as the Thailand Creativity Fund, investing in innoฌvative businesses.

BIG QUESTIONS THAT NEED QUICK ANSWERS

       World leaders will meet at the G-20 Summit with time running out to prevent the recession worsening
       The G-20 Summit in Pittsburgh, which will begin today and end on Friday, opens up an opportunity for world leaders to find a way out of the current financial mess. Prime Minister Abhisit Vejjajiva is also participating in this summit, as chair of the Association of Southeast Asia Nations.
       Five months ago, the world was reeling under unprecedented financial turmoil. Many were predicting that an economic depression was on the horizon, after decades of global imbalances and financial bubbles. A concerted action by the G-20 helped stave off the crisis, with some US$12 trillion having been poured into the global economy and financial system to prevent a systemic collapse.
       High on the agenda of the G-20 - the member countries of which control about 85 per cent of the world's gross domestic product - is a joint economic programme to arrest the recession, coordination efforts on financial policy to prevent another crisis, how to curb bank executives' pay to prevent them from taking excessive risks, and an exit strategy from the government intervention into the economies.
       There are dilemmas facing the G-20 leaders. The fiscal stimulus programmes may prevent economies from weakening any further, but they have created enormous burdens on public-sector debt. The loose monetary policy to assist banks and corporations in resuming their business might ignite fears of inflation. When is the appropriate time for the G-20 to exit from its heavy-handed involvement in the global economy and global financial system so that the private sector can take charge again?
       There are signs that the global recession is fading. But most G-20 leaders, and the International Monetary Fund, are not rushing to bet on that. Gordon Brown, the UK prime minister, said it is premature to conclude that the recession is over, and it is still necessary for the UK to continue its fiscal stimulus programme. US President Barack Obama said unemployment in the US will continue to worsen over the next couple of months. Canada is pledging a fiscal stimulus package equivalent to about 4 per cent of its gross domestic product, just to keep the economy humming. It has called for the G-20 to continue the fiscal programmes to help lift the world out of the recession.
       Most interesting will be how China plays its cards at the summit. China would like to have a greater say in the International Monetary Fund. It has said it is willing to subscribe to the tune of $50 billion in the IMF's $500 billion recapitalisation programme, to increase its lending capacity to needy countries facing balance of payments crises. The US and the European Union, however, are still cautious over China's attempt to exert its newfound influence in the international financial institutions.
       Moreover, China also wants to reform the IMF away from its current make-up, which has been around since the end of World War II. Along with Brazil, India and Russia, China has called for the international monetary system to steer away from the US dollar as the predominant reserve currency. China is relying on a two-track strategy on this front. It would like the role of the Special Drawing Rights - a currency unit of the IMF - to play a greater role in global financial transactions. At the same time, it is boosting the role of its renminbi, gradually taking steps to liberalise its financial system to allow greater convertibility of the currency.
       These are the big issues that the G-20 leaders will have to address to prevent this recession from deepening and the financial turmoil from getting any further out of control. If the global economy is to face a double dip, it will be difficult for them to pull it out of trouble a second time, given the massive resources they have already poured in to support it.
       Moreover, if the G-20 leaders do not have the courage to rein in control over the financial services, which have gone out of control, financial turmoil will return to haunt us all again.

CRISIS NOT BEHIND US, SAYS IMF

       The G-20 summit will kick off today in Pittsburgh with the leaders pledging to hold on to government stimulus measures to avoid interrupting the economic recovery because the cirsis is not over yet.
       The agenda at the September 24-25 summit includes possible curbs on financial industry pay, joint economic policies anad whether to start winding down stimulus spending.
       However, British Prime Minister Cordon Brown indicated that the global economy had yet to ffel the biggest impact of the government-led spending programmes to stimulate demand and reiterated concerns about removing them too early.
       "The stimulus that we have still got to give the world economy is greater than the stimulus we have already thad," Brpwm said. "What we want to do is safefuard a recovery from a recession we feared would develop into a depression."
       Politicians in Britain are calling for the government to put the brakes on spending and to fucus on curbing the budget deficit that next year will exceed 12 per cent of gross domestic product, the most in the Group of 20.
       But International Monetary Fund Manageing Director Dominique Strauss-Kahn called on leaders from the G-20 nations to maintain efforts to pull the world economy out of a recession, warning that the crisis is not over yet.
       "This recovery will be rather sluggish, at an average lower than growth we had befor the crisis," Strauss-Kahn said in an interview in Washington. "It's too early to say the crisis is behind us."
       The IMF chief also urged policy-makers to seize the opportunity to address imbalances in trade and investment flows blamed for contributing to the credit collapse.
       Giving China a bigger role in the fund will help bolster cooperation, he said, as policy-mamers seek agreement to pare US borrowing and buttress domestic demand in nations with trade surpluses.
       Brown is seeking support for a formal series of meetings among world leaders to coordinate economic policies and tackle problems ranging from trade imblances to bonus pay earned by bankers.
       Brown said economic recovery was not yet guaranteed, addomg tp cp,,emts from IS President Barack Obama, who this week said the unemployment rate "could even get a little bit worse, over the next couple of months".
       French Finance Minister Christine Lagarde, who will also be in the Pennsylvania city along with President Nicolas Sarkozy, echoed those sentiments.
       The G-20 needs to "give a very strong signal that they will continue the stimulus plans", Largarde said on France Inter radio. "We've stopped the free-fall, but we must continue to underpin the economy."
       The UK and the US are proposing similar measures to get national governments to steer economic policy so that futhure imbalances can be worked out before they damage the system.
       At the same time, Beijing is pressing for a bigger voice in the IMF and says G-20 leaders should start making good on promises to give developing countries more IMF votes.
       A deputy governor of China's central bank proposed the creation of a multinational sovereign wealth fund to help developing countries, in a report released ahead of the G-20 summit.
       "Considerations can be [given] to setting up a "suprasovereign wealth investment fund' to help channel captital inflow into the developing would so that these countries can serve as new engines in global recovery," said the official.

Funds stabilise as "vanished" cash returns

       Thailand's fund industry has returned to normal, with net assets under management industry-wide projected to exceed 1.82 trillion baht in 2010, according to Pichit Akrathit, the president of MFC Asset Management.
       The figure would represent a 3.73%increase from the 1.75 trillion baht now managed by local funds, and is based on a 2010 target for the Stock Exchange of Thailand index of 820 points.
       Portfolio assets held by the asset management industry would fall to around 1.804 trillion baht assuming the SET index stayed at around 750 points in 2010.
       he index closed yesterday at 730.52 points, up 6.15, in trade worth 32.5 billion baht.
       Dr Pichit said that from August to November 2008,130 billion baht in assets vanished from the local fund industry.
       The funds have since returned over the past four months, he said, adding that there was a 60% correlation between the SET and net asset values for the fund industry.
       Local stocks also still have room to move upward, even with the more than 60% gain posted by the SET for the year to date.
       Dr Pichit noted that over the past year, foreign investors had injected 40 billion baht in funds into local stocks,representing just 20% of the total outflows seen during the global crisis.
       He added that Thailand's financial system had also shown signs of growing maturity, with fund assets now accounting for 27.8% of total bank deposits compared with 20% before the global financial crisis.
       By the end of 2010, total net assets held by local funds is projected to rise to 28.8% of bank deposits.
       Narongchai Akrasanee, the chairman of MFC Asset Management, agreed that global financial markets have largely normalised.
       "Still, there remains a number of risk factors that deserve close monitoring,including the extent of financial losses post-crisis and the speed in which the real sector recovers," he said.
       Supakorn Soontornkit, a senior executive vice-president at MFC Asset Management, cautioned that local stocks could see a short-term correction on profit-taking that could push the index to 680 to 700 points.
       MFC plans to launch several new funds over the next few months, including a commercial property fund now in the filing process with the Securities and Exchange Commission.
       The company also expects to see progress under the Thailand Creativity Fund,a new fund to be placed with institutional investors and emphasising investments in innovative companies.

SCIB SHARE PRICE TO BE DECIDED EARLY NEXT YEAR

       Siam City Bank has said its major shareholder, the Financial Institutions Development Fund, will be able to decide the bank's share price for potential buyers of its stake by early next year.The FIDF, which holds about 47 per cent of SCIB's shares, has been engaged in the process of selling its stake for years and is expected to conclude the sale once the price is set. The share sale is therefore now likely to be concluded by the midฌdle of next year.
       "The FIDF expects it will get a financial advisฌer by October 22. It will have the adviser study all the information for about three to four weeks. Then, it will submit a prospectus to potential SCIB share buyers within another two weeks. So, we expect that we will know the final [share] price early next year," Chaiwat Utaiwan, presiฌdent and CEO of SCIB, said over the weekend.
       Currently, the FIDF holds 47.58 per cent of SCIB, which is the seventhlargest bank in Thailand.
       Early last week, the FIDF's board approved the hiring of a financial advisor in order to suggest strategy and a sharesale plan for SCIB. The adviser is expected to be appointed on October 22.
       The Bank of Thailand said the entire process for the SCIB share sale was likely to be concluded within the second quarter of next year.
       The share sale has attracted many buyers, including Thanachart Group, whose subฌsidiary Thanachart Bank's major shareholder is Canada's Scotia Bank. Other potential buyers include the Industrial and Commercial Bank of China, HSBC and Barclays.
       Chaiwat added that once the FIDF submitted a prospectus to buyers, they would send their letฌters of intent to buy SCIB shares to the fund and propose their pricing.
       The financial adviser and the FIDF will then consider the responses and allow buyers to conฌduct due diligence. The FIDF and the Finance Ministry will make the final decision on the purchaser.
       SCIB has more than 400 branches with banking business licences and conducts universal banking via subsidiaries, includฌing insurance, life insurance, leasฌing and securities.
       As of the end of June, SCIB's assets were accounted at Bt414 bilฌlion for separatฌed statement and Bt420 bilฌlion for consoliฌdated stateฌment. The bank's lending stood at Bt279 billion and deposits at Bt334 billion.
       Chaiwat said the bank would not be able to extend credit as targeted this year at Bt18 bilฌlion, which would have repฌresented annual growth of 6 per cent. New lendฌing will instead be in the range of Bt8 billion to Bt15 billion.
       He added that the bank had approved some large credits, but many corporate customers and small and mediumsized enterprise clients had not taken up their credit lines. In addition, these corporate and SME customers are repaying their existing debts.
       He expects the bank's lending growth for next year to either expand slightly from this year or remain flat, as it is currently under the process of a change in major shareholder. The change would affect the bank's organisation as well as business strategy and lendฌing growth, he said.

       "The bank will not be able to extend credit as targeted this year at Bt18 billion, which would have represented annual growl of 6 per cent. New lending will instead be in the range of Bt8 billion to Bt15 billion."

CHINA INVESTS $850M IN COMMODITIES TRADER NOBLE

       China's sovereign wealth fund is buying a US$850-million (Bt28.6-billion) stake in Noble Group, one of Asia's biggest trading houses, to expand its commodities investments.
       China Investment Corp (CIC), which manages a portion of Beijing's $2 trillion in foreign currency reserves, will own 12.91 per cent of Noble after the deal, Hong Kong-based Noble said in a statement.
       Chinese companies, flush with cash from the country's economic boom, are investing abroad in mining, oil, agricultural commodities and other resources in hopes of profiting from future increases in demand.
       Noble and CIC plan to jointly invest in infrastructure assets and supply chain management related to Noble's agricultural activities, the statement said. Noble's assets range from Australian iron mines to Brazilian sugar mills and cocoa processing in Africa.
       Noble, whose shares are traded in Singapore, reported $36 billion in 2008 revenues but profit has been hurt by the decline in commodities prices, falling 33 per cent in the quarter ending on June 30 from a year earlier.
       Among its other recent resource deals, CIC paid $1.5 billion in July for a 17-per-cent stake in Canadian mining Teck Resources LTd.
       ON THE NET:
       www.thisisnoble.com

       China Investment Crop will own 12.91% of Noble. Noble's assets range from Australian iron mines to Brazilian sugar mills and cocoa processing in Africa.

CHINA MAY BUY GOLD OFFERED BY IMF

       China may purchase some of the 403.3 metric tonnes of gold being offered by the International Monetary Fund, Market News International reported yesterday, citing two unidentified government sources.
       China will consider the purchase to diversify its reserves if the price is right and the potential return relatively high, the report said, citing one of the sources.
       There is no indication China is seeking to buy all of the gold on offer, it said, citing no one.
       The IMF board approved the sales, valued at about US$13 billion (Bt445 billion), pledging to avoid disrupting the market with the transactions and saying it would "stand ready to sell gold directly to central banks," according to a statement issued last Friday.
       An official at the People's Bank of China declined to comment.
       China, the world's biggest gold producer, has increased reserves by 76 per cent to 1,054 tonnes since 2003 and has the fifth-biggest holdings by country, Hu Xiaolian, head of the State Administration of Foreign Exchange, said in April.
       China's foreign reserves, the world's largest, rose 9.1 per cent in the second quarter, climbing a record $178 billion, and totalled $2.13 trillion on June 30, according to the central bank. The bullion sales can occur any time, the IMF said. Selling directly to central banks, which have not yet expressed interest, would be faster, according to the IMF.
       Bullion for immediate delivery declined as much as 1.2 per cent in Singapore to a low of $995.97 an ounce, the first day it traded below $1,000 since September 15.
       It was priced at $999.30 ounce late afternoon in Singapore.
       China may double the ratio of its gold holdings to its foreign-currency reserves over five years, Sun Zhaoxue, chairman of the China Gold Association, said on May 15.
       The association "hopes" China will increase gold holdings to 3 per cent of foreign currency reserves in five years from 1.4 per cent now, Sun added.

GOLD READY TO HIT HISTORIC HIGHS

       Despite the news that the International Monetary Fund would sell more than 400 metric tonnes of gold, local fund managers believe global gold prices could still stand above US$1,000 an ounce and would soon rise to a new historic high.
       Gold prices yesterday declined to under US$1,000 an ounce for the first time since September 15.
       They said several central banks have reduced exposure to the US dollar as a reserve currency, while more institutional investors have shifted more of their portfolios to gold.
       Yesterday, gold declined, further cooling a rally that sent prices above $1,000 an ounce this month, after the IMF approved bullion sales and as a rebound by the dollar curbed demand for an inflation hedge, according to Bloomberg.
       The IMF's executive board approved sales of 403.3 metric tonnes valued at about $13 billion (Bt445 billion), pledging to avoid disrupting the market with the transactions and saying it would "stand ready to sell gold directly to central banks".
       "I don't think it will affect the market too much," Jonathan Barratt, managing director at Commodity Broking Services, said on Monday. "It will either go to central banks or they might actually auction it off."
       Morgan Stanley also said the IMF's approval to sell gold is not a "material threat to current prices" and kept its 2010 gold forecast at $1,000 an ounce, according to an emailed report yesterday.
       Immediatedelivery bullion yesterday lost as much as $11.63, or 1.2 per cent, to $995.97 an ounce and traded at $1,000.20 by midmorning. The metal, which fell below $1,000 for the first time since September 15, added 0.2 per cent last week, a fifth gain.
       The US Dollar Index, a gauge of the greenback against six major currencies, extended gains, climbing as much as 0.2 per cent. Some traders buy gold to preserve purchasing power when the US currency weakens. On Friday, gold prices in New York were at US$1,010.3 an ounce.
       For the domestic market, gold bar prices early yesterday were quoted at Bt15,900 per baht weight for buying and Bt16,000 for selling, while gold ornaments were quoted at Bt15,675.44 for buying and Bt16,400 for selling.
       Gold bar prices were at 2:40pm changed to Bt15,850 for buying and Bt15,950 for selling, while gold ornament prices were changed to Bt15,614.80 for buying and Bt16,350 for selling.
       Gold has jumped 14 per cent so far this year on speculation that inflation will accelerate as the US economy emerges from the worst recession since the Great Depression. The precious metal rose 0.2 per cent last week, the fifth straight weekly gain and the longest streak since November 2007.
       Bullion has jumped around 30 per cent since the collapse of Lehman Brothers last year.
       Paisarn Krutdamrongchai, a senior executive of TMB Asset Management, pointed out that global gold prices still stand above $1,000 as several institutional investors have reduced their holdings of US treasuries, as they believe the US dollar would weaken. And they have turned to investing more via gold funds to diversify risks.
       Prapas Tonpibulsak, CEO of Ayudhya Fund Management, believes global gold prices could set a new peak above the record high reached last year at $1,034 an ounce.
       Most institutional investors and central banks view the US dollar as depreciating further, so several central banks have reduced their US dollar holdings.
       Fund managers have also shifted their funds away from US treasuries, which are likely to provide skimpier returns than commodities and gold.
       The stock market rally over the past year has made some riskaverse investors shift to bullion.
       Jitti Tangsithpakdi, president of the Gold Traders Association, said the news report of the IMF selling gold, which would curb the global gold rally, is only a report with no grounds.
       He said the IMF's gold sale needs approval from the US Congress and more than 100 member countries. The IMF is also under a sales quota of not more than 500 metric tonnes of gold per year.
       "I can tell you that this is only a news report released by speculators. I believe that gold will reach its new high within a short period," he said.