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.
Saturday, October 31, 2009
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.
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.
Tuesday, October 20, 2009
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."
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."
Saturday, October 17, 2009
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.
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.
Tuesday, October 13, 2009
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.
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.
Monday, October 12, 2009
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.
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.
Sunday, October 11, 2009
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.
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.
Thursday, October 8, 2009
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.
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.
Sunday, October 4, 2009
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."
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.
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.
"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.
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."
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."
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