New Fund: Kenanga Asia Pacific Total Return

After merging with ING Funds Berhad, Kenanga Investors Berhad launched its first new fund of the enlarged family. In this uncertain global economic environment, how much return can a fund generated was the main concern for many investors. Want to get higher return? Then, we cannot runaway from higher volatility! Are there any balance in between?

Yes. To cater for such investors, this new fund aims to provide a compounded rate of return of at least 10% per annum over market cycle (5 years) by investing in a diversified portfolio of Asia Pacific equities.

3 Reasons WHY it benefits you:

Well... Unlike others, this fund DO NOT has any benchmark constraint. This allows flexibility in identifying and implementing the most optimum investment strategy. Picture below shows the differences between Absolute and Relative return:

Still not yet convinced? How about the proven track record?

Click here to download prospectus

Source: Kenanga Investors Bhd

Key Highlights of BNM 3Q11 Report

Titled as "ECONOMIC AND FINANCIAL DEVELOPMENTS IN MALAYSIA IN THE THIRD QUARTER OF 2011", Bank Negara Malaysia (BNM) review some interesting facts on the status of our economy and the market outlook going forward. The announcement was chaired by Central Bank's governor to address the media after the closing of Bursa Malaysia.

Growth improved in the third quarter

Despite the challenging environment, Malaysian economy registered a higher growth of 5.8% (2Q11: 4.3%), due to stronger domestic demand. The robust  domestic demand was driven by an expansion in both household and business spending as well as higher public sector expenditure. Manufacturing sector recording a significantly better performance supported by firm regional  demand for resource-based products, coupled with the normalisation in supply chain disruptions arising from the Japan natural disaster.

The headline inflation rate, as measured by the change in the Consumer Price Index (CPI), rose to 3.4% on an annual  basis in the third quarter (2Q 11: 3.3%). The increase in consumer prices was largely the result of higher prices in the food and non-alcoholic beverages category.

Current  account recorded a larger surplus of RM26.6 billion, equivalent to 12.5% of GNI due to a higher goods surplus and lower income deficits. As at 31 October 2011, International Reserves position had increased to RM429.1 billion, equivalent  to USD134.8 billion, sufficient to finance 9.9 months of retained imports and is 4.1 times the short-term external debt.

Monetary policy is supportive of economic activity

The Overnight Policy Rate (OPR) was  left unchanged at 3.00% in the third quarter of 2011, following a 25 basis points increase in May. The stance of monetary policy is consistent with the assessment of heightened uncertainties arising from global developments that have created greater downside risks to growth.

The ringgit depreciated against the US dollar in the third quarter, in line with other regional currencies. The depreciation, mostly in September 2011, reflected mounting concerns over the European sovereign debt crisis and the sustainability of global economic recovery, which led to higher risk aversion and prompted some investors to unwind holdings of emerging market assets.

Please click here to read the full BNM report.

New Fund: PB Growth Sequel Fund

Public Bank is launching a new fund, PB Growth Sequel Fund (PBGSQF) on 15 November 2011. PBGSQF is an equity fund that invests in a diversified portfolio of primarily Malaysian equities to achieve capital growth over the medium- to long-term period. PBGSQF is managed by Public Bank’s wholly-owned subsidiary, Public Mutual.

Fund Specific Benefits

PBGSQF provides investors the opportunity to participate in the medium- to long term growth potential of the equity market through investments in a diversified portfolio of  index-linked companies, blue chip stocks and companies with healthy growth prospects that are listed on Bursa Securities.

PBGSQF will invest in companies with reasonable earnings growth prospect over the medium- to long-term to maximize the growth potential of the fund. Some of the sectors that the fund would focus on include financial, communications, industrial and consumer sectors.

What is the Asset Allocation?

To achieve increased diversification, PBGSQF may invest up to 30% of its net asset value (NAV) in selected foreign markets which include Singapore, Taiwan, South Korea, Japan, Hong Kong, China, Thailand, Indonesia, Philippines, Luxembourg and other permitted markets. 

The equity exposure of PBGSQF will generally range from 70% to 98% of its NAV. PBGSQF is suitable for investors who wish to participate in the medium to long-term growth potential of companies listed on Bursa Securities.

What else should I know?

The Fund may also invest in equity linked Participation Notes for selected regional stocks listed on the Luxembourg Stock Exchange. Equity linked Participation Notes are instruments designed to track designated securities. The movement of these notes are similar to the underlying shares listed in their respective markets. These Notes are issued by international foreign broking houses for investment by investors who are not able to invest directly in the underlying foreign shares.

Other than that, the Fund may also invest in:

• listed warrants and options (if any) to enhance its returns.
• unlisted equities with attractive potential returns, particularly in companies that are expected to seek listing on the Bursa Securities or selected regional markets within a time frame of two years.
• collective investment schemes both in the domestic or selected regional markets.
• fixed income securities such as sovereign bonds, corporate debt and money market instruments to generate returns.

Source: Public Mutual

New Fund: Public Ittikal Sequel Fund

The Public Ittikal Sequel Fund (PITSEQ) is a Shariah-compliant capital growth fund that invests in a diversified portfolio of index-linked companies, blue chip stocks and companies with growth prospects listed on the Bursa Securities. The fund may also invest in sukuk such as sovereign sukuk, corporate sukuk and Islamic money market instruments to generate returns.

The Fund will focus its investments mainly in the domestic market, capitalising on opportunities arising from Malaysia’s resilient economic growth prospects in the medium-to long-term. Some of the sectors that the Fund may invest in include consumer, industrial, telecommunications and utilities sectors.

How about foreign investment?

To achieve increased diversification, the Fund may invest up to 30% of its NAV in selected foreign markets. The foreign markets which the fund may invest in include Singapore, Taiwan, South Korea, Japan, Hong Kong, China, Thailand, Indonesia, Philippines, India, Australia, United States of America and other permitted markets.

Free Takaful?

The fund comes with free takaful coverage on Group Term Life with Total and Permanent Disability plus Group Personal Accident for unitholders aged between 18 to 59 years with a minimum NAV of RM5,000 at any point of time. The amount of takaful is equal to the NAV of units held in the ratio of RM1 takaful coverage for every RM1 NAV of units held, subject to a maximum amount of RM100,000 per unitholder of the fund.

Source: Public Mutual

New Fund: PB Asia Emerging Growth Fund

Ignoring the volatile and not-so-positive market currently, Public Mutual Bhd launched 3 funds in a row on 6th Sept 2011 to fill investors appetite. They were PB Asia Emerging Growth Fund, PB Bond Fund, and PB Sukuk Fund. Here, we will be only highlighting the equity fund.

PB Asia Emerging Growth Fund seeks to achieve capital growth over the medium to long-term period by primarily investing in the securities of emerging small to medium-sized companies in domestic and regional markets. The fund generally maintains equity exposures within a range of 70% to 98% against its NAV. The balance of the fund's NAV may be invested in domestic and foreign fixed income securities and money market instruments.

Investment Strategy

Generally, companies with reasonable earnings growth prospect are selected. In identifying such companies, the fund relies on fundamental research where financial health, industry prospects, management quality and past track record of the companies are considered. Although the fund is actively managed, the frequency of its trading strategy will very much depend on market opportunities.

What else can the fund invest into?

• Equity linked Participation Notes (instruments designed to track designated securities)
• Listed warrants and options to enhance its returns
• Unlisted equities with attractive potential returns (which are expected to seek listing within 2 years)
• Futures contracts to hedge against market volatility

Click here to download the fund's prospectus

Source: Public Mutual website

New Fund: OSK Indonesia Equity Growth Fund

To join in the Indonesia Theme bandwagon, OSK launched its own version of Indonesian Equity Growth Fund, which aims to achieve medium to long term capital appreciation through investments in securities of companies with high growth potential that are listed on the Indonesian Stock Exchange and/or companies listed on other exchanges whose business are substantially in Indonesia.

This fund is suitable for investors who:

• wish to participate in the potential and investment opportunities of the Indonesian economy
• are willing to accept higher risk in their investments in order to achieve potentially higher returns in the medium to long term
• seek capital appreciation rather than income

8 Answers to "WHY invest in Indonesia?"

1. Impressive equity market performance
• Jakarta Composite Index gained 46% in 2010
• The 7th year in which Indonesia has outperformed Asia ex-Japan over the past 9 years (Source: CLSA Research January 2011)
2. Strong economic growth
• Expected growth of 5.7% to 6% in year 2011
• Growth is driven by domestic consumption, currently stands at about 65% of Indonesia GDP
3. Favorable demographics
• 4th largest population in the world
• Middle and upper-middle class households is expected to increase from 29% currently to 41% by 2012
4. Resources rich
• World's biggest CPO producer
• World's biggest Thermal Coal exporter
• World's biggest Tin exporter
5. Government projects and infrastructure development
• 2011 budget is pro spending, especially in infrastructure development
• Development expenditure expected to increase 29% in 2011
6. Equity market remains attractive
• Currently trading on 13x PE with 22% earnings growth and 25% ROE
• Indonesia has the 2nd lowest Equity Market Cap / Nominal GDP ratio in the region
7. Outlook on Rupiah to strengthen
• Lagged regional currencies in the past 10 years
• Improving outlook for Rupiah makes Indonesia attractive to foreign investors

Investment Approach

1. Combination of "top-down" and "bottom-up" approach
• An investment strategy that is not mutually exclusive but closely inter-twined between asset allocation and stock specific selection
2. Value driven approach
• Stocks are then selected for their value
3. Emphasis on growth
• Stocks are further selected for their growth potential

Investment Approach

Portfolio Strategy

OSK sees several investment opportunities including

1. Banks
• Strong loan growth (+25%) driving revenues
• Low penetration of key financial services and credit
2. Infrastructure
• Total investment needed for infrastructure projects 2010 - 2014 will reach USD34.14 billion
3. Commodities
• Medium term outlook for thermal coal positive due to increasing demand from China, India and Indonesia
4. Consumption
• Low consumption in categories such as cars, motorcycles, cellular phones and cement

Source: OSK-UOB unit trust management berhad

Click here to read the prospectus

What is Statutory Reserve Requirement (SRR)?

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

What is SRR?

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

Why BNM uses the SRR as its "tool"?

Since SRR is available to BNM to manage liquidity and hence credit creation in the banking system, it was used to withdraw or inject liquidity when the excess or lack of liquidity in the banking system is perceived to be large and long-term in nature. Currently, BNM believes that our banking system is lack of liquidity, thus it may raised the SRR to "store" more money in banks.

Effective 1 March 2009, the SRR rate for banking institutions is 1% of EL. As of 1st September 2007, the EL base consists of ringgit denominated deposits and non-deposit liabilities, net of interbank assets and placements with BNM.

Previous adjustments to the SRR rate

What is the effect of higher SRR?

As explained above, higher SRR means that banks in Malaysia will have to keep more money as their reserve. This translates into lower loans growth for banks. Normally, banks wiould imposed stricter loan approvals for borrowers, because less funds are available for lending.

Normally, higher SRR translates into lower profit growth for banks. Banking stocks are the hardest hit. But, raising the SRR from a record low of 1% is unlikely to have any significant impact on credit growth. Finance Malaysia see this as an opportunity to accumulates banking stocks if they are battered down because of higher SRR.

Source: OSK Research

Source: OSK Research

Source: OSK Research

Source: OSK Research

Source: Bank Negara Malaysia

Related Posts:

Motor Insurance to cost more starting 2012?

Extractions from BNM monetary policy statement (Jan 2011)

How BNM OPR hiking affecting the market? (March 2010)

New Fund: PB Indonesia Balanced Fund

Today, Public Bank is launching its latest fund, PB Indonesia Balanced Fund, which primarily invests in the Indonesian market including Indonesian businesses or companies listed in other permitted markets. The fund adopts a balanced asset allocation (60% equity: 40% fixed income) approach to participate in the long-term growth prospects of the Indonesian market. The fund is managed by Public Mutual.

Key investment points:

1. Indonesia is the largest economy and one of the fastest growing countries in Southeast Asia.
2. An emerging economy which charted a healthy growth rate averaging 5.1% per annum (2008-2009)
3. Large domestic demand base with robust consumer spending, and rich of commodities.

Key features

Offering period   : 12th Oct - 1st Nov 2010

Initial price         : RM 0.2500 per unit

Initial investment : Min RM 1,000

Top-up              : Min RM 100

Service charge   : Up to 5.50%

Source: Public Mutual

New Fund: Public Optimal Growth Fund

On June 8, Public Mutual is launching a new fund, Public Optimal Growth Fund (POGF).

To achieve optimum returns for investors, this fund invests in a diversified portfolio of dividend and growth stocks in the domestic market.

According to Public Mutual’s CEO, global and regional equity markets had rebounded from multi-year lows in March 2009 on optimism that global economic activities would continue to strengthen on the back of government stimulus spending and supportive monetary policies.

“The domestic market should remain underpinned by the strengthening pace of economic recovery throughout the Asia Pacific region, resilient liquidity conditions and reasonable valuations,” she said.