Rooting for Dyana Sofya?

A Malay  Candidate on a DAP Ticket

Now that Ramkarpal, the new mountain tiger has clinched the Bukit Gelugor Parliamentary seat for DAP with ease-making all 3 independent desperado candidates to lose their RM 10 K deposits and be compelled to sneak away with utter embarrassment and shame; the attention now turns south to the Parliamentary seat of Teluk Intan.

At Ease with  Tok Guru Hadi-PAS Supremo

Granted, the demographics are absolutely daunting here,as compared to Bukit Gelugor.

The last GE in 2013 saw the DAP candidate only grabbing 7,000 odd votes against doyen Mah of Gerakan. I believe that many voters returned from outstation and overseas to give the PKR an even or better chance to take over Putrajaya. We have now to deduct this group of voters as they will unlikely return for this by-election.

Now the contest is invariably uncertain; for both sides are claiming underdog status.

Let us see who  is likely to call the bluff?

Maybe one, maybe both, maybe none.

Gerakan President Mah, the silver-haired doyen of politics is being pitted by BN to fight a young novice of unknown quantity,Dyana.

What has Dyana got that can possibly tip the scales for her against Mighty Mah?

Her demeanor and persona or the changing circumstances and vagaries of Malaysian politics?

Rapport with the Public

Can we understand the psyche of the voters of Teluk Intan this time around?

A majority of the voters are not to be taken for granted. They are unknown quantities as daily occurrences can quickly change their mind. Until they hold pencil in hand at the polling booth, their minds are in flux and their votes can be anyone's guess.

Firstly, the few incidents lately like the storming of the Penang State Legislature in session by persons claiming to be from UMNO Youth; the arson threat to burn the DAP HQ in KL by 50  rowdy miscreants and the riotous mood by some divisive elements  to damage the DAP office in Kuantan will in all likelihood solidify and cement Chinese votes against the BN. Dyana will have the votes here from the staunch DAP- aligned Chinese voters. Little doubt of it.

Secondly, underhand subterfuge with Dyana's look-alike photographs of a Filipino lass clad in a bikini has been widely distributed by outsourced groups in kampungs and a mosque to influence potential voters from the Malay heartland  from voting Dyana. How much of the 25% votes that went to the DAP in 2013 will be chiseled off and lost to Diana this time around because of this unscrupulous hatchet job? Will this anti-Dyana ploy really work against the DAP candidate?

Possibly with little effect as most of the Malay voters are still UMNO-biased. It's like trying to convert the already converted!

The confusion this time around for the rural Malay voters is how to vote or how should they vote? It's a quandary!

Should it be party-based (for BN) which is the old, boring conceptual playbook or for a first-time credible Malay candidate (which is an optical play) whom they can vote in truly as their very own anak Melayu generasi muda?

As mentioned before, UMNO still holds sway in many traditional Malay villages and so the majority of the 'old school' adult population will have the mind-set to vote for Mah robot-like IF they are not race-biased.

This is at best unclear these days.

Mah may not get many votes if the Malay voters just decide to stay away on election day in favour of neutrality.

If the younger set of the Malay population is voting, Dyana may have an even better chance.

A fair scenario will be one that is neutral giving Dyana  the 25% votes from  hard-core supporters of Parti Keadilan and PAS as well as potential disgruntled drop-outs from UMNO and possibly MCA.

Thirdly, what about the Indian votes of some 11% of the electorate?

The picture is vastly different from May 5 last year.

Hindraf has left the BN in a huff.

Palineval is at the helm at MIC.

To most observers, this can be advantageous to Dyana if the Hindraf voters, feeling cheated, may vote Dyana in revenge or in protest. Also, Palineval does not come across as an MIC leader of stature;  influential enough to sway a majority of the Indian voters, much less his own MIC members.

As the Indians continue to be the poorest of Malaysians; particularly in the plantations and in the urban areas eking out a living as jaga kereta boys, lorry drivers, corporate drivers, car washers, factory hands and other menial jobs that foreign labour  have slowly crept in to compete, it is likely, on balance, that the Indians will be averse to support Mah or the BN in favour of  Dyana.

The bet here is more Indians will vote opposition or even stay away from the voting booths. This will favour Dyana as traditionally, Indian voters support BN.

Firebrand Anwar for Dyana

Let's us look at Mah as the first votes will be cast come tomorrow.

Tested and of known quantity, the Chinese voters know fully well what he cannot do. At best, it is to give them lip service as a BN component party leader. As for representing the interests of the populace of Teluk Intan, he is limited in his verbal freedom and its parameters. He has to faithfully  tow the BN line or else face the harsh whiplashes of the unforgiving Barisan Whip!

Nothing significant will come from him if he gets voted in. Also, in consolation and to his detriment, he can always be made a senator if he loses as that is the safety net given for all BN party supremos! To an extent, this expectation and fact can grievously do him in.

As mentioned above, for the Malay voters,  Mah will be supported IF they vote on party lines. If UMNO continues to appear weak, the Malays will ignore him for obvious reasons and not come near the polling stations right until they closed.

Moreover, the Indians will see no great advantage voting in a has-been Gerakan Party which is dominated by Chinese, almost lock-stock and barrel after the fatal aftermath of 13th GE. As such, it is quite clear how the ordinary Indian voters will vote as there is no love lost between Mighty Mah and the Indian community.

Verdict:

Given my gut-feeling and simplistic arguments, it will be a fair fight given that both candidates have  credence and potential to profit Teluk Intan voters in some small way or another.

With token support from BN parties, Mah can bring in federal and state finance and some development projects. I doubt, it will be significant or long term. Possibly, marginal.

As with all Opposition candidates that won seats at both state and federal levels, traditional Opposition areas will support DAP candidates irrespective of their race or origin like in Bukit Gelugor! They also do not expect them to do much but to vehemently voice out their grievances and to fight gross BN injustices!

So, I give my 5 sen worth to Dyana that she will have one good fighting chance to fell the Gerakan Goliath in Teluk Intan come this Saturday, 31 May 2014.

But results can be perverse!

AEON: Expectation of 2014 and Managing 2015

Managing 2014-2015

Notwithstanding expected lower retail growth in Malaysia, Aeon Co (M) Bhd (Aeon) , is set to increase its investments this year.

As it envisaged sustained consumer spending, Aeon plans to invest RM 700 million in 2014 capex which is an increase of RM 536 million from FY13.

Aeon remains optimistic about consumer spending though it is apparently described it as "cautious" now.

Aeon will follow-through with its plans to open three outlets this year in Bukit Mertajam, Taiping, and in Quill City, Kuala Lumpur adding that they will be the anchor tenant at Quill City.

The RM 700 million capex planned for this year will include the three new stores, expenses of stores opened last year as well as refurbishments of current stores. 

“In the first year of operations, we usually have to contend with start-up costs of between RM 1 milionl and RM 2 million in each store that we open,” Aeon added.

Aeon also mentioned recently how operating costs has increased due to higher electricity tariffs which kicked in this year.

This cost component rise had an impact on the company’s recently announced first-quarter FY14 financial results to end-March that saw bottom line declining by 8.3% year-on-year to RM 46.88 milion despite top-line rising by a similar 8.8% to RM 945.5 million.

“This year, we are witnessing the impact of the increase in electricity tariffs. It is not only impacting us but also the rest of the industry. On a net basis, costs have increased by 17% so far after the tariff hike. This cost (component) needs to be reduced to a certain extent,” an Aeon spokesman said.

But given this is only the first quarter, generally the (financials) tend to grow stronger as we move along into the third and fourth quarters. We are looking at environmentally friendly; power-efficient devices and methods to reduce power consumption to cap these costs." Aeon said.

Such measures will include using LED lighting and installing escalator sensors. It will be done in phases on a store-by-store basis, with the aim of completing it within the next 12-15 months. Aeon does not intend to pass on these new cost increases to consumers. 

The company has notably been able to face rising costs in components such as labour, fuel and materials, as net margins have been maintained at a decent 6.5% in the past three years.

Aeon had also over the past five years reported steadily rising top and bottom line figures.

The company also plans to introduce an online shopping portal soon, with the aim of capturing an additional revenue stream from this business segment with a capex allocation of about RM 2 million over two years.

“We recognise the need for online shopping and growth possibilities in this area. This year, we will start developing the online side and are now working with some consultants to try to establish and set up our own website. In the future, we will also consider digital advertising,” Aeon indicated.

“The online business will work hand-in-hand and complement the brick-and-mortar business. I don’t think it will replace it, as Malaysian consumers still like to feel and touch (a product),” the Aeon spokesman informed.

Aeon, which also has a property management service business presently, owns 12 of its outlets, leases 13 and is anchor tenant at five of its outlets.

“We are anchor tenant at Sunway, Bandar Utama, IOI Mall, Queensbay and Mid Valley. We basically manage the whole shopping centre at the ones we own or lease - with Aeon inside and the rest of the space sub-let to other tenants,” Aeon said.

However, Aeon does not have any intention to establish a real estate investment trust at the moment, as there is no need for it.

“It’s an option that we are open to (in the longer term), but there is no necessity to jump into it right now,” Aeon added.

Aeon will open its first furniture outlet called the Index Living Mall in Puchong via its 70%-owned joint venture with the Thai-based Index Living Mall, which is the largest furniture retailer in Thailand. The furniture and wood products will be sourced from Thailand. The initial capital is about RM 10 million.

Index Living Mall has its own manufacturing plant in Thailand and is currently already exporting to other countries with a franchise business as well.

Why Investors Make Bad Choices

Fear or Guts?

I took this from the On-Line Star so that any one dabbling in stocks will learn how not to make bad choices.

"Investments are a very serious matter. As with other important aspects of our lives, proper decision-making is integral when it comes to investing. While not every investment decision we make can be 100% accurate, we do possess the necessary prudence to differentiate what a smart choice is from a less ideal choice.

So, despite having the aforementioned prudence, why do we still make ill-advised choices in terms of investments? There are three factors that affect our choices, as these are closely in line with our behaviour.

 Availability bias

According to behavioural scientists, availability bias is a person’s tendency to assume that if a certain incident has happened before, then that incident happens to be “available” or can and will happen again in the future.

The problem is that people also have a tendency to exaggerate on the probability that those events deemed available will happen again.

In terms of investments, availability bias works both ways. For one, investors who have enjoyed a measure of success in a particular investment in the past will have a particular prediction to the same type of investment, even if the results strongly advise against further investments. 

By the same token, people who have experienced some form of failure in specific investments will tend to exaggerate the frequency with which such instances do occur, thus clouding their decisions.

Loss aversion

Loss aversion is something that affects investors for the simple fact that nobody likes suffering loss of any kind. In fact, it is theorised that the level of impact loss has on a person is greater than the impact of a gain. This means people will not generally mind not gaining anything, as long as they do not suffer any loss. 

From an investment point of view, losses tend to come with the territory. However, it is hard to bounce back from loss, even for seasoned investors. 

A loss, especially a significant one, naturally affects choices investors will subsequently make; essentially preventing them from taking risks that may possibly yield high returns because the negative feelings—the disappointment, frustration, pain and even, to an extent, humiliation—associated with the loss are all too much to go through again. 

While many will argue that a person tends to harden after several losses, behavioural theorists claim that loss aversion operates mostly on a subconscious level. Most of us even avoid loss without even knowing we are doing it. 

Probability neglect     

Probability neglect revolves around how people tend to become emotional during high-pressure situations or any scenario wherein there is a weighty consequence to every course of action. 

Basically, this means that people get emotionally rattled, so much so that the focus will remain on the worst-case scenario of any situation instead of logically analysing probable scenarios and looking at the situation with a level head. 

When it comes to investments, a level head can mean the difference between a smart call and a poor choice. Probability neglect prevents an investor from looking at all the available pieces of information regarding a particular investment—seeing, instead, only the pieces of evidence that reinforces the perceived worst-case scenario. 

One solid example of this is the investing attitudes in the market after the recession. After the crash, investors were more reserved in their investing, due not just to probability neglect, but to a combination of all three factors specified here. The huge losses a lot of investors suffered have had most of them second guessing all the investment choices they have made. 

After all, if they were wrong once, the possibility remains that they can be wrong again. They have suffered losses they do not wish to suffer through again. And, a lot of them have become focused on the potential of another crash that an objective and logical decision becomes harder to make. 

This whole scenario shows that investors, despite all their power, resources and savvy, are also subject to the same kinds of pressures everyday Malaysians face. These factors are all normal human behaviour.

The difference between successful investors and failed ones, however, is not just making consistently right choices, but also knowing how to anticipate and appropriately deal with losses as they come.   

This content is created by Nazirah Ashari for the readers of The Star. Nazirah is Head of Content at CompareHero, the leading Malaysian financial comparison platform, aimed at helping Malaysians save time and money. "

Impending Mortgage Payment Upheaval!

July 10 Decision on OPR

The impending increase in interest rate is imminent.This may likely be decided at the next BNM meeting on July 10.

So for those having banking loans,personal loans and credit card charges, brace yourself for more pain.

Loan installments will go up and there is also the possibility of overdraft charges,hire purchase rates and credit cut interest moving north.

This will impact directly on disposable income caused by collateral inflation thus further straining the pocket book of the working class .

The imminent increase in interest rates has caused anxiety among some Malaysian households, as the prospects of higher repayments for their outstanding loans will likely put further strain on their spending power.

While the impact on those earning between RM 4,000 to RM 7,000 (40%) can possibly be contained; salaried workers earning less than RM 4,000 will certainly be disadvantaged. 

A sobering effect to be considered is that 80% of Malaysian households fell into the income bracket earning less than RM 4,000. This was confirmed by PEMANDU of the PM's Department.

The sad thing about inflation is that the government and its agencies unsympathetically raised all their tariffs at about the same time and the people have to bear the full brunt of it, all at one go!

To say that the poor are cushioned by the BRIM hand-outs is again elusive as not all has been given this financial support. 

Oftentimes, legitimate applicants are denied this assistance by the Internal Revenue Board due to technical reasons, unreasonably refining the concept of household income in a straight-jacket fashion, with the fact that family members or even married couples who  stay at separate addresses are not getting nothing from the BRIM hand-outs. In fact, it is true that some who eat out at shops before coming home have  their income included into household income to inflate it unjustifiably.

As for the tax-paying middle income group, they are as usual, left out on the lurch, from the benefits of the social safety nets! 

Characteristically they take out more housing loans from banking institutions than the lower income group, which makes up another 40% of the Malaysian population.

Another thing to take note is the heavy indebtedness of Malaysian households. Malaysian households have turned out to be one of the most heavily indebted in the South-east Asian region. At 86.8% of the country’s gross domestic product (GDP), Malaysia’s household debt level is the highest in Asia, slightly ahead of South Korea’s household debt level at 86% of its GDP, and Singapore’s 77% of GDP.

Bank Negara concedes that Malaysia’s household debt level is not likely to come down anytime soon, as demand for credit is expected to remain strong over the next few years, driven by the spending pattern of a young consumption prone labour force and increasingly affluent urban population.

Statistics show the bulk of Malaysia’s household debt is made of home-mortgage loans, as households take advantage of the current prevailing low interest rates to buy properties, leading to increased demand, and eventually, the significant ramped-up in property prices in the country in recent years.

By and large, the looming interest rate increase will have negative implications for most consumers, as mortgage rates, which in Malaysia is pegged to the base lending rate (BLR), will rise as will future hire-purchase and personal loan rates.

The expectations of an interest rate hike have been rising since BNM sent out the clearest signal early this month that it might have to adjust the degree of monetary accommodation to address the continued build-up of economic and financial imbalances in the country so that these risks do not undermine Malaysia’s growth prospects.

Most economists expect the overnight policy rate (OPR) hike to take place when BNM’s Monetary Policy Committee (MPC) convenes its next meeting on July 10.

BNM has left the OPR unchanged for the past two years. The last revision took place in May 2011, when the MPC decided to increase the OPR by 25 basis points (bp) to 3%.

According to economists, the impact of an interest rate hike on households will ultimately depend on the quantum of the rate increase.

A 25 bp increase to the benchmark OPR from the current 3% to 3.25% – which is what is widely expected by the financial community – is unlikely to cause any serious dent, economists argue.

“Based on our assessment, many households will likely be able to absorb any increases in debt obligations arising from a 25 bp increase without experiencing any severe circumstances,” Manokaran says.

“And at a higher rate of 3.25%, we think the OPR is still accommodative to growth,” he adds.
Zahidi concurs, saying, “The impact will not be that significant although consumers will still end up paying slightly more for their mortgages and future hire purchases.”

“But if another hike takes place, pushing the OPR up by 50 bp (from the current level), then the impact on consumers will likely be more pronounced and this may lead to further moderation in private consumption growth,” Zahidi argues.

Economists in general do not expect BNM to take a too aggressive stance on its monetary policy, given the negative implication on the country’s economic growth as a whole.

Expecting BNN to make only gradual adjustments to the country’s policy rate, RAM Ratings head of research Kristina Fong notes that “BNM has embarked on a very holistic approach to their policy rate decision.”

“Any decision made by BNM would have been well assessed so as to avoid any adverse impact on growth sustainability,” she argues.

Sharing the same sentiment, Bank Islam Malaysia chief economist Afzanizam Abdul Rashid says: “We do not subscribe to the idea that the central bank would aggressively tighten its monetary stance. A 25 bp hike would be sufficient enough at this juncture since growth in the second half of the year is expected to moderate on account of the implementation of subsidy rationalisation.”

Economists reckon that the prolonged period of low interest rates in Malaysia is a major driver of rising household debts in the country. The low borrowing costs have also encouraged many households to use borrowed funds to invest in speculative activities to seek higher returns, as partly evidenced by the significant increase in asset and property prices in the country in recent years.

“The adjustment in OPR is necessary to avoid risks of financial imbalances becoming more entrenched as the existing macro prudential measures have yet to exhibit significant slowdown in lending to households,” Afzanizam explains.

Drawing an example from the collapse in the US sub-prime mortgage, which subsequently led to the 2008/09 global financial crisis,  Afzanizam argues that there are always dire consequences of keeping interest rates too low for too long.

“The recent upturn of GDP growth data clearly suggests that Malaysia’s economy is on firmer footing, and therefore, any form of economic stimulus (which include low levels of interest rates) should be withdrawn in order to ensure growth remain sustainable,” Afzanizam says.

So, let us wait with baited breath whether BNM will increase the overnight OPR. 

If it does, expect a big bite on your pocketbook for mortgages and all sundry loans!

A Little Bird's Wisdom

These are truly wise sayings worthy of thought and action.

Read them with understanding and also for personal conduct of your affairs.