Off the Timing, as Usual

After three months,Permodalan Nasional Bhd (PNB) finally found it fit to clarify the few disturbing misconceptions on its new product, Amanah Saham 1Malaysia (AS1M). The statement touched on the distribution method, direct fees and charges, as well as the performance benchmark.

In Kuala Lumpur yestersay(2 December 2009), PNB finally found dutch courage to explain some gray areas of the 10 billion-unit fixed price fund of RM1 per unit that was launched in August for all Malaysian individuals, starting with a minimum initial investment of 100 units.

'Idris Kechot,deputy president of Unit Trust told the public that subscribers were free to cash out or sell their units at any time and still be entitled to the annual dividend payment based on the retained units.

“The method of distribution is based on the average sum of the minimum monthly balance of the units during the distribution period. AS1M is a fixed-price fund unlike other price-varied funds that are based on net asset value of the funds,” he told a media briefing yesterday. [This is a comfort aspect as the price would not decline below par.]

Idris said Amanah Saham Malaysia Bhd also had not imposed any sales charge on all its fixed-priced unit trust funds, including AS1M, although the latter’s prospectus stated a sales charge of up to 1% of the invested amount was applicable.[PNB should have clarified this in an errata or addendum to promote more sales which it did not.]

AS1M also did not impose any redemption charge and it had no maturity period, he added.

In terms of performance benchmark, Idris said AS1M was based on average five-year Malaysian Government Securities (MGS) yield as opposed to three-month Kuala Lumpur Interbank Offered Rate that was used in Amanah Saham Wawasan 2020, Amanah Saham Malaysia, Amanah Saham Bumiputra and Amanah Saham Didik.[The three-month Kuala Lumpur Interbank Offered Rate could be higher when BNM increased its overnight inter-bank rate which may be sooner than later if the economy improves.]

“Average five-year MGS yield is a more suitable benchmark due to its objective as an income and a long-term investment fund. Also, the rising inflation environment needs a higher benchmark in order for our unit holders to maintain their ‘real’ rate of return on investment,” he said.[Do you feel this is true?]

AS1M, which has an allocation of 50% for bumiputra investors, 30% for Chinese, 15% for Indians and the remaining 5% for other ethnic groups, has sold some 2.8 billion units. Idris said the decision to uplift the quota would be made before Dec 31.[70% of the Chinese quota has been taken up. The other racial quotas are sadly ignored.]

PNB – the investment manager of nine Amanah Saham trust funds – has seen tremendous growth this year that is translated into 700,000 new subscribers year-to-date compared with 500,000 last year despite the challenging economic climate.

“And the total investment up to October this year was at RM17.8bil compared with RM12bil for the whole of last year,” Idris said.'

Reading this piece of news really creates a bad taste in the mouth. Why is PNB in a passive mode even when the sale of PM Najib's much touted AS1M is fraying at the edge? Also, isn't it obvious that the quota uplift by December 31,2009 will not change the status quo?

Forget About Calcium Supplements!

Al Sears, MD has given some free medical advice today. Don't waste your money on calcium supplements,he said. According to him,do not expect to build strong bones or avoid osteoporosis by taking these supplements.

According to him, osteoporosis isn't caused by a lack of calcium. He cited studies to prove this. One of these was the the complete and well conducted Harvard Nurses' Study. The study followed 77,761 nurses. For 12 years, researchers examined the association between dietary calcium and bone fractures.Conclusion? Calcium intake does not prevent fractures due to bone loss.

The results showed there was no protection from fractures with any dose of calcium intake. Nurses who had the highest calcium intakes actually had an increased risk of bone fracture.

According to Al Sears,an Australian study confirms the result of the Harvard Nurses' Study. This study which also looked at the association between calcium and fracture
risk. After looking at lifetime calcium consumption in over 400 elderly participants,the study concluded that calcium consumption in early adulthood actually increased the risk of bone fractures as the person ages.

Also, doctors in the UK found that calcium and vitamin D did not prevent fractures. The two-year UK study showed that neither calcium nor vitamin D lowered the number of fractures in women over age seventy.

Al Sears explained that it is actually hormones and exercise that controls bone loss.

Bone building is hormonal. In women, estrogens are the main regulators of bone health and breakdown. Progesterone controls the rate of new bone deposition. But the most powerful bone builder in both men and women is testosterone. Testosterone is central for achieving maximal bone mass and strength.

Taking calcium supplements will give you a short-term boost in bone density, but that's it. Over time, your hormones will work against the extra calcium and actually leave your bones more brittle than before.

Al cited this fact.The US has the highest intake of calcium,yet the rates of osteoporosis are the highest in the world.Countries with lower intakes of calcium have lower rates of hip fracture and osteoporosis.

As such,maintaining healthy levels of hormones in the body is one way to keep bones strong.

There is an easy and inexpensive hormone precursor shown to improve the levels of other sex hormones. It's called DHEA (Dehydroepiandrosterone).It is involved in the manufacturing of most major sex hormones in the body,like estrogen and testosterone. DHEA treatments are becoming more common.

This is available over the counter but Al advised taking it without first checking blood levels. He suggested consulting a doctor to measure it before going on this hormone supplement.

According to Al Sears, physical inactivity can lead to weakening of the bones.The bones need to bear weight in order to become strong.So when one does weight bearing activities,one is actually telling the bones that they must become strong in order to continue these activities.

To strengthen bones, one need to push more weight. Challenging muscles and bones with weight bearing exercises is crucial.Walking,cycling, weight training or playing tennis or golf will help.

If a person wants strong bones for life, there are six things that need to be done.

1.Exercise:The best to increase bone density and reduce fractures is body weight exercises(like calisthenics)and resistance training.Make a habit of doing these exercises two or three times a week.Thirty minutes of walking a day will lower your risk of fracture by 30 percent. Whenever you exercise,your muscles pull on your bones. This pressure creates a challenge that your body responds to by increasing bone density. This will ensure that you stay mobile and independent.

2.Skip calcium supplements: Get your calcium through your diet. Eat a variety of small fish, dark, leafy green vegetables, almonds and cashews, or dairy products like milk, cheese, and yogurt. You should be aiming for about 400 mg per day.

3.Take a vitamin D supplement: The recommendation is 400 IU per day. It helps the body to absorb calcium and maintain bone density. Without vitamin D, calcium supplements are worthless. The best source of vitamin D is the sun -10 to 15 minutes of exposure a day should be enough. During the winter, take cod liver oil. It's by far the best supplemental source of vitamin D.

4.Eat your greens:Vitamin K found in dark leafy greens regulates calcium while stabilizing bones in addition to regulating blood clotting.Eat at least one serving of green vegetables like spinach, kale, collard greens, mustard greens, Brussels sprouts or broccoli every day.One study found people eating just 0.1 milligrams of vitamin K daily (about one large serving of greens) were 30% less likely to break their hips than people who ate less than that amount.

Another university study showed that vegetables and herbs improve bone metabolism.Researchers found that rats that missed out on their veggies much lower bone density.5 Another showed that fruits and vegetables increase your bone density. The same study found that dairy products did nothing.

5.Eat foods rich in B-complex vitamins: Your body also uses a variety of B vitamins in bone building.The best sources are liver, eggs, lean meats, yeast, fish, raw nuts, asparagus, broccoli and bananas.

6.Get a blood test: A simple blood test will tell you how your hormone levels affect your bone health. This is the best way to determine the health of your bones and your risk for fracture. Women may need to take natural progesterone. For both men and women testosterone is the most powerful controller of your bone density.

So,do you find this information helpful?

Dubai: Drowning in Sand

Leila De Kretser article in the Herald Sun titled, " Dubai drowning in financial sand" is a must read.

I append the article in its entirety for its full value.

"It always seemed a little silly that there could exist a city where you could ski in the middle of a desert and watch horse-racing on man-made islands in the shapes of palm leaves

Now, we learn that just like the rest of the absurd luxury that Wall Street lapped up in the recent era of the super-rich, the Arab port of Dubai is going to the dogs.

Well, not entirely.

If the most recent reports are to be believed, white knights from neighbouring states, such as the United Arab Emirates and Abu Dhabi, will rescue Dubai from its impending debt crisis.

It's hard to miss the irony that a city, in which the inhabitants openly scoffed at the restrictive laws of their Arab neighbours, must now turn to those religious zealots for a helping hand in paying back some of the $80 billion debt it now has owing.

For years, the ruler of Dubai Sheikh Mohammed bin Rashid al-Maktoum, along with global investors, had argued that the economic development of Dubai had progressed much farther than its neighbours because it was the only Arab territory not created from oil money.

Advanced infrastructure, an open attitude to Western business, tax breaks for foreigners and the pursuit of the global financial industry are what supposedly separated Dubai from surrounding states that had built their wealth almost entirely on the back of the oil industry.

Dubai garnered many admirers, be it Wall Street financiers who came to regard it as a sister city almost of the ilk of Hong Kong, London or Singapore, or politicians who praised its leaders for advancing the cause of democracy in the Middle East.

In the United States, Dubai came to play an integral role in the property market in New York, along with the racing industry in Kentucky. (In Lexington, where the Kentucky Derby is held, the arrival of Sheikh Mohammed's custom-built horse jet was sure to hike the average price of yearlings sold at sales.)

So there's no escaping the absurdity that Dubai has suffered from the same ailment that has plagued Wall Street and, hence, the US economy over the past decade.

The "irrational exuberance" that took the financial industry to its dizzying heights in 2007, and then crashing down immediately afterwards, was nowhere on better display than in the city that houses the world's tallest building.

Lucky for Dubai and the industries to which its money has poured (horseracing in the United States doesn't need another death knell), it's highly likely the doomsday predictions for the Arab city will be just as overblown as they were for Wall Street last year.

The key, as it was here on The Street, are the deep pockets and vested interests of those who will bail it out.

Just like Uncle Sam was completely reliant on Wall Street to keep the country's economy from collapsing, Dubai's Middle Eastern neighbours are deeply invested in the city's long-term success. It's their wealth, much more so than that of Wall Street billionaires, which has kept Dubai's streets paved with gold.

Besides, $80 billion may sound like a lot to us mere mortals, but it's $100 billion less than what was needed to save AIG."

So,it is a perspective thing. To the Arabs, $80 billion is just a scoop from the money jar!

Believe, me, it will only be a matter of time before Wall Streets shrugged the Dubai debacle off and continue to push up the market.

Malaysia: What are your Complaints,Malaysians?

Want to know what Malaysians are complaining about these days?

According to the National Consumer Complaints Center, it has to be direct selling. In 2008,there were 2,339 complaints, a substantial increase of 21% as compared with the 1,933 complaints in 2007.Consumers complained about scratch-and-win scams, credit card payments, cooling-off period (time given to consumers to reconsider the purchase), lack of information and defective products offered.

Next on the list is housing developers with 2,316 complaints — an increase of 11.6% from 2,076 complaints in 2007.Consumers often complained about abandoned housing projects, shoddy workmanship, late delivery penalty, non-refundable booking fee and Mortgage Reducing Term Assurance.

This is followed by telecommunications at 2,136 complaints, an in-crease of 24.1% from 1,721 in 2007. Consumers said service providers did not take their complaints about the frequency of the Internet service breakdown seriously.

These figures were revealed at the launch of the National Consumer Complaints Centre 2008 annual report at a hotel here yesterday (1 December 2009).

Banks: Cry and Cry Again

The New York Times circa December 2nd has painted a very gloomy post-Dubai fallout. In a sense, this is equivalent to the the second "sub-prime". Just when the banks are ready to go into the waters, another storm starts!

Let us read the article in its entirety.

" As Dubai, that one-time wonderland in the desert, struggles to pay its bills, a troubling question hangs over the financial world: Is this latest financial crisis an isolated event, or a harbinger of still more debt shocks?

Big banks that have only just begun to recover from the financial shocks of last year are now nervously eyeing their potential exposure to highly indebted corporations and governments.

From the Baltics to the Mediterranean, the bills for an unprecedented borrowing binge are starting to fall due. In Russia and the former Soviet bloc, where high oil prices helped fuel blistering growth, a mountain of debt must be refinanced as short-term IOUs come due.

Even in rich nations like the United States and Japan, which are increasing government spending to shore up slack economies, mounting budget deficits are raising concern about governments’ ability to shoulder their debts, especially once interest rates start to rise again.

The numbers are startling. In Germany, government debt outstanding is expected to increase to the equivalent of 77 per cent of the nation’s economic output next year, from 60 per cent in 2002. In Britain, that figure is expected to more than double over the same period, to more than 80 per cent.

The burdens are even greater in Ireland and Latvia, where economic booms fuelled by easy credit and soaring property values have given way to precipitous busts. Public debt in Ireland is expected to soar to 83 per cent of gross domestic product (GDP) next year, from just 25 per cent in 2007. Latvia is sinking into debt even faster. Its borrowings will reach the equivalent of nearly half the economy next year, up from 9 per cent a mere two years ago.

Like Latvia, the Baltic states of Lithuania and Estonia remain worryingly exposed, as do Bulgaria and Hungry. All of these nations carry foreign debt that exceeds 100 per cent of their GDP.

External debt is often held in a foreign currency, which means governments cannot use devaluation of their own currencies as a tool to reduce their debt when they run into trouble, according to economics professor Maurice Obstfeld at the University of California, Berkeley.

Few analysts predict a major nation will default on its government debts in the immediate future. Indeed, many maintain that rich nations and the International Monetary Fund would intervene in the event that a government needs to be bailed out.

But there are no assurances that companies in these nations, which, like governments, gorged on debt in good times, will be rescued.

Dubai’s refusal to guarantee the debts of its investment arm, Dubai World, may set a precedent for other indebted governments to abandon companies that investors had in the past assumed enjoyed full state backing.

“I see very good reasons to be worried that at some point in 2010, we are going to see more cases of ring-fencing because governments realise they can’t afford to guarantee the debts of these companies,” said Pierre Cailleteau, managing director of the global sovereign risk group and chief economist of Moody’s.

Said noted Harvard economist Kenneth Rogoff: “I think right now, every vulnerable country has one or two deep-pocketed backers that pretty much rule out a sudden run.”

But he said he expected a wave of defaults about two years from now, when the countries now serving as implicit guarantors turn their focus to economic problems at home.

One feature of the financial crisis is that some governments have taken on increasingly short- term debt. In the US, for example, Treasury debt maturing within one year has risen from around 33 per cent of total debt two years ago to around 44 per cent this summer, while falling slightly since then, according to Wrightson ICAP.

The US will soon have debt problems of its own.

“In another couple years, as industrialised countries’ own debts — in places like Germany, Japan and the United States — get worse, they will become more reluctant to open up their wallets to spendthrift emerging markets, or at least countries they view that way,” Rogoff said.

This might spell trouble for cash-tight nations. Facing a need to roll over their maturing debts, emerging markets may have to borrow around US$65 billion (RM221 billion) next year alone, said Gary Kleiman of Kleiman International."

We Do Forget the Pensioners!

This article by Ian McIntyre in the Malaysia Insider hits home. The point that pensioners are much neglected by the government still continue to broil ans stew. Till today, the government which had agreed to pay the pensions to civil servants based on their full period of service have still to see the light of day,notwithstanding that a 30 year service period capped at 30 years was implemented beginning January 2009.

Ian McIntyre's news article touches on how ignorance by pensioners made them to lose on some benefits. It also tells us that Pension Associations are doing their job to alleviate the plight of pensioners under the onslaught of the runwaway inflation in Malaysia. Read on....

Bukit Mertajam circa 1 December 2009.

"Many civil service retirees remain unaware of their special privileges as they do not bother to register with the respective state pensioners associations.

Plight of pensioners ad-hoc committee Penang coordinator S. Arumugam said this had created a lot of misinformation regarding the entitlement accorded to them by the Government.

For example, he said many did not know that they could claim reimbursements from the Public Services Department’s (PSD) pension services division for medicine obtained from private hospitals.

“All they need to do is get a doctor’s recommendation letter from a government hospital especially if certain medicines are not available from such hospitals.

“They can submit a claim to the pensions department which promises to reimburse them within 30 days of submitting the claims,” he said.

Arumugam, who was speaking to reporters after attending a briefing with PSD post-services division director Datuk Yeow Chin Kiong at the Seberang Prai Municipal Council meeting room yesterday, said the pensioners could also obtain cataract lenses costing RM750 a pair for free if it was not available from public hospitals.

His committee recently obtained 813 signatures from pensioners here, seeking a review in their pension wages. The memorandum was then sent to Prime Minister Datuk Seri Najib Tun Razak.

Arumugam said the meeting was fruitful as the participants were informed of the latest efforts by the PSD to alleviate the burden faced by pensioners in light of rising living costs and limited job prospects due to the fact that a large segment of the country’s population is generally below the ages of 50.

“Among the other privileges under consideration are rebates during renewal of international passports, lowering the costs of insuring old vehicles and up to 20% discount for shopping at selected hypermarkets.

“We were assured that no effort would be spared to ensure that pensioners can continue to enjoy a good quality of life despite a significant drop in their income disposal levels,” he added.

Arumugam said it was equally important for pensioners to keep themselves informed of their entitlements instead of claiming ignorance whenever there was dissatisfaction.

He also called on the Malaysian Employers Federation to support a proposal to extend the compulsory retirement age of the private sector from 55 to 58, similar to the public services sector."

As the pension associations are voicing out their grievances and providing the government suggestions on the things that the government can do to alleviate their current situation,will the government choose to listen?

Malaysia: GDP forecasted at 5% in 2011

The Malaysian Institute of Economic Research (MIER) today maintained Malaysia's GDP will expand by 3.7% next year. They also admitted that the economy is doing much better than it has anticipated.

The country's economy would contract by 3.3 per cent this year and expand by 3.7 per cent next year, said its outgoing executive director, Emeritus Professor Datuk Dr Mohamed Ariff.

For 2011, the private think-tank was more optimistic, forecasting Malaysia's GDP to expand by a commendable 5.0 per cent.

With economic indicators showing signs of improvement, MIER expected the economy to exit out of recession in the fourth quarter of this year, as evidenced by the positive trend in the Industrial Production Index which means increased industrial activity.

This was also supported by the effects of the larger public infrastructure expenditure, manufacturing turnaround, improved service trade and higher domestic spending.

"The economy is doing much better than what we anticipated. It is the regional trend. Even India today reported third quarter growth of 7.9 per cent and China 8.9 per cent, which is way above our expectations," Mohamed Ariff told reporters.

He said MIER also expected exports to rebound to 9.3 per cent year-on-year in 2010 after bottoming out at -17.5 per cent this year.

Demand recovery from the global electronics and electrical sector as well as improving commodity prices would also lift exports growth to a small positive number by the fourth quarter of this year, he said.

Such performance, he said, was no surprise as Asia had a thick layer of savings and private consumption helped absorb the shock of global recession.

He said all that was needed now was for Malaysia to register a one per cent growth in the fourth quarter of 2009 to able to get -2.8 per cent for the year as a whole.

"But MIER is still holding on to the forecast of -3.3 per cent for the year as we want to wait for the fourth quarter results," said Mohamed Ariff.

He said all indications were that Malaysia would perform better than expected, within the range of -2 to -3 per cent growth for the year and not more than that.

However, he cautioned that the future was really uncertain, saying that "there are a lot of landmines to avoid as a lot of systematic risk is still underway".

"I think there is a 50 percent chance of relapse in the US in the first quarter of 2010.

"The growth we see in many countries is artificial growth, mainly by huge fiscal stimulus packages, which created a different set of problems," he said.

He said one could not sustain fiscal stimulus for too long as it had huge debt implications.

"Sovereign debt problems can be a serious one," he said.

For instance, he said, Dubai delaying its debt payment in itself had become a major concern worldwide though it could be rescued by Abu Dhabi.

"So, what I am saying is that maybe many things we may be seeing is just the tip of the iceberg; especially, private debt being replaced with sovereign debt, which is not good for the global economy," Mohamed Ariff said.

He said another cause for concern was that the economic recovery could be scuttled by fear of inflation which might lead to higher interest rates next year and possible increase in oil prices.

As of now, MIER expected the overnight policy rate to be relatively unchanged at least until the end of next year.

Mohamed Ariff also cautioned that there could be serious problems in the exchange rate alignment, especially with the repegging of Chinese yuan to the US dollar.

"The dollar is overvalued and the yuan is undervalued. How can you put these things together?. It won't hold on for long," he said, expecting a lot of exchange rate volatility in the coming months.

"It's going to be a serious problem that no central bank can single handedly deal with. They have to get together and take a coordinated measure," he said.