Young investors seek alternative avenues
I read below "CASH IS KING" reiterated too many times, one should always remember! Your next question would be where to earn/generate/save-up sufficient cash reserves for the upcoming downturn?! (email me what sort of opportunities you are hoping & looking forward to, lets work out something, else if i do come across anything at all as an ‘opportunist’ as always, i’d be happy to refer you to the appropriate contact…)
I also read below ‘PROPERTY INVESTMENT’ not only as the investment vehicle of choice; but also of the largest portfolio portions, one should ponder why! Your next question would be, when to invest? how to invest? which properties to invest? (email me if you are interested in this asset class in particular, i’ll keep you informed as i go along my real estate negotiator cum property investor journey…)
Monday February 11, 2008 (TheStar)
With the volatile global stock market and uncertain economic climate, many young investors are refraining from investing in stocks and taking a cautious investment approach. The following are views from some young investors and industry players.
JENNIFER CHUNG
Corporate Trainer
Valoris Sdn Bhd
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Jennifer Chung
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CONSIDERING the uncertainty ahead, I would be taking a conservative stance on my investments – capital conservation type investments are preferred.
I think it’s best to conserve cash so as to be in a better position to capitalise on investment opportunities, which present themselves during down times.
To borrow an old adage appropriate to current circumstances, cash is, after all, king! Currently, I invest about 40% in property assets, 20% in equities and unit trusts, a negligible amount in gold and foreign currency accounts.
I would probably look at increasing assets in properties and equities further when valuations are at levels which I deem comfortable vis-a-vis my risk appetite, depending on the developing situation and economic outlook. But then again, we’ll see how it goes.
With the US on the verge of a recession and the continuing turmoil in global financial and credit markets, I am not exactly bullish on the country’s economy and the domestic stock market over the next two years.
With a fair bit of our electrical and electronic exports ending up in the US plus export exposure to other countries that are reliant on US demand, I believe that we’re not totally insulated from choppy tides ahead, despite palm oil and crude oil exports tilted in our favour.
My concern extends to the likely social repercussions in the form of increased incidents of crime and petty crime as the trickle-down effects of inflation are felt across the community.
ALBERT TAN
Head of Marketing
ABRIC Bhd
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Albert Tan
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SINCE Bursa Malaysia’s performance tends to hinge on news from abroad, and the US economy is slowing down, I must admit that I am a tad pessimist on our economic outlook this year.
I would holdback further investment in the stock market and fortify my savings instead. If the opportunity arises, I might also invest in real estate in good locations.
If indeed our stock market reacts negatively to the slowdown in the US economy, cash would be king. When the time comes, liquidity would give me the option to invest in good company shares at discounted price.
There might also be opportunity to pick up good properties from the market at value-buy. Basically, I want to keep my options open and be ready to invest when the opportunity arises.
I have always been more into property and I don’t have much investment left in shares and unit trusts. Frankly, I made a few not-so-wise stock picks last year, which I am now waiting for the best opportunity to exit with as little pain possible.
When the financial situation improves, I would likely explore consistent unit trust investments more than the unpredictable Malaysian stock market.
I think 2008 is likely to be a challenging year with high volatility. The slowdown in the US economy is a contributing factor, since a significant portion of our exports still goes to US.
ASHLEY YAP
Lawyer
Lee Hishammuddin Allen & Gledhill
I HAVE always been interested in property investment – condos, houses, shoplots, to name a few, as capital gain is almost guaranteed in the medium to long term.
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Ashley Yap
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The Government’s decision to abolish real property gains tax also makes it easier to take advantage of any price volatility in the short term.
Due to the current volatile market, I do not invest in shares but if the equity market drops due to the subprime crisis, I would then consider it.
I believe in the mid- to long-term investment, so I would not be shifting my portfolio in the face of a downturn.
I remember Tenaga trading at RM2.50 during the 1997 crash and within two months, it went up to RM10. I spent two days in bed recovering from the shock of not listening to advice to buy that stock.
I am cautious of the outlook of the country’s economy and stock market. If the KL Composite Index can tumbled 12.4% because of a single soldier running amok with an M16 in Kuala Lumpur (in 1987), who knows.
JENNIFER FOONG
Assistant Manager (Group Treasury)
Of A Regional Invesment Bank
CAPITAL-PROTECTED structured products are the type of investment I will go for and I will avoid investing in stocks, bonds, properties and most traditional instruments.
Investing in the stock and bond market is currently too risky, given the high volatility in both markets and personal low risk appetite.
There appears to be an oversupply of properties in the low to medium-price range, especially high-rise condominiums and apartments.
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Jennifer Foong
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The average young investor would not be able to invest in the high-end properties in prime areas, all of which are about RM1mil and above.
Capital-protected structured products provide capital protection, which is especially important in volatile markets, as well as opportunity to gain from an upward or downward market movement, depending on how the product is structured.
Currently, my investment portfolio is 90% in cash and 10% in structured products. In recession, cash is king.
I have not invested in unit trusts as traditionally unit trusts are only exposed to local equity or bond markets.
When world economy improves, I would consider unit trusts that allow investors access to global markets, like China and India.
CHOONG KHUAT HOCK
Director of Research
KSC Capital Sdn Bhd
THERE is a difference between financial decoupling and economic decoupling.
Financial decoupling is more difficult, as the correlation between regional markets and the US remains high.
The equity exposure of large funds is worldwide, and financial valuations in various markets are related.
We are not financially decoupled, except for a short while maybe, but you have to maintain the equity prices through domestic investor participation.
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Choong Khuat Hock
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It’s the funds flow and liquidity argument, the market cannot be separated from global funds flows.
On whether capital markets reflect the economy, Asia did well last year because Asian growth was strong, but it is still financially linked (to the US and the world).
Economically, decoupling is possible to an extent but in capital markets, as the US or European stock markets fall, Asia would look more expensive and funds would flow back to the US or Europe.
GERALD AMBROSE
Managing Director
Aberdeen Asset Management Sdn Bhd
AS a fund manager, we remain fully invested in Malaysia all the time as mandated by our clients. We haven’t changed our style.
At Christmas, people were confident of Asia decoupling from the US, but now that does not seem so certain. The trouble is that people confuse the equities market with the economy.
Malaysia has large foreign funds in the market, which means that the stock exchange is not financially decoupled from global market.
As for the economy, we have seen electronics demand, especially from the West, falling last year so the health of external demand is in doubt.
But, domestic demand remains strong with car sales, traffic volume along the North-South Expressway, mobile phone subscriptions and loans showing healthy growth.
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Gerald Ambrose
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The market is very hard to call in the next two quarters. It will be good and bad at the same time, like a weather report that says it will be sunny, but also expect some rain. The only advice would be sticking with companies that you think will continue to post earnings.
DANNY WONG
Chief Executive Officer
Areca Capital Sdn Bhd
I DISAGREE with reports of Asia decoupling from global markets. No country can decouple.
You still need to watch the global markets (and while). The regional markets might be able to sustain for a month or two but eventually, if the global environment does not recover, Asia would have to trend back in line with the US or major European markets.
I’m neutral on Malaysia partly because the internal factors are much stronger than some regional peers.
There are well-mitigating factors to keep our economy on the positive side, but if Europe and China also follows the US slide into recession, then Malaysia might not look so good.
On equities, in the short term there is upside in Malaysian stocks.
But as the index shoots up past 1,500 points, then the market would look more expensive compared with regional markets that might be down.
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Danny Wong
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In the first half 2008, the recent aggressive US rate cut and another expected 50 basis points cut suggests the US is facing really serious issues.
But by the second half, the US might look better. It all depends on the measures taken in rate cuts and other stimulus.
A fall in the US economy and capital markets would hit major regional markets like Hong Kong, South Korea, Japan and to some extent, Singapore, hard.
China could carry on growing, maybe not double-digit growth, but still close to 10%.
S. M. YEE
Regional Marketing Manager Of A Higher Learning Institution
THE price of property normally does not devalue and always has a return on investment. This is unlike investment in the stock market or unit trusts, where the risk is higher and the return is not guaranteed.
I have two properties and location is important to ensure that my investment will generate the necessary returns.
I think there will be a slowdown in the country’s economy. If indeed the US goes into a recession, Malaysia and most other countries will be somehow be affected. After all, we live in a globalised environment and each country’s economy is linked to one another.
However, I do not think the property sector will be affected. I am positive on the property sector and expect it to withstand the slowdown.
TAN THYE AN
Bank Officer
MY investment portfolio comprise of shares and some unit trusts because the returns are faster.
I agree that shares and unit trusts are risky but one has to weigh the pros and cons before investing; it is better to buy low and then to sell at higher price.
At the moment, I think our share market should be doing quite all right. It may not be the best time to buy now but it is more reasonable compared with two or three months ago during the run up. I think now is the time to accumulate some shares and then to wait and see.
The possibility of a recession in the US will affect our economy. I am not too worried if the economic slowdown will affect Malaysia because this is a cycle.
Usually, I will invest in blue-chip counters and some second-liner stocks. If blue-chip companies are still making money, I do not see why these companies will not continue doing well in the coming years.
Manager Of A Foreign University Office
I AM a very conservative investor and I put most of my money into insurance investment plan and units trusts. These are relatively safe compared with shares.
I started investing in insurance about five years ago; I started with a small amount and have increased it every year.
The insurance plan I bought is with an established company and I spread my investment in unit trusts through a few companies. These investments also provide an avenue for me to save.
I do not play shares because I am not well versed with the mechanics and I have never tried.
I think property is a good investment now. Based on my observation, the banks are clamouring to give the best deals in housing loans.
I recently bought a house but I do not see myself investing more in properties. I will continue to invest in insurance and unit trust on a yearly basis.
SURAYA NORIN ISMAIL
Unit Trust Consultant
CIMB Wealth Advisors Bhd
I INVEST in properties, unit trusts and very small amount in stocks. The majority of my savings are in unit trusts.
I see myself as a mid-risk investor, so investment in property and unit trust fit into my profile.
Globally, the share markets may be volatile but locally, we will have election soon. I believe the local market will go up and I am optimistic of the local market performance.
It is hard to say what is the outlook on the local economy and stock market but I hope to diversify my investment portfolio when the situation improves. I may also buy more properties in the future.
I foresee the property market to be strong this year; the prices of property and rental will go up.
I think the stock market will move up closer to election. Now that the share market is down, I think it is a good time to buy. I do not invest that much in stocks, so there is nothing to worry.
