Election Rally On The Cards?

Since reaching a record high of 1,524 on 14th January 2008, Malaysia's Kuala Lumpur Stock Exchange has since corrected by about 10% to the current level of 1,370. After the Lunar Chinese New Year celebration which just ended a few days ago, Malaysia has entered into a frenzy election climate as the country gets ready for her next general election on 8th March. I now could see banners of political parties hanged around almost every corner of the streets. It signals the start of more political and election campaigns being held at all districts for the next 13 days or so.

On the other hand, the stock market has been on a downward fall, just like any other major global stock market indices. There is one little good news amidst the current gloom and doom, sparked by the sub-prime and financial crisis in the US, that is, Malaysia stock market has been hit less compared to the other major Asian bourses such as Shanghai, Hong Kong and Singapore.


The main reason for KLCI's resilience relative to other regional markets is related to Malaysia being a major producer (second largest in the world) of Crude Palm Oil (CPO), which have been hogging the lime light for much of 2007 and 2008, as a result of it's record pricing performance, thanks (or no thanks?) to the sky rocketing crude oil prices (which have surpassed USD100 per barrel). Recall that all major commodities have become the safe-heaven of global investors amidst the current turmoil in global equity and US housing and financial markets.

So, what's in store from now leading to Malaysia's election on 8th March? Is there going to be a so-called election rally to instill an even better "feel-good" factor into the pockets of the people of Malaysia? "Traditionally, Government-linked stocks may be given a "lift" prior to election (although this is definitely not a cast-in-stone factor). Will this trend repeat by itself?

Unfortunately, it appears THERE WON'T BE ONE this time around! First and foremost, foreign funds seem to be on a gradual withdrawal mode since financial liquidity is on a tighter rope these days due to the financial turmoil back in US and many other countries of origin with exposure to the sub-prime. Moreover, lower tolerance of risks may also tempted funds to reinvest their money into other safer means such as commodities or cash instruments. Based on the above, overall sentiment has definitely been affected. Secondly, since the announcement of general election, share prices of many Government-linked stocks (such as MRCB) have in fact fallen by a large degree (a case of sell on fact?) in line with the general market trend. Thirdly, it could well be a myth to believe such a pre-election rally.


From the data above, an average of 1.9% rise 2 weeks before general election over the past six occasions could hardly argue a firmer stance against the statistics.

What's your view? I welcome any feedback.

Is Investing In ETF Better Than Unit Trust?

Exchange-Traded Fund or in short, ETF, is very much a mirror of unit trust fund. The key difference is that ETF can be traded just like stocks or shares in the stock exchange trading platform. The cost of ETF trading is therefore subject to the same ordinary costs of share trading, such as brokerage fee, stamp duty (may be exempted in some countries) and clearing fee. Essentially, the cost of ETF trading is also lower than investing in unit trusts, which typically attracts up-front sales charges and annual maintenance charges. With the cost of investing in ETF being lower, it is imperative that such instrument is gaining popularity, perhaps at the expense of unit trust.

For instance, in the case of Malaysia unit trust industry, it has been constantly dogged by high sales charges of between 3% to 6%, compared to other countries where the range generally starts from as low as 1%.

ETF was first introduced in the Canadian Toronto Stock Exchange in 1990 but it has since gained huge popularity in US and Europe and now Asia. ETF first started in US in 1993 and there are now over 400 ETFs traded in US and more than a thousand in the world, with total assets surging to about USD800 million! According to Morgan Stanley, average trading volume has also doubled over the last 12 months!

ETFs are essentially open-ended funds that track various index-linked equity, fixed income, commodity and even currencies. Trading of ETFs in Malaysia is relatively new, being only first introduced in 2005. The ETFs available in Malaysia are:

1. ABF Malaysian Bond Index Fund - This ETF invests in a basket of Ringgit denominated Government and quasi-Government bonds
   
2. FTSE Large 30 Index Fund - This ETF invests in a group of stocks comprising of the 30 largest companies listed in Bursa Malaysia.
   
3. Dow Jones Islamic Market Malaysia Titans 25 - This ETF is the first Syariah Exchange Traded Fund launched in Asia.
   

In a nutshell, ETFs enable investors the following benefits:
- gain broad exposure to entire stock markets of different countries with relative ease on trading and at a lower cost to unit trust;
- diversify portfolio without exposing to the risk of one individual stock;
- unlike unit trust, ETFs are highly liquid and transparent;

So, for those investors who are fed up with his or her unit trust funds' constant poor performances due to the failure of so-called "professional" fund managers, whose interests generally lean towards only beating index benchmarks, you may want to consider ETFs since you will now have better control and incur lower cost of investments.

However, do bear in mind there is no certainty in any form of investments. One will still subject to the economic, political, currency, legal or other risks inherent in a specific sector or market that affects the performance of the indexes being tracked by the ETFs.

4 Steps To Everlasting Riches: Business vs Personal

Ever desire or wonder how to attain everlasting riches? I came across this simple article posted by Prince Ben, a wealth creation expert, motivational speaker and best-selling author who help people to achieve their goals in life. Ben quoted the following four important steps to attaining everlasting riches:

1. You need to know what your real dreams are:

For you to achieve everlasting riches in life you need to know what your real dreams are. You also have to be specific and detailed about your dreams. You must be specific about what exactly you want to achieve in life. It is also very important to create a detailed action plan to reach your goals in life successfully

2. Positive Thinking

This has been said so many times and quite a number of people are tired of hearing it. As long as we live on this planet earth, the truth will always be said. Positive thinking is the simplest road to everlasting riches. Whatever your mind can conceive is what you are going to achieve, either positive or negative; failure or success. Stay away from thought concerning failure and never associate yourself with negative people.

3. Everlasting riches require action and more actions

Quoting Dayo Olomu from his best selling-book, 4 Indispensable Strategies for Success. He said the most important key to success is Action. Resolve to take action everyday towards the actualization of your dream. Never let a day go by without you having done something that moves you one steps closer to your most cherished goal. Life reward actions. What we do determine what we get. My message has always been and will always be that if you want anything in life you must first determine the actions that will get you there and then you must take immediate action.” He concluded.

4. Acquire knowledge

Knowledge is a powerful tool toward success in life. Try to continually acquire new skills and do what it takes to learn. You must be ready to acquire new skills in order to sharpen the existing one. Successful people seek after knowledge at any given time in life."

In my view, although the above may not be the full exhaustive list to make one achieve everlasting riches, they indeed form the basic key necessities to getting one. In fact, there is no difference between attaining personal riches against business riches. Just think about how businesses that continuously do well have in common: they all believe in setting corporate mission and goals. The goals lead to financial planning and budgets, which will then determine how they could strategize to make the targeted income and how they should spend the money wisely on their businesses. Imagine without a goal, it's like shooting blind folded, one can only "hope" the best will come! It's simply OUT OF YOUR HANDS!

With goals, people who indulged in sales will then go the extra mile to make sure that their sales targets are achieved, in the midst of intense competition. There will be full of challenges in order to win in the highly competitive landscape. As such, it is important that both management and sales people, in particular, must be equipped with the right knowledge and positive thinking to outdo the competition and to win the hearts of your customers.

Finally, an Action Plan is what one needs to fulfill the goals, the business plan and the related sales strategies. An action plan would be regularly scrutinized and reviewed for optimum results.
To many people who are either in business or working as an employee, the above steps are mission-critical. Therefore, they are not options but a must for execution. The strange thing is while one can apply these easily in business, it is not often one will apply the same in their personal capacity. Why is that the case?

It's back to the matter of "State of Mind". When one treats a matter as optional, people tend to procrastinate and taken lightly. However, when one treats the matter as "life and death", simply means, it's not optional anymore but to succeed, people will do all they can and go the extra mile to achieve something. This is why while the process and objectives are the same, application to business and personal capacity is entirely different.

Even if all of us understand the importance of executing these 4 simple steps, i can bet not everyone will be able to execute them well, mainly because of different emotions and state of mind. For many, they are more interested in making excuses in justifying to themselves or to other people why they should not follow certain steps or cannot be successful!

For me, i understood the importance of these processes but it also took me quite a while before i put them into real execution! However, once i started following the processes, i truly comprehend why this will lead our lives to greater heights, and YES, it is no difference whether one applies them in personal or corporate life!

For the full article by Ben, please click here.

Do leave me a comment on your thoughts on today's post.