What is Financial Planning?

For many people, financial planning is usually associated with insurance products or even unit trust funds. In reality however, it has a much broader scope. A comprehensive financial plan covers the following areas – investments, insurance, estate planning, cash flow management, taxation planning and others. In short, it involves the process of developing strategies to […]

Zimbabwe devalues currency to tackle economic crisis

HARARE, Feb 22 — Zimbabwe’s central bank began trading a sharply discounted replacement currency today, attempting to ease a cash crunch that has hobbled the economy and plunged millions deep into poverty. Zimbabwe adopted the dollar in 2009…

UOB maintains inflation forecast at 2.0pc in 2019

KUALA LUMPUR, Feb 22 — United Overseas Bank (Malaysia) Bhd has maintained its inflation forecast of 2.0 per cent for 2019 on the back of a sustained recovery in oil prices, stable broadband prices, potential weather disruptions, and resilient…

SE Asia Stocks-Most fall on global growth slowdown worries; Indonesia worst hit

Indonesia led losses as most Southeast Asian stock markets fell on Friday, as worries of a global growth slowdown continued to hamper investor sentiment, while Vietnam continued to rise for the fifth straight session.

Investors are also exercising caution amid trade talks between the U.S. and China with the tit-for-tat tariffs between the world’s two largest economic powers having already disrupted international trade and slowed the global economy since the trade war started several months ago.

“Slowing global growth is underway, evidenced by falling exports growth in trade-sensitive countries… An improved US-China relation may not provide an immediate boost to demand against the backdrop of peaking trade growth,” said Zhu Huani, an economist at Mizuho Bank said in a note.

The Indonesian benchmark dropped 0.7 percent, leading losses in the region, following the central bank’s decision to hold key rate on Thursday. But for the week, the index is set to snap two straight weeks of losses.

Indonesia’s central bank kept interest rates on hold on Thursday and said it was looking at ways to boost loan growth.

Financial and consumer stocks dragged the index with Telekom Indonesia and Bank Negara Indonesia falling 1 percent and 2 percent respectively.

Malaysian stocks fell 0.6 percent, ahead of the country’s January inflation data to be released later today. The index is, however, set to post its third consecutive weekly gain.

Malaysia’s consumer prices are expected to fall in January, the first decline in nearly a decade, amid a drop in domestic fuel prices, a Reuters poll showed on Wednesday.

The central bank however, said last week that the country was not at risk of deflationary pressure. The index was dragged by losses in healthcare and telecom stocks, with IHH Healthcare Bhd and Maxis Bhd shedding as much as 1.7 percent and 3.4 percent, respectively.

Singapore’s index shed 0.5 percent after the country’s second-biggest listed lender Oversea-Chinese Banking Corp Ltd posted disappointing quarterly financial earnings.

OCBC missed market estimates with a 10 percent drop in quarterly profit, due to a weak performance in its insurance business.

Shares of OCBC dropped as much as 2.2 percent, while those of its peer United Overseas Bank Ltd dipped as much 2.2 percent.

The Vietnam index continued to surge for the fifth straight day and rose 0.4 percent, with gains concentrated in financial stocks. Joint Stock Commercial Bank for Foreign Trade of Vietnam rose 2.8 percent.

Meanwhile, Philippine stocks edged marginally higher.

Weak US data underscore growing headwinds to economy

WASHINGTON, Feb 22 — New orders for key US-made capital goods unexpectedly fell in December amid declining demand for machinery and primary metals, pointing to a sustained slowdown in business spending on equipment that could further crimp…

PBOC sees benchmark rate cut as last resort, may use other tools

BEIJING: China’s central bank is not yet ready to cut benchmark interest rates to spur the slowing economy, despite cooling inflation and a stronger yuan, which have fanned market expectations of such a move, policy sources told Reuters. But the People’s Bank of China (PBOC) is likely to cut market-based rates and further lower banks’ […]

Zimbabwe’s currency reality check puts plaster on deep wound

HARARE, Feb 21 — Zimbabwe’s decision to scrap a peg between its quasi-currency bond notes and the US dollar brings a welcome end to a failing monetary policy, but it is not the solution to a deeper crisis, economists said today. The Reserve Bank…

Govt in talks with China on Panda bonds: Guan Eng

KUALA LUMPUR: Finance Minister Lim Guan Eng today confirmed that Malaysia has received an offer for the issuance of Panda bonds from China and said the relevant parties are currently in discussions.

Speaking to reporters at the 12th Malaysian Property Summit, Lim said the offer from China Construction Bank has been communicated to the Prime Minister and the Cabinet.

“But we are still at the discussion stage. Unlike the Samurai bond for which the working paper has been presented to and approved by the Cabinet, and both countries have agreed on it. This one is still at the discussion stage,” he said.

Earlier this week, China’s ambassador to Malaysia, Bai Tian, said China Construction Bank is proposing to issue Panda bonds in China to Malaysia to help alleviate financial stress.

“I see this as a positive sign from other countries and foreign investors, who are confident about the administration of the new government led by Prime Minister Tun Dr Mahathir Mohamad. Because they are confident, they are willing to extend a loan, just like Japan with their Samurai bond. This is something that is being done for the first time since the 80s,” said Lim.

He said such offers from Japan and China reflect the interest of foreign investors in Malaysia and their confidence in the new government, which was not seen before.

He noted the Samurai bond’s coupon rate of 0.65% is below market rate compared with the coupon rate of a Goldman Sachs bond issuance under the previous government which was 100 basis points above the market rate.

The ¥200 billion (RM7.34 billion) 10-year Samurai bond, guaranteed by the Japanese government, will be issued next month, at a coupon rate not exceeding 0.65%. The Samurai bond was initiated by Mahathir, who requested his Japanese counterpart Shinzo Abe for yen-denominated credit in June last year.

The Samurai bond will be used to reduce debt accumulated by the previous government. The Samurai bond sale will be Malaysia’s first in three decades, having last raised such debt in 1989.

Meanwhile, Lim said the government hopes to conclude talks on the East Coast Rail Link (ECRL) but noted the challenge of ensuring that the cost is something that the country can afford while at the same time maintaining good relations with China.

“We still maintain the best of hopes that this matter can be resolved and that they can meet our request for the price reduction. Otherwise we would not be able to afford it,” he said.

Lim said the ECRL is one of the remaining projects to be concluded while most of the other projects that were being reviewed have been finalised.

As for the proposed Airport Real Estate Investment Trust (REIT), which was announced in Budget 2019, he said it is working towards appointing a REIT manager but it has not been finalised yet.

In his keynote address, Lim said the cost of living is still high although consumer price index (CPI) was at 1% in December, which is the lowest inflation rate in nine years.

He said the government is looking at how to ensure the low CPI can be filtered down and allow the public to benefit from the low inflation rate.

He said the CPI is sometimes used as a benchmark for wage increases, which is not so accurate thus the government is looking at another index that can better reflect the cost of living, so that wage rises reflect the actual situation.

RAM Ratings expects Bank Negara to maintain OPR at 3.25pc

KUALA LUMPUR, Feb 21 — The overnight policy rate (OPR) is expected to be retained at 3.25 per cent by Bank Negara Malaysia (BNM) given the need to balance between capital outflow pressures and growth support, says RAM Ratings. The research house…

RAM Ratings: Deflation seen in Jan amid low fuel prices

KUALA LUMPUR: Inflation is estimated to be lower at -0.5% in January 2019, from +0.2% in December 2018, amid deflationary pressures from the transport fuel component, according to RAM Ratings.

The average price of RON95 petrol was markedly lower (-13.1% year-on-year) at RM1.98/litre in January, following the switch to the weekly fuel price mechanism based on the Automatic Price Mechanism (APM).

The new regime has led to a more direct and immediate transfer of actual global oil prices to end-consumers.

Looking ahead, headline inflation is projected to accelerate to 2.0% this year, mainly driven by expectation of continued spillover effects from the reintroduction of the Sales and Service Tax and low-base effects during the three-month window without the Goods and Services Tax (June-August 2018).

The impact is envisaged to be particularly pronounced for the food component, and will be the key driver of overall inflation in 2019.

The transport component is unlikely to repeat the impact it had last year, contributing to 1.7 percentage points of the overall 2.8 percentage point year-on-year decline in 2018’s headline inflation.

RAM head of research Kristina Fong (pix) said inflationary pressure from the transport component are still expected to be relatively muted this year against generally softer global oil prices.

“Even so, there may be some slight upward price pressure in 2H2019 following the switch to targeted fuel subsidies,“Fong said in a statement.

It expects Brent crude prices to average US$60-US$65 per barrel this year, compared to US$71 per barrel in 2018.

“Looking ahead, we anticipate Bank Negara Malaysia to maintain the overnight policy rate at 3.25% in 2019, given the need to balance between capital outflow pressures and growth support.”

She said although headline inflation is envisaged to accelerate this year, the pace of increase will still be rather nondescript as a trigger point, relative to the downside risks to growth from ongoing fiscal consolidation, volatile capital markets, US-China trade tensions and Brexit uncertainties.