Inovatif

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  • Silver Lining for Alternative Investments Despite Pandemic

    Silver Lining for Alternative Investments Despite Pandemic

    Since the first peer-to-peer (P2P) financing platform was launched in 2016, the alternative investments industry has witnessed healthy growth under the watch of the Securities Commission Malaysia (SC). The COVID-19 pandemic has, suffice to say, thrown the industry off course.

    “The Covid-19 pandemic has negatively impacted businesses across most industries, especially businesses that operate predominantly offline or rely on physical touch,” Funding Societies Malaysia co-founder and CEO Wong Kah Meng tells Smart Investor.

    In this case, P2P financing platforms play an important role in balancing the needs of both SMEs and investors, and this remains true, especially during the current unprecedented economic situation.

    On the outlook for the P2P financing sector, Wong foresees the sector will become more appealing to the investment community given the low-interest rate environment, coupled with the volatile capital markets globally.

    “Over the medium and longer term, we are hopeful the pandemic could even serve as a catalyst to spur the next wave of digitalisation of businesses across the economy as well as the emergence of new digital business models, which will benefit the P2P financing industry given its digital focus,” he opines.

    Wong Kah Meng

    However, equity crowdfunding (ECF) platform Ata Plus co-founders Elain Lockman and Kyri Andreou say it would be naïve to assume it is business as usual for the economy.

    Elain Lockman (left) and Kyri Andreou (right)

    “People’s behaviour, spending, and investment patterns have changed and the medium- and long-term impact on businesses have yet to be ascertained with any level of accuracy,” they say.

    For players in the ECF and P2P financing space, they observe there has been a considerable increase in interest for raising funds by SMEs via these two methods.

    “The improved terms for the Malaysian Co-Investment Fund (MyCIF) introduced at the onset of the pandemic can then be said to have succeeded to an extent, though in the end it still requires the participation of the wider investor market,” they explain.

    Challenges to Meet Loan Obligations

    As cash flow becomes tight and businesses see substantial declines in revenue during the coronavirus outbreak, it is inevitable many MSMEs find it a challenge to meet their loan obligations to P2P lenders.

    “Throughout the MCO, Fundaztic has never stopped MSMEs from having a chance to apply for funding with us. From a credit standpoint, however, we did take a more prudent and careful approach to ensure that all approved applicants are viable and creditworthy businesses,” explains Calvin Foo, acting CEO of Peoplender Sdn Bhd (which operates P2P platform Fundaztic).

    Bearing in mind that most businesses were not able to operate during the MCO and CMCO period, Fundaztic has also taken a proactive approach to offering restructuring and rescheduling (R&R) to their issuers as a solution to get them through these tough times.

    “This approach has eased our issuers’ financial burden over this short-term period and therefore, we are not seeing any huge spikes in our default rate,” adds Foo.

    Calvin Foo

    The situation, he continues, did improve mid-June onwards, and the number of notes and investments have started to gradually increase since then. This indicates a majority of businesses are starting to become operational once more.

    “As more businesses are adapting to the ‘new normal’, I foresee the P2P financing sector will continue to grow and assist more MSMEs in the country. In fact, I believe there will be more opportunities for the sector as businesses are starting to shift their businesses online.”

    microLEAP founder and CEO Tunku Danny Nasaifuddin Mudzaffar concurs, adding that the ability to restructure their loans allow issuers to extend the tenor of their financing so that they can pay less than what they usually pay in a month.

    “Doing so will also give P2P investors higher interest/profit at maturity. It’s a win-win situation for all parties rather than allowing the Investment Note to default.”

    On Funding Societies Malaysia’s part, Wong shares that with the slower economic activity during MCO, they anticipated deferment and restructuring requests from their SMEs.

    “Deferment and restructuring options can help SMEs alleviate their immediate repayment obligations of up to three months so that they were able to meet other financial commitments such as salary payments to their employees, thereby helping to save jobs. “In return, investors are able to earn additional interests during the deferment period as compensation,” Wong reveals.

    Growth Opportunities Abound

    Despite the predicament brought about by the pandemic, growth opportunities for the P2P industry are still available.

    Wong says one of their active efforts during the MCO was identifying SMEs with growth opportunities, particularly those within the defensive and counter-cyclical industries.

    These industries include healthcare, e-commerce, wholesale and retail of perishable goods, FMCG (fast-moving consumer goods), telecommunications and utilities, and transportation and logistics, among others, which they believe will remain strong or thrive during the current macroeconomic situation.

    “As traditional financing avenues are tightening up their credit lines, this gives the opportunity for digital financing platforms such as P2P financing to reach out to more unserved and underserved SMEs in Malaysia that would benefit from the additional financing assistance,” he adds.

    After all, over 98% of businesses in the country are MSMEs and as the whole industry has only served over 2,200 MSMEs as of June 2020, P2P financing is barely scratching the surface of the funding gap.

    Mitigating Risks for Investors

    The P2P financing industry is far from matured and although the COVID-19 pandemic may have slowed down the growth of the industry, this is believed to be just temporary.

    There will be many businesses still being underserved by financial institutions, and these are the target segments P2P financing platforms are working hard on closing the financing gap for.

    Tunku Danny

    At the end of the day, says microLEAP’s Tunku Danny, MSMEs still need financing and P2P investors still have funds to deploy. However, the question is this: how do P2P investors know that their investment comes with the least risks possible?

    “P2P investors need to look at which type of businesses will survive and which won’t. Businesses that have pivoted or have an online presence are doing well, while those that are only brick-and-mortar will find it hard to make money due to lower footfall.

    “P2P financing operators, on the other hand, need to encourage diversification of investments on their platform while being more selective in terms of the issuers they host on their platforms.”

    Interest in Early Technology Investments

    The pandemic, according to Ata Plus’s Lockman and Andreou, has clearly shown technology played a crucial role in keeping our society functional during periods of lockdown and quarantines.

    “These technologies coupled with the application of ‘new’ business concepts and/or models may prove to have a long-lasting impact beyond this pandemic. In terms of how we do business, how we trade, how we work, how we produce goods, how we buy goods, how we learn, how we seek medical services and how we entertain ourselves.

    “Business concepts/models such as the sharing economy, co-creation, crowdsourcing, customer to customer (C2C), freemiums, gamification, Big Data, software as a service (SAAS), community-driven, democratisation and Open Source are now more readily accepted and relevant than ever before.

    “It is not a surprise there is a renewed interest in technology investments due to the pandemic. Technology or tech-driven businesses that are agile, scalable and have high degree of automation or digitalisation capabilities with new business concepts/models will be the ones that will be on the watch list,” they say.

    As an ECF platform, Lockman and Andreou believe that Ata Plus, like other platforms, want to give investors access to new investment opportunities that would previously only have been available to angel investors, venture capitalists, or private equity firms.

    “We are here to connect investors who have the funds and businesses that need growth capital. Through ECF, sophisticated and retail investors can now access these investment opportunities with a much lower investment entry point into these exciting businesses. In Malaysia, the smallest investment that has been accepted by an issuer was RM10.

    “While this is a medium-longer term investment asset class with potential high returns, investors need to be aware of the risks and limits of their total crowdfunding investments. The investors may lose all their money and most start-ups will fail. The trick is to always diversify your investment and not to put all your eggs in one basket,” they conclude.

    By Bernie Yeo

  • Millennials Driving Stock Market Frenzy

    Millennials Driving Stock Market Frenzy

    The COVID-19 pandemic has had a devastating impact on global economies, sparking huge volatility in stock markets worldwide. However, the lockdowns imposed by many countries seemed to have sparked a strange phenomenon where millennials have piled into stock markets around the world including in Malaysia.

    In the past few years, millennial investor participation has been recording steady growth, with participation by this cohort in the local stock market being consistently above 20%. In their 20s to mid-30s, millennials are born between the early 1980s and mid-1990s.

    Statistics from Bursa Malaysia show retail investors in the local equity market have witnessed substantial growth in the last few months, coinciding with the imposition of the Movement Control Order (MCO).

    The exchange operator revealed year-to-date May 2020 the total retail registered an increase of 30% in new accounts opened while trading activity among retailers registered an 82% increase in average daily value.

    The retailers were also net buyers at RM5.1 bil, a whopping 607% increase compared to the same period last year.

    Similarly, online brokerage Rakuten Trade has reported a surge in account openings during the MCO period with almost 50,000 new accounts being activated between 18 March and 30 June 2020.

    “If one compares this to the more than 100,000 accounts activated since our start in May 2017, about half of the total accounts were opened in just four months,” acting CEO and chief marketing officer Kazumasa Mise tells Smart Investor.

    “The surge in retail participation can be attributed to the availability of good-value stocks due to the state of the capital market at the time. Many shares were below their historical prices, so it was a good time for new investors to enter the market and weigh their options,” he adds.

    Kazumasa Mise

    Equity Investment Trending among Millennials

    Investing in equities is fast becoming a trend among millennials, and the fact that approximately 80% of Rakuten Trade’s accounts are held by millennials is testament to this.

    For context, Rakuten Trade contributed almost RM20 bil in total trading value on Bursa Malaysia since its inception in May 2017. As of 30 June 2020, their retail market share stood at almost 7% while the clients’ assets under trust stood at more than RM1.5 bil.

    “From the onset, our fully-digital equity trading platform has appealed to those below the age of 40. This essentially means we are attracting a new segment of investors and thereby, enabling greater retail market participation, and this includes traders with no prior investment experience,” says Mise.

    He adds from the company’s perspective, their millennial traders generally find it easy and convenient to use a ‘zero contact’ and ‘low fees’ trading platform.

    As to what sectors or industries its millennial account holders are focusing their equity investments in, he says, “Our clients typically trade stocks that are in the news, trending or based on thematic investment such as healthcare-related or oil-related stocks while also generally favouring small- and mid-cap stocks.”

    Lok Eng Hong

    Maybank Investment Bank regional head of Retail Brokerage Lok Eng Hong says low interest rates globally is what’s pushing savers and investors into equity investment.

    “With better access to information and technology, millennials are most prepared to participate in online share trading and investment.

    “Investment gains and validation of good analysis attract young investors to develop money-managing skills and later, to begin their own investing journey.

    “Millennials are also deeply passionate about global issues that are important to them, and these include Environmental, Social and Governance (ESG), green technology and clean technology. Ultimately, investing in companies that champion good causes makes millennials happy,” says Lok.

    Investing in the Era of Technology

    Millennials have come of age during a time of technological change, globalisation and economic disruption. Being more diverse, better educated and more investment- and technology-savvy than the generations before them, millennials are fast changing the face of investing and wealth management.

    “Social media, private chat groups and easy access to research reports have provided trading insights and ideas to tech-savvy millennial investors during the MCO period,” says Lok.

    However, being able to gain access to information quickly with the use of social media and various available platforms does not always positively impact one’s portfolio, Lok reveals.

    “Millennials, usually the younger ones, can be influenced by various sources and influences, and we are not just talking about mainstream financial news or analysts’ recommendations – some may also be exposed to ‘expert’ commentaries and ideas, which may or may not be accurate.

    “Text messages, views and comments without proper support can easily spread through networks of friends and contacts. Sometimes, great ideas are shared, but more often than not, some high-risk speculative trade ideas are being shared as well,” he continues.

    As such, it is important for millennials to remain cautious and to rely on strong technical and fundamental aspects of a professional company and not being drawn into quick gains and rumours, especially during periods of market volatility.

    Risk Mitigation is Essential 

    All investments carry with them some degree of risk, and these risks can range from inflation and interest rate changes to political uncertainties and economic trends. Investing in equities can often be risky especially in times of market volatility such as that caused by the Covid-19 pandemic and resulting economic downturn.

    As such, risk mitigation – the process of determining what risks exist in an investment and then handling those risks in the best-suited way – is essential for any investment strategy and can help investors reduce losses and achieve their investment goals.

    “With investment of any kind, one must weigh the risks and benefits, and buying and selling shares are no different and must be done with caution,” Rakuten Trade’s Mise opines, adding when it comes to investing, time and effort are very much required.

    “An investor must know his own risk tolerance, investment time horizon, and most importantly, his own financial goals. Holding investments for the long term, too, is advisable.”

    Mise also goes on to emphasise the importance of financial literacy to make informed decisions when it comes to one’s investments.

    “Plan ahead on the possible circumstances that would justify selling. Investors should also avoid getting caught up with emotions that lead to making hasty decisions when their stocks are not performing well,” he advises.

    In terms of investment risks, Maybank Investment Bank’s Lok believes new investors should be aware of the risk of them losing all their investment funds, and potentially going into debt from over-trading and the wrong use of high leveraged derivative products.

    “Trading on stocks that have no fundamental earnings, poor cash flow and poor business model is a dangerous start. Penny stocks and cheaply priced warrants, too, can also turn into potential big losses as their price drops can be very sharp too,” he cautions.

    In addition, new investors should also be aware of the risk of stock price gap down and low trading volume, which will make some stop-loss strategy impossible to execute, says Lok.

    As such, investors should consider only value stocks and business models that are sustainable and should always make a practice of verifying if the information received is accurate. “It’s also always good to diversify. Track the market, and keep some cash ready for new opportunities that might arise,” he concludes.

    By Bernie Yeo

  • Business Confidence of Asian CEOs Shaken by Pandemic

    Business Confidence of Asian CEOs Shaken by Pandemic

    A study by Big 4 global accountancy firm KPMG revealed how drastically priorities and concerns of Asian CEOs have changed in the wake of the Covid-19 pandemic.

    The crisis has shaken CEO confidence, with fewer chief executives saying they are confident now than they were at the start of the year when reflecting on business and growth prospects over the next three years.

    In the first study of its kind, KPMG conducted two surveys – one at the onset of the pandemic in January and a second in July/August to measure changes in CEOs’ priorities and concerns during the global pandemic.

    The 2020 KPMG Global CEO Outlook revealed only 22% of CEOs in Asia Pacific remain confident about the growth prospects of the global economy over the next three years, a significant drop from 67% in January 2020.

    A clear result from the study reveals business leaders have “radically shifted” their perspectives as businesses and governments around the world continue assessing the long-term impact of Covid-19.

    It found during this period of unprecedented uncertainty, CEOs are prioritising digital transformation, talent and ESG (Environmental, Social and Governance) factors at the top of their agendas.

    On a more positive note, CEOs are much more assured in the resilience of their own business as 63% expressed confidence in their company’s growth for the same time period.

    Source: 2020 Global CEO Outlook, KPMG International

    Critical Measures to Bolster Resilience

    Datuk Johan Idris, managing partner of KPMG in Malaysia commented: “A majority of CEOs have undertaken critical measures to bolster their company’s medium-term resilience.

    “This is particularly evident at the height of the crisis when business leaders worldwide took steps to maintain business-as-usual activities in answer to restricted movements. With the extension of the Recovery Movement Control Order (RMCO) until 31 December 2020, business leaders are forced to relook at their operational strategies,” says Johan (pic).

    And key to this is the ability to move away from short-term measures and prepare for mid and long-term growth.”

    One way CEOs are collectively doing to secure long-term growth is channeling resources towards digital transformation initiatives.

    Before the pandemic, 64% of CEOs felt overwhelmed by the lead times required to achieve significant progress on digital transformation.

    However, following worldwide lockdowns and the need for physical distancing, 46% of CEOs have reported that progress for their digitisation of operations has sharply accelerated, putting them years in advance of where they expected to be.

    Almost two out of 3 (61%) plan to prioritise more capital investment in buying new technology and digitisation.

    “Clearly, there has been a momentous change in mindset in that CEOs are now more confident and willing to invest in technology to make their companies more operationally resilient, agile and customer-focused to achieve growth during this tumultuous time,” says Johan, adding he expects digital acceleration to increase in speed and scope even after the pandemic subsides.

    New Risk Paradigm

    CEOs have also identified talent risk as the main threat, a category which encompasses recruitment/retention, overall well-being and health of staff.

    This was the threat that CEOs were least concerned about at the beginning of the year. As a result of this pandemic, it has now risen to be the highest perceived threat to long-term growth.

    This could reflect the challenges CEOs face with recruiting and retaining personnel while motivating the workforce despite disruption to the usual ways of working.

    Most CEOs (72%) have said that remote working caused them to make significant changes to their policies to nurture culture, while 69% reported how remote working has widened their potential talent pool for future hires.

    Regardless of the barrier caused by physical distancing measures, CEOs recognise that losing key employees, attracting specialised talent, keeping workforces productive and the health and wellbeing of their staff can have a critical impact on their future business performance.

    Supply chain risk (just 1%) was at the bottom of the list for CEOs in January but catapulted to second place (14%) by July-August, the surveys revealed.

    The rise in supply chain concerns could be attributed to the fact over two-thirds of organisations (72%) have had to rethink their global supply chain approach given the disruptive impact of the pandemic.

    This could potentially lead to a redesign of global supply chains to become more agile in response to changing customer needs, and more robust to reduce risks and disruptions over the long term.

    Renewed Sense of Purpose

    Recent developments have driven 78% of CEOs in Asia Pacific to develop a stronger emotional connection to their organisation’s purpose, with 66% stating how they responded to the pandemic by shifting focus towards the ‘Social’ component of their ESG programme.

    KPMG’s survey also found that 76% have had to re-evaluate their organisation’s purpose as a result of the Covid-19 crisis.

    Johan concluded, “Recovery from the pandemic does not mean a return to normal, but instead an opportunity to define our post-pandemic reality.

    “As the crisis continues to change what good corporate leadership looks like, the role of the CEO is more important than ever in steering the business towards growth in the new reality and beyond.”

  • Investment Options for Young Investors

    Investment Options for Young Investors

    Young investors (or any beginner investor) will often ask: “What should I invest in?”

    If you are a millennial, the idea of investing your hard-earned money can come across as complex or perhaps intimidating. While it is important to secure your future, how do you go about doing it?

    Unlike previous generations, millennials are comfortable with technology and the convenience emanating from their smart devices. They enjoy co-working and travelling, and value experience above others.

    In other words, millennials are breaking away from the conventional mode of spending and saving, developing a pattern of higher risk-taking due to their need for instant gratification. But there is still hope!

    Despite the common misconception, investing isn’t just for the financially established – you can start investing for as little as RM50 per month and begin your journey to building wealth. To brave the high seas of investing, it is important to remember the key is not just randomly betting on different investments but learning to save and making informed decisions for your future.

    Smart Investor reaches out to several experts in the field for their perspective on the topic.

    SURAYA ZAINUDIN, FOUNDER, RINGGIT OH RINGGIT

    Based on my interactions with the Ringgit Oh Ringgit audience who are primarily within the millennial age group, many of them invest their money in a combination of unit trusts and mutual funds.

    Amanah Saham Bumiputera (ASB) and Private Retirement Schemes (PRS) are popular, with many taking advantage of the PRS Youth Scheme a few years back, and collecting the RM500/RM1,000 bonus upon RM1,000 deposit.

    Other popular investment options are stocks (especially dividend stocks), fintech platforms like Wahed Invest, Stashaway and MyTheo (robo-advisory platforms), gold (HelloGold), P2P lending (Funding Societies) and crypto assets (Luno).

    In terms of the recommended proportion of their income to be put aside for savings and investments, I recommend anyone to save at least three to six months of living expenses as soon as possible, regardless of income level. You need the savings to protect yourself against any of life’s unexpected expense.

    After you hit that amount, feel free to choose either to save as much income from salary, add more income (increase salary or do a side hustle), or both. Taking willpower out of the equation by automating investments is a great way to get rich slowly.

    The stock market, generally speaking, intimidates any beginner, millennials included. However, it is great that there are personal finance content creators nowadays that share their stocks portfolios online using relatable language. It makes the whole process – from research to reallocation – easier to visualise and thus implement.

    Getting help from a financial adviser, a robo-adviser or opting for a do-it-yourself (DIY) approach or investing in mutual funds or exchange-traded funds (ETFs) – these are great ways to get started. Personally, I’m an advocate for the DIY approach since it’s the most cost-efficient approach.

    Investment information and advice is very easy to get for free online, via a quick Google search. I would personally save for the services of a financial adviser for estate planning instead.

    STEPHEN YONG, CHIEF KNOWLEDGE OFFICER, WEALTH VANTAGE ADVISORY

    The concept of ‘pay yourself first’, which is to set aside funds every time you receive an active income, is advocated by many financial advisers.

    The whole idea behind paying yourself first is to consider as if you were an employee of Me Sdn Bhd, and ensure that you get paid every month. That being said, the moment you receive your pay, set aside an amount into another account that you will not touch.

    Once you have accumulated three to six months’ worth of emergency funds, paying yourself first should be channelled towards investing. This is especially important for young adults to allow for early investing and compounding to build serious wealth. Here are a few practical steps to pay yourself first:

    • Decide how much you will pay yourself. It can be a percentage (20% of your pay, for example), or a fixed figure (RM1,000 monthly);
    • Set up an automatic transfer every month into a separate account designated for investing; and,
    • Set objectives for the money in your account to be allocated into various investments.

    You can also automate some investments if there is a regular savings plan option to gain the benefits of dollar cost averaging.

    For those who have just started out in their career, there are an increasing variety of investment vehicles available. Rather than start investing based on recommendations from friends and family (which is something young investors are prone to do), a smarter approach to selecting your investments is to have a customised personal investment plan following your desired asset allocation.

    One of the most important determinants comes from deciding on asset allocation which determines ~90% of volatility and gives ~40% of returns (Determinants of Portfolio Performance by BHB published in the Financial Analysts Journal).

    What is asset allocation?

    Asset allocation is to set how much of one’s investments goes into various asset categories to get the best balance between returns and reduced overall portfolio volatility. Here are some smart investment options for each asset class:

    For risk appetite, investor risk profiles are generally categorised into the following from the highest to lowest risk:

    Examples of high-risk investments include shares, commodities, cryptocurrency and alternate investments. Examples of low-risk investments include bonds and money market funds.

    In terms of how much risk millennials should be willing to take to build their investment portfolio, it is important to note that every millennial investor needs to decide for themselves how much risk is suitable.

    As a millennial, time and compounding are on your side, so you may be able to take on more risk than someone who is retired or near-retirement. There are various investor risk profile assessments available which help you to know your investment risk appetite.

    Overall, one can reduce risk by practicing diversification and having a personal investment plan. Diversification can be done by diversifying across the following:

    On the question of whether millennials are generally apprehensive about investing in the stock market, I would say millennials today have access to a wealth of information and resources.

    As such, everyone has their own preferences with some feeling comfortable investing directly in the stock market while some prefer using other investment vehicles. The key thing for millennials is to get trustworthy professional advice on how to invest.

    Overall, we are seeing a blended approach working out well with a combination of working with a financial planner, robo adviser, and maybe handling some areas using a DIY approach.

    MARSHALL WONG, FOUNDER, planNERD

    The ‘pay yourself first’ concept is a good practice, and as a financial planner myself, even I have created an automated system to make sure that I am getting paid first. The keyword here is ‘automated’.

    To do this, I have two bank accounts. The first is what I call the ‘Holding Account’, which is the main account which I use to receive my income. In this particular account, I set a recurring transfer of funds to another account, which I call the ‘Parking Account’, which is set up for the sole purpose of accumulating money for my next investment.

    When it comes to smart investment options that a young person can consider, as cheesy as it may sound, I believe that investing in one’s own knowledge is always the first thing a young person should do. Without proper knowledge, the line between investing and gambling can blur.

    Take cryptocurrency as an example. Most people that do not understand blockchain beyond it being ‘just a system behind Bitcoin’ may think that cryptocurrency is a gamble. But for those that truly understand the potential and the value that blockchain can bring to us in the future, cryptocurrency is seen as an investment.

    Don’t get me wrong, I am not saying that everyone should jump into cryptocurrency. A young person should start reading articles on business and finance to be equipped with the necessary knowledge to understand the true value of where they put their money into.

    On the topic of mobile-friendly investment platforms, I have personally invested with StashAway, Wahed and MyTheo. These platforms are great for beginners as they are simple, seamless and do not require investors to do as much homework before they invest.

    However, it is important to be reminded that we should diversify and not put all our eggs in the same basket.

    Recently, we have seen a US$7.6 bil online brokerage firm, Robinhood experienced a massive outage due to technical problems. Nevertheless, I encourage young investors to use platforms like these but remember to consider other traditional investments.

    Are millennials apprehensive towards investing in the stock market? I personally don’t think so.  Whether they ought to get help from a financial adviser, a robo adviser or opt for a DIY approach, I think millennials should start by doing their own research and try out the DIY approach.

    That being said, if they do not have the time or confidence, or they have tried the DIY approach with unsatisfactory results, they should consult a fee-based financial planner. A fee-based financial planner will identify and quantify their life objectives and assist them in choosing the correct investment.

    Investing in mutual funds, index funds or ETFs on a piece-meal basis without knowing the bigger picture is dangerous as each investment has different levels of volatility and time horizons.

    Risk-wise, there is no hard and fast rule, but then again, it all depends on the investors’ investment objective. If the objective is a short-term one, you should not take too much risks. But if the objective is a long-term one, millennials should consider taking on more risk and pay less attention to the short-term fluctuations.

    All in all, as a financial planner, I encourage young investors to have multiple investment portfolios to achieve different investment objectives. As such, investors can have both portfolios with high and low risk simultaneously.

  • Growth of the Malaysian Gig Economy Among Gen-Zers

    Growth of the Malaysian Gig Economy Among Gen-Zers

    Social media has been the main source in forming a new culture among the younger generation, creating a new norm that challenges Gen Z to come out of their comfort zone. With technology constantly progressing and simplifying the way we execute our tasks, the gig economy is now high in demand, especially during a time like COVID-19.

    While many among us are afraid of salary cuts and retrenchments, Malaysians are leveraging the resourcefulness and popularity of freelancing to make ends meet.

    Glenn Tay

    According to Glenn Tay, CEO and Founder of Gigworks, the freelancing landscape will not be diminishing anytime soon but will in fact continue to grow at a rapid pace as majority of the workforce are currently conquered by millennials and their priorities are more focused on work-life balance.

    “Malaysian youths, similar to those around the world, are always craving for that opportunity to do the things that they are passionate about, be it traveling, exploring, experiencing etc. and while doing so, they want to have the flexibility to earn sufficient income from wherever they are residing at that time.

    “We cannot deny that this is a new way of working now where jobs are no longer restricted by geographical boundaries. The idea of being fully employed by one firm is not desirable for those looking to have ‘freedom’ in their work management,” said Tay.

    With jobs experiencing drastic change and with the labour force shrinking, competition for talent is getting increasingly intense. Organisations need to think out-of-the-box to attract the talent market such as redesigning the job scopes in a way that can both draw in and connect with the Gen Z and, at the same time guarantee that these jobs continue to create a path for future talents.

    The Gen Z in Comparison to X and Y

    A study by the Zurich Insurance Group (Zurich) and the Smith School of Enterprise and the Environment at the University of Oxford on agile workforce has found that 38% of the respondents in Malaysia who are currently in full-time employment, are looking to enter the gig economy in the next 12 months. This percentage is significantly higher than the global average of 20% recorded in the study.

    While individuals involved in the gig economy come from a diverse range of backgrounds, identifying the main target is essential for the gig economy to develop in years to come. An ever-increasing number of individuals from Generation Z appear to shun ordinary 9-to-5 jobs. Instead, they would prefer working for themselves by freelancing their way in order to obtain their dream jobs.

    The impact of their entry into the working environment will be quick and significant. However, Gen Z has an entirely different point of view compared to the rest when it comes to careers and how to define success.

    Gen Z More Inclined towards Autonomy 

    One of the factors contributing to more people opting for freelance work over permanent 9-to-5 professions is self-directed motivation. It is much simpler to be driven when you are in control of the flow of your work.

    It gives Gen Z a sense of autonomy which they desire for themselves – generating a sense of individuality, determination and providing the ability to achieve what they have been dreaming of. Having control over how they work and the type of job to work on is something that appeals to this young crowd.

    The appeal in this type of working lifestyle is that it also allows for work to be centred around creative passions based on portfolios and skills, as opposed to a full-time job that provides steady income but is more monotonous and rigid in structure.

    For example, university students juggling between college and work-life can find it challenging, therefore they are looking for easier alternatives to fund their tuition fees. Joining the gig economy as a freelancer allows them to have this much-desired flexibility. Although they may not always be able to earn as much as a full-timer, the option of being able to pay off their debts bit by bit while still having the capacity to manage their work-life-balance is satisfactory enough for these undergrads.

    Desire for Flexibility

    According to Workforce Institute, 55% of Gen Z-ers are attracted to the ability to work on their terms in gig employments as the flexibility allows you to go at your own pace and avoid breakdowns. Approximately 26% of Gen Z-ers would work harder and remain longer at an organisation that supports flexible working hours.

    Millennials and Gen Z currently account for slightly over a third of the global workforce. In the next decade, that figure is set to shoot up to 58%, making the youthful generations the most dominant drivers of the workforce.

    To meet the demands of this up-and-coming generation, we, as a society, have to respond to these differences in a mutually beneficial way that would increase trust and generate positive societal impact.

    Thus, it is important that a proper transition and greater overall acceptance of freelance careers is in place to welcome this new way of work.

    Digital Natives 

    Being moulded by technology, Gen Z was exposed to the Internet at a young age, making them the youngest influencers to appear on the scene. They are generally more tech-savvy than the older generations as they have never known a world without smartphones and the Internet.

    Non-traditional ways of working appeal to this group as they are more familiar and accustomed to a technology-driven society.

    We see a rising consensus that digital readiness is no longer optional, but mandatory. When MCO was enforced, the few months of this nation-wide exercise have shown that Malaysians have become more comfortable with utilising technology to collaborate and deliver work on time, replacing the need for physical travel.

    However, this period also brought to light certain difficulties and challenges encountered when working from home such as network issues, communication barriers, and lack of technology readiness.

    Nonetheless, Malaysia is well equipped and ready to adapt to this new normal, with Tun Dr. Mahathir Mohamad looking to implement the gig economy as part of the upcoming 12th Malaysia Plan, and most organisations already alerted and prepared following the MCO period.

    It is only a matter of time before we start to enjoy improved network connectivity and speed, better IT infrastructure, and clear work procedure and discipline to be implemented for the majority of Malaysian freelancers.

    Is Gig Work Appealing Enough?

    Numerous permanent jobs today do not provide a similar degree of job security compared to the past as employers often look at optimising cost efficiencies. Organisations often choose to reduce operation size as a way to find more resources to invest in other parts of the business.

    Instead of simply keeping full-time employees, a coordinated workforce permits organisations to better manage expenses and investments to coordinate business and market demands. Gen Z wants both stability and flexibility at the same time to stay in business.

    Due to this sentiment and in realising the limited options for individuals to find valid yet justifiable freelance work, Gigworks, a mobile application providing online professional service engagement is opening doors for all groups including the younger generation to ensure their talents are being recognised by businesses while catering to the needs of Gen Z.

    “We want to introduce a culture that builds the interest of Gen Z to have a work-balance and offer stability to foster them financially especially during a time like this. Encouraging them to pursue their passion will only make them more confident, allowing them to venture into new projects,” said Tay.

    In a nutshell, now that technology finally exists and caters to these demands, this will be something everyone can benefit from in the gig industry.

    This article is contributed by Gigworks, a mobile application inspired by the impact and advancement of technology in people’s lives. For more information on the company and its services, visit www.gigworks.co/sg.

  • Precious Metals Bull Market in Full Swing

    Precious Metals Bull Market in Full Swing

    After nine long years, the precious metals market is once again a bull market: gold has finally swept past its previous high of US$1,920 per ounce set in 2011 and is primed to push past US$2,000 in the coming months.

    In tandem with gold’s rise, silver – often seen to be the poor man’s gold – has also surged past seven-year highs in recent days and is positioning to make a run for its all-time high of near US$50 per ounce.

    Spot gold traded as high as US$1,945.72 on Monday before closing at US$1,942.24, topping the previous record (in US dollar terms) by more than US$20. Meanwhile, spot silver jumped as much as 8.1% to US$24.60 an ounce, the highest since 2013.

    After topping out in 2011 in the aftermath of the global financial crisis, gold and silver had fallen into an prolonged bear market lasting for years.

    However, the breakout of gold and silver prices is confirmation that the long-awaited bull market for the precious metals is in full swing, and this is garnering the attention of previously disinterested investors and business media.

    With the Covid-19 pandemic wreaking havoc on economies and equity markets around the world, the lure of gold as a safe haven asset has risen significantly.

    Analysts also attributed gold’s rapid rise to the weakening US dollar, low-to-negative interest rates, a flood of money printing by central banks in response to the pandemic, rising inflationary pressures, possible global stagflation and uncertain market conditions.

    Forecasts for further gains have been building even before gold’s breakthrough this week. Bank of America Corp has stuck with its April forecast for US$3,000 for gold over the next 18 months.

    UBS Group AG sees prices reaching US$2,000 by end-September, its global chief investment officer Mark Haefele said in a note on Monday. The group has added the metal to its “most preferred asset list”, according to a Bloomberg report.

    “You simply couldn’t pick a more perfect storm of events which would allow for gold to perform,” said Steve Dunn, head of ETFs at Aberdeen Standard Investments.

    “With low-interest rate policies, negative real rates, super accommodative monetary policy, huge amounts of global fiscal spending, a weaker US dollar, escalating US-China tensions and no clear end in sight for the coronavirus pandemic, all parts of the equation are coming together,” said Dunn in the report.

    Pullbacks Present Buying Opportunities

    As a note of caution, investors need to be aware that the surge in gold prices also increases the risk of profit-taking and a sharp downside correction.

    However, for those are inadequately invested into gold and silver bullion, exchange-traded funds (ETFs) or mining stocks, any pullback in the precious metals offers the opportunity to buy on the dip before prices rebound to newer highs.

    While gold has hogged the limelight recently, the smart money is investing in silver as it is still some 50% from its all-time high, with the potential for the monetary and industrial metal’s price to reach triple digits, according to some bullish analysts.

    They point out that in previous bull markets, gold will move first while silver lags behind. But once silver gets going, it will shoot past gold and outperform it by a country mile. Since it hit a low of US$11.64 per ounce in March, the spot price of silver has rebounded by more than 100%.

    Gold Fund for Local Sophisticated Investors

    Interestingly, in the midst of a global pandemic and a global economic slowdown, Maybank Asset Management Sdn Bhd (MAM Malaysia) launched a gold fund early last month.

    The fund is targeted at sophisticated investors with a long-term investment horizon, offering them the opportunity to invest indirectly in physical gold.

    The MAMG Gold Fund is a wholesale feeder fund which aims to maximise investment returns by investing in the Pictet CH Precious Metals Fund – Physical Gold (target fund), a Switzerland-domiciled fund of Pictet Asset Management SA.

    “Increasingly we see demand for gold as it is a good hedge against market uncertainties,” MAM Malaysia chief executive officer Ahmad Najib Nazlan said.

    He noted that safe haven investment demand created by the pandemic conditions as well as low-interest rates and rising money supply is still conducive to gold purchase.

    “Geopolitical issues, a (US) weaker dollar, renewed trade tensions and the upcoming US presidential election may support the demand for it too,” he added.

    “Our MAMG Gold Fund will be able to offer investors diversification in their investment portfolios. In these uncertain times, it is important to understand and provide investors with more options and strategies to suit their evolving investment needs,” he added.

    Building Portfolio Resilience with Gold

    Wei Li

    The need for the precious metal in one’s investment portfolio is also echoed by BlackRock, the world’s biggest asset management firm, which advocates having gold as a source of “portfolio resilience”.  Wei Li, iShares EMEA head of investment strategy at BlackRock, said gold is an attractive asset as uncertainty and volatility remain dominant themes for investors.

    Gold will be an attractive diversifier as it has “a low correlation to equities”, says Li.

    “In a climate of uncertainty, portfolio resilience is more important than ever: the ultimate shape and timeline of the post-pandemic economic recovery remains uncertain, the trajectory for company earnings is murky, and macro data shows signs of further deterioration.

    “This leaves ample room for volatility and sharpens focus on building resilience through a higher allocation to gold. The short-term outlook for gold shines due to its role as a portfolio diversifier.”

    Li added that over the longer term, gold may benefit from strategic tailwinds from pressure on bond yields through large central bank quantitative easing programmes and a lower-for-longer rate environment.

    “For investors looking to diversify within equities, gold producers may also be well positioned to benefit,” she said.

    A majority of gold and silver mining companies are listed on stock exchanges in Canada, the US and Australia. With the rapid rise in gold and silver prices this year, many mining stocks have seen their share prices rise 100% and more since the global equity market crash in March.

    By Lee Min Keong

  • Encouraging Property Trends Among M’sians Despite COVID-19

    Encouraging Property Trends Among M’sians Despite COVID-19

    iProperty.com.my has revealed encouraging property-seeking trends among Malaysians despite pandemic.

    iProperty.com.my has recently announced the results of its latest consumer survey. The survey aims to understand Malaysians in their property seeking journey during the Movement Control Order (MCO) period and how it has affected them.

    The survey also analyses the purchasing desire of homebuyers before, during and after MCO. The survey was conducted between 11 May – 1 June 2020.

    44% of survey respondents were looking to purchase a property before the announcement of MCO

    The property portal reveals that 44% of the survey respondents are looking to purchase a property before the announcement of the Movement Control Order (MCO).

    Out of these property seekers, 28% stopped actively looking after the MCO was announced on 16 March 2020. However, more than one third of the property seekers who stopped actively searching (38%) stated that they are either waiting for prices to drop or are still open to good property deals.

    The top two factors which influence a property seeker when evaluating an online listing is validation of a property’s valuation (pricing trends for similar properties) and listing content which gives a very clear understanding of the property’s space and layout.

    Property seeking interest unaffected by MCO

    According to the survey results, in spite of the unprecedented situation caused by COVID-19, property seeking trends among Malaysians remained encouraging.

    Interestingly, the survey results reveal that 24% of the respondents who were not looking to buy a property before the MCO are now looking to purchase after the MCO announcement.

    A majority of these new entrants are either looking at current market conditions as an opportunity to purchase their first homes, to upgrade their existing homes or to invest in property, while the minority mentioned that they are downsizing or moving to more convenient locations.

    With these new entrants the percentage of respondents who are actively looking for a property increased to 45% post MCO announcement. On top of this, another 10% of respondents, who are not actively looking for a property post MCO, are open to the right property deals.

    Taking into account this group, the percentage of respondents who are interested to purchase a property after the MCO announcement tops 55%.

    Nevertheless, 92% of the people who are actively seeking for a property state that they have a lower readiness to transact (49% are waiting for prices to drop while 43% are still looking but more cautious about making any financial commitments).

    90% of property seeking respondents named easy entry options as the top factor

    The survey further reveals that 90% respondents answered that the factors which will help ease their transaction decisions are easy entry options such as zero down payment, developer discounts and subsidised legal costs.

    In addition to easy entry points, the survey also reveals that 81% of respondents are looking for trustworthy and reliable developers/ agents.

    Also, 89% of property seekers are receptive to the idea of virtual viewings. 75% state that it will help them decide whether or not to view a property in person while the remaining 14% says it is enough for them to decide whether to buy/rent a property.

    On the same note, 83% of all respondents want to get updates on good property deals (new properties on promotion, or sub sale properties at good prices), while 54% of respondents are interested in market insights and data, to help them better understand the current state of the property market.

    This positive consumer survey highlights the timeliness of the re-introduction of the Home Ownership Campaign (HOC) under the government’s recent Economic Recovery Plan (PENJANA) package.

    The HOC initiative which features significant stamp duty holidays would help alleviate the financial burden of aspiring home buyers.

    Commenting on the consumer survey, iProperty.com.my General Manager of Marketing and Communications Wong Siew Lai said, “The findings from this consumer survey revealed something very encouraging on Malaysian property seekers purchasing desires despite the unprecedented situation caused by the COVID-19 pandemic.

    “Overall, volume of demand did not change significantly and people are still looking for properties. Property seekers are spending more time researching and evaluating their property options online.

    “The market may be much more receptive to property deals and solutions that help them discover those deals, as well as online content that helps them better understand the current market conditions.

    “If they discover the right deal, many opportunistic property seekers are willing to invest even beyond their original budgets.”

  • Investing Quandary for Gig Economy Millennials

    Investing Quandary for Gig Economy Millennials

    In Malaysia, the rising number of gig workers face various challenges to investing for their future.

    The rapid advancement of technology over the past decade have more than changed the way people live, work and spend their money. The employment landscape, too, has undergone an evolution, with hyper-connectivity and social media paving the way for the rise of the ‘gig economy’.

    The gig economy is a labour market characterised by the prevalence of short-term contracts or freelance work done by individuals. Driven by the digital environment and popularity of apps that instantly communicate information and opportunities for work, the gig economy sees companies engaging contract workers for a temporary period rather than hiring them for permanent positions.

    Simply put, the gig economy is a free market system in which companies – from small businesses to larger organisations – collaborate with independent contractors, project-based workers, part-time employees and freelancers.

    This segment of the economy is gaining popularity among the younger generation, especially millennials and Gen Z, simply for the fact that it provides them with dynamic flexibility towards their time management and encourages specialisation to provide specific services in accordance to their interests or talents.

    The gig economy has experienced a growth trend in recent years whereby about 25.3% of the Malaysian workforce in 2018 comprised freelancers, according to World Bank data.

    “This number is growing, thanks to the rapidly available platforms which act as intermediaries between independent workers and consumers,” Wealth Vantage Advisory certified Islamic financial planner Nuraishah Hanani Abdul Ghani.

    Nuraishah Hanani

    Not just about flexibility and freedom

    While being a gig employee offers great flexibility and freedom in terms of working hours and the people that you work with, the downside is that gig employment does not promise a fixed salary, says Blueprint Planning licensed financial adviser Gunaseelan Kannan.

    The other important implication is that the high instability of income will have a direct impact on their investment engagements, he adds.

    “Gig employees should understand the investment risks, investment time horizon, and the terms and conditions on the withdrawal of investments. In general, high liquid investments should be adaptive to an individual who is active in the gig economy,” he explains.

    According to Gunaseelan, the fact that gig employment does not provide Employees Provident Fund (EPF) contributions will also have severe implications on one’s retirement funds.

    Gunaseelan Kannan

    “Taking the initiative to make personal contributions to EPF is a good idea for gig workers as EPF currently allows investments of up to RM60,000 annually for this group of individuals.”

    Moreover, gig workers are also at the mercy of market risks and fluctuating economic conditions, licensed financial adviser Gor Sheau Shuenn chimes in.

    Gor further points out that the irregularity of income presents gig workers with a limited opportunity for investments as they are more likely to put their income aside for when they are in between projects.

    “In addition to EPF, the lack of Socso contributions and possibly, retirement savings and medical insurance as well may leave gig employees in a tight spot during rainy days or when they retire,” he adds.

    A right mindset is needed

    As to how gig workers can overcome these problems, Gor reveals that having a personal cashflow budget is important. “You should be clear how much money you need to put aside for investment, how much money you can spend, and what you spend your money on each month.

    “Next is an investment objective: will you be investing your money for retirement, for a property down payment, or for a college fund for your children?

    “Knowing how much money is needed in the long term and breaking it down to monthly, quarterly or yearly saving targets is a good practice. Once your priorities are clear, you can then work towards that goal,” he advises.

    Gor Sheau Shuenn

    Wealth Vantage Advisory’s Nuraishah concurs. “Because gig workers do not receive a regular salary, millennials who are engaging in the gig economy might face problems with their instalments which can affect their credit rating if the matter goes unattended in the long run,” she adds.

    Therefore, a detailed approach with the right mindset must be adopted to prevent the issue from ballooning up, which may eventually disrupt one’s financial stability.

    “The very first step to achieve this is by determining and strategically splitting your finances into different categories, namely basic needs, expenses, forced savings and investment allocations.

    “That way, you will always have extra money to carry forward into the next month in the event of low gig demands,” explains Nuraishah.

    Diversify your income

    With the immense freedom and flexibility of the gig economy comes the great responsibility of taking charge of your own financial future. And no doubt investment is probably a stressful topic for anyone involved in this segment of the economy.

    Nuraishah says a good first step is to start building an emergency saving fund immediately.

    “As a gig worker, millennials are more susceptible to financial hardship as compared to those who have to miss work due to an emergency.

    “In contrast to salaried workers, they do not have health coverage or other forms of protection at work, and it is critical they have enough money saved up in case of an emergency, in addition to having excellent coverage of term life and health insurance,” she explains.

    While it might seem like an obvious suggestion, Nuraishah suggests one of the keys to achieving financial success in the gig economy is for millennials to think like a business person and plan accordingly – and this means getting into the habit of keeping themselves accountable for their expenses.

    “Diversifying their income, meanwhile, may come naturally as they delve further into the gig economy, and for freelancers, this move becomes essential to achieving financial success.

    “As the nature of work in the gig economy is temporary, diversifying your income as much as possible is important to keep their financial and business plan on track.”

    Despite the lack of a fixed salary, Nuraishah believes it is not impossible for gig workers to have the upper hand in terms of investment.

    “In comparison to the regular working concept, millennials who have opted to join the gig economy are not restricted to the 9-6 routine which is rigid and repetitive with little to no opportunity of generating additional cashflow beyond what had already been agreed upon.

    “Thanks to the dynamic concept practised in the gig economy, gig workers are their own managers, and they alone can decide where their money ought to go to. For this matter, it is very crucial that they have a clear financial goal, which needs to be practical and yet, feasible to achieve.

  • Analysis: A Bright Spot for ASEAN Economies

    Analysis: A Bright Spot for ASEAN Economies

    Global trade volumes topped out in 2018 amid slowing global growth and ongoing trade tensions between the US and China. In 2020, the global pandemic has been another headwind for global trade. What about ASEAN economies?

    Nomura’s leading index of Asian exports, which aggregates the region’s exports (excluding Japan) of eight forward-looking components, and typically has a three-month lead, is signalling that aggregate export growth in the region could shrink between 10% to 20% (relative to last year) in the coming months.

    Further downside risk to global trade comes from the worsening relationship between the US and China and the potential for a reescalation in trade tensions. Understandably, this backdrop makes for a difficult environment for Southeast Asian economies – specifically, members of the Association of Southeast Asian Nations (ASEAN), a group of highly trade-dependent economies.

    That said, how the region weathered challenges in the past two years has given us some confidence in its ability to navigate the current environment.

    The News isn’t All Bad

    The Asean region has been a big beneficiary of ongoing trade tensions, the global pandemic, and China’s relatively early emergence from the Covid-19 outbreak.

    The region’s share of global trade has gone from strength to strength since 2000, with trade in electronics and integrated circuits being a major driver.

    When the US-China trade war started to escalate in early 2018, there were fears that slower global trade growth would negatively impact the trade-dependent region.

    But as events unfolded, it became clear that China looked increasingly to Asean to offset the impact of the trade war – and later, the Covid-19 outbreak – to counter the rise of increasingly stringent US trade policies.

    Asean’s share of Chinese trade (exports plus imports) overtook that of the US’ in early 2019. But it didn’t stop there – in early 2020, Asean overtook the European Union as China’s largest trading partner and its share of trade with China remains near a record high of around 15%.

    The ASEAN region has attracted many global companies that are looking to diversify their production in the wake of the US-China trade war, and the Covid-19 outbreak has accelerated that trend.

    The development is understandable – Asean sports many competitive advantages, among them, its member countries’ relatively high rankings in the World Bank’s Ease of Doing Business Index.

    The Asean-6 (namely, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam) all sit within the top half of global rankings across 10 areas of doing business – starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency.

    Other advantages that the region has over its competitors are: relatively lower-wage structures, better productivity, and geographic proximity to China. The fact that the region has a complementary industrial structure to China is also important.

    As China emerges from Covid-19, the gradual recovery in consumer demand in the country is being met by ASEAN. Vietnam, Malaysia, and Thailand have enjoyed particularly strong growth in demand for their goods from China.

    In our view, sectors that are likely to benefit as the Chinese economy kicks into gear include mining (benefiting major producers from Indonesia and Malaysia), semiconductor and electronics (benefiting Thailand, Malaysia, and Vietnam), and textiles and garment industries (benefiting Vietnam and Thailand).

    Important Mitigants in a Challenging Environment

    An acceleration in Asean integration in the coming years is likely to make the region even more competitive and resilient to global shocks.

    This could be achieved by reducing tariffs, improving market access, and increasing the region’s absorptive capacity further.

    The Regional Comprehensive Economic Partnership, a proposed regional free trade agreement that’s currently being negotiated, could go a long way to expand regional connectivity in trade and investment. Proponents of the agreement hope that negotiations can be concluded by the end of the year.

    On balance, even though the leading indicator for Asian export growth is warning of a major slump ahead and geopolitical risks remain elevated, there remain many positive dynamics at play that can serve as mitigants in a challenging environment.

    By Sue Trinh

    Sue Trinh is a senior macro strategist at Manulife Investment Management, a leading global asset manager, with investment expertise extending across a broad range of public and private asset classes, as well as asset allocation solutions.

  • P2P Financing an Ideal Investment Portfolio Amidst COVID-19

    P2P Financing an Ideal Investment Portfolio Amidst COVID-19

    The COVID-19 pandemic has created massive uncertainty in the investment market, and this is not an isolated case. All over the world, foreign investors are navigating uncharted waters as stock markets are becoming increasingly difficult to predict in the current economic climate.

    Malaysia’s FBM KLCI closed at 1,490.14 in end May, its highest level since March this year, although this may not necessarily signify the end of the ongoing crisis.

    The record high number of traded shares indicated active participation rate from retail investors in Malaysia, partly attributed to the country being home to the world’s largest glove makers of which demand for protective equipment has surged during the pandemic.

    Nevertheless, investors should ensure that they continue to diversify their investment portfolio especially during these times.

    Many experts believe it to be a protracted recovery from the COVID-19 pandemic. Therefore, investors should remain cautious of the recovering stock markets and hence, should be planning their investment decisions wisely, particularly amid economic uncertainty.

    At the end of the day, the fact that a vaccine has yet to be found very much points toward concerns surrounding the potential threat of the virus and its subsequent economic implications in the long run.

    Mitigating Risk through Diversification into P2P Financing Investment

    While the effect of COVID-19 remains uncertain and continued volatility can be expected, it is wise for investors to employ strategies to enhance returns, whether the market shifts violently up or down.

    Diversification helps reduce overall portfolio risk by allocating investments into different asset classes and hence reduces the risk of a single investment or asset class significantly impacting the performance of the overall portfolio, leading to more stable returns over time.

    Wong Kah Meng, Co-founder and Chief Executive Officer of Funding Societies Malaysia, the first and largest peer-to-peer (P2P) financing platform in Malaysia, commented, “It is ever more critical for investors to ensure that their investment portfolio is well diversified amid the current market uncertainty.

    “Whilst there could be opportunities for investors to make tactical investment decisions given the volatility in capital markets, investors should also be aware of the increased correlation across traditional asset classes and hence the greater need for diversification beyond traditional asset classes such as stocks and bonds. As such, P2P investment could play a key role in the diversification strategy for investors.”

    Added Wong, “Aside from diversifying their investment portfolio, we encourage risk averse investors to focus their P2P investment strategy on shorter tenure investment notes or collateralised investment notes which are more secure whilst still providing decent returns.

    “Overall, we believe that P2P financing serves as an attractive investment option which caters to the needs of a wide variety of investor risk – return profiles.”

    Investing with Funding Societies

    Funding Societies provides a seamless and user-friendly investment process supported by best-in-class customer experience. Investors can easily invest in local SMEs and earn attractive risk-adjusted returns compared with other forms of traditional investment options, with interest returns of up to 14% per annum (p.a.) after fees with minimum investment amount from as low as RM100.

    The platform has also recently taken a multi-pronged approach to further tighten its risk assessment processes, which includes assessing the impact of COVID-19 and MCO on their SME clients, reviewing existing SMEs’ exposures, and implementing action plans for impacted SMEs.

    These stepped-up efforts ensure their clients’ investments remain protected while simultaneously continuing to lend a helping hand to support the under-served SMEs who are affected by the outbreak.

    For more information on how to start investing with Funding Societies, visit www.fundingsocieties.com.my.