Inovatif

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  • Bursa Malaysia Derivatives Hits New Highs

    Bursa Malaysia Derivatives Hits New Highs

    With five all-time trading highs in January 2020, Bursa Malaysia Derivatives Bhd (BMD) is on a roll. It subsequently bettered some of these highs in February and March as market conditions deteriorated with the spread of the Covid-19 pandemic.

    BMD’s derivative instruments essentially allow market participants to take advantage of both upward and downward trends in the market, and are particularly relevant in light of global economic uncertainties and heightened market volatility.

    The derivatives market offers products that serve as an efficient price discovery and hedging instrument, providing market participants an effective avenue to manage risks as well as take advantage of the market position.

    “The rising trend, especially in open interest for all products, is a positive development, indicating a rise in confidence and strong appeal of BMD’s products by market participants,” BMD chief executive officer Samuel Ho (pic, below) tells Smart Investor.

    BMD aims to continue on this growth trajectory, he adds, by broadening its product offerings for investors and traders to manage their price risk exposure. Here are snippets of our interview with Ho.

    Smart Investor: BMD achieved five all-time trading highs in January 2020. Have there been new highs since then? Tell us more about this historical milestone.

    Samuel Ho: In the first quarter of 2020, BMD saw strong levels of trading activity, hitting several historical highs. We ended March 2020 with three historical highs:

    (1) Trading volume for all products combined at 2.13 million contracts surpassing the previous record of 1.72 million contracts registered in February 2020;

    (2) Monthly trading volume for Crude Palm Oil Futures (FCPO) of 1.66 million contracts surpassed the previous high of 1.43 million contracts registered in February 2020; and

    (3) Monthly trading volume of FBM KLCI Futures (FKLI) of 455,535 contracts surpassing the previous high of 388,755 contracts registered in August 2015.

    Additionally, the total daily open interest of 346,403 contracts for all products traded on BMD hit a new high on 26 February 2020, surpassing the previous all-time high of 343,251 contracts registered on 29 January 2020.

    How has the derivatives market performed in light of the COVID-19 pandemic and arising economic uncertainties and market volatility?

    In the derivatives market, the FCPO and FKLI have served as an efficient price discovery and hedging instrument that have provided market participants with an effective avenue to manage their risks as well as the opportunity to express their trading views to take advantage of the market position.

    The depth of the market has provided orderly execution with no significant negative movement. This has been evident by the increase in volumes trade for both FCPO and FKLI futures contract.

    With the global economy slipping into recession and equity markets in bear market territory, how can BMD help market participants manage their risks and thrive in such uncertain environment?

    BMD’s derivative instruments allow market participants to take advantage of both upward and downward trends in the market. In a downward market, investors can take advantage by short-selling FKLI futures contract to protect their equity portfolio.

    For example, the short position will gain as the FBM KLCI declines. This gain will allow investors to offset the loss in the underlying cash equity market. There are also traders with a speculative objective who enter a short position with FKLI futures in anticipation of a market downtrend.

    However, speculation can be extremely risky as they are vulnerable to both the downside and upside of the market as it involves leverage risk. It is therefore essential that investors have a clear understanding of the risk and reward before entering into any speculative trades.

    What are some of the action plans BMD has put into place to ensure continued sustainability and vibrancy of the capital market?

    The first quarter of 2020 was marred by various unpredicted events that have contributed to higher volatility in global markets. This included the oil price war between Saudi Arabia and Russia, tensions between the US and Iran, and the unprecedented health crisis caused by the COVID-19 pandemic.

    During this period, BMD registered several new highs in trading volume and open interest for our derivatives products. We also recorded the highest quarterly Average Daily Contracts (ADC) ever.

    This is an indication of the continuing confidence of our customers in BMD’s product offerings to manage their price risk exposures.

    Earlier this year, the Exchange launched the world’s first Options on Refined, Bleached & Deodorised Palm Olein Futures Denominated in US dollar (OPOL) contract.

    To encourage further participation in OPOL, the Exchange has waived the exchange and clearing fees until 30 June 2020. The OPOL contract allows for the introduction of more sophisticated strategies to raise the level of derivatives trading and will attract new categories of market participants.

    We also re-launched the Single Stock Futures (SSF) contract offering an expanded list of new underlying stocks. This will provide investors with an additional risk management tool as well as an opportunity to gain exposure to the equity market. You can view the full list of SSF contracts on our website at www.bursamarketplace.com/ssf.

    Moving forward, we aim to continue this growth trajectory by diversifying our products and service offerings as well as strengthening our derivatives ecosystem to enhance market attractiveness and vibrancy.

    What are some major programmes or initiatives that BMD will be rolling out in 2020?

    For our commodity products, BMD is implementing the Malaysian Sustainable Palm Oil (MPSO) Certified Physical Delivery to fortify further our benchmark Crude Palm Oil Futures (FCPO) contract in line with the Malaysian Government’s Malaysian Sustainable Palm Oil (MSPO) mandate.

    The national scheme is for all oil palm plantations, independent and organised smallholdings, and palm oil processing facilities to be certified per the requirements of the MSPO standards.

    We also plan to introduce the Alternative Delivery Procedure (ADP) for FCPO contract. This new facility allows flexibilities for buyers and sellers to negotiate their delivery terms other than one specified by the Exchange.

    We are also re-launching the Crude Palm Kernel Oil Futures (FPKO) contract to cater to the industry need for a palm kernel oil hedging instrument.

    For financial derivatives, we are currently working with Bank Negara Malaysia (BNM) and Securities Commission Malaysia (SC) to revitalise the 5-Year Malaysian Government Securities Futures (FMG5) contract by changing the settlement methodology from cash to physical delivery.

    The first physically delivered contract will be the Dec 2020 FMG5. This initiative is in line with BNM’s efforts to improve market efficiency, accessibility, and liquidity in the domestic financial market.

    Participation by foreign institutions has been growing from strength-to-strength, contributing close to 46% of our ADC. We will continue to build on this by promoting our derivatives products to foreign proprietary trading firms, hedge funds and commercial firms.

    We will also introduce foreign futures brokers to Malaysian futures brokers in our bid to forge new interbroker relationships for potential business opportunities in the future.

    As part of our market entry strategy into Greater China, our initiatives include offering market data fee waivers to new Futures Commission Merchants (FCM) from Greater China who promote BMD products to their clients.

    We have also recently embarked on a partnership with a leading financial media publication, China Futures Daily, as one of the foreign exchanges featured in their annual live trading competition.

    This partnership will help increase the visibility of our products in the region. For domestic institutional participants, BMD plans to work with palm oil industry associations to conduct targeted product awareness and risk management seminars or webinars to encourage local institutions to use futures and options as part of their risk management tool.

    We will continue to conduct a series of webinars to educate retail participants on derivatives trading. In our pipeline, we are developing a mentor-mentee programme, a collaboration with futures brokers and professional traders to help grow the professional trading community.

    However, because of the COVID-19 pandemic, our efforts to educate and promote will be carried out digitally. Finally, we are also looking out for opportunities to collaborate and forge strategic partnerships with other foreign exchanges.

    This is part of our continuous efforts to consolidate and lay the building blocks for our next stage of growth.

    BMD is one of the exchange partners in the global trading competition held by China Futures Daily. What benefits are expected from this competition?

    This live trading competition is one of China Futures Daily’s annual highlights. Last year, the competition attracted over 45,000 participants.

    This year, the competition is held from 27 March to 25 September 2020. It is open to all traders both from mainland China and other countries outside of mainland China.

    For the first time, BMD is participating as a Silver Sponsor and one of the Exchange Partners, with the FCPO as our participating product. We are offering two award categories based on the highest return rate and highest trading volume.

    Each category will feature three winners. The Champion for each category will take home a cash prize of RMB10,000 along with a trophy and a certificate! The collaboration with China Futures Daily aims to help increase our brand and product visibility in the Greater China region.

    This is also in line with our internationalisation strategy. For more information on this competition, you can visit the official website at http://special.qhrb. com/200122-1/ or email us at futures@bursamalaysia.com.

    By Bernie Yeo

  • Analysis: The World after the Flood of Fiscal Stimulus

    Analysis: The World after the Flood of Fiscal Stimulus

    The global fiscal stimulus tap has been unleashed to fight the impact of the COVID-19 outbreak. We think the impact of this stimulus is binary and, if sustained, it could break the decade-long disinflationary cycle.

    In contrast, if austerity measures are subsequently imposed, the era of low rates and low inflation will likely continue for the foreseeable future.

    The combined scale of fiscal and monetary response has been massive – estimated to be around US$17 trillion at the time of writing. The quantum of stimulus provided this year is also significantly higher than the 2008 Global Financial Crisis (GFC).

    This is not surprising since monetary policy has far less wiggle room now. Moreover, the pandemic is not due to bad economic decisions; there will be little backlash on governments supporting affected sectors (e.g. airlines, banks, small retailers etc.).

    Although we saw countercyclical fiscal stimulus after the GFC, it was followed by significant austerity measures as governments were worried about the inflation implications of quantitative easing (QE). But inflation never returned.

    The past decade has demonstrated the effect of loose monetary policies: negative interest rates, flatter yield curves, low inflation, accumulation of corporate debt, and narrowing credit spreads, among others. But we have little experience of knowing the combined effects of expansionary fiscal and monetary policies on economies and markets.

    Fig 1: Global fiscal stimulus exceeds 2008

    A Powerful Twin Policy-mix

    A key difference between monetary and fiscal policy is that while monetary stimulus creates a large positive liquidity shock, it requires households and companies to be willing to take on debt and spend. On the other hand, fiscal spending adds directly to aggregate demand with no private sector debt build-up.

    Large unemployment benefits and “helicopter” money are windfall gains to consumers and leave no debt behind. If the stimulus is directed towards public capital expenditure which ultimately increases economic growth and creates jobs, it would eventually crowd-in private spending and the multiplier effects would fuel higher growth.

    Recent fiscal packages have focused on mitigating the initial impact of COVID-19. When the second-round of impact hits i.e. higher unemployment, corporate defaults and bankruptcies, more fiscal support will likely be announced.

    Of course, if these stimulus packages prove to be one-off and governments hit the pause button on the deficits or actively seek to reduce it, the medium-term implications will likely mirror the conditions post GFC.

    However, if countries see renewed waves of COVID-19 outbreaks, unemployment rates may stay elevated for a number of years. Against this backdrop, and with demographics not in favour for many developed and some emerging markets, countries that have limited binding constraints will probably continue to run large deficits.

    The Fiscal Divergence

    There will likely be divergences in the impact of fiscal stimulus on developed markets (DM) and emerging markets (EM). DM economies that have the benefit of low rates, low external debt, and low inflation can afford to keep monetary and fiscal policy easy, facilitating the cycle of higher demand, higher inflation and steeper curves.

    But not all DM economies are in the sweet spot, particularly within Europe where monetary and fiscal policy do not work in tandem; certain countries may only be able to announce stimulus with constraints.

    However, within EM economies, there are potentially two groups – one which does little fiscal stimulus to start with given their prudent approach, and one that continues with fiscal stimulus despite weak external balance sheets and therefore potentially face vulnerabilities in their foreign exchange and bond markets.

    Looking at the EMBI universe, CEEMEA (Central & Eastern Europe, Middle East and Africa) countries stand out as being the most vulnerable as they have higher short-term external debts and are expected to run large fiscal deficits this year.

    These economies indulging in fiscal extravagance may face sovereign rating downgrades, spike in bond yields, and steeper yield curves, and eventually be forced to undertake austerity measures. EM Asian economies appear as relatively stronger, with most having short-term external debts lower than 10% of GDP, with the exception of Malaysia.

    While rising fiscal deficits are bringing debt sustainability questions to the fore, it is important to highlight that debt issuances are a problem mainly when interest rates are higher than nominal GDP growth. If interest rates remain low (as they are now) and fiscal spending leads to higher growth, then debt/GDP ratios might fall or at least remain steady.

    Fig 2: EM Asia appears to be better placed

    Inflation or Disinflation?

    Sustained fiscal deficit, combined with synchronised monetary stimulus may eventually break the decade-long disinflationary trend. Adding to this tailwind to inflation is the potential negative supply side shock driven by the end of globalisation and the reversal of supply chain efficiencies.

    This scenario can be thought of as being akin to the post World War II period; after the negative demand shock and low inflation, the US economy saw a sharp rise in inflation led by stimulus, eventually forcing monetary policy to tighten substantially.

    The process may be more gradual this time; it will take a while for the current economic slack to narrow. Besides, structural changes such as more remote working and less demand for business travel and commercial real estate will likely dampen inflationary pressures.

    There are several market trends that have relied on subdued inflation expectations. First would be the impact on the yield curve. Post GFC, the yield curve steepened significantly as fiscal policy eased, but reversed as soon as austerity measures kicked in. Yields have fallen substantially since and yield curves flattened as inflation expectations have plummeted and monetary policy has remained easy.

    Fig 3: Yields have declined substantially since GFC

    However, this trend may reverse – a spike in US treasury yields and a steeper yield curve is possible if the fiscal stimulus sustains. This in turn would have positive repercussions on rate-sensitive equities, particularly financials and other ‘value’ sectors.

    Binary Outcomes

    The risk of higher interest rates also implies that policymakers need to strike the right balance. Too swift a rise in yields could increase the debt burden and complicate refinancing issues for governments. Equally, rising inflation with no change in nominal rates could impede central bank credibility.

    Central bankers over the past few decades have allowed market participants to price in appropriate risks and maintained stability in bond markets, in particular.

    However, if central bank actions begin to differ from their stated objectives due to other interests, market participants will find it difficult to accurately price in various scenarios, leading to lower market confidence, higher market volatility and hinder price transparency.

    But in today’s situation, central banks may be forced to maintain accommodative policies for longer periods to maintain the solvency and liquidity of the government, keeping front-end rates well anchored.

    If this were the case despite rising inflation, real rates would decline even further, and wealth transfer would take place from savers to borrowers. From an asset allocation perspective, this would imply greater weight on equity over bonds in portfolios in order to meet stated investment objectives.

    In our view, the unprecedented fiscal stimulus we have seen post-COVID-19 can lead to binary outcomes. If the deficits sustain, the world will evolve more akin to post-World War II with higher demand, higher inflation expectations, and steeper yield curves.

    Alternatively, if governments are forced to impose austerity measures once demand returns to normal, as with post-GFC, then the era of low rates and low inflation will continue for the foreseeable future.

    By Nupur Gupta

    Nupur Gupta is multi-asset portfolio manager Eastspring Investments, Singapore. Part of Prudential plc, Easpspring Investments is a global asset manager with Asia at its core, offering innovative investment solutions to meet the financial needs of clients.

  • Building a Thriving Online Business

    Building a Thriving Online Business

    Malaysia’s e-commerce industry is expected to continue its upward trajectory and rapid growth in 2020 and for many years to come.

    As an aspiring entrepreneur, the opportunity to ride on the sector’s coat tail is an intriguing and exciting one. Whether you have already launched an online business on one of the e-commerce platforms or are looking to get involved in your very first venture, now is the time to get your foot in the door.

    Indeed, data from German online statistics portal Statista reveals that Malaysia’s e-commerce market for 2019 generated a whopping revenue of US$3.68 bil (RM15.2 bil), with a prediction for annual market growth to reach 11.8% by 2023.

    DataReportal, meanwhile, revealed there were 26.69 million internet users in Malaysia as at January 2020. The number of internet users in the country increased by 919,000 (+3.6%) between 2019 and 2020, while internet penetration in Malaysia stood at 83% as at January this year.

    Source: Datareportal 

    Mapping E-commerce Growth

    For perspective, Shopee led the industry with the highest consumer downloads of its mobile application, according to iPrice Group Sdn Bhd’s Map of E-commerce report for the third quarter of 2019 (3Q19). The e-commerce platform also tops the list of the most visits to its websites at 25,789,300 monthly web visits.

    As for Lazada, the e-commerce platform had the highest number of monthly active users of mobile application in 3Q19, while breaking into the top five list of most visited websites is PG Mall, a homegrown online shopping mall.

    With technological advances and not to mention the growth of the internet economy, the e-commerce industry is set for an exciting ride in the next few years.

    E-commerce Malaysia chairman Ganesh Kumar concurs, saying the local e-commerce industry is expected to grow up to 30% in 2020, supported by advancement in technology and wider access to virtual buying platforms.

    “Currently, we are seeing more people buying online and trusting e-commerce sites. More merchants are also starting to sell their products online,” he said recently.

    Fast-changing E-commerce Landscape

    In the era of Industry 4.0, technological advances have had a massive impact on the e-commerce industry, transforming the way consumers connect with brands and empowering them to shop more cost-effectively.

    Driven by the convenience of making purchases without the need to visit a physical store, e-commerce has now become an integral part of everyday life. But while the shift in consumer behaviour is a given, businesses, too, are adopting a changing mindset when it comes to e-commerce.

    “Rather than seeing e-commerce as a competition, businesses have now come to see it as another stream of revenue which will complement their brick-and-mortar business,” Shopee regional managing director Ian Ho (pic) tells Smart Investor.

    These businesses, to cater to the increasing demands of today’s e-commerce landscape, have set up dedicated e-commerce teams to manage various facets of their operations.

    This includes manning the online store, pricing, handling orders, fulfilment, and customer service, as well as investing in warehouses that come equipped with advanced systems to organise warehouse operations.

    Evolving mindset aside, many businesses however find it difficult to grow their sales effectively after opening a store.

    “This is because of operational and marketing challenges. These businesses lack the know-how to nurture the business and run marketing efforts to increase exposure for their online stores and product offerings,” Ho reveals.

    Helping Hand from Shopee

    In Shopee’s case, the e-commerce platform has empowered many brands and sellers to succeed online because they understand the challenges that businesses face, and offer various forms of support to help them succeed.

    For example, Shopee University, a free seller’s workshop to provide sellers with the knowledge and skills to grow their businesses on the Shopee platform, was launched in 2016.

    From the workshop, participants will learn multiple ways to boost sales; tips and marketing techniques to promote their store on Shopee; the right way to list products; and how to fully utilise all of Shopee’s features to help promote sales.

    “What has made these workshops even more resourceful is that they are also available through web seminars, which means that participants anywhere with an internet connection can join in,” shares Ho.

    To date, around 10,000 sellers have benefited from the Shopee University modules.

    In addition to Shopee University, the e-commerce platform further launched Shopee Live in 2019 in an effort to bring users closer to their favourite sellers and brands.

    This allows brands/sellers to engage their users throughout the shopping journey via a wide array of live content such as product reviews, guides and demonstrations hosted by popular local influencers.

    And the results are pretty impressive, to say the least. Tyra Kamaruzzaman’s Beautyra lipsticks, for instance, sold out in minutes on Shopee Live, recording over 2,000 orders, while Photobook’s store traffic and visibility increased by 18x after running a 45-minute live stream on Shopee Live.

    “In addition to driving orders, Shopee Live is also effective in driving traffic and followers to the retailers’ stores, as indicated by Shopee seller wanjojo of JJ70 Store who gained more than 800 store followers after a single live stream.

    “Another seller also shared that by doing daily live streams, he was able to rapidly gain followers and double his sales in less than three months, with 2019 being the first time he had managed to break the RM1 mil mark in annual sales,” Ho shares, adding the results are testament to Shopee Live’s success.

    Success: an effort of both parties

    Over the years, many businesses have achieved success on e-commerce platforms, but many others have also not done well. So how does a business guarantee its success online?

    PG Mall managing director Datuk Wira Louis Ng believes that success on e-commerce platforms stems from the effort of both parties, namely the platform operator and the merchant.

    “Successful merchants on the PG Mall platform put in a lot of effort from their end to build store awareness and visibility by participating in all PG Mall-related activities and campaigns.

    “In addition to providing attractive prices, these merchants are very committed, have zero cancellations rate, are very responsive to shoppers’ enquiries, and are efficient in processing orders to ensure a positive shopping experience.”

    On the flipside, there are merchants who – after setting up their online store – solely rely on the platform to drive sales without going all out and taking the initiative to do more, he adds.

    Merchants on the PG Mall platform are supported with regular creative campaigns that partner with different e-wallets and banks to drive both sales and traffic to the stores.

    PG Mall is also the only platform to partner with all major e-wallets in the country. The vast check-out options available will in turn gives merchants a boost in capturing more shoppers.

    On how merchants can conduct a successful business on PG Mall, Ng points out that PG Mall’s mission is to be the number one choice when it comes to online shopping, and therefore, it is always best for merchants to feature all products on hand to be available on the PG Mall platform.

    “Providing a fair price for shoppers is essential, as is the effort put into managing the store by putting up clear and attractive images as well as the right product descriptions.

    “While Success on e-commerce platforms stems from the effort of both parties, namely the platform operator and the merchant. these may sound trivial, these are factors that will influence a shopper’s final decision.”

    The homegrown e-commerce platform, which cites gold jewelleries, groceries and pets, as well as home appliances as its current best-performing categories, are in the midst of bringing in more brands to join the PG Mall family.

    Trusted Delivery Service

    Delivery service is a crucial aspect of online businesses, as it allows for the efficient and timely transportation of goods to customers.

    In today’s world, customers expect fast and reliable delivery, and the ability to track their orders in real-time. This is especially true for e-commerce businesses.

    Use Delyva as your main delivery platform that allows you to choose the best delivery service in Malaysia by price, speed, area coverage and reliability.

    By Bernie Yeo

    Find out more about Delyva here: https://delyva.com/my/delivery-service-in-malaysia/

  • Under the Influence of Social Media Influencers

    Under the Influence of Social Media Influencers

    Do you know of a life without social media? Better still, do you remember a life when there was no Facebook, Instagram, Twitter, WhatsApp, Snapchat and TikTok? Or influencers?

    Social media has grown to become one of the most dynamic developments in digital media over the past two decades. With billions of users worldwide, social media is now a huge aspect of modern society and has a tremendous impact on our culture, on business, and the world at large.

    Digital 2020, a collection of reports on digital trends and social media uses, reveals that as at January 2020, there are 3.80 billion active social media users in the world against a total population of 7.75 billion.

    Source: We Are Social Inc.

    Understanding the modern consumer

    There was a time when it was not possible to share your opinions about a specific product with others because there simply was no available outlet, and there was no way of reviewing a product or service except with a few family members, close friends and coworkers.

    Consumers today enjoy a very different situation, all thanks to social media. Through platforms like Facebook, Instagram and Twitter, consumers have been able to easily convey their opinions about various brands.

    In other words, there is now an opportunity for consumers and brands to build a working relationship in which opinions can be voiced and views exchanged.

    “The modern consumers want to interact and engage more with brands. Consumers want to speak with brands, and not be spoken to,” opines Karen Ong, Luxasia Group regional managing director (Singapore, Malaysia, Thailand and Vietnam) & country manager (Singapore).

    So for brands to be successful, it has to be a two-way communication between them and their consumers as this is how the latter prefers to communicate – they go directly to the brands to express their preference.

    Luxasia is the leading omnichannel partner for more than 140 luxury beauty and lifestyle brands including Bvlgari, Hermès and Prada.

    The growth of influencer marketing

    The use of influencer marketing has grown rapidly as consumers are already using social media platforms to follow influencers who create content according to a certain category or theme.

    What is interesting to note is that global ad spend on influencers, according to Business Insider Intelligence, is predicted to reach between US$5 bil and US$10 bil by 2022. But why is this so?

    The reason is simple, say Ong and Luxasia Group country manager (Malaysia) Cindy Poh. “Brands leverage on the trust and relationship these influencers have built with their follower base, who are very likely to be captive audiences and are interested in reading and hearing what these ‘key opinion leaders’ (KOLs) have to say about a brand.”

    They note that influencers create content that adds personalised touches in a way that mass media is unable to replicate. And it is through these personalised contents that the influencer is deemed a credible and authentic source as the content that he/she creates for the brand is aligned to the influencer’s personal brand.

    “A PwC Study in 2018 found that today’s consumers are more responsive to credible, authentic content and opinions from someone they know or trust on social networks, suggesting that opinions and suggestions on social media – posted by friends and strangers alike – have more influence on specific purchase decisions than factors that retailers can control, such as advertising, promotions, and pricing,” they explain.

    One good example of influencer marketing is YouTube celebrity PewDiePie’s collaboration with the makers of a horror movie set in the French catacombs under Paris in conjunction with the upcoming movie As Above, So Below in 2014.

    Renowned for his histrionic reactions to horror movie games, the Swedish YouTube celebrity agreed to undertake the ‘Catacomb Challenges’ where he would give his reactions to a recreated version of the movie’s setting.

    The resulting two-part video series was the perfect content for PewDiePie’s millions of subscribers, and received almost double the views of the movie’s trailer. It was, suffice to say, a win-win situation for everybody.

    An influencer’s perspective

    An influencer can be anybody from a popular fashion icon on Instagram to an indie wedding singer who blogs to a well-respected political figure who tweets. What makes them influential is their large followings on the web and social media.

    The shift to influencer marketing started about six to eight years ago first on banner ads on a digital medium to blogs (seen as a form of online media) before reaching social media platforms like Facebook, Instagram and Twitter, says local blogger, speaker, columnist and TV host Dr Choo Mei Sze.

    Choo, who holds a PhD in Development Psychology from the University of Hawaii at Manoa, is the Youth Ambassador for the National Cancer Society of Malaysia (NCSM).

    She advocates cancer awareness especially among youths through talks and youth support groups in collaboration with NCSM and has hosted a show called ‘An Awakening’ in collaboration with insurance company Axa Affin Life Bhd which showcases amazing stories of cancer patients, survivors and caretakers. Today, she blogs about her journey with the Big-C, in addition to topics on fashion, beauty and travel.

    “When I first came back from the States about eight years ago, I was surprised that many brands asked to advertise on my blog. At that point of time I was blogging as a way to connect with my friends and family and I didn’t imagine it being a form of advertising,” Choo tells Smart Investor.

    “These days, influencers are the new ‘word of mouth’ and brands prefer this form of advertisement as it allows them to see exact figures rather than made-up ones like on billboards.”

    Getting into the business

    But how does a person get into the business of becoming an influencer?

    “With the market being so saturated these days, anyone can be an influencer. Nowadays, an influencer is all about being able to influence enough people through the posts you put up on social media be it in the form of pictures or captions.

    However, I believe that a true influencer is someone who is able to encourage their target audience to purchase a product or share a posting though a shout-out,” Choo opines.

    As for who to collaborate with and the products she recommends on her social media platform, Choo admits she is rather picky.

    “My followers are urban and quite a few of them know their stuff and so, I refrain from endorsing brands that do not suit me and my personality.

    “As the Youth Ambassador of NCSM, a lot of people ‘follow’ me for health and cancer advice as well as for inspiration, and therefore, I will not promote things like cigarettes or alcohol.

    “I am careful when I choose the brands I collaborate with, and I collaborate with companies promoting organic skincare or healthy eats as these are the things that I actually use and practise on a daily basis.”

    This brings us to the next question: how much are influencers paid to post photos of a specific brand’s clothes, watches, jewellery and make-up on their platforms?

    According to SLPR Worldwide Group chief operating officer (Southeast Asia) Leon Tang (pic), remuneration usually comes in the form of an in-kind or a monetary token as a form of appreciation towards the influencer’s efforts.

    “Influencer marketing does not necessarily always involve monetary contributions or sponsored contents. It depends on the brand affinity the influencer has for the brand and whether the promoted products/services bring values to the audience of the particular influencer,” he says.

    As such, he adds, there are numerous cases whereby the influencer finds the brand to be of great value to their audience and are therefore more than happy to share the brand’s products/services at no cost whatsoever.

    In instances like these, the influencer will be offered a product sponsorship as a token of appreciation.

    “The exact value is not fixed and differs from influencer to influencer, although this is usually decided by both the brand and the influencer.

    “There are, however, some influencers who are employed under a specific talent agency and as such, already have a company-set rate card in place. The rates are usually determined based on the number of followers or the engagement rates per post,” explains Tang.

    No one-size-fits-all

    ‘Matching’ a brand to an influencer – and vice versa – is also an important element to be considered when it comes to getting influencers involved in a brand’s campaign.

    Among the factors to be considered include the number of authentic followers, the number of legitimate engagements in a post, demographics of followers, the track record of the influencer, his/her connections to other influencers, budget and the fit between the influencer and the brand in terms of the look, the styling, the ‘feel’ and even the use of linguistics.

    In Luxasia’s case, the process involves getting the right influencer whose profile fits the brand it carries. As simple as this may sound, however, the details involved in the selection of influencers is a complex one.

    “The challenge of a regional beauty business is in local marketing knowledge, effectiveness, and execution. Different markets have different platforms of choice, and hence different ways of doing influencer marketing.

    “This is also the very reason why Luxasia has so many local offices – we need to know the market locally and intimately to be effective,” explain Ong and Poh.

    “Before we address influencer selection, we need to be clear about social media platform selection. Instagram is the go-to social media platform for all things that are beauty-related.”

    Weighing in on the onboarding process, SLPR’s Tang adds: “A detailed background check on the influencer will be conducted before initiating a conversation with the influencer. The screening and selection process usually take around seven to 14 working days.”

    This will be followed by a meetup and if they are interested to be part of the campaign, remuneration and collaboration tokens will be discussed, he points out.

    In some Southeast Asian markets like Vietnam, Facebook still reigns, while in Thailand, apps such as LINE can be an effective channel for social-commerce as well.

    Luxasia’s local office in China engages influencers on platforms such as WeChat, Weibo, Douyin, and the beautycentric social shopping platform Little Red Book (Xiaohongshu).

    “As such, there is really no one-size-fits-all. We need to identify the effective platform for the local market, followed by the influencers to engage. Furthermore, we need to determine the nature of the campaign – image-centric or video posts of ‘live’ KOLstreaming.

    “For some brands, it may also be more relevant to engage 30 micro-influencers as opposed to five macro influencers,” say Ong and Poh.

    By Bernie Yeo

  • Analysis: Global Pension Report

    Analysis: Global Pension Report

    Allianz has recently unveiled the first edition of its ‘Global Pension Report’, taking the pulse of pension systems around the world with its proprietary pension indicator, the Allianz Pension Indicator (API).

    The indicator follows a simple logic: It starts the analysis with the demographic and fiscal prerequisites and then continues to examine pension systems along their two decisive dimensions: sustainability and adequacy.

    Hence, it is based on three pillars and takes in all 30 parameters into account, which are rated on a scale of 1 to 7, with 1 being the best grade. By adding up all weighted subtotals, the API assigns each of the analyzed 70 countries a grade between 1 and 7, thus providing a comprehensive view of the respective pension system.

    “Demographics and pensions have been eclipsed by other policies in recent years, first and foremost climate change and today the fight against Covid-19,” said Allianz chief economist Ludovic Subran.

    “But you ignore demographics at your own peril, demographic change will soon be back with a vengeance. Defusing the looming pension crisis and preserving generational justness and equality are key for building inclusive and resilient societies.”

    Dramatic Shifts in Demographics

    The dramatic shift in demographics is best characterised by the increase in the global old-age dependency ratio: until 2050, it will grow by a whopping 77% to 25%, i.e., faster than in the last 70 years since 1950.

    In many emerging economies the ratio is going to more than double within the next three decades, that is, in less than half of the time this development took in Europe and Northern America.

    The most prominent example is China where the ratio is going to increase from 17% to 44%. For industrialised countries, however, the absolute level of this ratio is the main reason for concern, reaching, for example, 51% in Western Europe.

    This development is reflected in the first pillar of the API, called the starting points, which combines demographic change and the public financial situation (financial leeway).

    Not surprisingly, many emerging countries in Africa score rather well as the population is still young and public deficits and debts are rather low. On the other hand, many European countries such as Italy or Portugal are among the worst performers: old populations meet high debts.

    “For most industrialised countries, the old Scottish joke applies: If I were to build a stable pension system, I certainly wouldn’t start from here,” said Michaela Grimm, author of the report.

    “And that is the situation before the coronavirus and its tsunami of new debt. One of the legacies of the current crisis will certainly be that we have to double our efforts to reform our pension systems. What remained of financial leeway has gone for good.”

    The second pillar of the API is sustainability, measuring how systems react to demographic change: Are there built-in stabilizers or will the system be blown apart when the number of contributors falls while that of beneficiaries keeps rising?

    In that context, an important lever is the retirement age. In the 1950s, an average 65-year old men, living in Asia could expect to spend around 8.9 years in retirement (women 10.3 years).

    Today, the average further life expectancy of a 65-year old is 17.8 years for women and 15.2 years for men and it is set to increase to 19.9 years (women) resp. 17.5 years (men) in 2050.

    As a consequence, the ratio of working life to time spent in retirement has declined markedly. Countries, which decided to adjust the legal retirement age or the increase of pension benefits to the development of further life expectancy like the Netherlands, have thus a more sustainable pension system than countries where postponing retirement further is still taboo.

    The third pillar of the API rates the adequacy of the pension system, questioning whether pension systems provide an adequate standard of living in old age.

    Important levers are the coverage ratio – i.e. how big are the shares of the working-age population and the age group in retirement age that are covered by the pension system? –, the benefit ratio – i.e. how much money (measured in terms of average income) does an average pensioner receive? –, and last but not least the existence of capital-funded old-age provision and other sources of income.

    Overall, the average score in the adequacy pillar (3.7) is slightly better than that in the sustainability pillar (4.0), a sign that most systems still put greater weight on the well-being of the current generation of pensioners than on that of the future generation of tax and social contribution payers.

    The countries leading the adequacy ranking have either still rather generous state pensions, like Austria or Italy, or strong capital-funded second and third pillars, like New Zealand or the Netherlands.

    However, capital-funded retirement solutions are under increasing pressure in the persisting low-interest rate environment. The COVID-19 pandemic has further exacerbated this trend by further pushing down yields.

    “The low yield environment has forced both pension funds and life insurers to explore alternative asset classes,” said Allianz SE head of global retirement proposition Cameron Jovanovic.

    “This push into alternatives enables benefit providers to capture the illiquidity premium that matches well with their portfolio duration. Another strategy is to offload risk rather than chasing returns as longevity swaps, pension risk transfers and creative reinsurance set-ups become means of optimizing the exposure taken on by pension funds and insurers.”

    Top 10 Pension Systems Worldwide

    Top 10 Pension Systems in Asia

  • Succesfully Investing in a Pandemic

    Succesfully Investing in a Pandemic

    For many investors around the world, the onslaught of the Covid-19 pandemic wreaked havoc on their investment portfolios as stock markets tanked in late February and March. How does one start successfully investing in a pandemic? From the lows of late March, equity markets including Bursa Malaysia rebounded significantly in April though it remains to be seen whether this just a “dead cat bounce” or an unsustainable rally within a bear market.

    Investors are understandably concerned the lockdown imposed in many countries, including Malaysia, will tip the global economy into a deep recession. In the event Malaysia falls into a recession, this will be the first time since 2009 that the economy has contracted.

    In such a scenario, investors will be preoccupied with preserving their investments in case the markets drop further. Nevertheless, astute investors are licking their chops in anticipation of a market crash that will enable them to swoop in to snap up a host of quality assets at a steep discount.

    Despite the volatility in the capital markets, FSMOne assistant research manager Tan Wei Yine thinks there are still opportunities residing within equity markets.

    However, he cautions that while global equities have rebounded strongly from their March lows, there is still “a great deal of uncertainty” surrounding the containment progress of Covid-19 across the globe.

    “In the coming weeks, macroeconomic data reflecting Covid-19’s impact on the economy are going to surface with more negative signs, which could inject an additional dose of volatility in stock markets.”

    On whether the rebound from the March lows is just a rally within a bear market, Tan notes that from a historical perspective the S&P 500 Index has seen 16 bear markets (excluding the current one) over the past 90 years.

    “With hindsight, four out of those bear markets have posted intermittent bull market rallies of more than 20% before trending lower later. Although counter-trend bulls may not appear as often, it would be unwise for one to rule out the possibility of it happening again completely,” he adds.

    Rebalancing investment portfolios

    What strategies should investors adopt during times of market stress such as now?

    FSMOne advocates investors to have a mix of equities and fixed income that is aligned to their risk profiles, explains Tan (right).

    “In market distressful periods, the fixed income portion of the portfolio could help provide stability and in decent times, the exposure to equity markets could help capture capital growth opportunities.

    “Investors may find it easier to hold onto a risk-aligned portfolio in challenging times. An investment portfolio that has large, concentrated exposure to volatile assets may induce huge swings in emotions that could lead to poor investment decisions in market distressful periods,” he adds.

    Tan advises that an investor should hold a portfolio that aligns with his risk profile. For instance, a balanced investor should have equal weights of 50:50 into equities and fixed income.

    In a market downturn, the equity allocation is expected to decline along with the drawdown in stock markets’ movement, while the fixed income portion that is holding up relatively well should have a higher allocation (e.g. the portfolio now has <50% to equities and >50% to bonds), he explains.

    Investors may take the opportunity to rebalance their portfolios by reducing their fixed income exposure and increasing equity exposure, bringing those allocations back to the neutral level of 50:50, he adds.

    “Mainly, investors are selling high (fixed income prices that held up relatively well) and buying low (equity prices that have been battered heftily). As there is still a great amount of uncertainty surrounding Covid-19 over the near-term, we recommend investors to rebalance progressively when equity markets continue to decline,” he advises.

    Preserving your capital

    When markets turn bearish, investors will need to adopt a defensive stance when it comes to their portfolio.

    Affin Hwang Asset Management chief marketing and distribution officer Chan Ai Mei says as a defensive measure, investors can diversify and opt to tilt their allocation towards fixed income and bond funds.

    “Its more modest drawdowns can help ensure capital preservation as well as provide a measure of stability through a regular income stream,” she says.

    To position their portfolios and navigate through volatility ahead, investors should first review their portfolios and assess if they are comfortable with the level of risk they are taking. Ideally, investors should also rebalance their asset allocation annually to correct any portfolio drifts, she adds.

    “If liquidity is crucial, especially for conservative investors who have retired or are approaching retirement, we believe it is appropriate for them to reduce exposure in equities. This might forego some future upside, but is ideal to help preserve and protect capital.

    “Within fixed income, conservative investors should also tilt their allocation towards investment-grade bonds and avoid high-yield exposure.”

    For investors sitting in the middle of the risk-profile spectrum and want some equity exposure, an important question they need to ask themselves is whether they can stomach the volatility for the next three to five years?

    “If the answer is yes, then investors should average down and split your investment into a few tranches to ease your way into the market,” Chan advises.

    Timing the Market

    With equity markets rebounding from recent lows, should investors consider buying the dip? Is it even possible to know when the market’s bottom is reached?

    Chan believes there is always an element of danger in timing the market. “Even the savviest investor can get it wrong. The ongoing Covid-19 episode has shown how sudden and vicious markets can turn, especially coupled with the presence of algo-traders that have exacerbated volatility.

    “Instead of trying to time a market in a downturn, the ideal approach for investors to take may be to just do nothing at all.”

    To illustrate, Chan examines how an investment of RM100,000 fares through different market cycles and how it would fare under two different scenarios:

    * The investor cuts losses by selling in every market downturn; and

    * The investors hold and does nothing in every market downturn.

    As can be seen from the tables, the investor who does nothing would perform better overall. Thus, investors should endeavour to spend time in the market instead of trying to time the market, she says.

    “Avoid making drastic shifts in one’s asset allocation, whether it is ploughing into the market or cashing-out all at once.”

    The Value of Waiting

    Chan also highlights what investing legend Charlie Munger – Warren Buffett’s right-hand man – once said: “It is waiting that helps you as an investor, and a lot of people just can’t stand to wait.”

    In this type of market environment, she says investors’ nerves are bound to get frayed and they may start turning jittery whenever they see a new headline about new infection rates or whispers about a recession or layoffs.

    “We believe investors stand to benefit more by doing less in 2020. Once the Covid-19 contagion recedes, there will be very little impact to long-term investment decisions and fundamentals. As such, we don’t advise doing much on your portfolios.

    “It is crucial that investors stick to their asset allocation and stay prudent in this current volatile landscape. Investors who remain disciplined in their approach by investing consistently and sticking to their long-term asset allocation will eventually reap the benefits and fare better overall,” Chan concludes.

    By Lee Min Keong

  • Analysis: Digital Banking in Malaysia

    Analysis: Digital Banking in Malaysia

    According to KPMG’s latest report entitled , in a post-COVID-19 world, the financial services sector will be a key driver of economic recovery and growth. In particular, the stage is set for digital banking to thrive.

    KPMG Malaysia Head of Financial Services Adrian Lee observed how the changing socio-economic landscape has altered customers’ money management and spending patterns as well as the way businesses are run. For both individuals and businesses, mode of payments and channels of financial management will also change.

    “Recent customer behaviours in both retail and commercial sectors during the pandemic have evolved in support of digital banking services. As customers and businesses seek alternatives to safely run operations, the potential is great for digital banking to be the next success story for the financial services sector in Malaysia,” he said.

    “Digital banking presents a value proposition poised to help companies and individuals get back into the economic saddle, and financial services providers that design its products around customer needs will stand out the most,” added Lee.

    Bank Negara Malaysia (BNM) is due to announce its application guidance for the five digital banking licences following a public consultation of the updated exposure draft on the licensing framework for digital banks, which is due to conclude on 30 June 2020.

    Interests have already been stirring among the bank and non-bank institutions, ranging from credit businesses, telecommunications, e-commerce platforms, advanced technology companies and local conglomerates.

    Lee continued, “It is widely anticipated that BNM will see a large number of applicants for the five digital bank licenses in Malaysia due to the lower entry requirements in minimum capital and significant market opportunities locally and in the region.

    “Given the emphasis BNM has placed on financial inclusion, the successful applicants will be the ones that demonstrate how their products and services will help the underserved and unserved segments rebuild themselves financially.”

    According to KPMG’s Financial Services Advisory Partner and Head of Financial Risk Management Yeoh Xin Yi, a successful digital bank should incorporate three areas into its strategic blueprint:

    Understand customer behaviours and expectations

    KPMG in Malaysia conducted an online survey to understand customer appetite and concerns when it comes to digital banking.

    The study revealed that 77% of the 1,220 respondents in Malaysia believe digital banking is the next evolution in financial services, and 82% are already using internet banking functions of their banking service providers. It is interesting to note that 82% indicated they would consider opening a bank account through online platforms only if they were regulated by BNM.

    The survey also highlighted that 79% expressed interest in better accessibility to financing products, where 52% of respondents prefer to perform online application for these financing services.

    With the conditioning of using mobile or internet services during the MCO period, it is expected that familiarity with online registrations and onboarding will increase. KPMG’s survey also indicates that consumers are most concerned about cyber security and convenience of information uploading, hence this is one area that digital banks need to pay attention to when designing a good customer experience for users.

    On preferred features of digital banks, respondents appear to look forward to products and services that add value to their lifestyle (see chart below).

    Source: Survey on digital/virtual banking in Malaysia by KPMG Management & Risk Consulting, conducted from September 2019 to February 2020, involving 1,220 respondents in Malaysia.

    “Malaysian consumers are clearly ready and willing to embrace digital banking. It is up to the players to make the crucial step in establishing a customer-first model for digital banking,” said Yeoh.

    Banks, she continued, need to incorporate advanced analytics into understanding customer preferences and behaviour, from a historical as well as a forward-looking point of view. Information and data are key to providing customers with better products and services, thereby translating to economic value for the digital bank.

    Improve financial literacy and inclusion
    Despite there being more than 1,823 bank branches in Malaysia as of December 2019  and more than 37 banking institutions covering commercial banks, Islamic banks, and development financial institutions, there is still a lack of coverage for the unserved and underserved segments of the B40 and M40 groups.

    Yeoh commented, “Customers that fall into the unserved or underserved segments are more likely than others to have a profile that fall short of the conventional bank’s credit criteria when financing is sought.

    “Digital banks can view this as an opportunity to expand its reach into untapped markets while also delivering on BNM’s aspirations for financial literacy and inclusion. Ideally, we would seek to have customers achieve higher financial literacy through the provider’s ability to advise, recommend and encourage positive financial behavior.”

    For the unserved or underserved in retail and non-retail segments, micro-savings or deposits, micro-financing and micro-insurance are some of the basic products that is needed.

    These “bite-sized” products enable consumers to access affordable financial enabling services in manageable quantum, and introduces those who are financially unaware to products that can gradually improve their financial literacy and economic livelihood.

    The unserved and underserved of the B40 groups in Malaysia should be onboarded to financial service platforms that can help in cashflow management, enabling micro-savings or deposits, micro-insurance that safeguards their basic needs, and basic financing products to tide them over their financial trouble if the need arises.

    The underserved M40 and T20 segment can also benefit from the convenience and value add that digital banks can offer from a lifestyle and advisory perspective, with a different set of customized targets to help achieve their financial needs.

    Be an active platform
    Digital banks should be an active platform in the economic lifecycle of the segments it serves. It can do so by forming an eco-system or be part of an eco-system that is relevant to their users, where the user will be immediately plugged into a host of services within the digital bank platform.

    Yeoh explained, “For a micro-enterprise, for example, the platform would enable receiving payments digitally, purchasing materials via a marketplace, micro-savings and micro deposit auto functions, analytics for its business and personal finance, and basic micro-financing that commensurate with their financial behaviour and capacity as a micro-enterprise.”

    In conclusion, by leveraging on advanced technology, digital banks can fill the void that is within our economic environment and address the pain points of the unserved and underserved in both retail and non-retail segments.

  • iProperty PRO: A Proptech Tool

    iProperty PRO: A Proptech Tool

    The changing property market conditions today is inevitable due to COVID-19. We are seeing digital and data driving the way consumers seek properties. The recent effects of COVID-19 is showing further shifts in the way property agents and property buyers, sellers and investors, interact on their property journey.

    iProperty.com.my is investing into the Malaysia property market with the launch of a brand new proptech tool, and special support & packages designed specifically for property agents for today’s market. This is with the objectives to forge stronger partnerships with property agents, help them recharge their businesses and the property market, and to come out of COVID-19, stronger.

    The Proptech Tool Fueled by Property Data Insights

    Property is one of the biggest financial transactions a consumer will make in their lifetime and today’s market condition sees property seekers demand more information and insights from property agents. It is key for a property agent to gain consumer confidence for a transaction to happen, and that is more so now than ever. Property seekers are also moving online for their property search and research, and COVID-19 have accelerated this.

    iProperty PRO is designed to equip property agents in the market with the right tools and property data insights to help them recharge and grow connections with the millions of property seekers in Malaysia whether it is buying, selling, renting or investing. We want to continue partnering with property agents to provide them with the right tools, support and packages to stand out and win.

    iProperty PRO allows property agents to be flexible and adapt to the changing environment. It is also a mobile-first, fast and simple-to-use tool that allows property agents to connect with the largest pool of property seekers in Malaysia anytime, anywhere. Property seekers can also benefit greatly by getting trusted and professional advice, and the latest data from their property agent before they make that important decision to buy, sell, rent or invest.

    #iPropertyCares: For Businesses Impacted by COVID-19

    The thousands of property agents in Malaysia are burdened by the aftereffects of COVID-19. It is our mission to help property agents get through this with not just the right tools but also with our support, and as the market recovers, Malaysia will have talented property agents to help grow the property industry further. #iPropertyCares support was introduced when the MCO was first announced in March 2020 with a second instalment when the MCO was extended.

    With this third installment, iProperty.com.my is making investments to help property agents recharge their businesses across the coming months:

    1. iProperty PRO – A brand new proptech tool driven by property data insights and designed mobile-first to allow property agents to connect with the largest pool of property seekers in Malaysia, anytime and anywhere. The flexible packages contain enhanced value to help property agents stand out and win at a time when they need it most.
    2. 25% discount on iProperty PRO subscriptions – New and renewing accounts will get 25% discount on new iProperty PRO subscriptions when signed up during May and June 2020. Applicable for selected packages only.
    3. 90 days payment holiday for iProperty PRO subscriptions – Property agents do not need to make payment until the 90th day, helping with their cash flow during these challenging times. It is available for new or renewals onto the new iProperty PRO subscription. The 90 days payment holiday is applicable for Visa and Mastercard debit card or credit card payments only.
    4. 30 days complimentary account subscription extension – All property agents with an active account subscription as of 6 May 2020 will receive an additional one-time only complimentary extension for 30 days, to their account.
    5. Up to 50% discount on property listings upgrades – All property agents with an active account subscription as of 6 May 2020 can enjoy up to 50% discount on Featured and Premium 28-day property listing upgrades, during May and June 2020.

    Property agents can contact their Account Manager for full details.

    iProperty.com.my’s aim is to ensure all property agent clients in Malaysia are aware of our support to them.

    “The #iPropertyCares third support package is designed to allow property agents to RECHARGE. We want to support the livelihood and careers of thousands of independent property agents in Malaysia who are impacted by COVID-19 to return stronger than before over the coming months. We are making an investment in the market to enable this to happen,” said Sean Liew, General Manager for Agent and Developer Sales, iProperty.com Malaysia Sdn Bhd.

    “Our investment into new proptech tools and data together with the support and packages offered during COVID-19 demonstrates our commitment to the Malaysia property market. We hope this partnership with our property agent clients will leave a positive impact to the Malaysia property market and broader economy,” said Liew.

    Premendran Pathmanathan, General Manager for Customer Data Solutions & Quality, REA Group Asia also said: “The property market is going through a lot of changes especially with the current COVID-19. We can expect the property market to continue to evolve as it makes adjustment to adapt.

    “With iProperty PRO proptech tool being launched, we want to ensure that property agents can get the latest cutting-edge property data and trends. iProperty PRO is embedded with the latest property market information and data insights that will help property agents navigate through any market changes.

    “It is a tool that is truly mobile and comes with packages that are value added to help customers stand out. Combined, we believe it will help property agents to recharge their business during COVID-19.”

    Added Prem, “With access to the largest pool of property seekers in Malaysia (iProperty.com.my) and latest innovation in design, data and technology, iProperty PRO is the perfect proptech tool and place for property agent clients to connect with the Malaysia property market.”

  • Laws of Attraction: What Attracts Malaysian Jobseekers?

    Laws of Attraction: What Attracts Malaysian Jobseekers?

    JobStreet Malaysia today announced the Laws of Attraction recruitment study, with insightful data from more than 10,000 local candidates, cutting across over 25 industries. The study of Malaysian jobseekers is especially timely for organisations seeking to build and retain teams that agilely combine skills and mindsets needed in the path toward post-COVID economic recovery.

    The Laws of Attraction study not only offers insights by JobStreet at a Malaysia-specific level but also crystallised information in terms of specialisation, industries, age groups and job levels with an overview comparison for each finding. The collective data is unlike any other as it is customisable, allowing organisations to explore and extract different candidates from any industry, based on their organisational as well as skills requirements.

    For Malaysian organisations seeking to navigate their way forward after the lifting of the Movement Control Order (MCO), these findings go hand in hand with the government stimulus package which is designed to help retain the existing workforce and secure new talents for rebuilding. Staying close to JobStreet’s mission as the trusted talent partner for organisations, the study is available online as a microsite with easy-to-use navigation tabs, categorised by segments to narrow down the specialisation the organisations require. This further solidifies JobStreet’s position as Asia’s Best Talent Sourcing Partner with user-friendly tools to find the right candidate.

    The study reveals thinking driving four generations of jobseekers from Gen Z: aged 18-23, Gen Y: aged 24-34, Gen X: aged 35-54 up to Baby Boomers aged: 55-65.

    Salary and Compensation along with Work-life Balance applied to all Malaysian talents but not for Gen Z. They prefer Personal Growth and Career Development as they are just starting to enter the workforce.

    Gen Y focuses on Career Development in an organisation when it comes to choosing a job – this includes overseas training and promotion opportunities.

    Job Security drives Gen Y, X and Baby Boomers due to factors such as commitments or family. The majority of Malaysians in the workforce are currently from Gen X and Gen Y, which comprise 45% and 40% respectively.

    The key drivers also differ according to industries. Salary and Compensation are high priorities for the Banking/ Finance and Consulting (IT) industries, whereas Work-life Balance is important for Advertising and IT industry. For talents in the Auto, Electronic & Manufacturing and those in Oil & Gas, are driven more by Career Development.

    The Laws of Attraction at a Glance

    With more Gen Z, Gen X, Gen Y and Baby Boomers working together, organisations today face unprecedented challenges in managing a multigenerational workforce. This is where the Laws of Attraction data help organisations make the right recommendation and hire with precision.

    Organisations are also faced with issues of retaining talents during this challenging time due to cash flow and income issues. To help organisations retain rather than retrench staff, the Malaysian government announced its RM250 bil Prihatin Rakyat Economic Stimulus Package (PRIHATIN).

    This package includes a range of financial assistance, ranging from deferment of payments for tax instalments up to six months to subsidising employee salaries. This initiative is targeted at assisting SME businesses which are especially prone to choosing this short-term solution due to their vulnerable cash flow, but such decisions tend to extract a higher cost when it comes in the recovery-19 crisis.

    As JobStreet Malaysia Country Manager Gan Bock Herm explained, “With the current economic pressures brought about by COVID-19, more than ever, employers need stronger recruitment and retention efforts. This is where data and local insights are important to understand what Malaysian organisations and workers need to form teams critical for their economic recovery after the pandemic. The Laws of Attraction harnesses insights on important motivators across four generations of talents. These insights provide a clearer overview for an organisation and recruiters to attract and retain top talent.”

    As organisations move toward recovery, the working environment is faces transformation in response to uncertainties brought about by the pandemic.

    Multi-generational Workforce 

    The two major factors of driving changes in the multi-generation workforce are demographic and technological transformation. In terms of demographics, each generation has different ways of communicating, different ways of working, and each with different expectations for employers. It is necessary to manage such an expectation in order to be able to work efficiently. The Laws of Attraction give insightful detail for organisations to understand these generational characteristics and enable them to effectively attract, building teamwork while adapting to economic changes.

    As underlined by Gan, “With four generations working together, organisations and recruiters need to pay attention to the subtleties of multi-generational cooperation so that the organisation can successfully maximize integration, collaboration and engagement toward business recovery as well as sustainability.”

    Accelerating Digitalisation 

    The COVID-19 pandemic has fast-tracked digital transformation in organisations. It has rapidly reshaped the way organisation and employees communicate and work as well as the deployment of technologies such as Big Data, Internet of Things (IoT), Artificial Intelligence, Machine Learning and Robotics to cope with the pandemic’s onset.

    These changes also impact the skills that are required in the workforce as well as how recruitment processes are done. Almost overnight, organisations not only had to speed up their digital transformation but more importantly, maintain a humanised recruitment process.

    The Laws of Attraction study found that 34% of Gen Z find it acceptable to have interviews through video calls than other generations, as compared to Gen Y at 32% and Gen X at 30%. For contrast, just 19% of Baby Boomers found video interviews acceptable. This further signifies the importance of organisations humanising the whole recruitment process. For example, a smart organisation would adapt to provide an immersive experience and making the session feel more like a two-way conversation. Talents, in turn, can get a real feel for the company values, culture or even team members as they would be “there in person”.

    Work-Life Balance 

    This is the second most common factor across all generations and an important sub-driver for work-life balance is the ability to work from home or remotely. This has proven particularly important and relevant to the current situation as the Malaysian Government enforces social distancing and the Movement Control Order (MCO) to contain COVID-19. It is shaping to be a requirement, rather than an option, at a time when organisations in non-essential industries to operate remotely to ensure business continuity.

    The Laws of Attraction findings further assist organisations to understand the perception of working from home from the four generations. It reveals 72% of Gen X prefer to work from home, closely followed by Gen Y with 71%, Gen Z trails with 64% and Baby Boomers at 66%. Malaysians are receptive toward working from home or remotely, given the higher than 50% approval rating from all generations.

    The comprehensive findings through the Laws of Attraction by JobStreet Malaysia offer a good perspective of talents for organisation and also help organisation to strategically plan their workforce, especially during these economic uncertainties. The findings will also help to minimise discord in the process of recruiting by understanding the forces that attract Malaysian talents to a role and how to best retain them in the long run. For more information, visit https://www.jobstreet.com.my/en/cms/employer/laws-of-attraction/

     

  • Gold Shines as Markets Turn Bearish

    Gold Shines as Markets Turn Bearish

    The spot price of gold touched US$1,700 in early March, a level last reached seven years ago. Though it has since dipped as global stock markets started to unravel, gold remains a safe haven for astute investors.

    Gold has been on an upward trend over the past few years as demand for it continues to grow among individual investors, institutional funds, and gold-backed exchange-traded funds (ETFs).

    Even national banks are getting into the act with the World Gold Council reporting that central banks bought a historic high of 374.1 tons of gold in the first half of 2019. The central banks of Russia, China, Turkey and Poland have been busy accumulating gold.

    In Malaysia, the appetite for physical gold has also seen a significant rise in recent times with several gold bullion companies such as Public Gold and Silver Bullion Sdn Bhd, and gold trading digital platform HelloGold confirming a rise in gold purchases even before the equity market mayhem intensified in March.

    Don’t Put All Your Eggs in One Basket

    As one of Malaysia’s largest bullion dealers, Silver Bullion has seen an increase in orders for gold in its Malaysian operations recently. “Not just gold but silver and platinum too,” says its manager Bryan Teh.

    He adds there has also been an increase in enquiries about its state-of-the-art storage facility in Singapore as investors start to realise the meaning of “do not put all your eggs in one basket”. “This relates to not putting all your assets in just one country as political instability and changes in monetary policy can easily restrict access to your assets.”

    Bryan Teh

    While demand for gold and silver, in general, has always been there, Teh says people are more aware of the economic situation around them compared to before.

    “We strongly believe this increase in demand came from people noticing that not just Malaysia’s economy but the global economy is beginning to show cracks. Ever since the trade war between US and China started, it has taken a toll on the global economy.

    “The final nail in the coffin was when the Covid-19 cases came to light and became a global pandemic which made people rush to gold and silver as they are safe-haven assets,” he says, explaining when there is a higher degree of fear in the market, investors will often rush to these safe-haven assets.

    “Astute investors on the other hand purchase gold and silver no matter whether the markets are in greed or fear mode as they understand that the current global financial system is a ticking time bomb. Why? It’s simple – currently, the global debt is standing around US$255 trillion with the US leading at roughly US$23 trillion.”

    Likewise, Public Gold has also seen demand for its gold products such as bars and coins increase from quarter to quarter at around 30%, says Datuk Wira Louis Ng, founder and executive chairman of PG Group of Companies.

    “Yes, Public Gold has been seeing an increase in orders for its gold products recently compared to the previous quarter as the gold price is moving higher and higher. Gold, which used to be at US$1,300 to US$1,400 per ounce, is now around US$1,600,” says Ng.

    Datuk Wira Louis Ng

    On the driver for rising gold demand, he says the COVID-19 pandemic coupled with the current turmoil in the global financial markets, including in the US, means that gold products are seen as “safe haven assets”.

    To add to that, many central banks in the world are slashing their interest rates due to the financial crisis. “This gives gold buyers more reasons to purchase gold, as gold always performs inversely compared to the other financial classes in the world,” says Ng.

    HelloGold also confirmed it has seen “a significant uptick” in its gold transactions in the last three months, says its CEO and co-founder Robin Lee.

    He says there are two key factors driving this increasing demand. This first is greater brand awareness of the HelloGold app amongst the investing public and greater recognition of the affordability of getting access to gold through its mobile app platform.

    The second factor is the upward momentum in the gold price since its launch in 2015, and specifically over the last few months, he adds. “At a global level, the flight to safety as a result of the ongoing outbreak of Covid-19 has led to a general risk reassessment of the equities markets, as investors consider the possibility of lower global growth and higher global inflation. And, at a domestic level, the recent weakening of the ringgit since the new year,” he adds.

    New High for Gold this Year?

    What are some factors that could drive a further upward trend in gold prices?

    Lee believes the chances of gold breaking its all-time high are increasing for a number of reasons. “Generally, the equities markets have enjoyed their longest bull run and most market commentators believe they are overdue a correction.

    “Secondly, geopolitical risks remain high in many parts of the world – impact of Brexit on Europe, US/Rest of the World trade tensions remain largely unresolved and, at best, held in abeyance; and the US elections at year-end.

    “More specifically, we believe that the longer the Covid-19 outbreak continues unabated, the bigger the impact it will have on the global economy – in the worst case, we see a 1970s-style recession,” he adds.

    The extreme volatility in global markets recently has also affected the spot price of precious metals like gold and silver, which dropped just like it did during the 2008-09 global financial crisis.

    Lee explains that a major correction in global equities is more likely to follow what happened during the 2008 global financial crisis. “Gold price initially dipped – by common consensus, that was driven by investors liquidating gold to meet margin calls in other positions and to generate liquidity.

    “Thereafter, gold climbed as investors moved into gold as a safe haven asset. In short, we believe that a global equities crash will likely drive gold prices up rather than down,” he adds.

    During the height of the 2008 crisis, the spot gold price fell from about US$1,000 an ounce to around US$730. It then started bouncing back and rising as stock markets bottomed out. Gold prices rose further as the economies recovered, peaking at its all-time high of just over US$1,900 (in US dollar terms) in 2011. So will this scenario play out again in the coming recession?

    Getting the Allocation Right

    So what percentage of their portfolio should ordinary investors be allocating to gold, especially in times of market turbulence?

    “Generally speaking, we believe that everyone should hold gold – not so much to make money but more to mitigate the impact of losing money (like a hedge/insurance against inflation, currency weakness, market stress),” says Lee.

    For this reason, he believes that an allocation between 5% and 15% in gold is something that everyone should consider, especially in these times of market uncertainty. That said, according to research by the World Gold Council, the amount of gold investors should have in their portfolio should be a function of how conservatively or aggressively they have constructed their portfolio, he adds.

    “For example, at the aggressive end of the spectrum, where a portfolio only has 6% in fixed income and the rest in equities and alternative investments, their research indicates that a 10+% gold allocation optimises the highest risk-adjusted return.

    “At the other end, a conservative portfolio that is two third in fixed income and the rest in equities and alternative investments is optimised with a 2+% allocation in gold,” says Lee.

    To Public Gold’s Ng, ordinary investors’ portfolios should contain 8% to 15% of gold. “This will help them to manoeuvre their way through the crisis that we are seeing in the stock markets currently. Gold should be in every portfolio to protect them from unexpected events.”

    By Lee Min Keong

    This article appeared in the April 2020 print issue of Smart Investor.