Inovatif

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  • 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.

  • SC Unveils Measures to Support Businesses

    The Securities Commission Malaysia (SC) today announced further reliefs for public-listed companies impacted by the COVID-19 fallout. It is also considering further measures to facilitate greater access to support businesses such as funding for small and midcap companies, as well as micro, small and medium enterprises (MSMEs).

    “With this Covid-19 pandemic, we are confronting a situation that none of us has experienced in our lifetimes. It requires measured responses that consider the longer-term impact on our market and its participants, beyond this immediate crisis,” said SC chairman Datuk Syed Zaid Albar at a virtual media conference to release its annual report for 2019.

    “While the world comes together to combat this public health emergency, we have taken proactive measures to ensure that markets continue to operate in an orderly manner, as access to funding is vital to maintain confidence and ensure the long-term recovery of the market,” he added.

             SC chairman Datuk Syed Zaid Albar

    Acknowledging that companies may face challenges as a result of the pandemic, the SC also announced that Bursa Malaysia will provide affected companies listed on the Main Market temporary relief from the Practice Note 17 nn (PN17) classification in relation to the following criteria:

    1. The shareholders’ equity of the listed issuer on a consolidated basis is 25% or less of the share capital (excluding treasury shares) of the listed issuer and such shareholders’ equity is less than RM40 mil.
    2. The auditors have highlighted a material uncertainty related to going concern or expressed a qualification on the listed issuer’s ability to continue as a going concern in the listed issuer’s latest audited financial statements and the shareholders’ equity of the listed issuer on a consolidated basis is 50% or less of share capital (excluding treasury shares) of the listed issuer.
    3. A default in payment by a listed issuer, its major subsidiary or major associated company, as the case may be, as announced by a listed issuer pursuant to paragraph 9.19A of the Listing Requirements and the listed issuer is unable to provide a solvency declaration to the Exchange.

    These measures will allow companies more time to regularise their financial positions. Similar temporary relief from Guidance Note 3 classification will also be provided by Bursa for companies listed on the ACE Market. The period for this PN17 relaxation will be effective from 17 April until 30 June 2021.

    Measures for Alternative Financing Platforms

    Observing heightened interests by MSMEs to tap into alternative fundraising channels, the SC also lifted fundraising limits on Equity Crowdfunding (ECF) platforms, and allowed ECF and peer-to-peer financing (P2P) platforms to operationalise secondary trading, both with immediate effect.

    From now till 30 September 2020, the government co-investment fund MyCIF, administered by the SC, has also increased its funding matching ratio from 1:4 to 1:2 for eligible ECF and P2P campaigns, to provide additional liquidity into the alternative fundraising space.

    The SC also called upon the industry to seize the opportunity to accelerate their digitisation transformations and offer more online products and services to investors as the regulator observed a significant increase of new online trading accounts opening in recent months.

    The SC itself, in view of this new norm, will expedite guidelines for holding virtual general meetings and facilitate alternatives to meet take-over requirements.

    The regulator is also working on efforts to broaden the suite of product offerings of fund management industry through facilitating the introduction of waqf-based collective investment schemes and alternative investments for wholesale funds, where underlying assets can be property, gold or private equity.

    Noting that extraordinary times call for extraordinary responses, Syed Zaid said this is not business as usual and the SC is deploying a wide range of regulatory tools to provide support to the market and relief to market participants.

    Protecting Investor Interest

    While the regulator is doing what it can to support the businesses, Syed Zaid said the SC remains steadfast in ensuring investor interest is protected during this challenging time. “We continue to raise investor awareness on scams, as scammers tend to target people during times of uncertainty.

    The SC will take a targeted approach to protect vulnerable investors and minority shareholders. I would also like to remind our intermediaries to remain vigilant and for PLCs to remember their obligations to shareholders and to make timely disclosures,” he stressed.

    The SC also assured investors that the Malaysian capital market remains fundamentally strong and is functioning in an orderly manner, supported by deep domestic liquidity, complemented by the government’s stimulus packages, amidst non-resident outflows.

    “Over the years, Malaysia has withstood many crises and the SC has worked closely with the industry to strengthen the capital markets and addressed systemic weaknesses. As a result, the Malaysian players and institutions are better equipped to face the onslaught of challenges arising from this pandemic,” added Syed Zaid.

    As the financial system adjusts to the impact of Covid-19, the SC will continue to monitor the evolving situation in global and domestic markets, and calibrate its responses and update the public accordingly.

    Segments of Bond Issuers under Stress

    Corporate bond issuers in the aviation, oil & gas (O&G) as well as trading and services segments are experiencing short-term financial stress that may result in higher risks to their credit positions.

    While that could weaken their credit positions it would not necessarily result in defaults as the majority of issuers are in the triple A and double A rating categories, said Kamarudin Hashim, SC executive director, of Market and Corporate Supervision, during the same media conference.

    “And in the event of credit deterioration, there should be should be sufficient buffers before cash flow becomes severely constrained.”

    In addition, he said several of these issuers within these segments have some form of support in the form of financial guarantees or corporate guarantees.

    He pointed out that defaults rates in the corporate bond markets have declined significantly since the Asian financial crisis. “At that time it was around 9.4% and has come down to below 1% up to last year,” said Kamarudin when answering a question from the media on the possibility of defaults by issuers of corporate bonds, sukuks and P2P (peer-to-peer financing) notes.

    “Moving forward and due to uncertainties arising from the Covid-19 pandemic as well as the slower global growth, there are several issuer segments that may see higher risks to their credit positions.

    “The areas include aviation, oil & gas as well as trading and services. These are segments under stress currently, and they represent around 8% of the total corporate bonds issuances,” he added.

    He said a prolonged weakening of issuers’ cash flow will be a cause of concern and the SC will continue to monitor this space.

    “As investors in the corporate bond market are also predominantly institutional investors, in the event of default they will be able to pursue various options to preserve their investments through negotiations such as rescheduling or restructuring, or rigorously pursuing their contractual rights and priority of claims against the issuer.”

    In relation to P2P financing, he said the average default rate remains similar to last year at around the 4% mark.

    “At the moment, the SC is not considering imposing a blanket moratorium on P2P financing notes. Our approach is for issuers to work together with [P2P financing platform] operators if they are under stress for possible restructuring and rescheduling,” he added.

    By Lee Min Keong

    For more information on the SC’s measures to maintain market integrity, please visit www.sc.com.my/covid-19 and www.sc.com.my/resources/publications-and-research/sc-ar2019

  • Malaysian Capital Market Continues to Finance Economy

    Malaysian Capital Market Continues to Finance Economy

    The domestic capital market continued to play an important role in financing the Malaysian economy during 2019, says the Securities Commission Malaysia (SC).

    The total size of the capital market expanded to RM3.2 trillion in 2019 from RM3.1 trillion the year before, with debt securities outstanding and equity market capitalisation of RM1.5 trillion and RM1.7 trillion respectively (2018: RM1.4 trillion and RM1.7 trillion respectively), according to the SC Annual Report 2019.

    Notwithstanding the challenging global backdrop and ongoing domestic policy reforms, the Malaysian capital market witnessed a higher level of fundraising activities during the year, with total funds raised in the bond and equity market amounting to RM139.4 bil in 2019 compared to RM114.6 bil in 2018.

    Alternative fundraising avenues have also continued to gain traction, especially in equity crowdfunding (ECF)  and peer-to-peer (P2P) financing, with total funds raised more than doubled to RM443.8 mil (2018: RM195.9 mi).

    A total of RM132.8 bil was raised in the corporate bond and sukuk market compared to RM105.4 bil in 2018, with issuances mainly in utilities and financial services. Sukuk made up 77.1% of total bond issuances in 2019.

    Meanwhile, RM6.6 bil was raised via the equity market (2018: RM9.2 bil), of which RM2 bil was through new equity listings with a total of 30 IPOs and RM4.6 bil raised via secondary fundraising. In 2019, four companies were listed on the Main Market, 11 companies on the ACE Market, and the remaining on the LEAP Market.

    Notably, the size of issuances via the LEAP Market grew by 60.6% y-o-y to RM92.2 mil in 2019 (2018: RM57.4 mil). In the fund management industry, total assets under management (AUM) rose to RM823.2 bil (2018: RM743.6 bil) amidst an increase in market value, driven by robust performance of small and mid-cap equities and higher net injection from dividend reinvestment.

    Total net sales for the unit trust segment amounted to RM30.5 bil in 2019, a decrease of 19.5% y-o-y (2018: RM37.9 bil). In terms of portfolio flows, total non-resident inflows amounted to RM8.7 bil in 2019 (2018: portfolio outflows of -RM33.6 bil), mirroring regional trends.

    The bond market recorded total inflows of RM19.9 bil (2018: outflows of -RM21.9 bil) while the equity market recorded total outflows of -RM11.1 bil (2018: outflows of -RM11.7 bil). In the bond market, non-residents accounted for 13.7% of total outstanding ringgit bonds as at end December (end-2018: 13.1%) – most of which were Malaysian Government Securities (MGS) at 80.1% of total foreign holdings (end-2018: 79.1%).

    Orderly Market Adjustments of Fund Flows

    In the equity market, foreign holdings remained stable at 22.4% of total market capitalisation in 2019, in line with its five-year average. The high level of domestic liquidity in the capital market continued to allow for orderly market adjustments of fund flows between non-residents and local investors.

    The Malaysian bond market grew 7.1% from RM1.4 trillion in 2018 to RM1.5 trillion as at end 2019. This was supported by higher levels of debt fundraising, sustained demand by domestic institutional investors, and favourable domestic macroeconomic conditions.

    Despite the challenging environment, Malaysia was also among the emerging East Asian economies that saw local currency bond markets expand in 2019. In 2019, as a percentage of GDP, Malaysia remained the third largest local currency bond market in Asia after Japan and South Korea.

    However, ongoing trade tensions, the shift in global monetary policy expectations, and general concern over slower global growth continued to drive volatility in the bond market throughout the year. MGS yields experienced downward pressure across tenures, tracking global trends, on the back of major central banks’ shift in monetary policy stance and overall higher global risk aversion.

    It also reflected the lower domestic growth and inflation expectations alongside the Overnight Policy Rate (OPR) cut by Bank Negara Malaysia (BNM) in May 2019. As such, yields reduced across the board while the overall curve was relatively flatter for the year.

    Double-digit Growth for Mid- and Small-caps

    For the Malaysian equity market, overall market capitalisation ended the year marginally higher by 0.7% to RM1.71 trillion in 2019 from RM1.70 trillion in 2018. This was despite the challenging external environment with heightened headwinds mainly from the ongoing US-China trade tensions and weaker global growth.

    Overall, while the FBMKLCI moderated in 2019, some segments in the broader domestic equity market gained significant traction, partly reflecting a shift in investors’ preferences. This occurred as sentiments swayed in favour of constituents with better valuation and corporate earnings prospects, particularly in the small and mid-cap segments.

    The FBMKLCI declined by 6% y-o-y to close the year at 1,588.76 points (2018: -5.9% y-o-y to 1,690.58 points), influenced by a year of event-driven volatility in sentiments as well as subdued corporate earnings, which continued to be a pressure point on the benchmark index.

    Additionally, the FBMKLCI was also weighed down by major counters subjected to key policy adjustments in 2019, aimed at longer-term improvement.

    Nevertheless, the non-FBMKLCI components in the Malaysian equity market performed favourably in 2019. It registered higher growth despite the challenging external headwinds, as improved earnings outlook garnered investor interest into this segment.

    The FBM MidS, FBM Small Cap and FBM ACE indices increased at robust double-digit rates of 32% y-o-y, 25.4% y-o-y, and 21.1% y-o-y respectively in 2019.

    The significant growth in small and mid-cap indices was mainly driven by the energy, construction, and technology sectors, which benefitted from stronger fundamentals and better valuation prospects of their key companies during the year.
    Excluding the FBMKLCI components, the energy sector specifically recorded the largest increase, rising by 50.7% y-o-y (2018: -17.3% y-o-y4), while the construction sector increased by 47.9% y-o-y (2018: -46.0% y-o-y), owing partly to the revival of public projects by the government.

    The technology sector, in turn, rose by 37.5% y-o-y (2018: -9.32% y-o-y), benefitting from the 5G network rollout, higher global smartphone shipments, and potential trade diversion stemming from the ongoing US-China trade war.

    Robust Fund Management Industry

    Meanwhile, in the fund management industry, the unit trust segment remained the largest source of funds towards the AUM, with net asset value (NAV) amounting to RM482.1 bil in 2019 (2018: RM426.2 bil).

    Overall, 75.3% of the fund management industry’s AUM was invested locally, of which 44.2% was in domestic equities, followed by 26.1% in money market placements, and 24.6% in fixed income.

    Compared to 2018, investment in local equities and fixed income rose in value by RM12.9 bil and RM19 bil respectively, while the domestic money market placements decreased by RM6.1 bil.

  • Don’t Let A Career Change Lead To Your Undoing

    Don’t Let A Career Change Lead To Your Undoing

    Author and motivation speaker Simon Sinek said, “Working hard for something we don’t care about is called stress; working hard for something we love is called passion.”

    If you totally relate to this and are considering a career change after climbing the corporate ladder for the past 15-20 years, you are not alone. It is becoming more common for early millennials, who are now in their late 30s or early 40s, to decide to venture out and start a business in a field new to them but which they are keenly interested in. There are numerous different reasons why professionals who have put in some of the best years of their lives into establishing a successful career are now willing to give all of that up.

    For the majority of Malaysians, it mainly tends to include a desire for a better work-life balance, more independence and autonomy, less stress and wanting to spend more time with young children. A decision of this nature is clearly not one that can happen overnight nor should it be rushed through.

    Many individuals have long harboured ambitions to embrace a mid-career change but due to uncertainties surrounding their circumstances, have been forced to put their dreams on hold indefinitely for fear of the financial impact such a change would make. This need not be the case so long as you plan ahead before taking the plunge.

    Before we look at how you can prepare financially to make a career change, it is vital that two prerequisites are covered. First, you need to already know what it is you want to do and why. This is not the time to dabble in a variety of gigs to figure out your calling; you can afford to do that when you are in college, not when you have dependants, loans and expenses.

    Secondly, family support plays a large part in a major decision like this as they are the ones most affected by the change and require assurance that the most important needs will be covered. It is crucial to discuss with your loved ones before taking the next step.

    Once this is done, you can proceed to this eight-point checklist to see how prepared you are before taking the plunge:

    1. Ensure you have sufficient emergency funds

    Your take-home pay is going to change but your household bills might remain the same. If both you and your spouse are working, the effect might not be so drastic. But if your spouse is not employed and you have young children, you will need to factor in a bigger buffer. Your family may need to temporarily cut down on non-essential spending such as upgrading a car or going on an overseas vacation.

    Don’t forget to take into account outpatient medical expenses which you will now have to foot on your own. A comfortable emergency fund of around two years of annual expenses is recommended if you anticipate a fairly certain cash flow from the new business venture, or more if otherwise.

    2. Ensure your family has adequate insurance protection

    The current insurance benefits under your employer will cease once you leave. You will need to review your personal coverage to anticipate a range of circumstances so that your dependents will be taken care of. These include family income insurance (in the event of death), total permanent disablement (in the event of disability), critical illness, medical card for hospitalisation and surgical benefits and also personal accident coverage. You will need to consider the insurance needs of your spouse and your children – particularly for a medical card.

    3. Business funding

    If possible, start with businesses that require lower start-up capital so that you do not exhaust too much of your savings at one go. Should a larger capital be required, consider using “other people’s money”. This does not mean borrowing from banks (or other shadier sources) and getting yourself further into debt.

    Try approaching interested investors for funding or seek out like-minded partners to be joint shareholders in the business. This way, you need not stretch yourself too thin to shoulder the entire capital requirements solely.

    4. Learn the ropes

    In stark contrast to larger organisations with different departments for different functions, once you are a business owner, you will be HR, Sales and Accounts all rolled into one. If your current job function is specialised or niche, it would be timely to start charting a learning path to take you from “employment” to “self-employed” by learning the key aspects required to run a business such as day-to-day operations, finance and marketing.

    Also, it would be a good idea to bring yourself up to speed with digital and social media advertising trends as these will provide a more cost-effective way to market a new business. Talk to friends who are also business owners to get some insights into their experiences and the challenges they might have faced when starting out. While they may not necessarily be in the same industry as the one you intend to break into, all new businesses tend to share some common general issues such as sourcing for investors, regulatory and statutory requirements or shareholding concerns. Certain businesses also require certification and licensing from the relevant authorities so if possible, get a head start on this early on.

    5. Test drive before jumping in

    If the new business venture is not something you are already familiar with, you might want to consider testing it out on a part-time basis to see if it truly suits you. For example, if you plan on getting into the F&B industry, you could help out at a friend’s café over the weekends and gauge if you are indeed cut out for the job demands (long hours, busy weekends, multi-tasking, dealing with customer complaints, etc).

    Given that you might be short on cash flow once you’re in the business on a full-time basis, test out your household’s ability to live on a single income (for double-income families) or on a smaller budget.

    6. Ask those who are already in the game

    Industry experts who have a wealth of experience in their respective fields often give talks to share tips and advice to business novices. You can seek out mentors or coaches in such capacities to guide you in areas that you want to work towards.

    7. Be prepared to give yourself time

    Success is not going to happen overnight, so you will need to have realistic expectations when embarking on this new chapter of your life. Include patience and perseverance into your mantra because chances are you are going to need lots of it. Business owners face multitudes of stumbling blocks all the time regardless of the industry they are in but many survive and become more resilient as a result.

    8. Get clarity on your financial well-being before pulling the plug

    Review your financial status thoroughly and stress test your numbers to ensure you have covered all the key areas of your personal finance for yourself as well as your dependents. Engage the help of a licensed financial planner to be the devil’s advocate and make sure you have not overlooked anything.

    With the assurance that you have the financial green light to make the switch, you will have less to worry about and can direct more energy into researching and preparing for your new career. All decisions involve an element of risk, especially one where your family’s livelihood and financial security may be impacted the most.

    By taking steps to mitigate the risks and increasing your preparedness financially, mentally and emotionally, you can embark on a mid-career change with confidence, knowing that you are one step closer to achieving your dreams.

    By Felix Neoh

    Felix Neoh CFP CERT TM is the director of Financial Planning at Finwealth Management Sdn Bhd and is a certified member of FPAM. He can be contacted at enquiry@finwealth.com.my.