finance

Chan insists letters not guarantee

noreply@blogger.com (syimiez) — Sun, 08 Nov 2009 15:20:00 +0000

IN ITS inquiry into how public funds were used for the multi-billion ringgit Port Klang Free Zone (PKFZ) project, Parliament's Public Accounts Committee (PAC) summoned at least 15 people over three months to help it understand what happened that caused the project cost to balloon from RM2 billion to RM4.6 billion, including interest charges.
Among those called to testify were former transport ministers Tun Dr Ling Liong Sik and Tan Sri Chan Kong Choy, former Port Klang Authority general manager Datin Paduka OC Phang,
Attorney-General Tan Sri Gani Patail and former and serving senior government servants.
The PAC tabled its 26-page report in the Dewan Rakyat on Wednesday, plus a thick volume of verbatim minutes of the inquiry sessions.
theSun will publish a series of reports based on these closed-door sessions.
We kick off with Chan who issued three letters of support to secure private funding for the project and later got a RM4.5 billion soft loan from the government as the PKA was in no position to pay the instalments.

>> CHAN, who helmed Transport Ministry from July 1, 2003 to March 18, 2008, appeared before the PAC from 11am to 2pm on July 29, 2009.
He was unwell at that time, holding a week-long medical certificate from the Sungai Buloh Hospital, and at the beginning of the meeting he said he was having some hearing problems.
He came with his lawyer Wang Ming Way upon the advice of PAC chairman Datuk Seri Azmi Khalid. This is what he said on:

> The three letters of support issued in 2004, 2005 and 2006:
Chan repeatedly stressed and insisted the letters were meant to assist a credit rating agency in rating the bond to be raised by developer Kuala Dimensi Sdn Bhd (KDSB) to finance the PKFZ project.
"The letter was issued by the (Transport) minister to a rating agency because KDSB through a SPV (special purpose vehicle) will issue a bond to finance the PKFZ project," he said, reading from a reply given by former Deputy Finance Minister Datuk Dr Awang Adek Hussein in parliament.
Despite what auditors Pricewaterhouse Coopers (PwC) believed, Chan maintained they had no implied or expressed elements of guarantee, as there was a paragraph in the letters which said so and he has received a written advice from the Queen's Counsel on this.
However, despite suggestion by PAC that the letters were upon request by KDSB, Chan could not determine who requested for them as he said the request was brought to him by his senior private secretary, a Mr Leong.
Chan also could not say for sure where the letters were addressed to as initially, he thought they were for Rating Agency Malaysia Bhd (RAM) but later, PAC pointed out that they were address to the Malaysian Rating Corp Bhd (MARC).
Chan also did not realise there were two rating agencies in Malaysia and during the meeting, he got mixed-up between MARC and MRCB (Malaysian Resources Corp Bhd).
Azmi said the PAC would request for the Auditor-General's Department to check where the letters were sent to as it was found out that in the end, it was RAM who did the rating for the bond.
To a question from the PAC, Chan said he was in no position to explain the difference between a letter of support and letter of comfort and admitted he did not know his letters were different from those issued by previous minister Ling.

Tan Sri Chan Kong Choy

> Land acquisition:
Chan did not want to comment on whether he was aware the land for the PKFZ project was acquired by PKA from KDSB for RM25 per square foot despite original valuation at RM10 because it was made before his time.

> The government soft loan:
Chan said he agreed to help PKA in getting the loan when he realised the project was having problems in its later stage.
However, in the meeting, both Chan and PAC constantly quoted different figures for the loan, namely RM4.5 billion and RM4.6 billion interchangeably.
Chan said he was advised by PKA to estimate the loan at RM4.5 billion and PKA had told him that the loan would be paid back from the income PKFZ derives from its businesses.
Chan could not recall whether in 2003, it was raised during a cabinet meeting that the PKFZ project must be self-financing.
Chan also said he was not aware of the Treasury advice to raise funds by government bonds to pay for the project instead of paying via installment with an interest rate of 7.5% to the developer.

> Viability of PKFZ project
Chan said he had full confidence in the project, saying it was a good project which could bring a lot of benefits to the country, create 20,000 job opportunities for Malaysians and enhance Port Klang as one of the major ports in the world.
When PAC pointed out Chan "could have done better" to make the project viable as the ministry had lagged in its supervisory role because he trusted his officers to do their work diligently, Chan said the statement was unfair.
However, Chan admitted he was not aware of certain details as he did not get involved in most of the things he considered "operational matters".

> PKA’s capability to run business being a regulatory body Chan refused to comment whether PKA has the right skills or expertise to go into business as the decision was made by the cabinet before his time.
On whether he knew the competency level of the ministry officers appointed to sit in the PKFZ board, he said since he was not involved in operational matters, he took good faith in the regular briefings they gave him.
When pointed out that appointment of ministry officers should be the responsibility of minister and not an operational matter and they had displayed weak project governance and management, Chan refused to comment.
However, Chan insisted when he became aware of the problems in PKFZ, the ministry formed a task force – jointly chaired by him and ministry secretary-general - to find ways to move forward.
He also claimed he was not aware that Jebel Ali Free Zone International (Jafzi) had agreed to cooperate with PKA but refused to have KPI on the future targets, as claimed by Phang.
While agreeing with PAC that he did not micro manage the PKFZ project, Chan refused to comment whether PKA had deliberately misinformed or misled him in the process.

> KDSB’s capability
Chan could not recall when he was highlighted about the financial problems faced by KDSB despite PAC pointing out that the Auditor-General had repeatedly stated in its annual report they did not have the financial capability.
"At the later stage, yes. That's why I assisted them to get a soft loan from the government," he said when Azmi asked whether the ministry officers raised the matter with him.
"I can’t remember, but honestly, it is at a later stage,” he said when asked whether it was in 2004, 2005 or 2006.
Azmi said: "This reflected that at the ministry level, they should have done better than to wait for the last minute to advise the minister."

> Jafzi's participation in the project
Chan said Jafzi was involved as project adviser, and together with PKA, it had briefed him on the project in several meetings.
He said Jafzi also had a part when he requested for the soft loan as it has given him an understanding that RM4.6 billion was enough to fund for everything.

Tun Dr Ling Liong Sik

"Jebel Ali took several years to grow into its present size and PKFZ will take five years to have 80% occupancy. If according to that schedule, it will be enough for them to generate enough income to pay back the government,," he told the PAC based on the briefing from Jafzi.
Chan said Jafzi was also instrumental in recommending that because of economies of scale, development of the 1,000-acre land should be "done at one go".
"Jebel Ali started with about 20,000 or 40,000 acres at one go," he added.
He said he did not hesitate about developing 1,000 acres because "Jafzi has a very good reputation and a lot of success stories to tell".
When asked about the termination of Jafzi in July 2007, Chan said he understood it to be a withdrawal, not termination, as Jafzi had a change in policy whereby it only managed free trade zones which it has a stake in.
He admitted knowledge of the strained relationship between senior officers and personalities of both PKFZ and Jafzi but did not want to quote names.
He said after Jafzi's departure, the government took several measures to ensure PKFZ moved forward, namely by setting-up a one stop agency and enhancing promotions for the project.

KL Shares To Extend Uptrend Next Week

noreply@blogger.com (syimiez) — Sat, 07 Nov 2009 11:27:00 +0000

Share prices on Bursa Malaysia are expected to extend the uptrend next week, with investors likely to react positively to an improvement in consumer confidence amid recovery signs in the global economy, dealers said.
They said this will provide a catalyst to the benchmark FBM KLCI to further gain and hover between the 1,260 and 1,270 levels for the week.
An analyst said investors are also looking forward to the upcoming listing of Maxis Bhd, which is expected to boost the FBM KLCI's performance.
He said institutional investors locally and overseas should take the opportunity to gain direct exposure to a highly-liquid mobile telco player.
He said the local bourse next week is also expected to track the regional and Wall Street's performance for a cue.
On a Friday-to-Friday basis, the FBM KLCI increased 18 points to 1,260.76, the FBM Emas Index advanced 86 points to 8,422.83, the FBM Top 100 Index was 79 points higher at 8,210.11, the FBM70 however, decreased 40 points to 8,090.28 and the FBM ACE Index gained 382 points to 4,687.65.
The Finance Index surged 241 points to 10,776.29, the Plantation Index went down 29 points to 6,058.91 and the Industrial Index rose 32 points to 2,699.87.
Turnover for the week increased to 6.577 billion shares valued at RM6.715 billion from the 4.585 billion shares worth RM5.979 billion last week.
The Main Market volume went up to 5.354 billion shares worth RM6.339 billion from last Friday's 3.807 billion shares valued at RM5.72 billion.
The volume of call warrants, however, fell to 100.850 billion shares valued at RM19.928 million from 115.661 million shares worth RM25.167 million previously.
The ACE Market volume advanced to 1.009 billion shares worth RM285.710 million from 390.248 million shares valued at RM88.246 million previously.

Business Schools World-Wide Add Courses on Islamic Finance

noreply@blogger.com (syimiez) — Fri, 06 Nov 2009 10:36:00 +0000

As Islamic finance grows into a thriving and increasingly lucrative sector, business schools around the world are adding courses, concentrations and specialized degrees to train students in structuring investments that comply with Quranic law.

The vast wealth of the Muslim world, buoyed by high oil prices, and a Muslim population increasingly interested in investing its money in ways that accord with religious principles have driven a boom this decade in specialized Islamic financial products.

When a sector grows so quickly, "the very first thing that there is a shortage of expertise," says John Board, director of the ICMA financial studies center at the University of Reading's Henley Business School in Britain, which has enrolled about 10 students in the first year of its masters' in investment banking and Islamic finance.

In both Muslim and non-Muslim countries, experts in the field say, there's great demand for practitioners trained to deal in the sometimes complicated products required to turn a profit while obeying strictures like a prohibition on interest. B-schools say the boom is so great that they've even had trouble finding faculty with the required expertise in both financial practice and the principles of Sharia law.

Both large international banks with Islamic finance divisions and specialized Islamic institutions are seeking the business of oil-producing countries' massive sovereign funds and of wealthy Muslim individuals. The schools are eager to train prospective and current employees in both full-time masters' programs and executive-education courses.

Universities in Muslim countries, particularly Malaysia, have added and expanded Islamic finance programs in recent years. Outside the Muslim world, Britain has sought to position itself as the main center for such work, with at least 22 banks providing some Islamic finance products and 55 British educational institutions, including business schools and private trainers, offering courses in the field, says Ruth Martin, managing director of the Securities and Investment Institute, a London-based professional body.

Lebanon's central bank initiated a joint effort by the Securities and Investment Institute and Beirut's Ecole Supérieure des Affaires to create an Islamic finance qualification, Ms. Martin says. The certification, started in 2007, is now being offered by more than 30 business schools in countries including Kuwait, Pakistan, Saudi Arabia and Britain, she says.

Bank Negara Malaysia, Malaysia's central bank, started the Islamic finance university INCEIF in 2006 to help train practitioners.

"We do find a number of Malaysians who work in this area are being snatched like hotcakes by the Middle Eastern countries," says Datuk Dr. Syed Othman Alhabshi, the school's dean.

In Saudi Arabia, the first cohort of students begins studies in March at the women's university Effat in a new executive Islamic financial management degree course run by the Ecole Supérieure des Affaires and Erasmus University's Rotterdam School of Management in the Netherlands.

Cass Business School is among the many British institutions with new programs in the area. The executive M.B.A. it offers in Dubai has given students the option since 2007 of specializing in Islamic finance, and corporate clients also send staff for a shorter-term overview of the field, says Zaher Barakat, who teaches in the program.

One of the central tenets of Islamic finance is its prohibition on the payment of interest, which has inspired a variety of alternatives to mortgages and other loans, as well as creative ways of helping those with capital earn a return.

Techniques like leasing, equity sharing and profit-and-loss sharing offer vehicles through which an investor can, for example, finance a new plant and then lease it to a manufacturer, rather than lending the money to buy it.

Sharia law also requires clarity and openness in all transactions, involving detailed audit trails so that all parties have full information about the sources of the funds involved. Debt cannot be classed as an asset to be sold to a third party, and investments in areas like alcohol, gambling and weapons are forbidden. Islamic bonds and insurance follow their own sets of rigorous rules.

Proponents note that the prohibition on interest charging and the selling of debt shielded the sector from exposure to subprime mortgages and some of the complex debt-backed instruments at the center of the financial crisis.

"There is a lot of reduction in risk," Dean Alhabshi says. "Sharia requires Islamic financing to be asset-based, or at least asset-backed."

And while its inherent conservatism has meant in the past that the potential for profit is lower in Islamic finance, many say that has begun to change. Environmentally conscious investments now earn as much as conventional portfolios, says Mr. Board of the University of Reading. "The same will become true of Islamic products," he says. "It's almost there now; that differential is getting smaller."

Finance isn't the only area where business schools have spotted opportunity in the Muslim world.

At Oxford's Saïd Business School, associate fellow Paul Temporal is researching marketing and branding to Muslim consumers. Almost no study has been done of consumer behavior and decision-making in the Muslim world, hamstringing local and international companies hoping to sell there, he says.

"It's a quarter of the world's population and represents a huge opportunity, but how do we get to them and how do they behave?" he asks.

Based on the results of Mr. Temporal's research, Saïd plans to offer executive education to companies that are based in the Muslim world and need branding expertise. It also hopes to reach large international corporations that want to sell in Muslim nations but lack the cultural understanding to market effectively.

KL Shares Higher In Early Trading

noreply@blogger.com (syimiez) — Fri, 06 Nov 2009 10:32:00 +0000

Share prices on Bursa Malaysia opened higher in early trading Friday on buying momentum as the market took the cue from the sharp overnight rally on Wall Street, dealers said.
At 9.15am, the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) rose 5.33 points to 1,259.29 led by gains on banking stocks. It opened 6.11 points higher at 1,260.07.
TA Securities said the sharp overnight rally on Wall Street, with the Dow Jones average surging 200 points to close above 10,000 triggered by lower jobless claims and productivity surge, should spillover into the region today.
" As such, buying momentum should strengthen on the broader market, with lower liners to outperform blue chips in terms of percentage gains," it said in a research note on Friday.
An analyst said the FBM KLCI is likely to gain further given the positive market sentiment like improvement in consumer confidence and global economic recovery.
The FBM Emas Index gained 33.71 points to 8,422.1, the FBM Top 100 shot up 30.97 points to 8,209.56, the FBM 70 rose 15.49 points to 8,125.54 and the FBM ACE Index surged 100.58 points to 4,699.19.
The Finance Index advanced 62.41 points to 10,774.82, the Plantation Index added 7.25 points to 6,071.61 and the Industrial Index rose 5.88 points to 2,693.47.
Gainers led losers by 204 to 24 with 101 counters unchanged and 942 others untraded.
Turnover stood at 122.68 million shares worth RM98.575 million.
For the actives, Redtone gained 5.5 sen to 47 sen, MRCB fell six sen to RM1.33, GHL System rose two sen to 51 sen and Time Engineering was unchanged at 53.5 sen.
Among the heavyweights, Sime Darby gained four sen to RM9.04, Maybank added three sen to RM6.86, CIMB earned 10 sen to RM12.80 but Tenaga Nasional Bhd was flat at RM8.40.

Islamic finance in uncharted territory

noreply@blogger.com (syimiez) — Thu, 05 Nov 2009 17:50:00 +0000

 A sukuk default by Kuwait's Investment
Dar and debt restructuring at Saudi conglomerates have shaken
confidence in the $1 trillion Islamic finance industry, fanning
debate about investors' protection and investors' rights.

 Billed as safer than traditional banking due to
requirements for assets to underpin deals, Islamic bond holders
worry they may not have any more legal safeguards than
conventional counterparts in case of default, or perhaps even
less, partly due to the untested nature of the process.

 Debt restructurings at Saudi conglomerates Saad Group
[SAADG.UL] and Algosaibi have put about $9.6 billion of
investments at risk at 30 Gulf banks alone, and the fate of
Dubai government-owned property firm Nakheel's $3.5 billion
Islamic bonds, which mature in December, is being closely
watched.

 Here is a timeline of developments since late last year.

 Oct 16: Texas-based energy company East Cameron Gas, which
had issued $166 million in sukuk in 2006, files for bankrupcty.
A year later, the case to decide bondholders' rights was still
before a U.S. court.

 Dec 14: Kuwait's Investment Dar (TIDK.KW) Islamic
investment firm shocks markets, saying it is considering
selling up to 20 percent of luxury British carmaker Aston
Martin, and may borrow up to $1 billion to refinance debt.
[ID:nLE424729]

 Dec 21: Kuwait's biggest investment bank, Global Investment
House (GLOB.KW), downgraded by two ratings agencies a week
earlier for allegedly failing to meet debt obligations,
appoints HSBC as an adviser with foreign lenders.
[ID:nLL438445]

 Jan 8: Global Investment House defaults on most of its
debt. At end-September, it had short-term borrowings of 389.8
million dinars ($1.38 billion), its website said. Total
liabilities stood at 806.7 million dinars. [ID:nL8123879]

 May 12: Investment Dar, Global Investment House's main
Islamic rival, defaults on a $100 million sukuk registered in
Bahrain and in the United States. The group is the first
Islamic Gulf company, and the second leading investment firm in
oil-rich Kuwait, to announce a default on debt repayment.
[ID:nLC281536]

 June 2: Privately-held $30 billion Saudi company Saad Group
[SAADG.UL] says it plans to restructure the debt of its units
hurt by a liquidity squeeze brought on by the financial crisis.
Ratings agency Moody's cuts its ratings on the group to junk
status. [ID:nN0167288]

 June 3: Credit agencies slash ratings for Saudi
conglomerate Saad Group to default status or withdraw coverage
altogether, saying Saad has ceased to pay creditors.
[ID:nL3334708]

 June 16: Saudi-based Ahmad Hamad Algosaibi & Bros Co (AHAB)
says it is about to start talks with creditors, after reports
it and Saad Group are seeking to restructure $10 billion in
debt. [ID:nLG841566]

 July 8: Malaysia central bank governor says no systemic
risks have arisen in the global Islamic finance industry from
problems related to Saudi Saad group's debt restructuring.
[ID:nKLA008319]

 July 13: Saudi Arabia creates special panel in connection
with the restructuring of heavily indebted AHAB, whose accounts
were frozen by the central bank in June, days after it froze
personal accounts of Saad head Maan Al-Sanea. [ID:nLD554720]

 July 14: Saad's sukuk investors mull setting up committee
to represent them at creditor meetings. It's common practice
for bondholders wanting to defend their positions ahead of a
debt restructuring. [ID:nLE513044]

 July 17: Saudi Arabia's indebted family conglomerate
Algosaibi files a lawsuit in New York alleging $10 billion in
loan irregularities involving billionaire Maan al-Sanea, the
head of the Saad Group, the Financial Times reports.
[ID:nLH567272]

 July 23: UAE central bank directs banks to take provisions
of 50 to 75 percent of their exposure to Saad and Algosaibi
over two years, to reflect probable defaults or losses.
[ID:nLN214179]

 -- Abu Dhabi Islamic Bank ADIB.AD declines to comment on
Saad, the day after a newpaper reports it has $67 million Saad
exposure due to a 2007 loan. [ID:nLN186787]

 Aug 1: Cayman Islands court freezes $9.2 billion of Saad
assets, including equity stakes outside the Gulf.
[ID:nLV613802]

 Aug 11: Moody's says its ratings on Islamic banks are
stable due to ample liquidity, high profit margins and
conservative lending; but that sector growth is hampered by a
lack of products to absorb abundant liquidity. [ID:nLB643725]

 Sept 6: Abu Dhabi Commercial Bank ADCB.AD, the United
Arab Emirates' third largest lender by assets, files a $30
million debt claim against a Saad Group unit [SAADG.UL].
[ID:nL6328632]

 Sept 7: Malaysian rating agency MARC downgrades 100 million
ringgit worth of Boon Koon Group Bhd's Islamic paper and notes,
removes ratings from MARCWatch. The reconditioning company's
weakened position stems from challenging industry conditions.
[ID:nKLR490635]

  Sept 23: Abu Dhabi Commercial Bank (ADCB) has more than
$600 million in exposure to the two Saudi, debt-laden
conglomerates, for which it will have to book additional
provisions, the lender says. [ID:nLN486412]

 Sept 28: Saudi Arabia's central bank governor says Saad
Group has struck an agreement with Saudi creditors to repay
syndicated and bilateral loans. [ID:nLS268341]

 Sept 30: MARC downgrades investment holdings company
Oilcorp Berhad's (Oilcorp) 70 million ringgit Murabahah and
other notes in expectation of an imminent default by Oilcorp.

Malaysia Expects Positive Economic

noreply@blogger.com (syimiez) — Wed, 04 Nov 2009 17:53:00 +0000

Malaysia's economy is expected to score a positive growth in the third quarter of 2009 buoyed by the government's fiscal stimulus packages, said Malaysian Prime Minister.

The outlook for the Malaysian economy to chalk up positive growth in the third quarter has brightened, New Straits Times reported on Wednesday, by quoting Prime Minister Najib Zarak's address at Tuesday's Kuala Lumpur Islamic Finance forum as saying.

The outlook beats the Malaysian government's early expectation that the positive economic growth could only be seen in the final quarter of the year.

Najib attributed the improvement of the economy to the government's 67 billion ringgit (some 19 billion U.S. dollars) worth of fiscal stimulus packages.

Najib noted that these stimulus packages have helped the economy through a global recession and generated much-needed economic activity to make up for a slowdown in private sector demand.

Asia for UBS Stays Dollar Bull

noreply@blogger.com (syimiez) — Mon, 02 Nov 2009 18:18:00 +0000

For Mansoor Mohi-uddin, the UBS AG managing director of currency strategy relocating to Singapore, Asia’s economic rebound can only be good news for the dollar.

“As part of my job, I meet and work closely with policy makers and I’m not under the impression they are about to desert the dollar,” said Mohi-uddin, who predicted in March that the Swiss National Bank would sell the franc against the euro three days before the central bank acted. “A move to Asia will allow me to follow developments more closely.”

Mohi-uddin, 39, will move in January, joining a growing number of banking executives settling in cities from Beijing to Sydney as the region’s economies recover from the global recession faster than the U.S. and Europe. Fifteen of Asia’s 18 stock indexes are beating the Standard & Poor’s 500 Index this year. China’s economy grew at an 8.9 percent annual rate last quarter as the U.S. expanded 3.5 percent and Britain shrank 5.2 percent.

“Australia became the first country to raise interest rates, yen volatility returned with the advent of Japan’s new government and we’ve seen a rebound in China,” Mohi-uddin said last week in an interview in Zurich, where UBS, the world’s second-biggest currency trader, is based. “The Asia-Pacific region is becoming more important, not just for the currency market, but also for the global economy.”

Asia Demand

Mohi-uddin, a fluent Urdu speaker and fan of English soccer champion Manchester United, will keep his role as head of UBS’s global foreign-exchange strategy when he moves. HSBC Holdings Plc is sending Mark McCombe, chief executive officer of its global asset-management arm, to become CEO of its Hong Kong unit in February. Stephen Roach, the Morgan Stanley chief economist who predicted China will overtake the U.S. as the world’s dominant economy, relocated to Hong Kong in 2007.

Mohi-uddin, who studied under former Bank of England Monetary Policy Committee member Charles Goodhart at the London School of Economics, said the dollar is unlikely to lose favor among Asian central banks even if it weakens in the next two years. The depth of U.S. capital markets, the lack of “strong” alternatives and the political importance of America to the region mean the dollar will remain the world’s reserve currency, he said.

The greenback will trade at the “upper end” of a range between $1.30 and $1.60 per euro, he said. It weakened 0.3 percent to $1.4772 per euro as of 12:44 p.m. in London today, bringing its decline this year to 5.4 percent.

Biggest Holders

Asia accounts for 60 percent of the world’s $7.3 trillion of international currency reserves. The Roseville, California- based Sovereign Wealth Fund Institute says China’s SAFE Investment Co. is the world’s fourth-biggest country fund, with $347 billion in assets, and Government of Singapore Investment Corp. is ranked sixth, with almost $248 billion.

Asian central banks are the biggest foreign holders of U.S. Treasuries. China owns $797 billion of the securities, up from $58.9 billion in 2000, according to the Treasury Department. The Federal Reserve’s holdings of government bonds on behalf of foreign central banks and other investors stood at $2.14 trillion as of Oct. 28, up from $1.7 trillion at the beginning of the year.

“Concern that foreign central banks won’t continue to buy Treasuries is very misplaced,” said Mohi-uddin, who has a master’s degree from the LSE in monetary economics. The dollar’s decline is being caused by “loose” U.S. fiscal and monetary policy, aimed at offsetting weak private demand, and investor appetite for higher-yielding assets, he said. Central banks’ moves out of the dollar reflect a need to reduce “concentration risks” rather than a shift in sentiment, he said.

Meeting Policy Makers

“If you talk to policy makers, you will be able to get more nuances and more insights into the policy-making process,” he said. “That’s very important for us because most investors will only be able to look at data releases and speeches.”

The move to Asia comes as sinking demand for dollar- denominated assets fuels gains in the region’s currencies. The Indonesian rupiah has risen 16 percent versus the dollar this year. The South Korean won strengthened 6 percent.

Mohi-uddin was born in Hyderabad, the capital of the southern Indian state of Andhra Pradesh and moved with his family to England when he was a child. He returned regularly to visit relatives and watched India’s economic emergence and the transformation of his home state into an information-technology hub. Companies from Amazon.com Inc., the world’s largest Internet retailer, to Qualcomm Inc., the biggest maker of semiconductors for mobile phones, are among those that have invested in Hyderabad.

1998 Start

“What happened in Hyderabad captures a lot of what’s going on in Asia in the last few decades,” Mohi-uddin said. “There was grinding poverty everywhere in the ‘70s and the ‘80s. But now things have improved tremendously.”

Mohi-uddin joined Swiss Bank Corporation in 1998 as an emerging-markets strategist shortly before the company’s $19.7 billion merger with Union Bank of Switzerland. Today, UBS is ranked second, behind Frankfurt-based Deutsche Bank AG, among the world’s biggest currency traders, according to Euromoney Institutional Investor Plc. The bank was the third-most accurate forecaster of the dollar-yen exchange rate this year, a Bloomberg survey showed.

After graduating from the LSE in 1992, Mohi-uddin worked two years for the Ministry of Finance of Uganda, a country he described as “the most beautiful place on earth” before moving back to Britain.

Learning Mandarin

Mohi-uddin and his wife Meeriam live in the Swiss town of Zug, where he keeps a collection of paintings, rugs and songkets -- hand-woven silk or cotton cloths originating from Malaysia and Indonesia that are typically patterned with gold and silver. Zug is also home to billionaire Marc Rich and companies such as Xstrata Plc, the raw-materials miner 34 percent owned by commodity trader Glencore International AG.

While the dollar remains supported by Asian demand today, it will make way for the Chinese yuan in the next three decades as the power of the world’s most-populous nation rises, said Mohi-uddin, who spent two months in China this year studying Mandarin after starting lessons when he lived in London.

“My Chinese is still basic, but I’m making an effort because I travel to China often and it’s important to be able to understand the people and their culture,” he said. “We recently met some Chinese delegates and I did the introduction in Chinese. It helped to break the ice.”

Share Prices Expected To Be Higher

noreply@blogger.com (syimiez) — Sun, 01 Nov 2009 08:34:00 +0000

Share prices on Bursa Malaysia are expected to be higher next week with investors taking advantage of recovery signs in the global market, particularly with the US economy having posted improved economic data on Thursday, dealers said.
Despite the unveiling of Budget 2010 on Oct 23, most of the shares this week were in a correction mode after two weeks of continuous rally, coupled with the weak external environment, they said.
However, with the United States posting better-than-expected third quarter economic results that exceeded market expectations, Wall Street and other bourses around the world, including Malaysia, reacted positively.
"We expect there will be a lot of window-dressing activities coming to year-end, which will boost some of the stocks. In addition, investors' sentiment is currently positive as the world's largest economy is starting to turn around in this quarter," said an analyst from a local brokerage.
The US economy, which returned to growth in the third quarter, expanded at an annual pace of 3.5 per cent between July and September, surpassing economists' forecast of 3.3 per cent following the US government's aggressive stimulus packages.
The local bourse was in decline for four straight days before rebounding on Friday as investors took the cue from Wall Street's improved performance overnight.
On the local front, the government announced a review of the National Automotive Policy on Wednesday, which is expected to stir interest in automotive-related stocks next week.
Bank Negara Malaysia yesterday released the report on monetary and financial developments in September.
Yesterday, the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) moved between 1,242.73 and 1,248.75 throughout the day.
On a Friday-to-Friday basis, the FBM KLCI declined 23.87 points to 1,243.23, the FBM Emas Index lost 178.85 points to 8,336.73, the FBM Top 100 Index was 171.87 points lower at 8,130.68, the FBM70 decreased 234.85 points to 8,149.88 and the FBM ACE Index dropped 6,013 points to 4,305.69.
The Finance Index fell 256.59 points at 10,535.17, the Plantation Index went down 118.41 points to 6,088.08 and the Industrial Index was 33.73 points lower at 2,667.95.
Turnover for the week declined to 4.585 billion shares worth RM5.979 billion from 5.044 billion shares valued at RM6.428 billion last week.
The Main Market volume went down to 3.807 billion shares valued at RM5.72 billion from last Friday's close of 4.408 billion shares worth RM6.289 billion.
The volume of call warrants, however, rose to 115.661 million shares worth RM25.167 million from 106.79 million shares valued at RM27.657 million previously.
The ACE Market volume dropped to 390.248 million shares valued at RM88.246 million from last Friday's 475.313 million shares worth RM86.844 million.

Need For Deeper Look Into Islamic Financial Products

noreply@blogger.com (syimiez) — Sun, 01 Nov 2009 08:33:00 +0000

While Malaysia is doing a great job in promoting Islamic finance, the adaptation process to some of its products will need a deeper look or "a second visit", according to a renowned Muslim scholar.
Dr Hatem El-Karanshawy, founding dean of the Qatar Faculty of Islamic Studies, has voiced caution over the need to quickly Islamise products just to be at par with other conventional instruments.
"We should not rush to adopt products and Islamise them in a way because we would like the products to be on the same footing as other western institutions or non-Islamic banking that are not based on Islamic principles," he said.
Egyptian-born El-Karanshawy, who was previously director of the Central Bank of Egypt, however, declined to name the products concerned when interviewed by Bernama during a recent financial event in Doha, Qatar.
He said that he had discussed the matter with those involved in the industry in Malaysia.
However, El-Karanshawy said Malaysia had done a great job in promoting the industry by hosting important international associations working for Islamic finance with the government giving a push in the social development of the system.
He dispelled the notion that Islamic finance is not progressive, saying that it is one of the fastest growing industries in the world.
However, he pointed out that some Islamic financial institutions are not adhering as they should be to the proper Islamic finance and this is where the real challenge is.
"If they can develop innovative products that would really correspond to the needs of society and adhere to the basic principles, then the growth would be faster and attract more financial institutions," he said.
On the notion that Islamic bank should not be profitable, El-Karanshawy said no one said that financial institutions in Islam should be charitable organisations.
"Yes they have to make profits but what type of profits? They have to make profits, they have to be successful. They are talking about corporate social responsibility after the aggressive movement of the market," he said.
This, he added, has been the misconception of Islamic finance.
Asked whether Islamic finance should be incorporated into the new global financial architecture, El-Karanshawy said the market then should be involved in social responsibility.
"If the financial sector job is financing investments, in the sense, it will study what's the money, where the money is going to and then have its returns based on fundamentals of investment and develop ways to share the risks, I think that is the direction that Islamic finance principles would help," he said.
He added that some elements for venture capital companies in the world could be easily adapted to accept or adhere to the idea of Islamic principles.
At the recent CNBC Global live debate in Doha, El-Karanshawy said current banking and finance had strayed from its function of being the "servant of the real economy" in facilitating productivity and development.
"People are talking about the secondary market, derivatives. Thinking about making profits rather than the real reason for making investments," he said.
With the problems posed by derivatives, El-Karanshawy questioned the action taken by the free market to address this.
Such innovations, according to him, have to be balanced and not risking investors' money.

A Tale of Three Mandates

noreply@blogger.com (syimiez) — Fri, 16 Oct 2009 09:45:00 +0000

Now that the Senate Finance Committee has passed a health reform bill, it must now be melded with the variation passed by the Senate Heath, Education, Labor and Pensions Committee. And that amalgamation, should it pass the Senate, will then have to be reconciled with the version that passes the House — itself the product of three separate committees. Much is the same across the three bills, but not the employer mandate.

The different mandates would have very different effects on businesses. We’ve already seen (here, here, and here) how one regional convenience store chain might react to the Senate Finance Committee’s plan — not only would it not offer insurance to the employees who don’t now have it, but it might even cancel coverage for some who do. How might this company respond to the other proposals?

The Senate Health, Education, Labor and Pensions Committee, chaired until his death by Edward Kennedy, came up with a slightly stiffer measure. Here, companies would have to pay $750 a year for each employee who works a 40-hour week but is not offered the minimum coverage (defined both in terms of benefits and a contribution of at least 60 percent of premiums) and $375 for each part-time employee.

The H.E.L.P. (love that acronym!) mandate would apply only to companies with more than 25 employees (excluding seasonal staff), and the first 25 are exempted. (That is, a business with 30 workers that does not offer the minimum required coverage will pay the mandate penalty on just four of them.) Under this mandate variation, companies wouldn’t be able to avoid responsibility for health care costs altogether by reclassifying full-time employees as part-timers, as in the Finance committee bill, but they could halve those costs simply by cutting employee work schedules to 39 hours. A company with 50 full-time employees could save around $9,000 by doing this.

Here’s how it would work out for our poorly paying convenience store chain, using the number of workers supplied by the commenter Ann Arnold, a retired Chicago labor lawyer who knows the company. Remember, it has 250 part-time and about 195 full-time hourly employees who get no insurance. It also has 125 salaried employees who are covered, including 92 low-wage store managers. Under the H.E.L.P. mandate, the company would pay a $240,000 penalty on its uninsured full- and part-time staff. From that, however, we must now subtract the 25-worker exemption, which could range from $9,375 if all the exempted employees are part-timers to $18,750 if they’re all full-time. (The law leaves it up to the health-care regulators to figure how to constitute the exemption.) Ultimately, the company’s total penalty would fall between $221,250 and $230,625. Unless, that is, the owners decide to reclassify its full-time uninsured to part-timers — that would reduce the penalty by $71,250, after adding back enough part-timers to cover the same total hours.

Would the company drop existing coverage for its low-paid managers, an expense that runs $808,128 a year? The free ride for doing so under the Finance Committee bill wouldn’t be available here. Instead, the maneuver would set our company back another $69,000, which, coupled with the raises that presumably would be necessary to make those employees whole, would make the choice much less stark. But Ms. Arnold’s logic on the Finance bill applies here, too: Workers wouldn’t notice a difference because they’d be eligible for government-subsidized replacement coverage, while the savings to the company ($739,128, the difference between $808,128 and $69,000) could be enough to turn a marginal business into a lucrative one. So why wouldn’t the company make the switch?

An early study by the C.B.O., conducted before the committee loosened the mandate somewhat, concludes that after an early bounce, the number of people with employer coverage would increase only modestly (up one million people) compared to a an unreformed market.

The mandates in the House bills stand in stark contrast to their Senate cousins for their stringency. The play portion of the House bills requires businesses to do several things. First, they must offer qualified insurance to every employee. Second, they must shoulder most of the premium cost — 72.5 percent of individual policies, 65 percent of family coverage. (For part-timers, the required premium contribution is proportionally smaller, based on the number of hours worked.) Third, when employees decline an offer that is unaffordable and instead find subsidized coverage on the health insurance exchange created by the bill, the company must pitch in by contributing 8 percent of its average wage for each worker.

If a company does not elect to take all three of those steps, it must pay 8 percent of its total wages as a single annual excise tax. The company can offer coverage to full-time staff but not to part-time staff. In that case, the excise tax applies just to the part-time wages.

The penalties are phased in for small businesses; the smallest companies are exempted altogether. (There are two competing small business exemptions in the House. One, approved by the Energy and Commerce Committee, excludes businesses with a payroll below $500,000, with the tax rising incrementally to 8 percent when payroll reaches $750,000. The other phases in from $250,000 to $400,000.)

The House bills don’t permit our convenience store business to pick and choose among its full-time staff, so if the company refuses coverage to its full-time hourly workers, it can’t offer it to salaried staff, either, without facing the full tax. But Ms. Arnold says that the chain simply can’t afford to insure any of its hourly clerks — that would nearly quadruple its health costs. The solution, she says, is to drop coverage for everybody, which costs the company nearly $1.1 million, and then give raises to key employees that cover the cost of buying insurance on their own.

Such a decision would not come cheaply. Ms. Arnold says the company’s payroll is nearly $9 million; the tax would amount to $720,000. Once the company factors in raises to senior staff — and the excise tax on those raises — it will not have saved any money at all. And even though the store managers would be eligible for subsidies under the House bill, they’d still face some additional out-of-pocket premium costs. So to retain those hard-working employees, the company probably will have to give them raises as well.

Keep in mind that under all three mandates, the businesses most likely to drop coverage are those with the lowest-paid employees — and that in all of these cases, the smallest businesses are partly or wholly exempted from the mandate. But if the House approach still sounds draconian, it’s only in contrast to the muddled proposals in the Senate, which are at best symbolic and at worst counterproductive. And this is borne out by the C.B.O. analysis: as we’ve reported, while under the House version some three million employees would lose the offer of coverage they’d otherwise have without reform, many more employees would eventually get new workplace insurance for the first time. In all, two to four million additional people would get employer-sponsored insurance previously unavailable to them, much more than in either Senate proposal.

Personal Finance Newsletter Is Cliffs Notes for Your Money

noreply@blogger.com (syimiez) — Sun, 04 Oct 2009 11:39:00 +0000

It used to be that our personal finances were so uncomplicated -- a simple bank account, 30-year mortgage, company pension.

That was then.

This is now: Our personal finances come with frustration, complication and financial products that seem incomprehensible. Just trying to understand -- and remember -- the new consumer protections for credit cards is enough to give yourself a headache.

With so much information to grasp and so many scam artists to avoid, you need CliffsNotes for your money, much like the guides that have helped students interpret complex literary works.

Well, as it turns out, there is the equivalent for personal finance. For the Color of Money Book Club selection for October, I'm recommending a monthly newsletter -- Consumer Reports Money Adviser -- which is as informative as it is visually appealing. The newsletter is published by Consumers Union, a nonprofit group that also publishes the wonderful Consumer Reports magazine.

The newsletter, which cannot be purchased at the newsstand, costs $29 for a 12-month subscription. To subscribe online, go to http://www.consumerreports.org/moneyadviser. You can also order by telephone at (800) 234-1970.

The typically 17-page newsletter covers personal finance topics in short, engaging articles -- from credit to investing to saving to insurance to real estate to retirement planning to taxes. In every issue, you'll find money tips. You'll find "Savings and Loans," a feature highlighting the best rates for putting money aside or borrowing. Two of my favorite features are "Behind the Hype" and "Gimmicks and Gotchas." Both expose the misleading ways companies try to get you to buy something.

"Wading through the fine print, hidden terms and other gotchas on mortgages, credit cards, bank accounts and student loans can be daunting for even the savviest consumer," wrote Noreen Perrotta in her editor's notes for the September issue.

Amen to that.

I was particularly interested in a feature story in the current issue that evaluates which strategy is best for paying off credit card debt. The options, as analyzed by the newsletter:

noreply@blogger.com (syimiez) — Sat, 03 Oct 2009 08:58:00 +0000

Oct. 2 (Bloomberg) -- Finance chiefs headed for Group of Seven talks in Istanbul pushing for a “strong dollar” amid concern its slide will impede their recoveries from the worst global recession since World War II.

“Everyone needs a strong dollar,” French Finance Minister Christine Lagarde told reporters in Gothenburg, Sweden, today as she met European Union counterparts. “We’ll have a chance to discuss this in the coming days.”

Her comments came four days after similar remarks from European Central Bank President Jean-Claude Trichet. Treasury Secretary Timothy Geithner yesterday also pledged support for a “strong” currency. G-7 officials meet tomorrow and will then brief reporters. A French official said they will release a statement after members earlier debated the need for one.

The dollar’s 13 percent fall this year against a basket of seven currencies threatens foreign economies by making their exports more expensive. At the same time, Geithner is being forced to defend its status as the world’s sole reserve currency.

“Market-moving announcements could be forthcoming,” said Geoffrey Yu, a foreign-exchange strategist at UBS AG in London. “We expect to hear renewed commitments to the U.S. strong dollar policy and the European delegation may be tempted to communicate their worries on further rises in the euro.”

G-7 Statement

The dollar has dropped almost 17 percent against the euro since Feb. 18 and slipped as much as 0.7 percent today as employers eliminated more jobs last month than economists forecast. Against the euro, it traded at $1.4601 at 7:37 p.m.

G-7 members have debated whether to break with tradition and not release a communiqué given the G-20’s leaders did so just a week ago after meeting in Pittsburgh. The G-7 is gathering in Istanbul before next week’s annual meetings of the International Monetary Fund and World Bank.

Limiting the G-7’s scope to reverse the decline in the dollar is the absence of China in its ranks and the G-20’s push for a narrowing of global imbalances such as the U.S. current account deficit.

Other policy makers have also expressed concern about the dollar this week. Japanese Finance Minister Hirohisa Fujii said Sept. 29 that the government may act to stabilize the foreign- exchange market and denied he supported a stronger yen. He won’t discuss the yen’s gains at the G-7, Kyodo News reported today.

Yen Strength

Canon Inc., Japan’s biggest maker of office equipment, says every 1 yen increase against the dollar will lower its second- half operating profit by 4.2 billion yen ($47 million). The company based its profit forecast of 110 billion yen on the assumption the yen would average 95 to the dollar in the last six months of the business year. The yen traded at 89.65 to the dollar today.

Still, John Lipsky, the IMF’s first deputy managing director, told Bloomberg Television today that at present “there is not a problem in broad terms of valuation of the principle currencies.”

Canadian Finance Minister Jim Flaherty yesterday pushed China to let its yuan appreciate “more quickly” after keeping it little changed against the dollar for more than a year.

That view was echoed today by IMF Managing Director Dominique Strauss Kahn, who said he still views the yuan as “undervalued.” The IMF was last week tasked by the G-20 with monitoring its members’ efforts to even out the world economy.

Inflexible China

China has frequently ignored campaigns by the G-7 for a more flexible exchange rate. It took almost two years to heed a request to loosen a currency peg with the dollar, only doing so in July 2005. The inflexibility helps Chinese exporters and means other currencies shoulder the burden of the weaker dollar.

While the dollar’s slide may buoy the U.S. economy by boosting demand for its goods, World Bank President Robert Zoellick repeated today that it may lose its rank as the only reserve currency if budget deficits aren’t curbed. For now, it should still attract investors as a safe haven, he said.

“The American public and the American political leaders take for granted the unique standards of having the reserve currency,” Zoellick said. “You could lose what is an incredible thing to have.”

$150m Islamic fund planned

noreply@blogger.com (syimiez) — Thu, 24 Sep 2009 07:43:00 +0000

The National Investor's (TNI) private equity arm and Kipco Asset Management Company (Kamco) plan to set up a $150 million (Dh550m) Islamic fund, in a sign that private equity activity in the Gulf is picking up.
The Shariah-compliant fund is to be launched within three months and will make six to seven investments with an average equity of $25m each in mid-size, family-owned companies.
"The market opportunity really lies in family businesses in the region who may have entered into too many disparate business lines and now feel they need to pick and choose and are looking into divestitures," said Yahya Jalil, Director of private equity at The National Investor.
"That creates opportunities for us," he said.
The fund targets companies that have fallen upon financial difficulties or that are in need of operational restructuring, said Jalil.
Private equity activity in the Middle East, like elsewhere globally, has fallen sharply since the beginning of the financial crisis, as it became more difficult for firms to obtain debt financing from the banking sector.
But analysts expect the sector to recover as credit markets are gradually opening up again and governments across the region have pledged to invest billions in healthcare, infrastructure and transport sectors.
TNI and Kamco will each contribute $15m to the fund, while the remaining $120m will come from third party investors. The target return for the investments is 30 per cent.
The reason for setting up a shariah-compliant fund is that "an Islamic structure can bring them [these companies] back into more modest debt ratios sustainable over the long run," Jalil said.
"The use of Islamic financing to supplement the equity tickets we write can potentially increase the investment firepower by 30 to 40 per cent," Jalil said.
"We will have the mandate to either take a minority stake, or where appropriate, a controlling stake in such mid-market firms," he said. TNI is an Abu Dhabi-based investment company active in investment banking, asset management, real estate and private equity.

How you can manage your finance

noreply@blogger.com (syimiez) — Tue, 08 Sep 2009 08:39:00 +0000

Cards for people with bad credit can help you move into your financial MeansID: 958Category: Finance Author: Item: Maps for people with bad credit is a convenient way to help you, your costs and get your life on the trail of financial, depending on how bad your credit is, people must understand that debt not only lead to big financial problems, but it can easily calculate the relationships with family and friends, and your poor credit rating could also be a good indicator that you are spending dependent. In my opinion it is not necessary to have more than two credit cards, and for many, three cards should be the maximum. The question is whether a MasterCard, Visa, American Express and other credit card under the sun, the difficulty in monitoring the spending limits by credit card, and because the statements come at different times, can easily During the month, you lose track of total amount spent on each. Now, with online access to maps, many people who are fully present their credit in one place, online maps, the right to repair or consolidate their debt with their cards, unsecured. But if you look at the interest that they finally ask, you can come and deeper than you right now B can check your credit rating with offices indicate position of your Finance / b If you contact your local office to get your credit report, you can then take a deep breath and see how good or bad is your current financial situation and your credit score is beyond repair, you have to make decisions, this type of debt relief you need. Your bank may be willing to offer you an unsecured credit card with an interest rate or a lower card consolidation and, if financially able to repay you, your credit limit without having to borrow money from existing maps, then you should take these possibilities into consideration before further Actions completed. If your credit problems are beyond your control, and interest on each card to speak of an emergency, then your next step to your financial institution or company debt consolidation loan application consolidation, and either hide your cards for a long time, or better yet, Cut out for good memory, it is never the end of the world, even if the personal bankruptcy login. As you take steps to improve your score again, and do what is necessary to create a better relationship with your lender or creditor, you can use other options to look like prepaid credit cards to get through your troubled times. William is the author and owner of the "free credit repair information, please visit a href = target = _blank http://www.free-credit-repair-information.com/index.htm www.free - credit repair information. com Your source for credit repair information Our site offers free information to help you to learn about your credit and learn valuable tips on how to avoid identity fraud. If you already _blank in debt and looking for options and possibilities for a href = target = http://www.free-credit-repair-information.com/Products/debt_consolidation.htm debt consolidation / a, we can source for answers to give.

What Causes Your Financial Issues?

noreply@blogger.com (syimiez) — Tue, 08 Sep 2009 08:34:00 +0000

How often do you hear something like, “Cut up your credit cards!” as a solution to a spending problem. While this is a nice thought, and while cutting up your credit cards can certainly help slow your spending spree, the fact of the matter is that your credit cards are a symptom of the problem, and not a cause.
When you have financial issues, you need to look for the cause of the problem. Look at the why behind your current financial issues. Do you have a problem with instant gratification? Does shopping therapy get you through when you are feeling stressed? Do you neglect to keep track of your spending? Are you disregarding a budget? Do you feel pressure to keep up a certain lifestyle?
Without addressing these underlying issues, you won’t make changes to your personal finance behaviors. You have to first acknowledge that there is a problem with the way you have been doing things.
Then you need to take steps to correct the habits and attitudes that got you here in the first place. It’s about making a lifestyle and financial change. You may need some sort of professional help, whether from a financial planner or even from a counselor if you are worried about the psychological underpinnings of your financial problems.
In the end, you need to take an honest look at yourself and how you feel about money, and the reasons that you spend it the way you do. When you can do this, you can begin rectifying the problem.

facts you need to know about finance

noreply@blogger.com (syimiez) — Mon, 07 Sep 2009 16:00:00 +0000

here's the general of finance

Finance is the science of funds management. The general areas of finance are business finance, personal finance, and public finance.Finance includes saving money and often includes lending money. The field of finance deals with the concepts of time, money and risk and how they are interrelated. It also deals with how money is spent and budgeted.

Finance works most basically through individuals and business organizations depositing money in a bank. The bank then lends the money out to other individuals or corporations for consumption or investment, and charges interest on the loans.

Loans have become increasingly packaged for resale, meaning that an investor buys the loan (debt) from a bank or directly from a corporation. Bonds are debt sold directly to investors from corporations, while that investor can then hold the debt and collect the interest or sell the debt on a secondary market. Banks are the main facilitators of funding through the provision of credit, although private equity, mutual funds, hedge funds, and other organizations have become important as they invest in various forms of debt. Financial assets, known as investments, are financially managed with careful attention to financial risk management to control financial risk. Financial instruments allow many forms of securitized assets to be traded on securities exchanges such as stock exchanges, including debt such as bonds as well as equity in publicly-traded corporations.^{[dubious – discuss]}

Central banks act as lenders of last resort and control the money supply, which affects the interest rates charged. As money supply increases, interest rates decrease.