Property prices will fall by 5-10 per cent from the first quarter of next year as a slower economy cools demand, a property consultant said.
The slump in prices will be for properties across the board, Association of Valuers & Property Consultants in Private Practice Malaysia (PEPS) president James Wong Kwong Onn said.
He said properties below the RM300,000 radar and luxury condominiums tagged at above RM750,000 are already hit from a slower economy.
Wong believes there will be a correction in the housing market next year.
"There will be fewer launches due to poor demand. Prices will fall, but gradually, due to lack of confidence in the market," Wong said after a media briefing on the 2nd Malaysian Property Summit 2009 in Kuala Lumpur yesterday.
But Wong said a housing bubble is unlikely although the market will be depressed by a slew of bearish factors like poor economic data and worries over increasing credit market losses in the US.
He said Malaysia's real estate is resilient enough to withstand the onslaught of the economic turmoil.
His confidence is boosted by the RM7 billion economic stimulus package announced last month.
Wong expects Malaysia's real estate to also fare better than Singapore, Thailand and Hong Kong as the latter three are more exposed to the US-led subprime crises.
"Property prices in these countries have also shot up by 100 per cent or more whereas the upward price in Malaysia was gradual. There is room to grow so we will definitely fare better," he added.
Meanwhile, Sime Darby Property Bhd managing director Datuk Tunku Putra Badlishah said the company has new products lined up for next year but will remain cautious when planning the launches.
"We are fortunate as most of our landbank is in prime areas and a majority of our market is owner-occupied. Despite the market shrinking, we believe it has eased a little," he said.
In the past one month, Sime Darby has been able to sell 241 properties worth RM141 million located within its 10 on-going townships.
Sales were boosted by its "Guaranteed Buy Back" scheme, instilling confidence in buyers.
The 2nd property summit, organised by PEPS, will be held on January 20 2009 at the Sime Darby Convention Centre, Kuala Lumpur. More than 200 participants from various sectors are expected to attend.
Source: Busines Times Online @ Money3.com.my
Date: 17/12/2008
Friday, December 19, 2008
Thursday, December 18, 2008
Strategic package to drive economy: Malaysia
The government may implement a so-called "strategic package" to drive the economy and woo foreign investors, said Minister in the Prime Minister's Department, Senator Tan Sri Amirsham A. Aziz.
"It's still very much in a discussion stage. We are talking to various ministries on the implementation... As soon as we clear that, we'll be making some announcements," said Amirsham, who is also the head of the Economic Planning Unit (EPU).
The package, unlike the RM7 billion stimulus which focuses on boosting the economy over the short term, will address issues to help grow the country over a longer period.
The measures include new policies to make the country's economy more competitive as well as improving the investment process for foreign investors.
"It's not so much of a stimulus package ... It's more like a strategic package.
Some of it involves making the various sectors more liberal in attracting foreign investment, and we're looking at improvements of the delivery system.
"I don't want to announce which sectors. But typically, we're looking at services as key to driving the future of the economy," Amirsham told reporters on the sidelines of an EPU briefing in Putrajaya yesterday.
Meanwhile, the EPU said it will closely look into whether the country needs another "stimulus package" next year.
"Right now, we think that the world economy is evolving quite dramatically. We'll see from there whether we need or do not need another stimulus package.
"We think that the RM7 billion that we've talked about earlier should be able to take us through for a while."
The government announced last month that it would pump RM7 billion into the economy next year so that the country would not sink into a recession.
The country is expected to post 3.5 per cent growth next year.
Source: Business Times Online @ Money3.com.my
Date: 18/12/2008
"It's still very much in a discussion stage. We are talking to various ministries on the implementation... As soon as we clear that, we'll be making some announcements," said Amirsham, who is also the head of the Economic Planning Unit (EPU).
The package, unlike the RM7 billion stimulus which focuses on boosting the economy over the short term, will address issues to help grow the country over a longer period.
The measures include new policies to make the country's economy more competitive as well as improving the investment process for foreign investors.
"It's not so much of a stimulus package ... It's more like a strategic package.
Some of it involves making the various sectors more liberal in attracting foreign investment, and we're looking at improvements of the delivery system.
"I don't want to announce which sectors. But typically, we're looking at services as key to driving the future of the economy," Amirsham told reporters on the sidelines of an EPU briefing in Putrajaya yesterday.
Meanwhile, the EPU said it will closely look into whether the country needs another "stimulus package" next year.
"Right now, we think that the world economy is evolving quite dramatically. We'll see from there whether we need or do not need another stimulus package.
"We think that the RM7 billion that we've talked about earlier should be able to take us through for a while."
The government announced last month that it would pump RM7 billion into the economy next year so that the country would not sink into a recession.
The country is expected to post 3.5 per cent growth next year.
Source: Business Times Online @ Money3.com.my
Date: 18/12/2008
Monday, December 15, 2008
Waiting game for property buyers
It will continue to be challenging in 2009 for the secondary residential property market as buyers continue to adopt a wait-and-see stance on property purchases due to the global economic slowdown, property experts said.
The degree of softening in property sales would depend on the severity of the economic downturn next year, they said.
Regroup Associates Sdn Bhd executive director Paul Khong acknowledged that the secondary residential property market has been quite slow as potential buyers have been holding off decisions on house purchases.
“This has significantly impacted the property market especially in the current quarter,” he told StarBiz.
“The quiet period is expected to continue through to the first quarter of 2009 after all the holidays are over.”
S.K. Brothers Realty (M) Sdn Bhd general manager Chan Ai Cheng said buyer sentiment had taken a beating due to the current economic uncertainties.
“It’s a waiting game for buyers. There are even ‘aborted’ cases where buyers have placed an earnest deposit to purchase a property and subsequently pulled out from the transaction, in the hope that prices will come down further or in search of fire-sales while others are uncertain of their job stability and postponing the purchase commitment,” she said.
Nevertheless, Hartamas Real Estate Sdn Bhd managing director Eric Lim is anticipating stable to moderate growth due to bargain hunting in certain segments of the secondary property market, especially landed residential property.
“(However) the market for properties that are purchased for investment and speculation will be slower,” he acknowledged.
The agency experienced a 20% to 30% drop in sales in the second half of the year versus the corresponding period of 2007.
“This is quite substantial for us. Sentiment is still not good,” Lim noted.
CH Williams Talhar & Wong Sdn Bhd managing director Goh Tian Sui concurred.
“The last two to three months have been quite bad – enquiries and sales activities have dropped. Owners are more open to negotiations in pricing,” he said.
The prices of certain secondary residential properties could also face more pressure next year due to a lack of demand and an increase in supply of completed projects.
Citing an example, Regroup’s Khong said the situation for high-end condominiums in the KLCC and Mont Kiara areas were getting critical and there would be more pressure on rental and capital values as many of the projects in the vicinity would be completed within the next one or two years.
“Supply will be mounting on a monthly basis as demand continues to be low and this will eventually translate into lower capital values and rental.
“An easy 15% to 20% shed in values are envisaged for this sector generally,” Khong said.
The asking prices for middle-class residential properties in general, for example, terrace houses in good locations such as Sri Hartamas, Bandar Utama and even Taman Tun Dr Ismail, had already been adjusted 5% to 10% lower to reflect current market conditions, Khong said.
Khong & Jaafar Sdn Bhd managing director Elvin Fernandez noted that prices of high density condominiums with a low occupancy rate in not-so-choice locations were about 10% lower now compared with a year ago.
“Although prices have softened, it is still difficult to sell such properties,” he said.
Source: The Star Online @ Money3.com.my
Date: 15/12/2008
The degree of softening in property sales would depend on the severity of the economic downturn next year, they said.
Regroup Associates Sdn Bhd executive director Paul Khong acknowledged that the secondary residential property market has been quite slow as potential buyers have been holding off decisions on house purchases.
“This has significantly impacted the property market especially in the current quarter,” he told StarBiz.
“The quiet period is expected to continue through to the first quarter of 2009 after all the holidays are over.”
S.K. Brothers Realty (M) Sdn Bhd general manager Chan Ai Cheng said buyer sentiment had taken a beating due to the current economic uncertainties.
“It’s a waiting game for buyers. There are even ‘aborted’ cases where buyers have placed an earnest deposit to purchase a property and subsequently pulled out from the transaction, in the hope that prices will come down further or in search of fire-sales while others are uncertain of their job stability and postponing the purchase commitment,” she said.
Nevertheless, Hartamas Real Estate Sdn Bhd managing director Eric Lim is anticipating stable to moderate growth due to bargain hunting in certain segments of the secondary property market, especially landed residential property.
“(However) the market for properties that are purchased for investment and speculation will be slower,” he acknowledged.
The agency experienced a 20% to 30% drop in sales in the second half of the year versus the corresponding period of 2007.
“This is quite substantial for us. Sentiment is still not good,” Lim noted.
CH Williams Talhar & Wong Sdn Bhd managing director Goh Tian Sui concurred.
“The last two to three months have been quite bad – enquiries and sales activities have dropped. Owners are more open to negotiations in pricing,” he said.
The prices of certain secondary residential properties could also face more pressure next year due to a lack of demand and an increase in supply of completed projects.
Citing an example, Regroup’s Khong said the situation for high-end condominiums in the KLCC and Mont Kiara areas were getting critical and there would be more pressure on rental and capital values as many of the projects in the vicinity would be completed within the next one or two years.
“Supply will be mounting on a monthly basis as demand continues to be low and this will eventually translate into lower capital values and rental.
“An easy 15% to 20% shed in values are envisaged for this sector generally,” Khong said.
The asking prices for middle-class residential properties in general, for example, terrace houses in good locations such as Sri Hartamas, Bandar Utama and even Taman Tun Dr Ismail, had already been adjusted 5% to 10% lower to reflect current market conditions, Khong said.
Khong & Jaafar Sdn Bhd managing director Elvin Fernandez noted that prices of high density condominiums with a low occupancy rate in not-so-choice locations were about 10% lower now compared with a year ago.
“Although prices have softened, it is still difficult to sell such properties,” he said.
Source: The Star Online @ Money3.com.my
Date: 15/12/2008
Friday, December 12, 2008
Two differing views on how to solve global financial crisis
Former prime minister Tun Dr Mahathir Mohamad and the 2003 Nobel Laureate in Economics, Professor Dr Robert F. Engle, have espoused different methods to solve the current global financial crisis.
Dr Mahathir said he was for a return to the gold standard to stabilise financial markets while Engle proposed a “counter cyclical regulatory system” at the Bridges – Dialogues Towards a Culture of Peace conference yesterday.
“In the past, the money we used was based on something that had value, now we are using pieces of paper where the value is dependent on what people say it is,” Dr Mahathir said, referring to the Bretton Woods system, set up in 1944, when fixed exchange rates were tied to gold reserves and the US dollar.
The Bretton Woods system broke down in the 1970s as industrialised countries moved to floating currencies and the influence of capital markets grew.
“Today, they say the ringgit is worth so much. Tomorrow they say it is lower some more,” Malaysia’s fourth prime minister said, referring to the 1997 Asian financial crisis.
Engle said the current crisis was not a result of foreign exchange volatility but due to the collapse of the US subprime mortgage market and the subsequent credit crunch that brought down US banking giants.
“I think we should look at a policy to tighten regulation when banks are doing well and to give more flexibility when the banking system is going through problems,” he said, referring to his “counter cyclical regulatory” approach.
In the run-up to the current crisis, Western banks had been given more flexibility during the boom period to create debt instruments as they saw fit, Engle noted.
Dr Mahathir agreed that governments needed to regulate the markets or businesses would “do whatever they think will bring them profit and not worry about the welfare of the people”.
“It is the government that has been entrusted by the people to look after their welfare, and not businesses,” he said, but acknowledged that “the government must be business friendly”.
He also said the possibility that Islamic banking could solve some of the problems of the current global crisis should not be dismissed.
Source: The Star Online @ Money3.com.my
Date: 12/12/2008
Dr Mahathir said he was for a return to the gold standard to stabilise financial markets while Engle proposed a “counter cyclical regulatory system” at the Bridges – Dialogues Towards a Culture of Peace conference yesterday.
“In the past, the money we used was based on something that had value, now we are using pieces of paper where the value is dependent on what people say it is,” Dr Mahathir said, referring to the Bretton Woods system, set up in 1944, when fixed exchange rates were tied to gold reserves and the US dollar.
The Bretton Woods system broke down in the 1970s as industrialised countries moved to floating currencies and the influence of capital markets grew.
“Today, they say the ringgit is worth so much. Tomorrow they say it is lower some more,” Malaysia’s fourth prime minister said, referring to the 1997 Asian financial crisis.
Engle said the current crisis was not a result of foreign exchange volatility but due to the collapse of the US subprime mortgage market and the subsequent credit crunch that brought down US banking giants.
“I think we should look at a policy to tighten regulation when banks are doing well and to give more flexibility when the banking system is going through problems,” he said, referring to his “counter cyclical regulatory” approach.
In the run-up to the current crisis, Western banks had been given more flexibility during the boom period to create debt instruments as they saw fit, Engle noted.
Dr Mahathir agreed that governments needed to regulate the markets or businesses would “do whatever they think will bring them profit and not worry about the welfare of the people”.
“It is the government that has been entrusted by the people to look after their welfare, and not businesses,” he said, but acknowledged that “the government must be business friendly”.
He also said the possibility that Islamic banking could solve some of the problems of the current global crisis should not be dismissed.
Source: The Star Online @ Money3.com.my
Date: 12/12/2008
Wednesday, December 10, 2008
Lower rates is a wrong prescription
Across the Western world, a self-imposed financial meltdown is now seriously damaging tens of millions of ordinary firms and households – turning their lives upside down.
It’s not good enough to “avoid the blame game” and “look to the future.” For, be in no doubt, this crisis has its roots in fraud – from the mortgage brokers who sold loans they knew would fail to the investment “professionals” who rolled-up the debts into securities and the ratings agencies that stamped them triple-A.
We need tough questions and full investigations. Those most guilty must go to jail. Unless that happens, and is seen to happen, expect a repeat crisis in a few years’ time.
Historians won’t be kind to the central bankers who, having lowered rates in the aftermath of 9/11 and the dotcom crash, kept them low far too long – so pumping up the credit bubble.
I fear historical ignominy, too, for their counterparts who are now also slashing rates willy-nilly. That includes the Bank of England, which cut rates by a whole percentage point on Thursday, to 2%. That’s the lowest level since 1951, when King George VI opened the Festival of Britain.
The central bank’s latest move also caused (albeit murmured) celebrations. Following its dramatic 1.5 percentage point cut in November, many say the Monetary Policy Committee (MPC) “did the right thing”. There are now calls for a “zero interest rate policy” – and the sooner the better.
The vocal retail lobby wants rates nailed to the floor as they’re desperate for something (anything) that might ensure a “good Christmas”. Powerful bankers hope ever-lower rates might generate an asset price recovery – so they can avoid “fessing-up” their remaining, still undisclosed, “subprime” liabilities.
But beyond those vested interests – and the commentators they seem to control – am I alone in seeing huge dangers in our “chain-saw” monetary policy? Are we not way past the point at which lowering rates does far more harm than good?
Bank lending has stalled. The latest figures show total secured and unsecured lending grew at an annual rate of just 4.7% last month. But that’s the same rate of expansion as in October 1993. And back then we didn’t opt for a no-holds-barred Japanese-style monetary policy.
The current lending slowdown hurts, of course, because the Western world – and the UK in particular – is emerging from a decade-long debt-fuelled consumer frenzy. The end of that was always going to hurt but that doesn’t mean we should repeat past mistakes and impose ultra-low rates in a bid to avoid the inevitable de-leveraging.
The problem, anyway, isn’t the cost of credit but the availability. Credit won’t become more available until the banks trust each other and the inter-bank market reboots. That won’t happen until the banks are forced to reveal their potential subprime losses – as this column has often argued. Lower rates just delay that “day of reckoning” – by giving the banks more hope they can get away without “full disclosure”.
Remember, too, that yanking down rates causes huge collateral damage. The MPC says rates of 2% are necessary “in order to meet (it’s) inflation target in the medium term”. Everyone knows that’s rubbish. The Bank of England, against its better judgement, has been forced by its political masters to throw inflationary concerns to the wind.
But inflation, as measured by the consumer price index, remains at 4.5% – more than twice the central bank’s target. While oil prices have fallen, the futures market says cheap crude won’t last long. Monetary and fiscal policies are now also wildly loose, which will stoke up future inflation.
Our leaders have said calculated inflation doesn’t matter. Like the rulers of a banana republic, they don’t care about monetary excesses because some other sucker will be in power when their ghastly effects are felt. Ministers can smash-up the monetary regime but they can’t ignore the currency constraints. The dollar’s reserve status gives the US scope (for now) to print money and cut rates with abandon. But the UK cannot afford such luxuries.
A month ago, you could sell a pound for US$1.80. Now, you’d get US$1.46. A euro was recently worth only 64p. Now it’s equivalent to 86p – the pound, on a trade-weighted basis, at a 13-year low. By weakening sterling, and making imports more expensive, lower rates cause inflation even when the economy is slowing. And – lock me in the Tower for saying so – surely our monetary policy, combined with gargantuan government borrowing, could soon cause a run on the pound.
Even if we avoid such a disaster, a weaker currency makes it harder for the Government to sell its debt. The UK needs to sell £150bil of gilts in each of the next three years – more than triple the recent annual average.
Then there’s the impact of ultra-low rates on savers – the great unsung losers when the MPC hits the panic button. Weighed down by debts and insolvencies, the UK desperately needs to save more – so providing the deposits, and stability, that will get credit moving. Half our workforce – 13 million people – have very little or no savings at all.
Yet, here we are, trying to repair a debt-crisis with more debt, a lack of saving by discouraging saving further. Through political weakness, and regulatory neglect, the West brought this crisis on itself – and the rest of the world. If that wasn’t bad enough, we’re now making the same crisis even worse.
Source: The Star Online @ Money3.com.my
Date: 10/12/2008
It’s not good enough to “avoid the blame game” and “look to the future.” For, be in no doubt, this crisis has its roots in fraud – from the mortgage brokers who sold loans they knew would fail to the investment “professionals” who rolled-up the debts into securities and the ratings agencies that stamped them triple-A.
We need tough questions and full investigations. Those most guilty must go to jail. Unless that happens, and is seen to happen, expect a repeat crisis in a few years’ time.
Historians won’t be kind to the central bankers who, having lowered rates in the aftermath of 9/11 and the dotcom crash, kept them low far too long – so pumping up the credit bubble.
I fear historical ignominy, too, for their counterparts who are now also slashing rates willy-nilly. That includes the Bank of England, which cut rates by a whole percentage point on Thursday, to 2%. That’s the lowest level since 1951, when King George VI opened the Festival of Britain.
The central bank’s latest move also caused (albeit murmured) celebrations. Following its dramatic 1.5 percentage point cut in November, many say the Monetary Policy Committee (MPC) “did the right thing”. There are now calls for a “zero interest rate policy” – and the sooner the better.
The vocal retail lobby wants rates nailed to the floor as they’re desperate for something (anything) that might ensure a “good Christmas”. Powerful bankers hope ever-lower rates might generate an asset price recovery – so they can avoid “fessing-up” their remaining, still undisclosed, “subprime” liabilities.
But beyond those vested interests – and the commentators they seem to control – am I alone in seeing huge dangers in our “chain-saw” monetary policy? Are we not way past the point at which lowering rates does far more harm than good?
Bank lending has stalled. The latest figures show total secured and unsecured lending grew at an annual rate of just 4.7% last month. But that’s the same rate of expansion as in October 1993. And back then we didn’t opt for a no-holds-barred Japanese-style monetary policy.
The current lending slowdown hurts, of course, because the Western world – and the UK in particular – is emerging from a decade-long debt-fuelled consumer frenzy. The end of that was always going to hurt but that doesn’t mean we should repeat past mistakes and impose ultra-low rates in a bid to avoid the inevitable de-leveraging.
The problem, anyway, isn’t the cost of credit but the availability. Credit won’t become more available until the banks trust each other and the inter-bank market reboots. That won’t happen until the banks are forced to reveal their potential subprime losses – as this column has often argued. Lower rates just delay that “day of reckoning” – by giving the banks more hope they can get away without “full disclosure”.
Remember, too, that yanking down rates causes huge collateral damage. The MPC says rates of 2% are necessary “in order to meet (it’s) inflation target in the medium term”. Everyone knows that’s rubbish. The Bank of England, against its better judgement, has been forced by its political masters to throw inflationary concerns to the wind.
But inflation, as measured by the consumer price index, remains at 4.5% – more than twice the central bank’s target. While oil prices have fallen, the futures market says cheap crude won’t last long. Monetary and fiscal policies are now also wildly loose, which will stoke up future inflation.
Our leaders have said calculated inflation doesn’t matter. Like the rulers of a banana republic, they don’t care about monetary excesses because some other sucker will be in power when their ghastly effects are felt. Ministers can smash-up the monetary regime but they can’t ignore the currency constraints. The dollar’s reserve status gives the US scope (for now) to print money and cut rates with abandon. But the UK cannot afford such luxuries.
A month ago, you could sell a pound for US$1.80. Now, you’d get US$1.46. A euro was recently worth only 64p. Now it’s equivalent to 86p – the pound, on a trade-weighted basis, at a 13-year low. By weakening sterling, and making imports more expensive, lower rates cause inflation even when the economy is slowing. And – lock me in the Tower for saying so – surely our monetary policy, combined with gargantuan government borrowing, could soon cause a run on the pound.
Even if we avoid such a disaster, a weaker currency makes it harder for the Government to sell its debt. The UK needs to sell £150bil of gilts in each of the next three years – more than triple the recent annual average.
Then there’s the impact of ultra-low rates on savers – the great unsung losers when the MPC hits the panic button. Weighed down by debts and insolvencies, the UK desperately needs to save more – so providing the deposits, and stability, that will get credit moving. Half our workforce – 13 million people – have very little or no savings at all.
Yet, here we are, trying to repair a debt-crisis with more debt, a lack of saving by discouraging saving further. Through political weakness, and regulatory neglect, the West brought this crisis on itself – and the rest of the world. If that wasn’t bad enough, we’re now making the same crisis even worse.
Source: The Star Online @ Money3.com.my
Date: 10/12/2008
Tuesday, December 9, 2008
MEF Survey: Average Salary Increase And Bonus On The Downtrend In 2009
There is an downward trend in companies granting salary increases and bonuses for their employees in 2009, in view of the global economic uncertainties, a survey by the Malaysian Employers Federation (MEF) indicated.
"Many respondent companies have adjusted the forecast salary increases and the bonus payment for 2009 in view of the global economic downturn," the MEF president, Datuk Azman Shah Haron told a media briefing on the 2008 MEF Salary Survey for Executives and Non-Executives here Tuesday.
The overall average forecasted salary increase for executives in 2009 after taking into account the global economic uncertainties, was lower at 5.53 percent compared with an earlier forecast of 5.78 percent.
As for non-executives, the number is expected to be at 5.59 percent for next year from the 5.85 percent estimated earlier.
"The actual salary increase for 2008 was at 6.09 percent for executives and 5.69 percent for non-executives.However, the numbers have been adjusted due to the sharp increase in fuel prices in June this year," he said.
Azman said the forecasted salary increase for executives in the manufacturing sector was lower at 5.50 percent compared with the 5.56 percent in non-manufacturing sector.
The MEF survey, completed in August this year, saw the participation of 202 member companies. It covered 15,163 executives and 43,499 non-executives.
Azman said that generally, employers needed to retain the talent within the companies and would cut other costs in tightening their belts during the slowdown.
"Retrenchment would be the last option," he said.
In terms of bonus, 72.1 percent of the respondent companies estimated it would be granted to non-executives in 2009 while 59.8 percent forecast the payment for executives.
However, the average forecasted bonus payment for non-executives in 2009 after taking into account the global economic downturn, was lower at 1.78 months compared with the 1.99 months estimated earlier.
Meanwhile, the bonus payment for executives will be at 1.98 months in 2009 as against 2.10 months forecasted before.
Azman said about 90 percent of the respondent companies granted a bonus to their employees this year with the average contractual bonus for non-executives at 1.74 months and 1.85 months for executives.
Source: Bernama.com @ Money3.com.my
Date: 09/12/2008
"Many respondent companies have adjusted the forecast salary increases and the bonus payment for 2009 in view of the global economic downturn," the MEF president, Datuk Azman Shah Haron told a media briefing on the 2008 MEF Salary Survey for Executives and Non-Executives here Tuesday.
The overall average forecasted salary increase for executives in 2009 after taking into account the global economic uncertainties, was lower at 5.53 percent compared with an earlier forecast of 5.78 percent.
As for non-executives, the number is expected to be at 5.59 percent for next year from the 5.85 percent estimated earlier.
"The actual salary increase for 2008 was at 6.09 percent for executives and 5.69 percent for non-executives.However, the numbers have been adjusted due to the sharp increase in fuel prices in June this year," he said.
Azman said the forecasted salary increase for executives in the manufacturing sector was lower at 5.50 percent compared with the 5.56 percent in non-manufacturing sector.
The MEF survey, completed in August this year, saw the participation of 202 member companies. It covered 15,163 executives and 43,499 non-executives.
Azman said that generally, employers needed to retain the talent within the companies and would cut other costs in tightening their belts during the slowdown.
"Retrenchment would be the last option," he said.
In terms of bonus, 72.1 percent of the respondent companies estimated it would be granted to non-executives in 2009 while 59.8 percent forecast the payment for executives.
However, the average forecasted bonus payment for non-executives in 2009 after taking into account the global economic downturn, was lower at 1.78 months compared with the 1.99 months estimated earlier.
Meanwhile, the bonus payment for executives will be at 1.98 months in 2009 as against 2.10 months forecasted before.
Azman said about 90 percent of the respondent companies granted a bonus to their employees this year with the average contractual bonus for non-executives at 1.74 months and 1.85 months for executives.
Source: Bernama.com @ Money3.com.my
Date: 09/12/2008
Wednesday, November 12, 2008
Malaysia Home Loans - What's New (November, 2008)
Very soon, they will be teaching kids at school that Earth’s gravity pull is felt not only by objects but also mortgage interest rates. Talks of interest rates going up was only beginning to get going before Lenders went about reducing rates…again. It wasn’t so long ago when BLR+0% was considered “hot”.
November saw quite a bit of interest rate activities, culminating in what in our opinion, are some of the best loans ever introduced. Here are some of our favourites:
[Best BLR-based Loan]
Now, EON Bank, for the 3rd consecutive month offers the lowest BLR-based loan, this time at BLR-2.4% for the entire tenure. Launched on the 13th of November the extremely attractive package comes with a few conditions set out as follows:
- Acceptance must be within 2 DAYS of the Letter of Offer date
- Property Value RM 400K and Above
- Only for a maximum Margin Of Finance of up to 80%
- Option to finance the entry costs with additional 5% (80% + 5%)
- For Refinance, Sub-sale, New acquisition of Under Construction properties with completion status > than 70%
- Flexi Loan comes attached with deposit-linked account with cheque book.
- No account Set up Fee (unlike other similar flexi-loans for e.g., Alliance Bank Save Link, SCB Mortgage One where customer has to pay an account set up fee of RM 200 – 1 time payment)
- Monthly maintenance fee of RM 10 - Insurance is optional
[Best Overall BLR-based Loan]
Whilst there is no doubt that EON’s loan package is a winner in the interest rate stakes, critics may grumble that the RM400,000 min loan amount and the maximum margin of finance of 80% are limiting. Well gripe no more…if good rates at a higher margin is what you need, then Affin Bank surprises this month with its Affin Home Solutions briefly summarized as follows:
Affin Home Solutions (Non-Free Moving Costs)
Loan Amount Yr 1-3 Thereafter
<> RM 1.0M BLR - 2.40% BLR - 2.30%
For Free Moving Cost packages, the offers are as follows:
Loan Amount Yr 1-3 Thereafter
<> RM 1.0M BLR-2.20% BLR-2.10%
With the Margin of Finance set at a maximum of 90%, and the loan tenure stretched to a maximum of 45years up to age 75 (where most banks cap loan tenure up to a maximum of age 70), this is certainly one of the best loan packages available today. And just to make sure that they got your attention, Affin caps the loan’s interest rate to a maximum of 10%.
However, am important note is that to enjoy the full bag of goodies, all Letters Of Offer must be formally accepted within 3 days of issuance.
[Best Hybrid Islamic Home Financing-i: Fixed then Float]
Another “newcomer” to our list is none other than CIMB Islamic. For a full range of fixed then floating ISLAMIC loans, no one does it better for now. Here is a summary of what they offer:
For Completed Properties / Loan Amount RM300K to RM500K (Without MRTA)
a) Fixed Rate for 3 years
NFMC 4.90% (Yr1-3), BFR-2.15% (Thereafter)
FMC 5.10% (Yr1-3), BFR-1.95% (Thereafter)
b) Fixed Rate for 5 years
NFMC 5.40% (Yr1-5), BFR-2.15% (Thereafter)
FMC 5.65% (Yr1-5), BFR-1.95% (Thereafter)
c) Fixed Rate for 10 years
NFMC 6.25% (Yr1-10), BFR-2.15% (Thereafter)
FMC 6.45% (Yr1-10), BFR-1.95% (Thereafter)
For Under Construction Properties / Loan Amount RM300K to RM500K (Without MRTA)
d) Fixed Rate for 3 years
NFMC 5.10% (Yr1-3), BFR-1.95% (Thereafter)
FMC 5.30% (Yr1-3), BFR-1.75% (Thereafter)
e) Fixed Rate for 5 years
NFMC 5.60% (Yr1-5), BFR-1.95% (Thereafter)
FMC 5.80% (Yr1-5), BFR-1.75% (Thereafter)
f) Fixed Rate for 10 years
NFMC 6.45% (Yr1-10), BFR-1.95% (Thereafter)
FMC 6.65% (Yr1-10), BFR-1.75% (Thereafter)
NOTE: After the fixed years, the rate is cheaper by a further 0.1% if the borrower takes MRTA.
Other features of this loan include:
- Option to choose Free Moving Cost (FMC)/ Non-Free Moving Cost Package (NFMC);
- Rate protection with capped ceiling rate at 10.75%;
- No stamp duty for refinancing from conventional loan;
- 20% discount on stamp duty for new purchases;
- For completed and Under Construction properties and for landed & Non-landed.
[Best Fixed Rate Loan]
AIA regains the “lowest fixed rate” throne with the introduction of a few new rates
1) Standard Home Loan Packages
NZMC MOF: 80%-90%
MOF: Below 80% 5.85%
5.75%
ZMC MOF: 80%-90%
MOF: Below 80% 5.99%
5.89%
2) AIA Mortgage Save Packages
NZMC MOF: 80%-90%
MOF: Below 80% 5.70%
5.60%
ZMC MOF: 80%-90%
MOF: Below 80% 5.85%
5.75%
Lending Terms & Conditions for AIA Mortgage Save
- Customer is required to purchase a new AIA Whole Life Non-Par (WLNP) policy to fully cover the loan
- The new AIA policy purchased is to be assigned to the loan and must be kept in force throughout the entire loan duration.
Source: Money3.com.my
November saw quite a bit of interest rate activities, culminating in what in our opinion, are some of the best loans ever introduced. Here are some of our favourites:
[Best BLR-based Loan]
Now, EON Bank, for the 3rd consecutive month offers the lowest BLR-based loan, this time at BLR-2.4% for the entire tenure. Launched on the 13th of November the extremely attractive package comes with a few conditions set out as follows:
- Acceptance must be within 2 DAYS of the Letter of Offer date
- Property Value RM 400K and Above
- Only for a maximum Margin Of Finance of up to 80%
- Option to finance the entry costs with additional 5% (80% + 5%)
- For Refinance, Sub-sale, New acquisition of Under Construction properties with completion status > than 70%
- Flexi Loan comes attached with deposit-linked account with cheque book.
- No account Set up Fee (unlike other similar flexi-loans for e.g., Alliance Bank Save Link, SCB Mortgage One where customer has to pay an account set up fee of RM 200 – 1 time payment)
- Monthly maintenance fee of RM 10 - Insurance is optional
[Best Overall BLR-based Loan]
Whilst there is no doubt that EON’s loan package is a winner in the interest rate stakes, critics may grumble that the RM400,000 min loan amount and the maximum margin of finance of 80% are limiting. Well gripe no more…if good rates at a higher margin is what you need, then Affin Bank surprises this month with its Affin Home Solutions briefly summarized as follows:
Affin Home Solutions (Non-Free Moving Costs)
Loan Amount Yr 1-3 Thereafter
<> RM 1.0M BLR - 2.40% BLR - 2.30%
For Free Moving Cost packages, the offers are as follows:
Loan Amount Yr 1-3 Thereafter
<> RM 1.0M BLR-2.20% BLR-2.10%
With the Margin of Finance set at a maximum of 90%, and the loan tenure stretched to a maximum of 45years up to age 75 (where most banks cap loan tenure up to a maximum of age 70), this is certainly one of the best loan packages available today. And just to make sure that they got your attention, Affin caps the loan’s interest rate to a maximum of 10%.
However, am important note is that to enjoy the full bag of goodies, all Letters Of Offer must be formally accepted within 3 days of issuance.
[Best Hybrid Islamic Home Financing-i: Fixed then Float]
Another “newcomer” to our list is none other than CIMB Islamic. For a full range of fixed then floating ISLAMIC loans, no one does it better for now. Here is a summary of what they offer:
For Completed Properties / Loan Amount RM300K to RM500K (Without MRTA)
a) Fixed Rate for 3 years
NFMC 4.90% (Yr1-3), BFR-2.15% (Thereafter)
FMC 5.10% (Yr1-3), BFR-1.95% (Thereafter)
b) Fixed Rate for 5 years
NFMC 5.40% (Yr1-5), BFR-2.15% (Thereafter)
FMC 5.65% (Yr1-5), BFR-1.95% (Thereafter)
c) Fixed Rate for 10 years
NFMC 6.25% (Yr1-10), BFR-2.15% (Thereafter)
FMC 6.45% (Yr1-10), BFR-1.95% (Thereafter)
For Under Construction Properties / Loan Amount RM300K to RM500K (Without MRTA)
d) Fixed Rate for 3 years
NFMC 5.10% (Yr1-3), BFR-1.95% (Thereafter)
FMC 5.30% (Yr1-3), BFR-1.75% (Thereafter)
e) Fixed Rate for 5 years
NFMC 5.60% (Yr1-5), BFR-1.95% (Thereafter)
FMC 5.80% (Yr1-5), BFR-1.75% (Thereafter)
f) Fixed Rate for 10 years
NFMC 6.45% (Yr1-10), BFR-1.95% (Thereafter)
FMC 6.65% (Yr1-10), BFR-1.75% (Thereafter)
NOTE: After the fixed years, the rate is cheaper by a further 0.1% if the borrower takes MRTA.
Other features of this loan include:
- Option to choose Free Moving Cost (FMC)/ Non-Free Moving Cost Package (NFMC);
- Rate protection with capped ceiling rate at 10.75%;
- No stamp duty for refinancing from conventional loan;
- 20% discount on stamp duty for new purchases;
- For completed and Under Construction properties and for landed & Non-landed.
[Best Fixed Rate Loan]
AIA regains the “lowest fixed rate” throne with the introduction of a few new rates
1) Standard Home Loan Packages
NZMC MOF: 80%-90%
MOF: Below 80% 5.85%
5.75%
ZMC MOF: 80%-90%
MOF: Below 80% 5.99%
5.89%
2) AIA Mortgage Save Packages
NZMC MOF: 80%-90%
MOF: Below 80% 5.70%
5.60%
ZMC MOF: 80%-90%
MOF: Below 80% 5.85%
5.75%
Lending Terms & Conditions for AIA Mortgage Save
- Customer is required to purchase a new AIA Whole Life Non-Par (WLNP) policy to fully cover the loan
- The new AIA policy purchased is to be assigned to the loan and must be kept in force throughout the entire loan duration.
Source: Money3.com.my
Wednesday, November 5, 2008
The Best Home Loan Package At Your Fingertips
Buying a home is a life-transforming event in terms of financial and social commitments as well as status.
Choosing a financing package for the purchase can be one of the most stressful and important decisions in a persons life.
As you embark on one of the biggest financial decisions you would ever make in your lifetime, it is important to be aware that where home loan packages go, many things are open to interpretation, and sometimes the consequences of an uninformed decision could prove dire.
Getting it right the first time can save you thousands of ringgit. Otherwise, you may find your finances strained as you travel further down the long and winding road of home ownership.
Shopping around and comparing notes is an indispensable part of the search process. But looking for that gem of a deal that suits your requirements to a T can be a daunting experience.
Bombarded with an onslaught of innocuous acronyms and impressive financial jargon from over 500 different home loan packages offered by over 30 lenders in the country; even the money savvy can be overwhelmed.
For the layperson that lacks the depth in financial techniques and knowledge, it would be a Herculean task to separate the wheat from the chaff, from the torrent of information available to determine what is right.
Many among us would welcome a little help in this department before we feel comfortable enough to sign on the dotted line.
Wouldn't it be great if you can talk to an experienced financial advisor or consultant who listens to your needs and is able to proffer an unbiased opinion on the pros and cons of the different aspects in home loan packages, and determine the one most suitable for you, at no extra cost?
HELP AVAILABLE AT YOUR FINGERTIPS
The discerning consumer will be elated to know that such services are indeed available at your fingertips.
Incorporated in Malaysia on Oct 16, 2002, Capital Tree Sdn Bhd (Money3) provides the consumer with relevant up-to-date information on all home loan packages offered by financial institutions in the country.
"A home loan is a financial commitment that changes one's entire financial horizon. Being laden with a home loan will dictate how you manage your personal finances thereafter," Money3 Senior Partner, Martin Chow told Bernama in an exclusive interview recently.
However, according to Chow, in accessing their eligibility for a home loan, borrowers invariably will only take their present financial position into consideration.
But the stark reality is that a person's financial position is hardly ever fixed and yet, most of the time, a very important and substantial financial decision is made based on a very narrow parameter.
In the mid to long-term, a wrong type of mortgage works against that persons financial health.
Presently, so long as the monthly repayment does not exceed a certain percentage of their monthly income as predetermined by the lender, most will be happy to accept the loan.
"Borrowers almost always never take into consideration contingencies like future increase in the base lending rate (BLR), hiccups in cash flows created by unforeseen emergencies or the probability of losing one's present job.
In any case, most if not all hardly ever take into account the impact of the home loan on their ability to adequately save for future expenses such as their children's education and the ultimate need for medical and surgical attention," Chow said.
The reality is that even small changes can have significant effects in the web of life.
One should always be prepared for the unexpected and have workable alternatives at hand for such eventualities. It is to one's best interest not to throw caution to the wind and eventually end up as victim of one's ignorance.
"Most people do not factor in these considerations because they do not know how to," Chow explained.
INDEPENDENT AND UNBIASED ANALYSIS
Money3 specialises in creating computer software and developing financial programmes as tools for analysing monetary and loan packages and services tailored to local economic environment.
Launched in February, the company's website at http://www.money3.com.my/ is the conduit for a convenient way of applying for home loans for the Malaysian consumer and provides such information free of charge.
The website is constantly updated with accurate and truly independent real-time information on the latest home loans available, as well as tools such as calculators for the consumer to use and sort things out, in deciding which package is best suited to his or her requirements.
Money3's multi-level online Loan Search programme allows the consumer to factor in what one is looking for in a home loan package.
Once all the input has been entered, the system will filter through every home loan package available in the country and produce an independent and unbiased analysis of the Top Ten list of lenders, based on the parameters given.
"Our experienced consultants can also provide either over-the-telephone or face-to-face consultation to chisel out workable compromises that satisfy your requirements but at the same time does not burn a hole in your pocket," Chow said.
CLOSE COLLABORATION
Money3 work in close collaboration with several banks - local and foreign - on issues relating to product development, creating sales channels as well as distribution and outsource functions.
These banking institutions have initiated proactive measures by providing information and data support, and are even prepared to factor the company's input into their financial products, all in the name of providing better quality products with faster turnaround time and at a cheaper rate.
"Our partners recognised the fact that as more and more people become aware of the need to develop an aptitude for personal financial planning, they will become better quality customers. Consequently, the propensity for non-performing loan (NPL) diminishes," Chow explained.
This meaningful teamwork and fruitful cooperation has resulted in a cross-pollination of ideas that have opened the floodgate for progressive financial software that will be incorporated into the company's website.
UNIT TRUST AND INSURANCE PORTALS
Liabilities, with a little ingenuity, can be turned into assets. Conversely, assets left to deteriorate and not improved upon, can eventually become liabilities.
Thus, in the ever-evolving world of personal finance, the customer has all the right to expect financial consultants to know more, do more and advise more.
Congruent to such expectations, Money3 will, in the coming few weeks, be rolling out its Unit Trust and Insurance Portal.
In any investment, situations and circumstances can change at the blink of an eye and may require a reversal of decisions made earlier.
The prudent investor should always monitor his portfolio and take decisive actions to stay on top of things.
Everybody would at least know of a person who, as a result of injudicious investments and a cavalier disregard for financial management, has been left with nothing but the shirt on his back.
In recognition of this fact, the Unit Trust Portal has robust safeguards like monitoring, weekly performance report and red-flag functions to allow stopgap measures to enhance gains and prevent losses.
The primary objective of www.money3.com.my is to provide Malaysian consumers with critical up-to-date information on all the financial products available in the money and capital markets, so that they can exercise their freedom of choice in making well-informed and financially savvy decisions.
For the purposes of communication and illumination, such proactive features on the company's website would transform consumers from merely being passive armchair participants to assertive investors.
"The Unit Trust Portal is designed to empower the investor to make informed decisions in different economic environments, critical to minimising investment risks, rather than rely on sales pitch and hearsay advice.
For the professional agent, this portal is set to be the best friend in providing top-level service and added value to their clients," said Chow.
Money3 will soon spread its wings to East Malaysia and is also presently speaking to interested parties in various other states in the Peninsular, with a view of expanding the company's products and services there.
"Ultimately, we want to be the go-to place for those seeking home loan packages and investment opportunities," Money3s affable head honcho declared with spirited enthusiasm.
With over three million hits a month, and growing by the day, that time may not be long in coming.
Source: Money3.com.my
Choosing a financing package for the purchase can be one of the most stressful and important decisions in a persons life.
As you embark on one of the biggest financial decisions you would ever make in your lifetime, it is important to be aware that where home loan packages go, many things are open to interpretation, and sometimes the consequences of an uninformed decision could prove dire.
Getting it right the first time can save you thousands of ringgit. Otherwise, you may find your finances strained as you travel further down the long and winding road of home ownership.
Shopping around and comparing notes is an indispensable part of the search process. But looking for that gem of a deal that suits your requirements to a T can be a daunting experience.
Bombarded with an onslaught of innocuous acronyms and impressive financial jargon from over 500 different home loan packages offered by over 30 lenders in the country; even the money savvy can be overwhelmed.
For the layperson that lacks the depth in financial techniques and knowledge, it would be a Herculean task to separate the wheat from the chaff, from the torrent of information available to determine what is right.
Many among us would welcome a little help in this department before we feel comfortable enough to sign on the dotted line.
Wouldn't it be great if you can talk to an experienced financial advisor or consultant who listens to your needs and is able to proffer an unbiased opinion on the pros and cons of the different aspects in home loan packages, and determine the one most suitable for you, at no extra cost?
HELP AVAILABLE AT YOUR FINGERTIPS
The discerning consumer will be elated to know that such services are indeed available at your fingertips.
Incorporated in Malaysia on Oct 16, 2002, Capital Tree Sdn Bhd (Money3) provides the consumer with relevant up-to-date information on all home loan packages offered by financial institutions in the country.
"A home loan is a financial commitment that changes one's entire financial horizon. Being laden with a home loan will dictate how you manage your personal finances thereafter," Money3 Senior Partner, Martin Chow told Bernama in an exclusive interview recently.
However, according to Chow, in accessing their eligibility for a home loan, borrowers invariably will only take their present financial position into consideration.
But the stark reality is that a person's financial position is hardly ever fixed and yet, most of the time, a very important and substantial financial decision is made based on a very narrow parameter.
In the mid to long-term, a wrong type of mortgage works against that persons financial health.
Presently, so long as the monthly repayment does not exceed a certain percentage of their monthly income as predetermined by the lender, most will be happy to accept the loan.
"Borrowers almost always never take into consideration contingencies like future increase in the base lending rate (BLR), hiccups in cash flows created by unforeseen emergencies or the probability of losing one's present job.
In any case, most if not all hardly ever take into account the impact of the home loan on their ability to adequately save for future expenses such as their children's education and the ultimate need for medical and surgical attention," Chow said.
The reality is that even small changes can have significant effects in the web of life.
One should always be prepared for the unexpected and have workable alternatives at hand for such eventualities. It is to one's best interest not to throw caution to the wind and eventually end up as victim of one's ignorance.
"Most people do not factor in these considerations because they do not know how to," Chow explained.
INDEPENDENT AND UNBIASED ANALYSIS
Money3 specialises in creating computer software and developing financial programmes as tools for analysing monetary and loan packages and services tailored to local economic environment.
Launched in February, the company's website at http://www.money3.com.my/ is the conduit for a convenient way of applying for home loans for the Malaysian consumer and provides such information free of charge.
The website is constantly updated with accurate and truly independent real-time information on the latest home loans available, as well as tools such as calculators for the consumer to use and sort things out, in deciding which package is best suited to his or her requirements.
Money3's multi-level online Loan Search programme allows the consumer to factor in what one is looking for in a home loan package.
Once all the input has been entered, the system will filter through every home loan package available in the country and produce an independent and unbiased analysis of the Top Ten list of lenders, based on the parameters given.
"Our experienced consultants can also provide either over-the-telephone or face-to-face consultation to chisel out workable compromises that satisfy your requirements but at the same time does not burn a hole in your pocket," Chow said.
CLOSE COLLABORATION
Money3 work in close collaboration with several banks - local and foreign - on issues relating to product development, creating sales channels as well as distribution and outsource functions.
These banking institutions have initiated proactive measures by providing information and data support, and are even prepared to factor the company's input into their financial products, all in the name of providing better quality products with faster turnaround time and at a cheaper rate.
"Our partners recognised the fact that as more and more people become aware of the need to develop an aptitude for personal financial planning, they will become better quality customers. Consequently, the propensity for non-performing loan (NPL) diminishes," Chow explained.
This meaningful teamwork and fruitful cooperation has resulted in a cross-pollination of ideas that have opened the floodgate for progressive financial software that will be incorporated into the company's website.
UNIT TRUST AND INSURANCE PORTALS
Liabilities, with a little ingenuity, can be turned into assets. Conversely, assets left to deteriorate and not improved upon, can eventually become liabilities.
Thus, in the ever-evolving world of personal finance, the customer has all the right to expect financial consultants to know more, do more and advise more.
Congruent to such expectations, Money3 will, in the coming few weeks, be rolling out its Unit Trust and Insurance Portal.
In any investment, situations and circumstances can change at the blink of an eye and may require a reversal of decisions made earlier.
The prudent investor should always monitor his portfolio and take decisive actions to stay on top of things.
Everybody would at least know of a person who, as a result of injudicious investments and a cavalier disregard for financial management, has been left with nothing but the shirt on his back.
In recognition of this fact, the Unit Trust Portal has robust safeguards like monitoring, weekly performance report and red-flag functions to allow stopgap measures to enhance gains and prevent losses.
The primary objective of www.money3.com.my is to provide Malaysian consumers with critical up-to-date information on all the financial products available in the money and capital markets, so that they can exercise their freedom of choice in making well-informed and financially savvy decisions.
For the purposes of communication and illumination, such proactive features on the company's website would transform consumers from merely being passive armchair participants to assertive investors.
"The Unit Trust Portal is designed to empower the investor to make informed decisions in different economic environments, critical to minimising investment risks, rather than rely on sales pitch and hearsay advice.
For the professional agent, this portal is set to be the best friend in providing top-level service and added value to their clients," said Chow.
Money3 will soon spread its wings to East Malaysia and is also presently speaking to interested parties in various other states in the Peninsular, with a view of expanding the company's products and services there.
"Ultimately, we want to be the go-to place for those seeking home loan packages and investment opportunities," Money3s affable head honcho declared with spirited enthusiasm.
With over three million hits a month, and growing by the day, that time may not be long in coming.
Source: Money3.com.my
Malaysia unveils RM7b stimulus plan
The government has unveiled a RM7 billion stimulus package to reinforce and stimulate the economy, and at the same time, bring relief to the public at an economically challenging time.
Announcing the stimulus package in Parliament, Deputy Prime Minister Datuk Seri Najib Razak, who is also finance minister, said the measures were proof of the governments concern for the people's well-being and to stimulate private sector confidence.
Najib said the RM7 billion was from the savings derived from cuts in the fuel subsidy.
The government will adopt an expansionary policy as is the current practice in other countries.
He said the government had the flexibility to implement value added high impact projects.
Najib said the gross domestic product would be revised downwards to 3.5 per cent for 2009, but the fiscal deficit would remain at 4.8 per cent.
The reason for the deficit is that the government chooses to continue with Budget 2009, as announced, to maintain the growth momentum.
Najib told the Dewan Rakyat that to ensure more people could own houses, RM1.2 billion has been allocated to build 25,000 units of low- and medium-cost houses.
He said RM500 million has been set aside to upgrade, repair and maintain police stations, living quarters, army camps and quarters.
Najib also said RM600 million would be channelled to minor projects, including village roads, community halls and small bridges.
The deputy prime minister said the jobs would go to small-time contractors.
Public amenities such as roads, schools and hospitals will be allocated RM500 million, while a similar amount will be used to build and upgrade roads in rural areas, villages and agriculture roads, including in Sabah and Sarawak.
Najib said RM200 million had been set aside to improve school facilities, with the funds given evenly to religious, mission, Chinese and Tamil schools.
He said RM300 million would be allocated for a fund to implement a skills programme catering to the needs of employers and industry, particularly in the development corridors.
He said RM1.5 billion would be used to set up a special fund to attract private sector investment and would be disbursed as grants, cheap loans or as equity.
Another RM100 million has been allocated to set up new business premises to increase the number of small- and medium-scale entrepreneurs.
Youth programmes will receive RM100 million.
Najib said the packages were aimed at alleviating hardship and encourage spending.
Civil servants also received some good news with the extension of all housing loans from 25 years to 30 years, while the quantum of loan to buy cars has been increased.
Najib said Bank Negara would encourage local banks to introduce a similar measure for its housing loan customers.
To encourage the development of retail business and domestic tourism industry, hyper markets can open till 11pm on weekdays and 1am on weekends. Those in shopping complexes could seek to operate round the clock.
To stimulate activity in the private sector, import duties for cement, long iron and steel products for the construction and manufacturing sectors have been abolished.
The government will also allow individuals or foreign entities to buy commercial real estate worth RM500,000 and above without any Foreign Investment Committee approval, for their own use.
Source: Business Times Online
Date: 05/11/2008
Announcing the stimulus package in Parliament, Deputy Prime Minister Datuk Seri Najib Razak, who is also finance minister, said the measures were proof of the governments concern for the people's well-being and to stimulate private sector confidence.
Najib said the RM7 billion was from the savings derived from cuts in the fuel subsidy.
The government will adopt an expansionary policy as is the current practice in other countries.
He said the government had the flexibility to implement value added high impact projects.
Najib said the gross domestic product would be revised downwards to 3.5 per cent for 2009, but the fiscal deficit would remain at 4.8 per cent.
The reason for the deficit is that the government chooses to continue with Budget 2009, as announced, to maintain the growth momentum.
Najib told the Dewan Rakyat that to ensure more people could own houses, RM1.2 billion has been allocated to build 25,000 units of low- and medium-cost houses.
He said RM500 million has been set aside to upgrade, repair and maintain police stations, living quarters, army camps and quarters.
Najib also said RM600 million would be channelled to minor projects, including village roads, community halls and small bridges.
The deputy prime minister said the jobs would go to small-time contractors.
Public amenities such as roads, schools and hospitals will be allocated RM500 million, while a similar amount will be used to build and upgrade roads in rural areas, villages and agriculture roads, including in Sabah and Sarawak.
Najib said RM200 million had been set aside to improve school facilities, with the funds given evenly to religious, mission, Chinese and Tamil schools.
He said RM300 million would be allocated for a fund to implement a skills programme catering to the needs of employers and industry, particularly in the development corridors.
He said RM1.5 billion would be used to set up a special fund to attract private sector investment and would be disbursed as grants, cheap loans or as equity.
Another RM100 million has been allocated to set up new business premises to increase the number of small- and medium-scale entrepreneurs.
Youth programmes will receive RM100 million.
Najib said the packages were aimed at alleviating hardship and encourage spending.
Civil servants also received some good news with the extension of all housing loans from 25 years to 30 years, while the quantum of loan to buy cars has been increased.
Najib said Bank Negara would encourage local banks to introduce a similar measure for its housing loan customers.
To encourage the development of retail business and domestic tourism industry, hyper markets can open till 11pm on weekdays and 1am on weekends. Those in shopping complexes could seek to operate round the clock.
To stimulate activity in the private sector, import duties for cement, long iron and steel products for the construction and manufacturing sectors have been abolished.
The government will also allow individuals or foreign entities to buy commercial real estate worth RM500,000 and above without any Foreign Investment Committee approval, for their own use.
Source: Business Times Online
Date: 05/11/2008
Tuesday, November 4, 2008
Inflation on the retreat in Asia
Inflation is slowing across Asia, giving policy makers in the region scope to reduce borrowing costs to protect their economies from a global slump.
South Korean consumer prices rose in October at the weakest pace in six months, the statistics office said yesterday in Gwacheon. Inflation also slowed more than economists expected in Indonesia and Thailand last month.
Asian central banks are switching their focus from fighting inflation to bolstering growth as the global financial crisis that has pummelled the US and Europe threatens to engulf the region's export-dependent economies. The Reserve Bank of Australia and the Bank of Korea are both expected to cut interest rates further this week, according to Bloomberg surveys.
"Central banks have room to reduce rates significantly," said Ramya Suryanarayanan, an economist at DBS Bank in Singapore. "Commodities prices are falling and demand is weakening. You will see inflation declining pretty much everywhere."
Sliding fuel and commodity prices have helped ease inflation across Asia. Crude oil has fallen 53 per cent from an all-time high of US$147.27 a barrel on July 11 and dropped 27 per cent in the past year. Copper and wheat have tumbled more than 50 per cent from records this year.
Consumer prices in South Korea rose 4.8 per cent last month from a year earlier, moderating from a 5.1 per cent gain in September and matching the median estimate in a Bloomberg survey. Prices fell 0.1 per cent in October from the previous month.
The Bank of Korea last week lowered borrowing costs by a record amount, the second reduction in less than three weeks, in an emergency move to restore confidence and revive the economy. Governor Lee Seong Tae hinted at further rate cuts.
Easing inflation in Indonesia and Thailand may give policymakers in Southeast Asia's two largest economies room to pause after raising borrowing costs earlier this year amid soaring consumer prices.
Indonesia's inflation rate declined to 11.8 per cent in October from 12.1 per cent in September, the Central Statistics Bureau said in Jakarta yesterday.
That may give Bank Indonesia room to keep its benchmark interest rate unchanged at 9.5 per cent after six consecutive increases in the measure, said economists including Enrico Tanuwidjaja from Oversea-Chinese Banking Corp in Singapore.
Consumer prices in Thailand rose 3.9 per cent in October from a year earlier, the lowest pace in 10 months and below the 4.9 per cent median estimate in a Bloomberg News survey.
Bank of Thailand policy makers, who next meet on December 3, kept the benchmark one-day bond repurchase rate at a 16-month high of 3.75 per cent on October 8 after raising it 50 basis points in two meetings since July.
"Many economies around the region have started to cut interest rates to support domestic demand and that's the right thing to do," David Burton, head of the International Monetary Fund's Asia-Pacific department, said in an interview with Bloomberg Television in Hong Kong. "Because inflation is coming off, there is room to do more on monetary policy."
China and India, the world's fastest expanding major economies, have cut borrowing costs in the past week.
The Reserve Bank of India on Saturday lowered its benchmark interest rate for the second time in two weeks, and for the first time in 11 years reduced the amount of money lenders are required to keep in government bonds.
The Bank of Japan also reduced its key overnight lending rate by 20 basis points to 0.3 per cent last Friday. Taiwan and Hong Kong also trimmed their benchmark rates last week.
Source: Business Times Online
Date: 04/11/2008
South Korean consumer prices rose in October at the weakest pace in six months, the statistics office said yesterday in Gwacheon. Inflation also slowed more than economists expected in Indonesia and Thailand last month.
Asian central banks are switching their focus from fighting inflation to bolstering growth as the global financial crisis that has pummelled the US and Europe threatens to engulf the region's export-dependent economies. The Reserve Bank of Australia and the Bank of Korea are both expected to cut interest rates further this week, according to Bloomberg surveys.
"Central banks have room to reduce rates significantly," said Ramya Suryanarayanan, an economist at DBS Bank in Singapore. "Commodities prices are falling and demand is weakening. You will see inflation declining pretty much everywhere."
Sliding fuel and commodity prices have helped ease inflation across Asia. Crude oil has fallen 53 per cent from an all-time high of US$147.27 a barrel on July 11 and dropped 27 per cent in the past year. Copper and wheat have tumbled more than 50 per cent from records this year.
Consumer prices in South Korea rose 4.8 per cent last month from a year earlier, moderating from a 5.1 per cent gain in September and matching the median estimate in a Bloomberg survey. Prices fell 0.1 per cent in October from the previous month.
The Bank of Korea last week lowered borrowing costs by a record amount, the second reduction in less than three weeks, in an emergency move to restore confidence and revive the economy. Governor Lee Seong Tae hinted at further rate cuts.
Easing inflation in Indonesia and Thailand may give policymakers in Southeast Asia's two largest economies room to pause after raising borrowing costs earlier this year amid soaring consumer prices.
Indonesia's inflation rate declined to 11.8 per cent in October from 12.1 per cent in September, the Central Statistics Bureau said in Jakarta yesterday.
That may give Bank Indonesia room to keep its benchmark interest rate unchanged at 9.5 per cent after six consecutive increases in the measure, said economists including Enrico Tanuwidjaja from Oversea-Chinese Banking Corp in Singapore.
Consumer prices in Thailand rose 3.9 per cent in October from a year earlier, the lowest pace in 10 months and below the 4.9 per cent median estimate in a Bloomberg News survey.
Bank of Thailand policy makers, who next meet on December 3, kept the benchmark one-day bond repurchase rate at a 16-month high of 3.75 per cent on October 8 after raising it 50 basis points in two meetings since July.
"Many economies around the region have started to cut interest rates to support domestic demand and that's the right thing to do," David Burton, head of the International Monetary Fund's Asia-Pacific department, said in an interview with Bloomberg Television in Hong Kong. "Because inflation is coming off, there is room to do more on monetary policy."
China and India, the world's fastest expanding major economies, have cut borrowing costs in the past week.
The Reserve Bank of India on Saturday lowered its benchmark interest rate for the second time in two weeks, and for the first time in 11 years reduced the amount of money lenders are required to keep in government bonds.
The Bank of Japan also reduced its key overnight lending rate by 20 basis points to 0.3 per cent last Friday. Taiwan and Hong Kong also trimmed their benchmark rates last week.
Source: Business Times Online
Date: 04/11/2008
Australia: Reserve Bank slashes interest rates to 5.25pc
THE Reserve Bank has slashed interest rates by 75 basis points to 5.25 per cent and economists say borrowers can look forward to more cuts in coming months.
Today's 75 basis point cut beat market expectations of a 50 basis point cut.
If banks pass on the rate cut in full to borrowers, home owners with an average $300,000 mortgage will see a further $150 knocked off their monthly repayments.
But by 6.30pm, just one bank had announced it was cutting its mortgage rates - and the cut was not the full amount. Almost immediately after the RBA announcement, Commonwealth Bank said it would cut interest rates on its standard variable home loan rates by 0.58 per cent, effective November 10.
Source: news.com.au
Date: 04/11/2008
Today's 75 basis point cut beat market expectations of a 50 basis point cut.
If banks pass on the rate cut in full to borrowers, home owners with an average $300,000 mortgage will see a further $150 knocked off their monthly repayments.
But by 6.30pm, just one bank had announced it was cutting its mortgage rates - and the cut was not the full amount. Almost immediately after the RBA announcement, Commonwealth Bank said it would cut interest rates on its standard variable home loan rates by 0.58 per cent, effective November 10.
Source: news.com.au
Date: 04/11/2008
Thursday, October 23, 2008
Call for banks to continue giving loans
Banks and financial institutions should not be too strict and rigid in approving housing loans to eligible borrowers during this global financial crisis.
Real Estate and Housing Developers Association (Rehda) Johor branch immediate past chairman Steven Shum said they should not use the situation in Europe and the US as an excuse.
“We believe banks are cautious now but they should not tighten for the sake of tightening,” he told StarBiz.
Shum said banks in the country should not use the subprime crisis or credit crunch in the US as an excuse not to dispose loans to deserving consumers in Malaysia.
He said although giving out loans was the prerogative of the banks, sometimes it required judgment, confidence and trust on their side.
Shum said if the businesses were viable or the persons applying for the loans had long-term employment and able to serve their loans, banks should not be reluctant to lend them the money.
“At the same time, banks also should look at ways to assist existing borrowers to either refinance their loans or extend their payment period.
“It should be a win-win situation for both the banks and borrowers and the Government must step in to ensure that both parties are well protected,” said Shum.
Developers were likely to consolidate during this time and would look at better construction methods to reduce cost, he said, adding that more were expected to adopt the pre-fabricated method as the costs of labour and raw materials were escalating.
“The pre-fabricated method seems to be a better choice because fewer defects occur during construction, as the pieces are manufactured at the factories compared with the in-situ methods.”
Beginning next year, most developers would go for small launches, said Shum.
Rehda Johor will be organising the Malaysia Property Expo 2008 at the Podium Area, Johor Baru City Square shopping complex, from Oct 30 to Nov 2.
Although the economic outlook was not good, 34 developers taking part in the event were still optimistic that they would be able to generate RM60mil in sales, he said.
He added that they were committed to serve and deliver their products during good or bad times and buyers should use the event to do market research.
Source: The Star Online
Date: 23/10/2008
Real Estate and Housing Developers Association (Rehda) Johor branch immediate past chairman Steven Shum said they should not use the situation in Europe and the US as an excuse.
“We believe banks are cautious now but they should not tighten for the sake of tightening,” he told StarBiz.
Shum said banks in the country should not use the subprime crisis or credit crunch in the US as an excuse not to dispose loans to deserving consumers in Malaysia.
He said although giving out loans was the prerogative of the banks, sometimes it required judgment, confidence and trust on their side.
Shum said if the businesses were viable or the persons applying for the loans had long-term employment and able to serve their loans, banks should not be reluctant to lend them the money.
“At the same time, banks also should look at ways to assist existing borrowers to either refinance their loans or extend their payment period.
“It should be a win-win situation for both the banks and borrowers and the Government must step in to ensure that both parties are well protected,” said Shum.
Developers were likely to consolidate during this time and would look at better construction methods to reduce cost, he said, adding that more were expected to adopt the pre-fabricated method as the costs of labour and raw materials were escalating.
“The pre-fabricated method seems to be a better choice because fewer defects occur during construction, as the pieces are manufactured at the factories compared with the in-situ methods.”
Beginning next year, most developers would go for small launches, said Shum.
Rehda Johor will be organising the Malaysia Property Expo 2008 at the Podium Area, Johor Baru City Square shopping complex, from Oct 30 to Nov 2.
Although the economic outlook was not good, 34 developers taking part in the event were still optimistic that they would be able to generate RM60mil in sales, he said.
He added that they were committed to serve and deliver their products during good or bad times and buyers should use the event to do market research.
Source: The Star Online
Date: 23/10/2008
Wednesday, October 22, 2008
Rate cut likely to be put on hold
Conditions may seem ripe for Bank Negara to cut interest rates at the monetary policy meeting on Friday but economists feel the central bank may leave rates unchanged for the moment.
Domestic economic indicators still show some strength and economists feel interest rates would only be cut should there be signs of a precipitous decline in the economy.
“There are no worrying signals yet and I don’t think Bank Negara will rush to react,’’ said Aseambankers Malaysia Bhd chief economist Suhaimi Ilias. “Perhaps from Bank Negara’s standpoint, the economy is fairly resilient.’’
Worries have emerged over the health of Malaysia’s external trade and industrial production, but consumption indicators such as strong sales of cars in September and credit card repayments indicate the consumer was still in good financial health. This sends a mixed bag of signals on the health of the economy.
The possibility of a rate cut in Malaysia was floated by some after the Government on Monday released pre-emptive measures such as giving RM5bil to Valuecap Sdn Bhd and promising not to cut spending to stabilise the economy. Details of the full package would be known on Nov 4.
The Government’s move was in response to external-led economic worries, which have led to a number of countries to introduce fiscal measures with deep cuts in domestic interest rates.
Those countries have slashed interest rates over the past few weeks to keep growth rates up on concerns over the repercussions from a financial meltdown in the US.
A similar argument for Malaysia could be made but economists were quick to point out that Bank Negara kept interest rates steady in the past even though other countries were raising rates to stem off inflationary pressures. Those interest rate hikes were made prior to the financial crisis in the US.
“At this point, there is ample liquidity in Malaysia,’’ said RAM Holdings Bhd chief economist Dr Yeah Kim Leng.
“When a market lacks confidence, it is not the rate cut that counts.’’
Yeah said there was a possibility of a cut in rates, but he too does not think it would take place at the end of the week.
He said that with real interest rates extremely low as they already were, any cut in the current global environment might not be as effective given the lack of confidence in the global capital markets.
Bank Islam Malaysia Bhd senior economist Azrul Azwar also felt that Bank Negara would keep interest rates unchanged.
“Come Nov 24, the date of the final meeting for the year, Bank Negara might have more or less a complete picture of the current economic trends in Malaysia,’’ he said. “If by then the economy does turn out to be worse, Bank Negara may cut interest rates then.”
Source: The Star Online
Date: 22/10/2008
Domestic economic indicators still show some strength and economists feel interest rates would only be cut should there be signs of a precipitous decline in the economy.
“There are no worrying signals yet and I don’t think Bank Negara will rush to react,’’ said Aseambankers Malaysia Bhd chief economist Suhaimi Ilias. “Perhaps from Bank Negara’s standpoint, the economy is fairly resilient.’’
Worries have emerged over the health of Malaysia’s external trade and industrial production, but consumption indicators such as strong sales of cars in September and credit card repayments indicate the consumer was still in good financial health. This sends a mixed bag of signals on the health of the economy.
The possibility of a rate cut in Malaysia was floated by some after the Government on Monday released pre-emptive measures such as giving RM5bil to Valuecap Sdn Bhd and promising not to cut spending to stabilise the economy. Details of the full package would be known on Nov 4.
The Government’s move was in response to external-led economic worries, which have led to a number of countries to introduce fiscal measures with deep cuts in domestic interest rates.
Those countries have slashed interest rates over the past few weeks to keep growth rates up on concerns over the repercussions from a financial meltdown in the US.
A similar argument for Malaysia could be made but economists were quick to point out that Bank Negara kept interest rates steady in the past even though other countries were raising rates to stem off inflationary pressures. Those interest rate hikes were made prior to the financial crisis in the US.
“At this point, there is ample liquidity in Malaysia,’’ said RAM Holdings Bhd chief economist Dr Yeah Kim Leng.
“When a market lacks confidence, it is not the rate cut that counts.’’
Yeah said there was a possibility of a cut in rates, but he too does not think it would take place at the end of the week.
He said that with real interest rates extremely low as they already were, any cut in the current global environment might not be as effective given the lack of confidence in the global capital markets.
Bank Islam Malaysia Bhd senior economist Azrul Azwar also felt that Bank Negara would keep interest rates unchanged.
“Come Nov 24, the date of the final meeting for the year, Bank Negara might have more or less a complete picture of the current economic trends in Malaysia,’’ he said. “If by then the economy does turn out to be worse, Bank Negara may cut interest rates then.”
Source: The Star Online
Date: 22/10/2008
Announcement On Price Reduction For Consumer Products On Friday - Shahrir
In line with Prime Minister Datuk Seri Abdullah Ahmad Badawi's call to industries to reduce prices of commodities and oil, consumers can expect a reduction in prices of essential products by Friday, says Domestic Trade and Consumers Affairs Minister Datuk Shahrir Samad.
Shahrir said his Ministry had held discussions with a number of hypermarkets but so far only company had agreed to reduce the prices of essential products.
"We hope more companies will agree to reduce prices, especially prices of food and household products," he told reporters after meeting representatives of Non Governmental Organisations (NGO), Industries and Media at his Ministry here Wednesday.
He added that apart from trying to reduce the prices of essential goods, his Ministry was also carrying out a study to overcome a shortage in supply of essential products in rural areas.
"We are carrying out a pilot project in Seberang Perai Utara, Penang and Pekan, Pahang to improve the delivery system so that rural areas can receive essential products on time and at a reasonable price. The project has been successful and I will submit it to the cabinet," he said.
Speaking of a demand by 3,200 petrol station operators who had claimed RM41 million in compensation from the Finance Ministry, Shahrir said in business, loses are a common risk faced by everyone and that no business was free from such risks.
The 3,200 petrol station operators had claimed that the 10 sens reduction in oil prices by the government on Oct 15, had resulted in loses amounting to RM41 million.
"Since the price of crude oil in the global market had dropped, the government had decided to reduce the price so that the people can enjoy the benefit. If we (government) didn't do that it won't be fair," he said.
He added that the operators had also urged the government to review oil prices once a month and not once in two weeks but they must understand that though we review the prices every 14 days, it does not mean that prices would go down.
"They can avoid risks by not stocking up supply before the old stock runs out," said Shahrir.
Source: Bernama.com
Date: 22/10/2008
Shahrir said his Ministry had held discussions with a number of hypermarkets but so far only company had agreed to reduce the prices of essential products.
"We hope more companies will agree to reduce prices, especially prices of food and household products," he told reporters after meeting representatives of Non Governmental Organisations (NGO), Industries and Media at his Ministry here Wednesday.
He added that apart from trying to reduce the prices of essential goods, his Ministry was also carrying out a study to overcome a shortage in supply of essential products in rural areas.
"We are carrying out a pilot project in Seberang Perai Utara, Penang and Pekan, Pahang to improve the delivery system so that rural areas can receive essential products on time and at a reasonable price. The project has been successful and I will submit it to the cabinet," he said.
Speaking of a demand by 3,200 petrol station operators who had claimed RM41 million in compensation from the Finance Ministry, Shahrir said in business, loses are a common risk faced by everyone and that no business was free from such risks.
The 3,200 petrol station operators had claimed that the 10 sens reduction in oil prices by the government on Oct 15, had resulted in loses amounting to RM41 million.
"Since the price of crude oil in the global market had dropped, the government had decided to reduce the price so that the people can enjoy the benefit. If we (government) didn't do that it won't be fair," he said.
He added that the operators had also urged the government to review oil prices once a month and not once in two weeks but they must understand that though we review the prices every 14 days, it does not mean that prices would go down.
"They can avoid risks by not stocking up supply before the old stock runs out," said Shahrir.
Source: Bernama.com
Date: 22/10/2008
Rising cost of living puts a damper on Deepavali sales
The Star Multimedia team recently spoke to shoppers and retailers at the KL Sentral Deepavali bazaar to hear what they have to say.
Monday, October 20, 2008
During financial "tsunami" buying property a better bet
CAN the financial “tsunami” currently drowning many banks in the United States and Europe hit our shores? And, if so, how will our property market be affected?
I believe we cannot run away from the contagion effects of the credit crunch in the West and like it or not when our economy is affected, so will the property market.
However, we will pull through especially given our conservative and well-regulated banking system.
The good thing is we are not faced with a property “bubble” as in the early 1990s and also, banks have reduced their construction loans since end of last year to avoid an over-supply situation.
Fear, uncertainty and even panic have gripped many investors who have dumped their shares in the local bourse.
We must remember that it’s not the global credit crunch that is worrying but soaring inflation caused mainly by spikes in crude oil prices. Although crude oil price has dropped recently, it may go up again.
Our property market has been affected by the high construction costs, inflation and a perceived over-built situation especially of high-end homes.
However, I am confident that if one has extra money and can afford to service a loan, investing in property especially in a good location is still a safer bet and will yield better returns in the long run.
This is not to say that one should not save money in fixed deposits. It is always prudent to have sufficient savings but with fixed deposit rates hovering around 3.7% to 4.2% for 12- and 60-month tenures respectively, it is still a negative return when compared with the current inflation rate of over 7% (for many people it is more like 30%).
What about the stock market? Punters have been nibbling at some bargains in the hope of making a tidy profit in the event of an upswing in price. Trouble is many of us are unsure of when it will hit bottom and how long it will take for it to recover, not to mention a bull-run which seems unlikely in the near future.
Unlike property, which is solid brick and mortar, share prices are often determined by sentiments and, currently sentiments are very weak. Many property counters have taken a beating.
My advice for those wishing to buy their first home is to do it now. Don’t fool yourself that prices of new launches will come down because developers cannot afford to reduce prices anymore as their profit margins are already cut to the bone.
In fact many developers I talked to said they were either withholding launches or increasing prices by 20% to 30%. This is also a good time to go bargain hunting in the secondary market and snap up unsold units of upmarket residential homes before developers are forced to increase their price.
Those who can afford homes priced above RM1mil may hold back on their purchase because of the prevailing global financial and local political uncertainties. There are already reports of some high-end projects having problems pushing off their units.
Times are indeed very challenging.
Even established companies such as Sunrise Bhd has seen a 50.6% drop in property sales from RM1.182bil in 2007 to RM583mil for its financial year ended June 30, 2008.
Sunrise executive chairman Tong Kooi Ong in the latest annual report said the current environment was extremely hostile to property developers in launching new properties, even if they could secure financing.
“We face many of the same challenges as other developers. The most critical currently is the sharp rise in construction costs. With a weaker demand condition, gross margins of future projects will likely fall.
“Projects launched earlier face shrinking profits due to higher costs now. Sales will also likely be slower in the months ahead affecting cash flows and profits negatively.
“With two major future projects on the basis of build-then-sell, our gearing is expected to rise substantially and our interest expenses is likely to be much higher,” he said.
Tong said the sudden and substantial rise in costs had severely damaged the construction industry’s capacity.
“This will affect timely completion of projects and will reduce the availability of suppliers and contractors. The industry is further challenged by the increasing shortage of professionals due to the attraction of overseas markets,” he added.
He warned that construction costs for new projects were expected to rise even further in the months ahead.
“The weaker demand means developers will not be able to adjust prices upwards, leaving little, if any, profit margins,” he said, adding that problems faced by contractors, with mounting costs and shrinking cash flow, would further burden developers.
Source: The Star Online
Date: 20/10/2008
I believe we cannot run away from the contagion effects of the credit crunch in the West and like it or not when our economy is affected, so will the property market.
However, we will pull through especially given our conservative and well-regulated banking system.
The good thing is we are not faced with a property “bubble” as in the early 1990s and also, banks have reduced their construction loans since end of last year to avoid an over-supply situation.
Fear, uncertainty and even panic have gripped many investors who have dumped their shares in the local bourse.
We must remember that it’s not the global credit crunch that is worrying but soaring inflation caused mainly by spikes in crude oil prices. Although crude oil price has dropped recently, it may go up again.
Our property market has been affected by the high construction costs, inflation and a perceived over-built situation especially of high-end homes.
However, I am confident that if one has extra money and can afford to service a loan, investing in property especially in a good location is still a safer bet and will yield better returns in the long run.
This is not to say that one should not save money in fixed deposits. It is always prudent to have sufficient savings but with fixed deposit rates hovering around 3.7% to 4.2% for 12- and 60-month tenures respectively, it is still a negative return when compared with the current inflation rate of over 7% (for many people it is more like 30%).
What about the stock market? Punters have been nibbling at some bargains in the hope of making a tidy profit in the event of an upswing in price. Trouble is many of us are unsure of when it will hit bottom and how long it will take for it to recover, not to mention a bull-run which seems unlikely in the near future.
Unlike property, which is solid brick and mortar, share prices are often determined by sentiments and, currently sentiments are very weak. Many property counters have taken a beating.
My advice for those wishing to buy their first home is to do it now. Don’t fool yourself that prices of new launches will come down because developers cannot afford to reduce prices anymore as their profit margins are already cut to the bone.
In fact many developers I talked to said they were either withholding launches or increasing prices by 20% to 30%. This is also a good time to go bargain hunting in the secondary market and snap up unsold units of upmarket residential homes before developers are forced to increase their price.
Those who can afford homes priced above RM1mil may hold back on their purchase because of the prevailing global financial and local political uncertainties. There are already reports of some high-end projects having problems pushing off their units.
Times are indeed very challenging.
Even established companies such as Sunrise Bhd has seen a 50.6% drop in property sales from RM1.182bil in 2007 to RM583mil for its financial year ended June 30, 2008.
Sunrise executive chairman Tong Kooi Ong in the latest annual report said the current environment was extremely hostile to property developers in launching new properties, even if they could secure financing.
“We face many of the same challenges as other developers. The most critical currently is the sharp rise in construction costs. With a weaker demand condition, gross margins of future projects will likely fall.
“Projects launched earlier face shrinking profits due to higher costs now. Sales will also likely be slower in the months ahead affecting cash flows and profits negatively.
“With two major future projects on the basis of build-then-sell, our gearing is expected to rise substantially and our interest expenses is likely to be much higher,” he said.
Tong said the sudden and substantial rise in costs had severely damaged the construction industry’s capacity.
“This will affect timely completion of projects and will reduce the availability of suppliers and contractors. The industry is further challenged by the increasing shortage of professionals due to the attraction of overseas markets,” he added.
He warned that construction costs for new projects were expected to rise even further in the months ahead.
“The weaker demand means developers will not be able to adjust prices upwards, leaving little, if any, profit margins,” he said, adding that problems faced by contractors, with mounting costs and shrinking cash flow, would further burden developers.
Source: The Star Online
Date: 20/10/2008
Najib: Country not in financial crisis
Finance Minister Datuk Seri Najib Tun Razak says the government is mindful of the impact of global financial turmoil but remains confident in Malaysias financial sector.
Malaysia ideal as hub for international dispute resolutions
Prime Minister Datuk Seri Abdullah Ahmad Badawi says foreign investors and the international dispute resolution community can rest assured that Malaysia is well-equipped to be the major hub for international arbitration and dispute resolutions.
Friday, October 17, 2008
Malaysia, Singapore guarantee bank deposits
Bank Negara's guarantee will cover all ringgit and foreign currency deposits in banks, investment banks and financial firms
SINGAPORE/KUALA LUMPUR: Singapore and Malaysia yesterday pledged to guarantee all local and foreign currency bank deposits, joining governments across the world in shoring up confidence in the embattled banking system.
The neighbouring Southeast Asian countries announced within minutes of each other they will guarantee bank deposits until December 2010.
In the past week Hong Kong, Australia and New Zealand have provided blanket guarantees on all deposits amid a crisis of confidence in global financial markets.
Their actions, however, threatened to draw deposits from neighbouring Asian countries, leading other governments to follow suit with matching assurances.
Singapore’s finance ministry and central bank said in a joint statement the government will back all local and foreign currency deposits in banks, finance firms and investment banks in the country.
The guarantee will be backed by S$150 billion (US$101.4 billion) of government reserves.
“Although Singapore’s banking system continues to be sound and resilient, the government has decided to take precautionary action to avoid an erosion of banks’ deposit base and ensure a level international playing field for banks in Singapore,” the statement said.
Malaysia’s central bank said the government guarantee will cover all ringgit and foreign currency deposits in banks, investment banks and financial firms.
Bank Negara also said access to its liquidity facility will be extended to insurance firms and takaful operators that it supervises and regulates.
It added Malaysia’s banking system was sound and well capitalised, and “it is unlikely that these guarantees will be called upon”.
“These measures are pre-emptive and precautionary, since Malaysian financial institutions are well-capitalised with ample liquidity, and confidence of depositors remains intact,” it said.
Source: Business Times Online
Date: 17/10/2008
SINGAPORE/KUALA LUMPUR: Singapore and Malaysia yesterday pledged to guarantee all local and foreign currency bank deposits, joining governments across the world in shoring up confidence in the embattled banking system.
The neighbouring Southeast Asian countries announced within minutes of each other they will guarantee bank deposits until December 2010.
In the past week Hong Kong, Australia and New Zealand have provided blanket guarantees on all deposits amid a crisis of confidence in global financial markets.
Their actions, however, threatened to draw deposits from neighbouring Asian countries, leading other governments to follow suit with matching assurances.
Singapore’s finance ministry and central bank said in a joint statement the government will back all local and foreign currency deposits in banks, finance firms and investment banks in the country.
The guarantee will be backed by S$150 billion (US$101.4 billion) of government reserves.
“Although Singapore’s banking system continues to be sound and resilient, the government has decided to take precautionary action to avoid an erosion of banks’ deposit base and ensure a level international playing field for banks in Singapore,” the statement said.
Malaysia’s central bank said the government guarantee will cover all ringgit and foreign currency deposits in banks, investment banks and financial firms.
Bank Negara also said access to its liquidity facility will be extended to insurance firms and takaful operators that it supervises and regulates.
It added Malaysia’s banking system was sound and well capitalised, and “it is unlikely that these guarantees will be called upon”.
“These measures are pre-emptive and precautionary, since Malaysian financial institutions are well-capitalised with ample liquidity, and confidence of depositors remains intact,” it said.
Source: Business Times Online
Date: 17/10/2008
Wednesday, October 1, 2008
Malaysia Home Loans - What's New (October, 2008)
October arrives ushering in the festive months, starting with Hari Raya with Deepavali and Christmas closely in tow. Before you know it, it is 2009 and Chinese New Year again. It is a joyous time…but for a most people, these few months also happen to be the most expensive months of the year.
Payment Holidays:
For those who took their home loans from Bank Islam, there is reprieve as the special feature of Bank Islam’s loans is the built-in 2-month payment holiday in November and December of each and every year of the loan tenure. Handy, if you have just blown the Raya budget into orbit, or simply planning to take that long overdue year end get-away.
And the interest rates aren’t too shabby either with rates such as Baiti Home Financing-i (BFR-1.30% to BFR-1.80%) & Baiti Cakna Financing-i (Yr 1: 3.00%, Yr 2: 5.00%, TA: 7.00%)
Lowest Interest Rate:
Competition among lending banks continue to be fiercely fought and EON Bank signals it’s presence with a smashingly low rate of BLR-2.3% for the whole tenure making this the lowest BLR-based loan (for the entire loan tenure) on offer in the market. The package is for property values higher than RM200,000 and is a non-ZEC (non zero entry cost) package [Click here to calculate Entry Cost]. MRTA is compulsory. Lock in period is 5 years and a penalty of 5% of loan amount or RM5,000 is charged for early redemption.
For ZEC package, EON offers BLR-2.10% for years 1-6, and BLR-2.3% thereafter. Lock-in period for the ZEC package is 6 years.
EON’s offer ends 31st October 2008.
For variations of the package e.g ZEC packages, see here.
Fixed Low-start Loan:
These are loans with fixed interest rates in the initial years before reverting to a BLR-based interest rate. If you are of the opinion that interest rate is northward bound anytime now but will eventually drop again, then these are the loans for you.
For this category, it’s a coin toss between OCBC, and Asian Finance Bank: OCBC offers 5.5% for the first 3 years, followed by BLR-1.75% (years 4-5) and then BLR-2% thereafter. A very good rate indeed plus the loan carries prepayment and “re-draw” facilities. Minimum loan amount is RM200,000 and the package is a non-ZEC package.
Or if you prefer to enjoy a fixed rate for 5 years, OCBC offers a 5-year fixed rate @ 6.25% followed by BLR-2% from years 6 onwards. [See the rest of OCBC’s loans]
Lock-in period is 3 years for the 5.5% fixed package and 5 years for the 6.25% fixed package.
The other contender in this category is a relatively “new” player i.e. Asian Finance Bank. Not many people have heard of Asian Finance Bank although they will now, with AFB’s introduction of a loan with the welcoming 5% fixed rate in years 1 & 2, followed by BFR-1.5% (negotiable depending on credit strength). There is ZERO LOCK-IN period, so if you can actually clear your entire loan within 2 years, here is the absolutely cheapest loan in town – very useful if you are buying a new property whilst selling off another.
AFB is an Islamic Bank and therefore, like Bank Islam, borrowers enjoy discounts off the stamp duties 20%.
The AFB loan package is for properties in Klang Valley and Johor Baharu only and applies to landed and non-landed properties. Maximum margin is 90% and the big bonus is that there is ZERO lock-in period with this package.
Floating Low-start Loan:
As for “non-fixed low-start” loans, Alliance Bank is still the undisputed champion with BLR-2.4% for years 1 and 2. Thereafter the rate is still attractive at BLR-2.1%.
In addition, margin of borrowing can go up to 90%+5% if borrowers choose to finance legal fees and MRTA. However, this extremely attractive offer is for loan amounts between RM300,000 and RM1Million.
Flexi (Deposit-Linked) Loans:
The “Best Flexi Loan” title is retained by Alliance Islamic . Last month, this is what we wrote about it and nothing has changed:
“While a normal Savelink (deposit-linked) loan allows you to offset the amount you keep in deposit against the loan principal, the deposit-linked- account DOES NOT pay you any interest per se.
Alliance Islamic Flexi is a deposit-linked account that NOT ONLY saves you interest by offsetting the deposit sum against the financing sum…IT ALSO PAYS YOU A “PROFIT RATE”. After all, why have your cake if you can’t eat it.
In addition, the one-time set up fee of RM200 applicable on normal Savelink is also not applicable with the Islamic Flexi.
Other goodies include:
-Financing tenure of 35 years or up to age 65, whichever is earlier
-Maximum financing of 90% of purchase price
-Option to include MRTA and stamp duty into financing (+ additional 5%)
-Option to choose Zero Entry Cost (ZEC)/ Financed Entry Cost (FEC) Package) on daily rest calculation
-Rate protection with capped ceiling rate at 9.9%
-No stamp duty for refinancing from conventional loan
-20% discount on stamp duty for new purchase
-For completed properties and for landed & Non-landed
See Alliance Islamic Financing Rates here…
Tuesday, September 16, 2008
Malaysia Home Loans - What's New (September, 2008)
The much anticipated rise in mortgage lending rates has not happened as predicted and the Overnight Policy Rate remains at 3.5%, and Base Lending Rate for the time being, stays at 6.75%. However pundits maintain that an interest rates increase in the third quarter of 2008 is likely.
Regardless of the eventual movement in OPR, Malaysian lenders continue to compete, and September saw the launching new “discounted” home loan packages and some with innovative features.
For quite a long time, HSBC watched as Malaysian Banks slashed rates. Now the “world’s local bank” with a long history and reputation of service excellence, finally introduces a number of “winning” home loans. If you are not fussy about its 7-year lock-in, then check out HSBC’s Home Smart value Plan (Non Free Moving Cost, No MRTA) which starts with a first year rate of BLR-2.25%, followed by BLR-1.75% (years 2-5) and then BLR-1.95% from the sixth year onwards.
The bonus is that the said package comes with “flexi” features, allowing prepayments and withdrawals.
However, the attractive rates apply provided the Letter of Offer is accepted within 3 days of issuance, which is fair enough.
As far as Refinancing is concerned, smart money is with HSBC’s Home Smart Refinancing (min RM RM250,000) that starts with BLR-2.35% and ends with BLR-2% (years 2-5 interest rates vary depending on the loan amount). This is without a doubt the star amongst all refinancing packages out there…and as said earlier…delivered with a healthy dose of top-notch service.
Unconfirmed reports from borrowers seem to indicate that for existing HSBC clients and for those with good credit credentials, HSBC may even do better than the published rates! See the rest of HSBC’s new loans.
ING went off the lending activity radar for a while but is now back with a vengeance, determined to reclaim the mantle of the “lowest fixed rates”. ING is now offering Non-Free Moving Cost loans with rates fixed at 5.85% (margin of below 80%) and 5.95% (80%-90% margin).
Regardless of whether interest rates are likely to increase in the short or long term, a fixed rate of 5.85% is always a good bet as it provides certainty for borrowers and a peace of mind. (click here to see how much more interests is charged as rates go up)
For its FREE MOVING COST package, ING is offering 6.25% (below 80% margin) and 6.35% (80%-90% margin).
The rates apply for properties that are completed as well as those under-construction. Insurance/MRTA is compulsory **
A point to note: ING will not consider applicants with more than 4 credit cards.
For certain ING will not be offering this special low fixed rate for much longer and the loan package offer closes end September 2008. So hurry!
** Note: What if you like the low fixed rate BUT do not like to the compulsory Insurance/MRTA? Although it is not official news, AIA Mortgage with fixed rates of 5.99% (0.05% higher than ING’s…plus change) has on a number of occasions waived its requirement for insurance.
Bank Simpanan Nasional enters the fray packing a mighty punch with its 5.99% Islamic Fixed Rate (BSN Mortgage Bonanza). Although fixed rates have previously been offered by insurance lenders such as AIA and ING and Islamic Banks, BSN is the first Bank to offer an Islamic financing with such a low fixed rate.
The financing offer is only applicable to completed properties, up to 90% margin of financing. Minimum loan is set at RM200,000
As with any Islamic financing , enjoy a 20% discount off the stamp duty for new purchases, and also a Takaful policy that covers even ‘Acts of God’.
The challenge is to locate one of only 13 branches that do housing loans. For further information, click here and your enquiries will be directed to the relevant BSN branch.
Whilst “deposit-linked” loans are quite common these days, Alliance Islamic has on offer an Islamic Deposit-Linked Financing…with a good twist!
While a normal Savelink (deposit-linked) loan allows you to offset the amount you keep in deposit against the loan principal, the deposit-linked- account DOES NOT pay you any interest per se.
Alliance Islamic Flexi is a deposit-linked account that NOT ONLY saves you interest by offsetting the deposit sum against the financing sum…IT ALSO PAYS YOU A “PROFIT RATE”. After all, why have your cake if you can’t eat it.
In addition, the one-time set up fee of RM200 applicable on normal Savelink is also not applicable with the Islamic Flexi.
Other goodies include:
-Financing tenure of 35 years or up to age 65, whichever is earlier
-Maximum financing of 90% of purchase price
-Option to include MRTA and stamp duty into financing (+ additional 5%)
-Option to choose Zero Entry Cost (ZEC)/ Financed Entry Cost (FEC) Package) on daily rest calculation
-Rate protection with capped ceiling rate at 9.9%
-No stamp duty for refinancing from conventional loan
-20% discount on stamp duty for new purchase
-For completed and Under Construction properties and for landed & Non-landed
See Alliance Islamic Financing Rates here…
Bank Islam continues to impress with its Baiti Cakna, offering 100% financing for both completed and under-construction properties. The margin of 100% is only for properties on Bank Islam’s panel of developers . Interest rate for properties under construction is 2% in year 1; 4% in year 2 and BFR-1.3% to BFR-1.8% thereafter (non Zero Entry). For completed properties, year 1 interest rate is 3% and 5% for year 2. See Bank Islam Loans
More good news follow. OCBC has reintroduced their “Hybrid Loans” ie fixed for a few years and then float, and it is a very good one! At the time of this writing OCBC has not made public the rates but we understand it is ridiculously low fixed rate in the first 3 years, and then followed by up to BLR-2% from year 6 onwards. How low is the rate? Ask OCBC here.
While it is a normal term loan, loan prepayment and over the counter withdrawals are allowed.
Another bonus from OCBC is that while a lot of lenders look at total commitment (including other debts, credit cards, hire purchase etc) OCBC’s credit assessment focuses on the repayment amount of the OCBC loan you are applying to as a ratio of your declared income. Translated, it means that technically it is “easier” to qualify for approval, although by no means does that imply that the Bank compromises on quality.
Finally, MAA Mortgage with its unique 100-year revolving loans (Long Life Loan) has revised its rates to KLIBOR[3.69%] + 3.15% = 6.84%. With a minimum loan of RM222,000 for landed properties and RM300,000 for non-landed properties, MCL remains the only loan that caters for borrowers over 65 years of age.
MAA’s financial planners also feel that with 100 year loan, borrowers can manage their retirement years cash flow better and have cash-at-call (withdrawal facilities are available) without having to sell their homes to fund retirement expenses.
In addition, MAA recently launched 2 new packages (MHF) with KLIBOR + 1.89% for completed and under-construction properties above RM225,000 and KLIBOR + 2.39% for properties under RM225,000. Unlike “Long-Life” MHF does not come with a revolving credit component and it’s a straight out term loan albeit with a maximum term of 45 years or until 80 years of age.
Special promotion: Zero Entry Cost loans are available at MAA at same rates provided applications are received before 31st March 2009. To apply/enquire, click here
Monday, September 15, 2008
How to get top dollars for your house
SPRING is selling season for real estate and, despite warnings that this year will be worse than last year, there are still things people can do to get the best price.
Brock Harcourts Henley Beach director Sam Hosking says people could lose tens of thousands of dollars if they fail to make their home stand out from the crowd.
"There are many reality-TV shows about the property market that demonstrate the benefits of time and effort spent on presentation prior to sale,'' he said. "A poorly presented home is unlikely to generate emotional appeal and attract buyers.''
Mr Hosking said it was important to discuss presentation with your real estate agent, who might call in a specialist to help.
"Take the time to tidy up the garden and consider cosmetic improvements such as a fresh coat of paint, because it is not just a case of a quick tidy-up the night before the inspection,'' he said.
Timing is also important.
"The process of selling a home can take three to four months from start to finish, so make sure you allow enough time,'' he said.
"This includes appointing an agent, preparing the property for inspection and finalising marketing and advertising material. Once on the market, the time it takes to sell a property that has been accurately priced is generally between four and six weeks. If you're selling your home by public auction, the marketing schedule will run for about four weeks.''
The method of selling a property is usually either by private treaty or public auction, although some prestige homes may sell by registration of interest or tender.
Mr Hosking said it was important to discuss this with your agent.
"If a property is likely to attract more than one potential buyer, auction allows competitive bidding to increase the final sale price,'' he said.
"However, deciding the method of sale should be an objective decision based on market conditions, the location of the home, the type or style of home and whether it has a multitude of uses.''
Mr Hosking said in some states new laws had been introduced to combat under-quoting.
"Both agent and vendor are required to record their expected price. Advertisements must use the higher amount, known as the prescribed minimum marketing price, and can range 10 per cent above if desired,'' he said.
"Auction practices have also changed, with people not allowed to bid unless they have registered with the agent.''
Checklist
* Start early - the process of selling a home can take three or four months.
* Appoint an agent you trust.
* Confirm selling costs with your agent.
* Present your home in the best shape possible.
Source: news.com.au
Date: 15/09/2008
Brock Harcourts Henley Beach director Sam Hosking says people could lose tens of thousands of dollars if they fail to make their home stand out from the crowd.
"There are many reality-TV shows about the property market that demonstrate the benefits of time and effort spent on presentation prior to sale,'' he said. "A poorly presented home is unlikely to generate emotional appeal and attract buyers.''
Mr Hosking said it was important to discuss presentation with your real estate agent, who might call in a specialist to help.
"Take the time to tidy up the garden and consider cosmetic improvements such as a fresh coat of paint, because it is not just a case of a quick tidy-up the night before the inspection,'' he said.
Timing is also important.
"The process of selling a home can take three to four months from start to finish, so make sure you allow enough time,'' he said.
"This includes appointing an agent, preparing the property for inspection and finalising marketing and advertising material. Once on the market, the time it takes to sell a property that has been accurately priced is generally between four and six weeks. If you're selling your home by public auction, the marketing schedule will run for about four weeks.''
The method of selling a property is usually either by private treaty or public auction, although some prestige homes may sell by registration of interest or tender.
Mr Hosking said it was important to discuss this with your agent.
"If a property is likely to attract more than one potential buyer, auction allows competitive bidding to increase the final sale price,'' he said.
"However, deciding the method of sale should be an objective decision based on market conditions, the location of the home, the type or style of home and whether it has a multitude of uses.''
Mr Hosking said in some states new laws had been introduced to combat under-quoting.
"Both agent and vendor are required to record their expected price. Advertisements must use the higher amount, known as the prescribed minimum marketing price, and can range 10 per cent above if desired,'' he said.
"Auction practices have also changed, with people not allowed to bid unless they have registered with the agent.''
Checklist
* Start early - the process of selling a home can take three or four months.
* Appoint an agent you trust.
* Confirm selling costs with your agent.
* Present your home in the best shape possible.
Source: news.com.au
Date: 15/09/2008
Thursday, September 11, 2008
Australia: New way to buy property
BUYING into Australia's $3.2 trillion housing market -- without owning a single property -- will soon be a mouse click away.
An agreement between the Australian Securities Exchange and property research groups PR Data and Rismark has paved the way for the introduction next year of residential property derivatives, which will be traded on the ASX like shares, The Australian reports.
Modelled on a successful US scheme that had $US2 billion ($2.5 billion) worth of trades in its first year, Australian investors will be able to both buy and sell derivative or futures contracts in our major housing markets without owning property.
"It's a synthetic way of gaining exposure to Australian housing markets,'' said Paul Williams, the head of property derivatives for GFI Australia.
"This is exciting for our developing property derivatives market.''
The scheme is mostly pitched at investors seeking exposure to property without the hassles of owning real estate and the typical $20,000-$50,000 transaction costs involved in buying and selling residential property. It could also be a godsend for renters priced out of the market by escalating prices.
Rismark International executive director Ben Skilbeck said first-time buyers required to save a $100,000 deposit for a $500,0000 home were commonly locked out because by the time they had saved their deposit, the cost of the house had risen another $200,000.
Mr Skilbeck said owing derivatives meant savings would effectively increase in line with house prices, providing a hedge against a future housing boom.
While the ASX declined to reveal details of the scheme -- including the cost to investors -- market players will be able to punt on falling house prices.
"If prices are going down in Perth, I will be able to sell my derivatives contract at a profit,'' said one analyst.
The scheme, which involves the purchase of derivative contracts from the ASX, is likely to be popular with apartment builders and developers looking to set benchmarks for both pricing and returns.
Source: news.com.au
Date: 11/09/2008
An agreement between the Australian Securities Exchange and property research groups PR Data and Rismark has paved the way for the introduction next year of residential property derivatives, which will be traded on the ASX like shares, The Australian reports.
Modelled on a successful US scheme that had $US2 billion ($2.5 billion) worth of trades in its first year, Australian investors will be able to both buy and sell derivative or futures contracts in our major housing markets without owning property.
"It's a synthetic way of gaining exposure to Australian housing markets,'' said Paul Williams, the head of property derivatives for GFI Australia.
"This is exciting for our developing property derivatives market.''
The scheme is mostly pitched at investors seeking exposure to property without the hassles of owning real estate and the typical $20,000-$50,000 transaction costs involved in buying and selling residential property. It could also be a godsend for renters priced out of the market by escalating prices.
Rismark International executive director Ben Skilbeck said first-time buyers required to save a $100,000 deposit for a $500,0000 home were commonly locked out because by the time they had saved their deposit, the cost of the house had risen another $200,000.
Mr Skilbeck said owing derivatives meant savings would effectively increase in line with house prices, providing a hedge against a future housing boom.
While the ASX declined to reveal details of the scheme -- including the cost to investors -- market players will be able to punt on falling house prices.
"If prices are going down in Perth, I will be able to sell my derivatives contract at a profit,'' said one analyst.
The scheme, which involves the purchase of derivative contracts from the ASX, is likely to be popular with apartment builders and developers looking to set benchmarks for both pricing and returns.
Source: news.com.au
Date: 11/09/2008
Wednesday, September 10, 2008
Demand for home loans remains weak
JUST 50,279 people took out a new home loan in July and retail spending remained slim, despite households benefiting from a round of tax cuts.
Demand for owner-occupied home loans fell for a sixth straight month in July, declining by a seasonally-adjusted 0.2 per cent to a four-year low, the Australian Bureau of Statistics says.
Economists had forecast flat growth in July.
At the same time, the bureau's new retail trade trends report shows consumer spending rose 0.1 per cent in trend terms to $18.2 billion.
The data - released today - back the Reserve Bank of Australia's decision to cut its official cash rate earlier this month, the first reduction in nearly seven years.
The $7 billion in tax cuts introduced in July - worth around $20 per week for the average wage earner - was partly offset by another round of independent loan rate increases by the retail banks.
The format for the bureau's new retail report, which now just gives trend estimate figures rather than seasonally-adjusted and original measures as well, was the result of the Rudd Government's Budget cuts.
The sample size for the retail report has also been been cut by two thirds, which the bureau says will increase month-to-month volatility in the numbers.
However, the seasonally-adjusted numbers - preferred by economists and financial market traders - are available on the bureau's website.
It showed retail trade rose by a seasonally-adjusted 1.4 per cent in July.
Economists had forecast a seasonally-adjusted increase of 0.5 per cent.
Source: news.com.au
Date: 09/09/2008
Demand for owner-occupied home loans fell for a sixth straight month in July, declining by a seasonally-adjusted 0.2 per cent to a four-year low, the Australian Bureau of Statistics says.
Economists had forecast flat growth in July.
At the same time, the bureau's new retail trade trends report shows consumer spending rose 0.1 per cent in trend terms to $18.2 billion.
The data - released today - back the Reserve Bank of Australia's decision to cut its official cash rate earlier this month, the first reduction in nearly seven years.
The $7 billion in tax cuts introduced in July - worth around $20 per week for the average wage earner - was partly offset by another round of independent loan rate increases by the retail banks.
The format for the bureau's new retail report, which now just gives trend estimate figures rather than seasonally-adjusted and original measures as well, was the result of the Rudd Government's Budget cuts.
The sample size for the retail report has also been been cut by two thirds, which the bureau says will increase month-to-month volatility in the numbers.
However, the seasonally-adjusted numbers - preferred by economists and financial market traders - are available on the bureau's website.
It showed retail trade rose by a seasonally-adjusted 1.4 per cent in July.
Economists had forecast a seasonally-adjusted increase of 0.5 per cent.
Source: news.com.au
Date: 09/09/2008
Save money by swapping, not shopping
AUSTRALIAN mothers are swapping rather than shopping to try to save money.
New websites set up by enterprising mums allow parents to swap services such as babysitting, odd jobs, holidays, and clothes.
One woman has signed up to new site mumswap.com.au to swap her husband's lawnmowing for clothes for her daughter.
Another new site, matchandmind.com.au, has been set up to help parents wanting to look after each others' children for free.
As grocery and petrol prices soar, and families battle crippling interest rates, these savvy mums are keen to give families a break -- often for no personal profit.
Melbourne mum Christie is the brain behind mumswap.com.au which is a free bartering hub.
It has been going only since the beginning of August, but is on track to get 2000 visitors a month.
Christie, 29, a mother of one from the southeastern suburbs, said the idea was born when she "realised everything mums were saying they wanted could be provided by another mum''.
"Mums offer to do someone's chores and borrow their boat for the weekend or do some babysitting and get some cooking lessons,'' she said.
Babysitting swap site, matchandmind.com.au, was set up by Carol Stephenson, a Malvern mother of five.
"Not having family in Melbourne, we would swap babysitting as we needed to with friends, and I thought there must be some way we could help others do the same. And so the website was born,'' she said.
"If you want a morning off once a week, it's like a play date -- it gives you a break. And then you might return the favour another day.''
Mums pay $39.95 a year to contact others, but no money changes hands for babysitting.
Another website, runrabbitrun.com.au, begun by Eltham mum Michelle Caird two weeks ago, offers designer kids' clothes at cost prices.
One keen money-saver is Jodie Daniel, 40, a Keysborough mother of two.
She's signed up to mumswap.com.au to help promote her home-based business deadsea.com.au, selling beauty products, and to swap some of her kids' clothes and toys.
Source: news.com.au
Date: 10/09/2008
New websites set up by enterprising mums allow parents to swap services such as babysitting, odd jobs, holidays, and clothes.
One woman has signed up to new site mumswap.com.au to swap her husband's lawnmowing for clothes for her daughter.
Another new site, matchandmind.com.au, has been set up to help parents wanting to look after each others' children for free.
As grocery and petrol prices soar, and families battle crippling interest rates, these savvy mums are keen to give families a break -- often for no personal profit.
Melbourne mum Christie is the brain behind mumswap.com.au which is a free bartering hub.
It has been going only since the beginning of August, but is on track to get 2000 visitors a month.
Christie, 29, a mother of one from the southeastern suburbs, said the idea was born when she "realised everything mums were saying they wanted could be provided by another mum''.
"Mums offer to do someone's chores and borrow their boat for the weekend or do some babysitting and get some cooking lessons,'' she said.
Babysitting swap site, matchandmind.com.au, was set up by Carol Stephenson, a Malvern mother of five.
"Not having family in Melbourne, we would swap babysitting as we needed to with friends, and I thought there must be some way we could help others do the same. And so the website was born,'' she said.
"If you want a morning off once a week, it's like a play date -- it gives you a break. And then you might return the favour another day.''
Mums pay $39.95 a year to contact others, but no money changes hands for babysitting.
Another website, runrabbitrun.com.au, begun by Eltham mum Michelle Caird two weeks ago, offers designer kids' clothes at cost prices.
One keen money-saver is Jodie Daniel, 40, a Keysborough mother of two.
She's signed up to mumswap.com.au to help promote her home-based business deadsea.com.au, selling beauty products, and to swap some of her kids' clothes and toys.
Source: news.com.au
Date: 10/09/2008
iPod invented by furniture salesman
Apple has admitted it did not invent the iPod, which was in fact the brainchild of a British man who patented his prototype 30 years ago.
Kane Kramer, now 52, took out a worldwide patent in 1979 for a media player that looked similar to the iPod but could store only 3.5 minutes of music. He dubbed it the IXI and planned to expand its capacity as technology advanced.
However, after running out of funds in 1988 Kramer was unable to put forward the £60,000 needed to renew the patent so his idea fell into the public domain.
Kramer, now a struggling furniture salesman, was therefore not entitled to receive any money or recognition from those who used his design.
The revelations came to light after patent holding company Burst sued Apple, claiming the iPod infringed on its patents.
Apple flew Kramer to the US to give evidence in its defence and used his original 1979 drawings of the IXI as evidence that Kramer, in fact, was the iPod's inventor.
The original iPod was unveiled in October 2001 and, since then, 163 million have been sold, filling Apple's coffers with billions of dollars in revenue.
"I was up a ladder painting when I got the call from a lady with an American accent from Apple saying she was the head of legal affairs and that they wanted to acknowledge the work that I had done," Kramer told the Daily Mail.
"I must admit that at first I thought it was a wind-up by friends. But we spoke for some time, with me still up this ladder slightly bewildered by it all, and she said Apple would like me to come to California to talk to them."
Kramer was questioned by Burst's lawyers for 10 hours. The dispute was eventually settled out of court.
Kramer, who recently closed down his struggling furniture design business, is now negotiating with Apple to receive compensation for the company's use of his drawings.
So far he has only been paid a fee by Apple for consultancy work related to the legal case.
"I can't even bring myself to buy an iPod for myself," he told the newspaper.
"Apple did give me one but it broke down after eight months."
Source: smh.com.au
Date: 10/09/2008
Kane Kramer, now 52, took out a worldwide patent in 1979 for a media player that looked similar to the iPod but could store only 3.5 minutes of music. He dubbed it the IXI and planned to expand its capacity as technology advanced.
However, after running out of funds in 1988 Kramer was unable to put forward the £60,000 needed to renew the patent so his idea fell into the public domain.
Kramer, now a struggling furniture salesman, was therefore not entitled to receive any money or recognition from those who used his design.
The revelations came to light after patent holding company Burst sued Apple, claiming the iPod infringed on its patents.
Apple flew Kramer to the US to give evidence in its defence and used his original 1979 drawings of the IXI as evidence that Kramer, in fact, was the iPod's inventor.
The original iPod was unveiled in October 2001 and, since then, 163 million have been sold, filling Apple's coffers with billions of dollars in revenue.
"I was up a ladder painting when I got the call from a lady with an American accent from Apple saying she was the head of legal affairs and that they wanted to acknowledge the work that I had done," Kramer told the Daily Mail.
"I must admit that at first I thought it was a wind-up by friends. But we spoke for some time, with me still up this ladder slightly bewildered by it all, and she said Apple would like me to come to California to talk to them."
Kramer was questioned by Burst's lawyers for 10 hours. The dispute was eventually settled out of court.
Kramer, who recently closed down his struggling furniture design business, is now negotiating with Apple to receive compensation for the company's use of his drawings.
So far he has only been paid a fee by Apple for consultancy work related to the legal case.
"I can't even bring myself to buy an iPod for myself," he told the newspaper.
"Apple did give me one but it broke down after eight months."
Source: smh.com.au
Date: 10/09/2008
Monday, September 8, 2008
Is the world facing another stagflation?
THE 1970s were known for stagflation due to the 1973 oil shock following a war in the Middle East that saw the Arab members of the Organisation of Petroleum Exporting Countries lowering oil production.
Today, the world might be entering another period of stagflation despite lower energy and food prices as a number of countries, especially in the euro area and Japan, have reported slower growth and stock markets continue to weaken.
This time around, the world is again facing heighten geopolitical tensions in the Middle East and other oil producing regions of the world such as Nigeria and Venezuela.
Turmoil in the financial markets, resulting from the subprime crisis in the US, continue to haunt investors.
Based on June’s prices, oil and crude palm oil (CPO) were still 99% and 32% higher respectively than the average world market prices in the same period last year. In June 2008, oil and CPO traded at about US$135 per barrel and RM3,300 per tonne, respectively.
Oil was at it highest on July 11 this year, when it traded at over US$147 per barrel while CPO was at its highest in March, when it traded at RM4,486 per tonne.
An economist with a Hong Kong-based bank told StarBiz that lower consumption from countries in the euro area and Japan did not necessarily presage a collapse in commodity prices as strong demand is still coming from emerging markets such as China and India.
“Commodities posted their best performance in more than 30 years in the first six months of this year, rising about 30%.
“In July, they had their worst month in 28 years, falling by 10%,” he said, adding that Goldman Sachs Group Inc had predicted that China’s demand for oil would grow by 5% annually.
Slower GDP growth
For Malaysia, it is the general consensus that growth would slow to between 4.5% and 5% this year compared with last year’s 6.3% while inflation, according to Bank Negara’s forecast, is expected to be between 5.5% and 6%. For the month of July, Malaysia’s inflation rose to 8.5% compared with 7.7% in June.
This of course pales in comparison to Vietnam, where inflation last month surged 28.3% amidst soaring food, housing and transportation costs. The Asian Development Bank has lowered its growth forecast for the country to 6.5% this year and 6.8% next year. Last year, the country’s economy expanded by 8.2%.
The situation is made worst by the breakdown in late July of the Doha round of talks of the World Trade Organisation because curbs on the free flow of goods and labour that this could add to the troubles of stagnating economies.
Australia and New Zealand Banking Group Ltd (ANZ) analysts led by Asia head of economics and research Paul Gruenwald said in a report that growth was slowing across most but not all of Asia with the more export-dependent open economies being the hardest hit.
“We expect growth to continue to slow into 2009 as the external environment weakens further,” he said.
According to investment bank Schroders plc, on a consensus basis, global inflation is forecast to hit 4.8% while among emerging economies, which includes China, India and a slew of Southeast Asian and Latin American countries, inflation is forecast to hit 8%.
Last year, global inflation was 2.9% while emerging economies saw inflation rising to 5.2%.
US slowdown
Schroders chief economist Keith Wade said in a report that there was increasing evidence a slowdown in the US was affecting the rest of the world, with output in Europe and Japan falling in the second quarter.
“The world economy appears to be re-coupling as evidence increases of the slowdown spreading beyond the US. Both Europe and Japan recorded a fall in GDP during the second quarter and business surveys suggest that there is worse to come,” he said.
Wade said the countries of the Organisation for Economic Cooperation and Development was facing a “coordinated downturn” while pressure was mounting in emerging economies. “In terms of changes in consensus, emerging economies are now in stagflation zone: forecasts for growth are falling while those for inflation are rising,” he added.
Meanwhile, even the six-member Gulf Cooperation Council (GCC), an important oil-producing region of the Middle East, have seen investors exiting its markets as oil price dropped but inflation continued to stay high.
“Foreign institutions are exiting emerging markets as they try to cover positions in the US,” KFH Research Ltd said in a report on the GCC.
Source: The Star Online
Date: 08/09/2008
Today, the world might be entering another period of stagflation despite lower energy and food prices as a number of countries, especially in the euro area and Japan, have reported slower growth and stock markets continue to weaken.
This time around, the world is again facing heighten geopolitical tensions in the Middle East and other oil producing regions of the world such as Nigeria and Venezuela.
Turmoil in the financial markets, resulting from the subprime crisis in the US, continue to haunt investors.
Based on June’s prices, oil and crude palm oil (CPO) were still 99% and 32% higher respectively than the average world market prices in the same period last year. In June 2008, oil and CPO traded at about US$135 per barrel and RM3,300 per tonne, respectively.
Oil was at it highest on July 11 this year, when it traded at over US$147 per barrel while CPO was at its highest in March, when it traded at RM4,486 per tonne.
An economist with a Hong Kong-based bank told StarBiz that lower consumption from countries in the euro area and Japan did not necessarily presage a collapse in commodity prices as strong demand is still coming from emerging markets such as China and India.
“Commodities posted their best performance in more than 30 years in the first six months of this year, rising about 30%.
“In July, they had their worst month in 28 years, falling by 10%,” he said, adding that Goldman Sachs Group Inc had predicted that China’s demand for oil would grow by 5% annually.
Slower GDP growth
For Malaysia, it is the general consensus that growth would slow to between 4.5% and 5% this year compared with last year’s 6.3% while inflation, according to Bank Negara’s forecast, is expected to be between 5.5% and 6%. For the month of July, Malaysia’s inflation rose to 8.5% compared with 7.7% in June.
This of course pales in comparison to Vietnam, where inflation last month surged 28.3% amidst soaring food, housing and transportation costs. The Asian Development Bank has lowered its growth forecast for the country to 6.5% this year and 6.8% next year. Last year, the country’s economy expanded by 8.2%.
The situation is made worst by the breakdown in late July of the Doha round of talks of the World Trade Organisation because curbs on the free flow of goods and labour that this could add to the troubles of stagnating economies.
Australia and New Zealand Banking Group Ltd (ANZ) analysts led by Asia head of economics and research Paul Gruenwald said in a report that growth was slowing across most but not all of Asia with the more export-dependent open economies being the hardest hit.
“We expect growth to continue to slow into 2009 as the external environment weakens further,” he said.
According to investment bank Schroders plc, on a consensus basis, global inflation is forecast to hit 4.8% while among emerging economies, which includes China, India and a slew of Southeast Asian and Latin American countries, inflation is forecast to hit 8%.
Last year, global inflation was 2.9% while emerging economies saw inflation rising to 5.2%.
US slowdown
Schroders chief economist Keith Wade said in a report that there was increasing evidence a slowdown in the US was affecting the rest of the world, with output in Europe and Japan falling in the second quarter.
“The world economy appears to be re-coupling as evidence increases of the slowdown spreading beyond the US. Both Europe and Japan recorded a fall in GDP during the second quarter and business surveys suggest that there is worse to come,” he said.
Wade said the countries of the Organisation for Economic Cooperation and Development was facing a “coordinated downturn” while pressure was mounting in emerging economies. “In terms of changes in consensus, emerging economies are now in stagflation zone: forecasts for growth are falling while those for inflation are rising,” he added.
Meanwhile, even the six-member Gulf Cooperation Council (GCC), an important oil-producing region of the Middle East, have seen investors exiting its markets as oil price dropped but inflation continued to stay high.
“Foreign institutions are exiting emerging markets as they try to cover positions in the US,” KFH Research Ltd said in a report on the GCC.
Source: The Star Online
Date: 08/09/2008
What you should do as rates fall
THE first Reserve Bank (RBA) rate cut in seven years was greeted with relief by borrowers last week. All the big banks and non-bank lenders agreed to pass on the 0.25 per cent cut in full -- and in record time.
Pressure exerted by Treasurer Wayne Swan before the announcement prompted the banks to respond within five minutes of the announcement last Tuesday.
The cut will mean a homeowner with a $300,000 mortgage will save around $55 a month in repayments, based on a 30-year term.
But the cut has also presented house-hunters -- and those looking to re-mortgage -- with a bit of a quandary. Should they stick with their variable-rate loan, or take some of the cheaper fixed-rate deals now on the market?
The typical bank variable rate will now be around 8.36 per cent, compared to the best fixed deals, which start from around 7.99 per cent -- an immediate saving for those who fix.
But economists say that the cash rate may well fall by as much as 1.5 per cent during the next year or two -- and that means variable mortgage rates could fall to around 7.11 per cent.
That lower rate, however, assumes that the banks will pass on all of the cash rate cuts -- and that is unlikely.
Last Wednesday, CBA boss Ralph Norris was emphasising that, although the RBA may well announce a series of rate cuts, the rising cost of funds on the international wholesale markets, where banks raise around one-third of their mortgage funds, means that the banks may not be able to pass on many more cash rate reductions.
"I can't guarantee anything,'' Mr Norris said. "At the moment, we have a situation where offshore funding costs have increased dramatically -- about eight-fold in margin over the last nine or 10 months, due to the overseas (sub-prime) crisis.''
It all makes the decision, for those in the market for a mortgage, much more complex even than usual.
Jennifer Nielsen, CEO of mortgage broker The Loan Market Group, says: "The cheapest fixes at the moment are around 8 per cent and you wouldn't want to fix yet. Variable rates are the way to go. The trick is to fix when you can see we are nearing the bottom of the cutting cycle -- and we are a long way from that at the moment.
"We are almost certainly looking at a downwards or, at worst, flat period in mortgage rates, so you shouldn't lock yourself into a fixed rate at current levels, unless you really need that peace of mind.''
"It all comes down to individual circumstances. The financial markets are pricing in an 80 per cent chance of another cut next month and are expecting a further two by next April, bringing the cash rate down to 6.25 per cent.
Frank Lopez, of financial data firm Cannex, says borrowers can get the cheapest variable rate, if they go for a deal with no bells or whistles -- just a clean repayment mortgage.
Wizard is offering a rate-breaker loan at 7.88 per cent, with a fee of $760. One Direct Home Loans is offering a rate of 8.61 per cent, but with a fee of just $60. These deals have minimal features, but also competitive rates.
"Many people who take mortgages with lots of additional features, such as redraw or payment holidays never actually use them -- or don't use them enough to justify the higher rate they pay for the privilege,'' Mr Lopez says. "Think hard before paying for any extra features at all.''
Savers
While borrowers may be celebrating the rate cuts, the future looks less rosy for those banking their pennies.
Savings accounts rates have already been falling and may fall rapidly as further cuts kick in. But there were some good deals available this week.
Many planners advised those who depended on savings accounts to boost their income to lock into a term deposit account before rates fell any lower.
Paul Bilson, of Woodward Nhill Financial Planning, said he favoured a mixture of term deposits and income funds.
"Sure, put part of your money into term deposits, but remember there will be penalties if you need to access your cash," he said.
Mr Bilson said most income funds, which primarily invest in mortgage debt, were returning seven to 8 per cent
"There is a little more risk," Mr Bilson said.
"They are not guaranteed - you have to make certain that the one you choose is very well rated."
He said companies including Mariner, Axa and Colonial First State all ran good funds invested in quality loans, fixed interest securities and cash.
Investors
Usually a rate cut is welcomed by the stock market because it makes the returns on cash less attractive and so forces more money into the stock market.
But after the cut on Tuesday, the market finished marginally down and fell further later in the week, stripping 5 per cent off Australian stocks.
It was the worst result since the major index fell 5.53 per cent in March.
Shane Oliver, chief economist at AMP Capital, said: "It is difficult to escape the bad news in the economy, which is going to make it harder for companies to grow their profits, and that will act as a drag on the stock market for some time."
He said retail and discretionary spending would be hit hard by an economic slowdown.
"Unemployment will rise, but these things do not last forever," Mr Oliver said.
Source: news.com.au
Date: 08/09/2008
Pressure exerted by Treasurer Wayne Swan before the announcement prompted the banks to respond within five minutes of the announcement last Tuesday.
The cut will mean a homeowner with a $300,000 mortgage will save around $55 a month in repayments, based on a 30-year term.
But the cut has also presented house-hunters -- and those looking to re-mortgage -- with a bit of a quandary. Should they stick with their variable-rate loan, or take some of the cheaper fixed-rate deals now on the market?
The typical bank variable rate will now be around 8.36 per cent, compared to the best fixed deals, which start from around 7.99 per cent -- an immediate saving for those who fix.
But economists say that the cash rate may well fall by as much as 1.5 per cent during the next year or two -- and that means variable mortgage rates could fall to around 7.11 per cent.
That lower rate, however, assumes that the banks will pass on all of the cash rate cuts -- and that is unlikely.
Last Wednesday, CBA boss Ralph Norris was emphasising that, although the RBA may well announce a series of rate cuts, the rising cost of funds on the international wholesale markets, where banks raise around one-third of their mortgage funds, means that the banks may not be able to pass on many more cash rate reductions.
"I can't guarantee anything,'' Mr Norris said. "At the moment, we have a situation where offshore funding costs have increased dramatically -- about eight-fold in margin over the last nine or 10 months, due to the overseas (sub-prime) crisis.''
It all makes the decision, for those in the market for a mortgage, much more complex even than usual.
Jennifer Nielsen, CEO of mortgage broker The Loan Market Group, says: "The cheapest fixes at the moment are around 8 per cent and you wouldn't want to fix yet. Variable rates are the way to go. The trick is to fix when you can see we are nearing the bottom of the cutting cycle -- and we are a long way from that at the moment.
"We are almost certainly looking at a downwards or, at worst, flat period in mortgage rates, so you shouldn't lock yourself into a fixed rate at current levels, unless you really need that peace of mind.''
"It all comes down to individual circumstances. The financial markets are pricing in an 80 per cent chance of another cut next month and are expecting a further two by next April, bringing the cash rate down to 6.25 per cent.
Frank Lopez, of financial data firm Cannex, says borrowers can get the cheapest variable rate, if they go for a deal with no bells or whistles -- just a clean repayment mortgage.
Wizard is offering a rate-breaker loan at 7.88 per cent, with a fee of $760. One Direct Home Loans is offering a rate of 8.61 per cent, but with a fee of just $60. These deals have minimal features, but also competitive rates.
"Many people who take mortgages with lots of additional features, such as redraw or payment holidays never actually use them -- or don't use them enough to justify the higher rate they pay for the privilege,'' Mr Lopez says. "Think hard before paying for any extra features at all.''
Savers
While borrowers may be celebrating the rate cuts, the future looks less rosy for those banking their pennies.
Savings accounts rates have already been falling and may fall rapidly as further cuts kick in. But there were some good deals available this week.
Many planners advised those who depended on savings accounts to boost their income to lock into a term deposit account before rates fell any lower.
Paul Bilson, of Woodward Nhill Financial Planning, said he favoured a mixture of term deposits and income funds.
"Sure, put part of your money into term deposits, but remember there will be penalties if you need to access your cash," he said.
Mr Bilson said most income funds, which primarily invest in mortgage debt, were returning seven to 8 per cent
"There is a little more risk," Mr Bilson said.
"They are not guaranteed - you have to make certain that the one you choose is very well rated."
He said companies including Mariner, Axa and Colonial First State all ran good funds invested in quality loans, fixed interest securities and cash.
Investors
Usually a rate cut is welcomed by the stock market because it makes the returns on cash less attractive and so forces more money into the stock market.
But after the cut on Tuesday, the market finished marginally down and fell further later in the week, stripping 5 per cent off Australian stocks.
It was the worst result since the major index fell 5.53 per cent in March.
Shane Oliver, chief economist at AMP Capital, said: "It is difficult to escape the bad news in the economy, which is going to make it harder for companies to grow their profits, and that will act as a drag on the stock market for some time."
He said retail and discretionary spending would be hit hard by an economic slowdown.
"Unemployment will rise, but these things do not last forever," Mr Oliver said.
Source: news.com.au
Date: 08/09/2008
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