Monday, February 1, 2016

Two in three Singapore investors regret not planning their investments better: Manulife

Two in three Singapore investors regret not planning their investments better: Manulife

SINGAPORE investors may be diligent in saving and tracking their expenses, but the majority (69 per cent) regret not planning their investments better. One in three also hold debt, excluding mortgages.
This was according to results from the latest Manulife Investor Sentiment Index (MISI) survey.
When asked about their reasons for regret, investors cited not being more proactive in reviewing their portfolios (27 per cent), and holding too much money in cash instead of making more investments (26 per cent) as the top factors.
Singapore investors generally performed better in saving and tracking their expenses than their regional counterparts, with saving for retirement cited as their top financial priority. Despite this, Singapore has the third highest proportion of investors in debt across the eight Asian markets surveyed.
Close to half (46 per cent) of indebted investors in Singapore owe S$10,000 or more, and 44 per cent expect to take longer than one-and-a-half years to clear their debt.
The top contributor to investors' debt was daily living expenses such as food, utilities, and transportation, followed by discretionary expenses, such as clothes, entertainment, and travel.
In addition, more male investors are in debt compared to female investors (37 per cent versus 28 per cent), with a significantly higher average debt amount of S$40,985 as compared to S$25,502.
Naveed Irshad, president and chief executive officer of Manulife Singapore, said: "Singapore investors are taking steps in the right direction by working hard to keep track of their expenses and save for retirement. However, their debt burdens may be holding them back from achieving their financial goals."
Singapore investors are also not transferring knowledge to the next generation, the survey found.
Close to half (44 per cent) of Singapore investors who are parents do not teach their children about financial planning. Three in 10 of these parents believe that children should learn on their own, while close to one in four attributed their inaction to their own lack of knowledge about financial planning.
However, when surveyed, 41 per cent of young investors below the age of 35 cited their parents as the second most influential source of financial planning advice after themselves.
For the moment, Singapore investors are pessimistic towards home and China markets. They feel the effects of the lacklustre global economy, with sentiment towards the Singapore market and China dropping.
"Most investors appear to be adopting a wait-and-see approach towards China, with close to half (48 per cent) saying they would avoid investing further in China until its economy improves, and 43 per cent feeling unsure about what is the best strategy for investing in China," the report noted.
Wendy Lim, CEO of Manulife Asset Management (Singapore), said that it is volatile times like these that highlight the importance of building and having a diversified portfolio invested in different geographies and asset classes.
"Alternatively, retail clients can look to invest in a multi-asset fund that is dynamically managed across economic cycles to help ride through today's volatile market," she added.

Ringgit slides with stocks as 1MDB woes come back into focus

Ringgit slides with stocks as 1MDB woes come back into focus

[KUALA LUMPUR] The ringgit led declines in Asia and stocks fell as state-investment company 1Malaysia Development Bhd (1MDB) came back to haunt the currency just as a pickup in oil was stoking a recovery.
A week after Prime Minister Najib Razak, who chairs the company's advisory board, was cleared in a probe over any wrong doing related to a political donation, the Swiss Attorney General announced it's pursuing an investigation into alleged diversion of funds from 1MDB.
Singapore has also seized bank accounts related to possible money laundering associated with the firm, which was in the limelight last year due to concern about its rising debt.
The ringgit weakened 0.7 per cent to 4.1845 a dollar as of 9:56 am in Kuala Lumpur, after last week posting its biggest rally since October as the outlook for the oil-exporting nation's finances improved amid a recovery in Brent crude. The commodity fell for a second day on Tuesday as Malaysian markets reopened after a holiday on Monday.
"It appears that the dust is being kicked up on 1MDB all over again," said Vishnu Varathan, a Singapore-based economist at Mizuho Bank Ltd.
"Downside pressures for the ringgit could re-emerge."
The ringgit climbed 3.3 per cent in January, more than any other in emerging markets, on speculation 2015's 19 per cent decline was overdone. The dollar's 14-day relative-strength index dropped below 30 last week, indicating to some traders that the greenback was poised to rebound.
Malaysia's benchmark stock index fell 0.5 per cent after climbing 2.6 per cent in the five days through Jan 29. Government bonds due in 2020 rose, with the yield falling two basis points to 3.36 per cent, Bursa Malaysia prices show.
1MDB has been the subject of overlapping investigations at home plus Switzerland and Hong Kong amid allegations of financial irregularities. Singapore has seized "a large number" of bank accounts in connection with possible money laundering, the Monetary Authority of Singapore and Commercial Affairs Department said in a joint statement in response to queries on the company.
A statement from Swiss prosecutors last week said they are seeking legal assistance from Malaysia after a probe they conducted into 1MDB revealed "serious indications" that about US$4 billion may have been misappropriated.
Najib is "not one of the public officials under accusation" in that investigation, Andre Marty, a spokesman for the Swiss attorney general's office, said Monday in a statement.
BLOOMBERG

China approves 11.1 billion yuan rail project in Fujian province

China approves 11.1 billion yuan rail project in Fujian province

[BEIJING] China's top economic planner said on Tuesday that it had given the green light to a railway project in the southeastern province of Fujian, the latest slew of infrastructure approvals as Beijing looks to avert a sharp slowdown in the economy.
The project, with a total investment value of 11.1 billion yuan (S$2.41 billion), will involve the construction of a 162 km (101 mile) railway in the province and is expected to take 4.5 years, according to a statement posted on the National Development and Reform Commission (NDRC) website.
REUTERS

'Game Of Thrones' leaves banker fretting over Malaysia's future

'Game Of Thrones' leaves banker fretting over Malaysia's future

[KUALA LUMPUR] As Malaysia's government seeks to shut the door on one funding furor, another opens. Rolling scandals that have hit the country for seven months have the premier's brother, a senior banker, likening the climate to HBO's Game Of Thrones.
The future for Malaysia "terrifies" him, Nazir Razak wrote in an Instagram post on Saturday. That was a day after the Swiss Attorney General's office said a probe of debt-ridden government investment fund 1Malaysia Development Bhd revealed "serious indications" that about US$4 billion may have been misappropriated from state companies in the Southeast Asian nation.
Just last week, Malaysia's attorney general cleared Mr Nazir's elder brother, Prime Minister Najib Razak, of wrongdoing in receiving a US$681 million personal donation from the Saudi royal family in 2013, as well as funds from a company linked to 1MDB. Of the Saudi funds, US$620 million was later returned.
Malaysia will cooperate with Swiss authorities and review the findings before determining a course of action, Attorney General Mohamed Apandi Ali said on the weekend. 1MDB said it hasn't been contacted by any foreign legal authorities. Najib is "not one of the public officials under accusation," Andre Marty, a spokesman for the Swiss attorney general's office, said Monday in a statement.
'UNNECESSARY DISTRACTION'
The premier's office declined to comment on the matter or on Mr Nazir's comments. The prime minister said after his exoneration by Mr Apandi that the Saudi donations probe was an "unnecessary distraction" for Malaysia.
As some overseas probes continue into 1MDB - whose advisory board Najib chairs - questions have been raised by opposition lawmakers and Mr Najib's critics over the robustness of agencies overseeing Malaysia's governance. The imbroglios have led to calls for Mr Najib's ouster from the opposition and former premier Mahathir Mohamad, and recalled Malaysia's decades-long struggle with corruption and money politics.
"The parallels with Game of Thrones continue," wrote Mr Nazir, chairman of CIMB Group, one of the country's biggest lenders. "I just can't see how our institutions can recover, how our political atmosphere can become less toxic, how our international reputation can be repaired."
On Monday, Mr Nazir said he did not wish to comment further. Mr Nazir and Mr Najib have been seen interacting at public events and Nazir posts some of those pictures on his Instagram account.
'POLICY CHALLENGES'
The scandals come at a time growth and investment are slowing. Investments in manufacturing, services and primary sectors fell 15 per cent in the first nine months of 2015 compared with the year before. The government last week trimmed its growth expectations for 2016.
"With the economy flagging, inflation rising and markets losing ground, the policy challenges are growing, exacerbated by the latest falls in the oil price," Christine Shields, lead economist at Oxford Economics, said in a January report. "Despite strong policy discipline and good technocratic management, strains are emerging."
Perched on the lower end of peninsular Southeast Asia, Malaysia is a conduit for trade between Europe and Asian economic powers like Japan and China. Bigger in area than all but four US states, Malaysia is a net oil and gas exporter and the world's second-largest producer of palm oil.
NEVER TOUGHER
Malaysia's score worsened in Transparency International's Corruption Perceptions Index for 2015 released last week, putting it on a ranking near Slovakia, Kuwait and Cuba. Issues related to 1MDB contributed to the nation's fall on the global list to 54th from 50th in 2014, according to the Malaysian head of Transparency International.
In November, Mr Nazir posted a picture on Instagram of his first investor roadshow in London in 1992, saying he had "been promoting Malaysia for a long time and it has never been tougher than now due to 1MDB and related issues." 
Foreign investors pulled RM30.6 billion (S$10.4 billion) from stocks and bonds in 2015 and helped send the currency to a 17-year low.
Mr Najib has faced challenges before, including the campaign by Mahathir to get him out. In power since 2009, Mr Najib has removed detractors including his deputy premier and an attorney general who was part of a team investigating the funds that went into his personal accounts. 
He silenced critics at a meeting of the ruling party in December and is wooing the ethnic Malay majority by bringing his United Malays National Organisation closer to the main opposition Islamic party.
'SMART MOVE'
"It's not uncommon to see changes in top positions in Malaysia," said Samsul Adabi Mamat, a political science lecturer at the National University of Malaysia. "It's a smart move for any leader to strengthen his leadership machinery, and when that is done, policy implementation will all be in the same direction."
1MDB has consistently denied wrongdoing, or transfers of funds to Mr Najib. It agreed in November to sell its power assets to a Chinese company in what many see as moving it a step closer to winding down operations.
In response to queries on 1MDB, Singapore said on Monday it had seized a "large number" of bank accounts in connection with possible money-laundering carried out in the country.
"Malaysia could come to be misunderstood despite its potential" as 1MDB pops up on international news headlines time and again, said Wellian Wiranto, an economist at Oversea-Chinese Banking Corp in Singapore.
Mr Nazir again called for the establishment of a National Consultative Council, similar to one his father set up as deputy prime minister after riots erupted between Muslim Malays and ethnic Chinese in Kuala Lumpur in 1969.
 "I think we have to pause, fix our moral compass and deal with our structural problems holistically," Mr Nazir said.
In an October speech he had urged such a council made up of the "best and brightest" Malaysians to deliberate constitutional, electoral and economic reforms.
Mr Najib, who has the support of the bulk of UMNO divisional chiefs, has time to regain the trust of voters. But it's crucial for him to revive the economy, said Norshahril Saat, a fellow at the ISEAS-Yusof Ishak Institute in Singapore who has studied Malaysian politics for a decade.
"This is a test of how the government can communicate with the public effectively," he said. "Society constantly wants answers."
BLOOMBERG

China hands investors risk-free returns as IPOs lure US$1t

China hands investors risk-free returns as IPOs lure US$1t

[HONG KONG] Chinese stocks may be tumbling at the fastest pace in seven years, but one part of the US$5.2 trillion market is hotter than ever: initial public offerings.
The six Chinese companies that took bids from IPO investors over the past two weeks attracted orders worth 7.1 trillion yuan (S$1.56 trillion), more than the value of Australia's entire equity market. The offerings - the first under new rules that allow investors to bid without making upfront deposits - were oversubscribed by more than 1,800 times on average.
Now that IPO orders no longer tie up cash, the deals have turned into the equivalent of lottery tickets that only require buyers to pay if they hit the jackpot. Gains are seen as virtually assured because regulators have capped IPO price-to- earnings ratios at levels less than half the median valuation on mainland exchanges, a ceiling that led to average one-month returns of 383 per cent last year. While odds of securing an allocation are minuscule, the prospect of outsized profits is proving hard to pass up as investors try to recover from last month's 23 per cent plunge in the Shanghai Composite Index.
"Returns are guaranteed," said Wang Zheng, the Shanghai- based chief investment officer at Jingxi Investment Management Co. "That's why everyone is so willing to participate in bidding and demand for new shares is so high." The valuation cap - at 23 times earnings - is one of many market distortions introduced by Chinese authorities in their effort to protect individual investors in one of the world's most volatile equity markets. The government has also ordered state-linked funds to buy stocks, clamped down on futures trading and restricted stake sales by major shareholders.
"The 23 times P/E ratio is a line no one dares to touch now," Mr Wang said. "The regulator will conduct 'window guidance' should anyone overstep it." China's securities regulator said in December it would no longer require investors to pay upfront for IPOs, a rule that had been wreaking havoc on liquidity conditions in the nation's financial system. Almost every time a new batch of companies took orders over the past year, money-market rates climbed and the Shanghai Composite slumped as investors hoarded cash for their bids.
"The good thing about the new IPO system is that it won't cause wild swings in liquidity," said Wei Wei, an analyst at Huaxi Securities Co in Shanghai.
For the six deals priced under the new system, odds of getting an allocation were 0.05 per cent, according to data compiled by Bloomberg from exchange filings. That compares with about 0.5 per cent under the old rules.
Guangzhou Goaland Energy Conservation Tech Co, a maker of water-cooling systems for power stations, surged by the 44 per cent daily limit in its trading debut on Tuesday after luring bids for 4,300 times the number of shares on offer. The company raised 258.7 million yuan, the amount it sought, after receiving orders from 7.5 million investors. Upcoming Chinese IPOs include Eastern Pioneer Driving School Co, Southern Publishing & Media Co and TopScore Fashion Shoes Co.
The boom in IPO orders comes before an anticipated shift to a more market-based registration system later this year. The new regime would leave the questions of IPO supply and timing to companies and the market, rather than the China Securities Regulatory Commission, and give firms more power to determine pricing. The perception that IPOs are riskless has encouraged some investors to use borrowed money to amplify their wagers, exposing them to deeper losses once prices stop climbing.
For now though, the perception that IPOs are can't-lose bets is as strong as ever. New offerings account for all of this year's best performing stocks on the Shanghai Composite, with Jiangsu Jingshen Salt & Chemical Industry Co almost tripling after listing on Dec 31. Beijing Qianjing Landscape Co, an architecture firm that had its trading debut on the same day, has surged 72 percent. The benchmark index has tumbled 24 per cent over the same period, the world's biggest decline.
"Though the stock market isn't performing well, IPO shares will still rise after listings," said Guo Feng, an investment adviser at Northeast Securities Co. "As long as offer prices are curbed, bidding for IPOs will be crazy."
BLOOMBERG

US consumer spending flat; savings at three-year high

US consumer spending flat; savings at three-year high

36666817 - 12_11_2015 - USA-WALMART_.jpg
US consumer spending was unchanged in December as households cut back on purchases of automobiles and unseasonably mild weather weighed on demand for utilities, but a jump in savings to a three-year high suggested there is enough muscle to boost consumption in the months ahead.
[WASHINGTON] US consumer spending was unchanged in December as households cut back on purchases of automobiles and unseasonably mild weather weighed on demand for utilities, but a jump in savings to a three-year high suggested there is enough muscle to boost consumption in the months ahead.
The Commerce Department said on Monday the unchanged reading in consumer spending followed an upwardly revised 0.5 per cent increase in November. When adjusted for inflation, consumer spending edged up 0.1 per cent after a 0.4 per cent gain in November.
Economists polled by Reuters had forecast consumer spending, which accounts for more than two-thirds of US economic activity, edging up 0.1 per cent in December after a previously reported 0.3 per cent gain in November.
Consumer spending increased 3.4 per cent in 2015 after advancing 4.2 per cent in 2014.
That data was included in last Friday's fourth-quarter gross domestic product report, which showed consumer spending slowed to a 2.2 per cent annual rate from the third quarter's brisk 3 per cent pace.
Moderate consumer spending, weak export growth and ongoing efforts by businesses to reduce unsold merchandise piled up in warehouses helped restrict economic growth to a 0.7 per cent pace in the fourth quarter. More cutbacks in investment by energy firms struggling with lower oil prices also hurt GDP growth.
In December, income rose 0.3 per cent after a similar gain in November. Wages and salaries increased 0.2 per cent after shooting up 0.5 per cent in November. Income in 2015 increased 4.5 per cent, the largest increase since 2012, after rising 4.4 per cent in 2014.
With income outpacing spending, savings surged to US$753.3 billion in December, the highest level since December 2012, from US$717.8 billion in November.
Higher savings and rising house prices should help to soften the blow from a recent stock market sell-off and drive spending in early 2016.
With consumption soft, inflation retreated in December.
A price index for consumer spending slipped 0.1 per cent after ticking up 0.1 per cent in November. In the 12 months through December, the personal consumption expenditures (PCE) price index, however, rose 0.6 per cent after increasing 0.4 per cent in November.
That was the largest increase since December 2014. Year-over-year inflation rates are rising as the weak readings during the year drop out of the calculation. Excluding food and energy, prices were unchanged after rising 0.2 per cent in November. The so-called core PCE price index increased 1.4 per cent in the 12 months through December after a similar gain in November.
Core PCE is the Federal Reserve's preferred inflation measure and remains well below the US central bank's 2 per cent target.
REUTERS

Syria donors meet in London in bid to stem refugee crisis

Syria donors meet in London in bid to stem refugee crisis

[LONDON] World leaders will gather in London on Thursday to try to raise US$9 billion for the millions of Syrians hit by the country's civil war and a refugee crisis spanning Europe and the Middle East.
The donor conference, the fourth of its kind, hopes to meet the UN's demand for US$7.73 billion to help Syria plus US$1.23 billion assistance for countries in the region affected by the crisis.
British Prime Minister David Cameron will host more than 70 international leaders, including German Chancellor Angela Merkel, UN Secretary General Ban Ki Moon, Lebanese Prime Minister Tammam Salam, and Chinese Foreign Minister Wang Yi.
The war, which began with protests against President Bashar al-Assad in March 2011, has claimed more than 260,000 lives and caused a major humanitarian crisis.
The conflict has forced 4.6 million Syrians to seek refuge in countries in the region - Jordan, Lebanon, Turkey, Iraq and Egypt - while hundreds of thousands have attempted to reach Europe, sometimes paying with their lives while making the risky crossing of the Mediterranean.
From toddler Aylan Kurdi - found drowned on a Turkish beach - to the death by starvation of 16-year-old Ali in the besieged Syrian town of Madaya, the eyes of the world have recently been opened to the civilian impact of the ongoing violence.
In response, donors need to do more than just dig deep financially, Mr Cameron urged.
"We need to agree concrete action," he said, calling for the provision of jobs and education in countries neighbouring Syria as the living conditions of refugees deteriorate by the day.
"This is not just in the interests of Syria and her neighbours," he added.
"It is in the interests of Europe too. The more we do to enable people to stay in the region, the less likely we are to see them coming to Europe." Mr Cameron has called for better trade links between Jordan and the European Union, and for neighbouring countries to impose a minimum limit on the number of Syrians employed in certain sectors.
With Dr Merkel's popularity slipping over her policy of welcoming hundreds of thousands of migrants, Germany comes into the talks with a similar goal to limit migration levels.
"In the long term, education and work must contribute... to stem the flow of refugees to Europe", said German Foreign Minister Frank-Walter Steinmeier.
German Development Minister Gerd Muller recently told German media that a "work alliance" could help create 500,000 jobs for refugees in Jordan, Turkey and Lebanon.
The hope is that policies to boost general employment will also ease growing resentment felt by the indigenous population over the rights afforded to refugees.
"The increasing distress and vulnerability of Syrian refugees and the increasing perception in host communities across the region that refugees are a threat to their own livelihood are causes for alarm and constitute one of the most important risks to stability in the region," warned a report by The Regional Refugee and Resilience Plan - a blueprint for the humanitarian response to the conflict.
The conference, which opens less than a week after the start of a Syrian peace summit in Geneva, will focus heavily on education, highlighting that 700,000 refugee children lack access to schooling.
"Urgent concerted efforts and resources are needed to save this generation of children. It's a race against time", said Peter Salama, UNICEF's regional director for the Middle East and North Africa.
Given the risk of a lost generation, young Pakistani Nobel Peace Prize winner Malala Yousafzai has launched a petition for donors to pledge US$1.4 billion a year to educate Syrian refugee children.
To achieve this, donors will need to show more generosity than last year, when the UN and its agencies received only US$3.3 billion of the promised US$8.4 billion.
Aid group Oxfam pinpointed Germany, Britain and Sweden as star students, with France, Russia at the back of the class.
Britain, Germany and Norway have called for more to be done.
Mr Cameron's office said in a statement that the three agreed last month "that all countries in attendance should look to at least double their 2015 financial contribution to the crisis".
AFP

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