Latest News
Nov 2016 14

Brace for higher financial market volatility, says don (Malay Mail)

A customer counts her ringgit notes outside a money changer at the central business district in Singapore. — Reuters picKUALA LUMPUR, Nov 14 — Malaysia has to brace for an increased volatility in the financial markets, given...

A customer counts her ringgit notes outside a money changer at the central business district in Singapore. — Reuters pic

A customer counts her ringgit notes outside a money changer at the central business district in Singapore. — Reuters pic

KUALA LUMPUR, Nov 14 — Malaysia has to brace for an increased volatility in the financial markets, given the surge in the reverse capital flows in line with the expected US interest rate hike, as well as improved growth prospect in the US economy. 

Sunway University Business School Professor of Economics Dr Yeah Kim Leng said this came as there had been a shift in the US economic expectation after Donald Trump’s election as the 45th US president. 

“The increased volatility will likely take place in most emerging markets as investors are uncertain over the US policies when Trump assumes the presidency.  “But the volatility will vary in each country. In the case of Malaysia, the foreign investments in bonds market, especially in the government securities, may see some increased outflow,” he told Bernama here today. 

Yeah said this would also result in greater weakness in the ringgit.  “However, we think this is just one of the episodes taking place in the Malaysian financial market, like in the past episodes, where we have been able to cope with this kind of outflow. 

“What the ringgit is exhibiting is that the Malaysian and foreign investors are trying to hedge their currency positions due to increased demand for the US dollar,” Yeah said. 

At 2pm, the ringgit was quoted at 4.3250 against the greenback, unchanged since today’s opening. — Bernama

- See more at: http://www.themalaymailonline.com/money/article/brace-for-higher-financi...

Language English
Nov 2016 10

Shock and angst in Asia as Trump rises (The Star)

KUALA LUMPUR: Donald Trump’s stunning performance in the US presidential election triggered shock and angst in Asia, where observers fretted over the implications for everything from trade to human rights and climate change....

KUALA LUMPUR: Donald Trump’s stunning performance in the US presidential election triggered shock and angst in Asia, where observers fretted over the implications for everything from trade to human rights and climate change.

Although the race remained too close to call, Trump has won key states in the nail-biter against Hillary Clinton, building momentum as large numbers of American voters shrugged off concerns over the billionaire’s temperament and lack of experience.

Trump’s rise has been keenly watched abroad as he campaigned on a platform of trashing trade agreements, restricting immigration, dismissing climate change, and otherwise disengaging from the rest of the world.

In often hushed scenes, viewers at election-watching events around Asia stared at giant screens tallying the returns as they digested the impact of Trump possibly heading the world’s most powerful nation.

 

Dianita Sugiyo, 34, a university lecturer in Indonesia -- the world’s most populous Muslim country -- said she was particularly concerned by Trump’s calls to temporarily ban from Muslims from countries with a history of terror ties.

”As a Muslim I feel very uncomfortable if Trump wins. He has always been anti-Muslim and I am afraid he will discriminate against Muslims,” said Sugiyo, a member of a leading Indonesian moderate Muslim organisation.

”The United States is a multicultural country and there are a lot of Muslims there, so this is very terrifying,” she said at a US embassy event in Jakarta.      

-‘Dangerous’ for the planet -      

Financial markets registered their concern, with Tokyo’s main index tumbling 5.5 percent, leading regional stocks mostly downward.

Trump’s tirades against global free trade were a big concern, said Clarita Carlos, a political science professor at the University of the Philippines.

”The world is globalising and if the US, which is one of the economic powerhouses, is going to put up walls, I don’t see that as good for the world economy,” she said.

”They can practically slow down economic growth for everybody. He is a businessman. He should know better.”

Greenpeace Southeast Asia’s Executive Director Yeb Sano said he was struggling to understand how Trump, who has threatened to “cancel” the historic UN pact struck last year to address climate change, could win.

”In the context of a lot of other things happening around the world right now, it would be fair to ask: “What have we become?,” Sano said.

”On climate change, clearly this is a massive blow to our prospects of progress and hope that the Paris Agreement had given us.”

At election events around the region, American Democratic supporters gradually deflated throughout Wednesday morning, while Republicans were buoyed.

Bradley Jordan, a retired 59-year-old Californian in Bangkok, said a Trump win would “throw the whole world upside down.”

”It’s dangerous for the planet. If Trump wins, we will do nothing about climate change and the planet will be screwed. I just can’t believe this is happening right now,” he said, adding that he may renounce his US citizenship.

Even some Republicans expressed surprise.

”To be honest we didn’t really think he would win. The polls have all been quite clear,” Kym Kettler-Paddock, a US Republican, said at an event hosted by the American Chamber of Commerce in Hong Kong.

She said Trump’s outsider status was bound to increase uncertainty abroad in the short-term over what type of president he would be.

”I think after that transition period it would settle down,” she added.

But Amanda Mohar, the vice chair of Democrats Abroad Hong Kong, said the overseas fears are justified given Trump’s calls to tear up international agreements he doesn’t like.

”His instability up to this point has made his administration very unpredictable. We have no idea if he says he’s going to review all of our treaties, if he’s actually going to do that,” Gohar said, adding that he would be a “dangerous person” in office. - AFP

Language English
Nov 2016 9

Asia sees changed US relationship, whoever wins (Malay Mail)

A man votes during the 2016 presidential election in Hawthorne, California, November 8, 2016. ― Reuters pic                  TOKYO,...

A man votes during the 2016 presidential election in Hawthorne, California, November 8, 2016. ― Reuters picA man votes during the 2016 presidential election in Hawthorne, California, November 8, 2016. ― Reuters pic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOKYO, Nov 9 ― Win or lose, Donald Trump's campaign has changed the way countries in Asia view their relationships with Washington.

Final polling suggests the most likely outcome is a victory for Hillary Clinton. But even Clinton, an architect of the US strategic pivot to Asia, has some work ahead of her in rebuilding trust, analysts and former officials in Asia said.

“With or without Trump, this marks the end of US leadership, in particular, moral leadership,” said a former Japanese diplomat, who asked not to be identified because of the sensitivity of the topic.

“I don't think it's a question of Trump as an individual, but a question of the US society that produced this man as the Republican candidate.”

Trump upended US democratic traditions during his White House campaign, drawing enthusiastic crowds where people cheered his often provocative and outrageous remarks. Critics labelled him ignorant, uncouth, a racist, hypocrite, demagogue and a sexual predator, all accusations he denied.

He described a dark America, knocked to its knees by China, Mexico and the Islamic state.

Trump's harnessing of a populist backlash against immigration and global trade has challenged the ideal of benevolent American power that helped shape the global economy ― and the forces of globalisation ― since the fall of the Soviet Union in the early 1990s.

Now the United States faces a rising China, long an economic force and now becoming more assertive in geopolitics ― building its military capability and ignoring an international tribunal's ruling against its claims to most of the South China Sea.

Trans-Pacific partnership

Asia is most worried about trade protectionism ― exports make up a quarter of Asia's GDP and a fifth of them go to the United States.

The Trans-Pacific Partnership (TPP) trade deal, championed by Barack Obama in part to increase US influence in Asia, was to be an essential feature of Washington's strategic pivot to Asia ― an “economic Nato”.

It now looks dead in the water. Both Clinton and Trump oppose the deal, which would set up a free trade zone among 12 countries that excludes China.

Former Indonesian finance minister Chatib Basri told Reuters the TPP “is an important instrument for the US pivot to Asia”.

“There is some kind of a rivalry between America and China, and the way America can get into Asia is with TPP,” said Basri, now a visiting professor at Australian National University.

With US allies such as Japan, South Korea, Taiwan and Singapore among the biggest winners of an open trade regime, a more isolationist and protectionist stance will cost Washington influence in Asia.

Ironically, it would be China, the subject of many of Trump's tirades, that could emerge the big winner as uncertainty over Washington's future commitment to Asia pushes countries into dealing more closely with Beijing.

“If the US pulls out of TPP, that will certainly increase China's influence in Asia,” said Kanti Bajpai, Professor of Asian Studies at the Lee Kuan Yew School of Public Policy in Singapore.

“Already, US criticism of domestic issues in Thailand, the Philippines, and Malaysia has alienated those countries and caused them to lean towards Beijing. Pulling out of the TPP will help China geopolitically.”

Philippine President Rodrigo Duterte has been particularly hostile towards Washington over its criticism of his lethal anti-drugs campaign, announcing a “separation” from the United States during last month's visit to China.

Malaysian Prime Minister Datuk Seri Najib Razak came back from a visit to China last week with US$34 billion (RM142 billion) worth of deals and an agreement to buy four Chinese naval vessels.

Security worries

China has long been in Trump's sights, with promises to declare it a currency manipulator and impose punitive tariffs on imports. But any such moves could also hurt Asian exporters who ship components there for assembly and export to the United States, at a time when global trade is already weakening.

Gareth Leather, senior Asia economist at Capital Economics, said the Philippines, Taiwan and South Korea were the emerging Asia economies most vulnerable to a Trump presidency.

“Perhaps the biggest risk to the region's economies, however, stems not from Trump's trade policies, but from his foreign policy,” Leather said.

Trump has created doubts over his commitment to security alliances, suggesting Japan and South Korea need to pay more for a US military presence and that they should even develop their own nuclear capability to counter China and North Korea.

Clinton, who was secretary of state when the Obama administration launched its Asia pivot, is expected to maintain Obama's foreign policy, with some seeing her as being more hawkish.

The divisive US presidential campaign has already done a lot of damage to the reputation of the United States in Asia, regardless of the election outcome, according to some analysts.

“The broader question is whether the United States can assert global leadership,” said Jesper Koll, CEO at fund manager WisdomTree Japan.

“All my Chinese friends say, 'We thought we would run the world in 20 years. Now it's going to be in January'. This is not a joke. It's the natural state of development,” Koll said. ― Reuters

- See more at: http://www.themalaymailonline.com/malaysia/article/asia-sees-changed-us-...

Language English
Nov 2016 8

S&P's reaffirms Malaysia's ratings (New Straits Times)

BY RUPA DAMODARAN KUALA LUMPUR: The government is expected to continue with its fiscal and economic reforms, according to Standard & Poor’s (S&P’s).The international ratings agency also expects Malaysia’s net...

BY RUPA DAMODARAN
 

KUALA LUMPUR: The government is expected to continue with its fiscal and economic reforms, according to Standard & Poor’s (S&P’s).

The international ratings agency also expects Malaysia’s net general government debt to peak at 51 per cent of gross domestic product (GDP) next year and to modestly decline thereafter.

In reaffirming its “A-/A-2” foreign currency and “A/A-1” local currency sovereign credit ratings on Malaysia, S&P’s said: “The ‘stable’ outlook balances Malaysia’s strong external asset position and high monetary flexibility with its relatively weaker but stable public finances”.

The ratings agency has also affirmed its “axAAA/axA-1+” Asean regional scale rating on Malaysia.

“We project net general government debt will peak at 51 per cent of GDP next year, and expect it to modestly decline thereafter,” said S&P’s report, adding that the 1Malaysia Development Bhd (1MDB) issues “will not impede effective policymaking”.

In addition, the report said Malaysia has a high degree of monetary policy flexibility.

“Bank Negara Malaysia has an
established track record in controlling inflation, indicating strong monetary flexibility that helps absorb major economic shocks,” it said, adding that Malaysia’s efforts in fiscal consolidation were encouraging.

“The government has shown considerable commitment towards fiscal consolidation even amid deterioration in the country’s terms of trade, and ongoing political challenges,” said S&P’s report.

On concerns of the high household indebtedness of Malaysia, the rating agency said it was somewhat contained by a banking sector that was well-capitalised and has a good regulatory record.

Household financial assets are also ample and Malaysia is ranked fourth in its banking, industry and country risk assessment.

“Malaysia’s relatively high share of non-resident holders of ringgit-denominated government bonds leaves the country’s capital market exposed to a sudden potential funds outflow,” it said, identifying it as one of the credit risks now.

As of end last year, this metric stood at about 26 per cent.

 

Standard & Poor’s projects Malaysia’s net general government debt to peak at 51 per cent of gross domestic product next year, and expects it to modestly decline thereafter. Bloomberg pic
Language English
Nov 2016 7

Your credit score’s out there (The Star)

BY MEK ZHINMore often than not, personal financial health is a low priority for most Malaysians, says Chin.Credit reporting agency CTOS has made its consumer credit score report available via phone apps. Your ‘credit-...

BY MEK ZHIN

More often than not, personal financial health is a low priority for most Malaysians, says Chin.

More often than not, personal financial health is a low priority for most Malaysians, says Chin.

Credit reporting agency CTOS has made its consumer credit score report available via phone apps. Your ‘credit-bility’ is now in the public realm, with the agency saying this may encourage people to be more aware and to take charge of their credit health. MEK ZHIN reports.

MALAYSIAN credit reporting agency CTOS has made its credit score report available to the public and kicked off the launch of their service.

It‘s offering the first 100,000 MyCTOS Score Reports worth RM25 each for free.

The report contain comprehensive details on identity verification, business exposure, credit repayment behaviour, legal actions, case status and bankruptcy information for the past 24 months.

The move is part of CTOS Data Systems’ ‘What’s Your CTOS Score?’ initiative, which is an education campaign targeted at all consumers at every life stage to enable better credit management and health.

CTOS chief executive officer Eric Chin says the move is a step towards empowering consumers to manage their own credit worthiness.

“More often than not, personal financial health is a low priority for most Malaysians. This is mainly due to a lack of awareness and understanding of it. There’s also a lack of effective tools to measure credit health or worthiness,” he explains.

According to Chin, the move by CTOS can be seen as an industry milestone as it moves towards a move consumer-centric financial lending landscape.

The CTOS Score is presented in the form of a three-digit number ranging between 300 to 850, with a higher score indicating lower credit risk.

Among the benefits of a good credit score are increased chances of getting a loan, speedier loan approvals, more available credit and fairer credit decisions.

The score is calculated based on the publicly accessible Central Credit Reference Information System (CCRIS) report from Bank Negara Malaysia, as well as its own database containing information such as loan payment history, credit facilities and amount owed, credit history length, credit mix and new credit.

CTOS had launched its credit score earlier this year, but it was only available to its subscriber base, banks, telco companies, legal firms and companies.

“Launching it to the public was always in the plan,” he stresses.

“In the months following our credit score launch, we went through a sort of testing period with our clients. Now, we are better able to advise consumers on their credit scores based on the ‘testing’ we did,” Chin says.

He assures that consumers need not worry too much about a bad credit score as the score is dynamic and changes as new pertinent information is obtained.

“We want to focus on creating awareness and educating people on their options and eventually towards taking charge of their own credit health and managing it. It is a time-consuming process which should start now,” he states.

Chin also says consumers can seek advice or help with understanding their credit score better at any of the seven CTOS branches nationwide.

As of May 2016, Malaysia’s household debt stood at RM1.03tril or 89.1% of the gross domestic product (GDP) and is among the highest in Asia, though Bank Negara has said that this is still within the manageable limit.

The most popular credit facilities accessed by Malaysians include car loans (40%), home loans (21%), personal loans (19%), credit card loans (15%) and student loans (4%).

Many young Malaysians are in an unhealthy debt cycle due to ineffective credit management and reliance on high-cost borrowing methods, including personal loans and credit cards, according to a CTOS statement.

In conjunction with the campaign launch, CTOS also introduced its first strategic partner, Alliance Bank Malaysia Bhd, which will be offering competitive deals for those with a good CTOS credit score on their MyCTOS Score Report.

 

  • To get your credit score report, go to www.ctoscredit.com.my or via the CTOS mobile app which is available for Apple and Android.
Language English
Nov 2016 4

New ‘Akaun Emas’ to lock in savings until contributor turns 60 (The Star)

BY NEVILLE SPYKERMANandJO TIMBUONGKUALA LUMPUR: In one move, the Employees Provident Fund is taking into account what its members want and, at the same time, making sure they have enough for their golden years.From Jan...

BY NEVILLE SPYKERMANJO TIMBUONG

KUALA LUMPUR: In one move, the Employees Provident Fund is taking into account what its members want and, at the same time, making sure they have enough for their golden years.

From Jan 1, a new account – Akaun Emas – will be opened for all contributors who turn 55. The money in that account cannot be withdrawn until the member turns 60. All contributions made until the age of 55 will be available to the member.

For those who are already past 55 as at Jan 1, all their new contributions will be locked in but the money in their other accounts will be available to them.

The fund’s chief executive Datuk Shahril Ridza Ridzuan described Akaun Emas as a second retirement nest egg considering that Malaysians were working beyond the age of 55 with the minimum retirement age of 60.

 

“The savings during this five-year period will go a long way in serving members’ needs when they retire,” he said during a media briefing at the fund’s headquarters here.

The move, he said, followed EPF’s Members Consultation Exercise in April last year.

“A total of 94% of respondents wanted EPF to maintain 55 as the age of withdrawal, with new contributions from age 55 to 60 to be locked in until retirement,” he said.

Shahril assured members the Akaun Emas will not affect the existing scheme, where members have the option to make full or partial withdrawals upon reaching the age of 55. The partial withdrawal at age 50 also stays.

When a member reaches the age of 55, contributions from both Account 1 and Account 2 will be transferred into one account – Akaun 55 – and will be available to the member.

Members will also continue to earn dividends for their savings in both Akaun Emas and any savings in Akaun 55.

At the age of 60, they will have access to all their contributions. EPF will also extend the dividend payment limit to age of 100 from the current age of 75.

“This will benefit members who choose to maintain a portion of their savings with the EPF, allowing them to benefit from the compounding effect of receiving dividends until a full withdrawal is made,” he said.

EPF is also introducing several other enhancement initiatives and policy changes.

Initial payment of death withdrawal has been increased from RM20,000 to 25,000 depending on the balance of savings in the deceased members’ account.

Witnesses are no longer required for nominations. For Muslim members, under Syariah principles, nominees act as administrators to the account and not beneficiaries.

To expedite and simplify the distribution process to the next-of-kin, he said, nomination will be revoked if withdrawal applications are not made within one year after member’s death. He added that an underage nominee can execute the responsibility of administrator upon reaching 18.

EPF’s Basic Saving quantum – a guide that sets the limit members will need upon retirement – will be increased from RM196,800 to RM228,000 to align with the revised minimum pension for public sector employees.

There will also be additional withdrawal options for non-Malaysian members.

They will be allowed to make pre-retirement withdrawals at age 50, housing withdrawals (for property purchased in Malaysia), and for education and health.

Full withdrawal can be made at 55 and 60 or when they leave the country, become incapacitated or upon death.

Shahril added that savings will no longer be protected in the event of a forfeiture order under the Anti-Money Laundering Act, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001.

 
Language English
Nov 2016 3

HSBC: Buy gold, no matter who wins the US election (Malay Mail)

Swiss gold bars of a distinct stamp, some of which were found by detectives in a New Jersey safe deposit box, seen here in New York, Sept. 4, 2015. — NYT pic           ...

Swiss gold bars of a distinct stamp, some of which were found by detectives in a New Jersey safe deposit box, seen here in New York, Sept. 4, 2015. — NYT picSwiss gold bars of a distinct stamp, some of which were found by detectives in a New Jersey safe deposit box, seen here in New York, Sept. 4, 2015. — NYT pic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NEW YORK, Nov 3 — There’s one certain winner of next week’s presidential election, according to HSBC Holdings Plc: investors in gold.

Although they deem a Donald Trump victory more supportive for the price of the metal than a win by Hillary Clinton, the bank’s Chief Precious Metals Analyst James Steel says it’ll enjoy at least a 8 per cent jump whoever wins the race. 

Both candidates have espoused trade policies that could stimulate demand, with gold offering a potential “protection against protectionism”, he says.

Even the relatively more internationalist Democratic candidate has argued for the renegotiation of longstanding free-trade agreements. 

That’s positive for gold — even if “not on the scale of Mr Trump’s agenda”.

If the real-estate magnate triumphs, gold could rise to US$1,500 (RM6,273) an ounce, according to HSBC, up from around US$1,289 at 10:55am in New York. 

If Clinton wins, the price of the metal could improve to US$1,400 an ounce by year end, Steel writes, adding that a Democratic sweep of Congress would further stoke demand for the metal owing to a possible boost in fiscal spending. 

Clinton’s not alone in having suggested stimulus through channels outside of monetary policy, with Trump at one point saying he would put at least half a trillion dollars to work. 

James Butterfill, head of research and investment strategy at ETF Securities, echoed HSBC in predicting gold prices may rise as much as 10 percent within a year of a Trump administration, stimulated by policy uncertainty and the prospect of rising inflation, given the Republican candidate’s broadsides against the independence of the Federal Reserve.

QuickTake gold’s ups and downs

“Gold is seen as a hedge against political uncertainty, and President Trump would bring more political unpredictability than any president for generations, particularly over the US Federal Reserve’s leadership and monetary policy strategy,” he wrote in a recent note.

Shifts in the partisan affiliation of the Presidency have historically had a positive impact on bullion, while it tends to perform poorly when there is no change in administration, the analyst notes, after observing gold-price swings that followed the 22 presidential elections since 1928. — Bloomberg

- See more at: http://www.themalaymailonline.com/money/article/hsbc-buy-gold-no-matter-...

Language English
Nov 2016 2

Malaysia on track to record RM1.5t in trade for 2016 (Malay Mail)

Ong said, moving forward, the ministry expected export from the services industry, which was still a new segment, to improve further. ― Picture by K.E. Ooi           ...

Ong said, moving forward, the ministry expected export from the services industry, which was still a new segment, to improve further. ― Picture by K.E. OoiOng said, moving forward, the ministry expected export from the services industry, which was still a new segment, to improve further. ― Picture by K.E. Ooi

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KUALA LUMPUR, Nov 2 — Malaysia is on track to record total trade of RM1.5 trillion this year, supported by contributions mainly from the manufacturing and commodities sectors, said Minister of International Trade and Industry II, Datuk Seri Ong Ka Chuan.

He said as at August 2016, Malaysia's total trade stood at RM1.1 trillion.

"Last year, we achieved RM1.46 trillion and are expecting a growth of between 0.9 and one per cent this year," he told reporters at the launch of Malaysia Fashion Week 2016 (MFW 2016) here today.

Ong said his ministry was optimistic of achieving the target as Malaysia was a strategic location for businesses.

In the recent budget announcement, Prime Minister Datuk Seri Najib Tun Razak said Malaysia’s total trade was expected to reach RM1.5 trillion.

Meanwhile, Ong said, moving forward, the ministry expected export from the services industry, which was still a new segment, to improve further.

This include the contribution from the fashion and lifestyle segment, he said.

Malaysia External Trade Development Corp (Matrade) had said that exports from the fashion and lifestyle segment was set to rise by 12 per cent this year from nine per cent in 2015. 

Last year, the segment chalked up an export value of RM21 billion.           

The four-day MFW 2016, organised by Matrade, is dedicated to the fashion and lifestyle sector.

It showcases over 300 exhibition booths by local and international exhibitors from 16 countries, among them, Japan, South Korea, UK, Hong Kong, Australia and Turkey.

It is a public-private initiative aimed at elevating the profile of Malaysia as a fashion capital in the region. — Bernama

- See more at: http://www.themalaymailonline.com/money/article/malaysia-on-track-to-rec...

Language English
Oct 2016 31

How superiority bias hurts you financially (The Star)

IT’S EASY for most people to accept that they do not belong to the top 1% or 5% in many fields – income, intelligence, health, strength, beauty, humour. We can be realistic – to a degree. But it is very hard for people to...

IT’S EASY for most people to accept that they do not belong to the top 1% or 5% in many fields – income, intelligence, health, strength, beauty, humour. We can be realistic – to a degree. But it is very hard for people to accept that they do not belong to the top 50%. 


In fact, if you ask people whether they belong to the top 50% of the population in any of these fields – driving skills, job performance, honesty, memory – 90% of people will say they do, which obviously doesn’t make sense. Voila: the superiority bias illustrated. 

The superiority bias is sometimes called the “Lake Wobegon effect”, after a fictional town from writer Garrison Keillor, where “all the children are above average”. 

It basically comes down to having an inflated view of ourselves; to believe we are much better in comparison to the general population than we actually are.  We are optimistic about ourselves and realistic about others. 

While this is harmless in many ways, when it comes to managing your finances and investing, it can be extremely dangerous. 

Let's take a look at two examples: buying real estate and investing in the stock market.

Many Malaysians consider buying real estate one of their most important investments or major achievements on their way to “adulthood”. 

But the superiority bias could cause you to lose out throughout the life cycle of buying and selling property or other investments. 

First, you could overestimate your ability to analyse the real estate market and whether prices are increasing or declining in the future, and at which rate. 

Second, you could overestimate your ability to correctly appraise the actual value of the house. 

Third, you might be mistaken about your negotiation skills, versus those of your counterpart, as well as the willingness and ability to buy off other potential buyers. 

Fourth, you might wrongly assume the interest rate the bank is willing to give you, based on your financial situation and (future) employment status. 

But that’s not the end of it. 

Tens of years down the line, when you are looking to sell your property and you will learn whether your forecasts about your career and movements in the housing market have actually been realised, you will have to go through the same motions again. 

Understanding future movements of property prices, the value of your house, and your negotiation skills.

The same applies when you are investing in the stock market and believe you have the ability to beat the market. 

Due to transaction costs, much less than 50% of investments are actually beating the market and if you believe you have superior foresight, chances are, your counterparty with whom you are transacting believes this as well about his own skills.

So how can you prevent the superiority bias from hurting you financially? 

These are a few precautions you can take:

Be humble: accept you are not the smartest guy or girl in the room. I myself learned this in the most expensive way, with a real estate transaction which cost me dearly.

Involve other people: get multiple, conflicting points of view, to make sure you get a comprehensive amount of information before making a financial decision. Two heads know more than one.

Be content with less. If you can be satisfied with an average return on your investment instead of seeking to beat the market, you are less likely to engage in risky decisions which will hurt you down the line.

Mark Reijman is co-founder and managing director of http://www.comparehero.my/ dedicated to increasing financial literacy and to help you save time and money by comparing all credit cards, loans and broadband plans in Malaysia.

IT’S EASY for most people to accept that they do not belong to the top 1% or 5% in many fields – income, intelligence, health, strength, beauty, humour. We can be realistic – to a degree. But it is very hard for people to accept that they do not belong to the top 50%. 

In fact, if you ask people whether they belong to the top 50% of the population in any of these fields – driving skills, job performance, honesty, memory – 90% of people will say they do, which obviously doesn’t make sense. Voila: the superiority bias illustrated. 

The superiority bias is sometimes called the “Lake Wobegon effect”, after a fictional town from writer Garrison Keillor, where “all the children are above average”. 

It basically comes down to having an inflated view of ourselves; to believe we are much better in comparison to the general population than we actually are.  We are optimistic about ourselves and realistic about others. 

While this is harmless in many ways, when it comes to managing your finances and investing, it can be extremely dangerous. 

Let's take a look at two examples: buying real estate and investing in the stock market.

Many Malaysians consider buying real estate one of their most important investments or major achievements on their way to “adulthood”. 

But the superiority bias could cause you to lose out throughout the life cycle of buying and selling property or other investments. 

First, you could overestimate your ability to analyse the real estate market and whether prices are increasing or declining in the future, and at which rate. 

Second, you could overestimate your ability to correctly appraise the actual value of the house. 

Third, you might be mistaken about your negotiation skills, versus those of your counterpart, as well as the willingness and ability to buy off other potential buyers. 

Fourth, you might wrongly assume the interest rate the bank is willing to give you, based on your financial situation and (future) employment status. 

But that’s not the end of it. 

Tens of years down the line, when you are looking to sell your property and you will learn whether your forecasts about your career and movements in the housing market have actually been realised, you will have to go through the same motions again. 

Understanding future movements of property prices, the value of your house, and your negotiation skills.

The same applies when you are investing in the stock market and believe you have the ability to beat the market. 

Due to transaction costs, much less than 50% of investments are actually beating the market and if you believe you have superior foresight, chances are, your counterparty with whom you are transacting believes this as well about his own skills.

So how can you prevent the superiority bias from hurting you financially? 

These are a few precautions you can take:

Be humble: accept you are not the smartest guy or girl in the room. I myself learned this in the most expensive way, with a real estate transaction which cost me dearly.

Involve other people: get multiple, conflicting points of view, to make sure you get a comprehensive amount of information before making a financial decision. Two heads know more than one.

Be content with less. If you can be satisfied with an average return on your investment instead of seeking to beat the market, you are less likely to engage in risky decisions which will hurt you down the line.

Mark Reijman is co-founder and managing director of http://www.comparehero.my/ dedicated to increasing financial literacy and to help you save time and money by comparing all credit cards, loans and broadband plans in Malaysia.

Language English
Oct 2016 28

World Bank gives high marks to Malaysia in Doing Business Report 2017 (The Star)

BY DANIEL KHOOHigh marks: Razali showing a copy of the Doing Business Report 2017.PETALING JAYA: Malaysia has scored well in the indicators for getting electricity, protecting minority investors and dealing with...

BY DANIEL KHOO

High marks: Razali showing a copy of the Doing Business Report 2017.

High marks: Razali showing a copy of the Doing Business Report 2017.

PETALING JAYA: Malaysia has scored well in the indicators for getting electricity, protecting minority investors and dealing with construction permits under the World Bank’s Doing Business Report 2017, according to the Malaysia Productivity Corp (MPC) director general Datuk Mohd Razali Hussain.

“We are credited alongside Japan as being the best performers on the reliability of supply and transparency of tariffs index under the getting electricity indicator with a distance to frontier score of 94.34.

“Last year we were also one of the best performers on this index,” Razali said at a press conference earlier in the week.

“We are also acknowledged as having made paying taxes easier by enhancing the electronic system for filing and paying the goods and services tax (GST),” he added.

 

Malaysia ranked 23rd out of 190 world economies with a distance to frontier (DTF) score of 78.11 in the Doing Business Report 2017 from 22nd in the previous year.

Commenting on the results, Razali said that he was fairly confident that the country would be able to improve its ranking in the report by the year 2020 based on previous experience.

“Our aspirations for this particular report is to be in the top 10 by 2020. Given our experience we had before and the cohesiveness of the focus groups (working on this).

“As we speak, the focus groups are figuring out what has happened. With these factors we hope we can speed up the process for us to climb the rankings,” Razali said.

“We actually saw a steady improvement in our rankings from 2010 (23rd) to 2014 (6th).

“The rankings’ methodology was revised for three times, with the last one for 2016’s rankings. We worked very closely with the World Bank when we were 23rd (then in 2010) to understand how we were being measured. The new methodology is very challenging as it does not just focus on just efficiency alone but also in terms of quality,” he added.

Razali added that it was not for MPC to just work alone to improve these rankings but rather a joint effort of both the public and private sector.

“If we can improve on the collaborations, then we can see our rankings rise,” he said.

The MPC is an agency in the government that is tasked to look into this matter.

He said that key areas that Malaysia can improve on in the Doing Business Report 2017 include the starting a business and border compliance.

“The number of procedures to start a business has increased from three to 8.5. While under border compliance for exports has increased to 48 hours from 20 hours in the year before. This is the time taken to do border compliance: the processes that are required,” he said. “It involves several departments including customs, permits and issuing agencies, agriculture ministry and other government agencies. Customs is the main player which is in the focus group and we are engaging them at the moment.”

He also said one other area that Malaysia could improve on the paying taxes indicator which is an indicator that measures payments, time and total tax rate for a firm to comply with all tax regulations.

Language English