INAUGURAL EVENT: (From left) Senior general manager of MAAKL, Patrick Nge, Ng and Devadason. The ‘Wealth Talk’ is an inaugural event in the city organised by MAAKL.
MAAKL invited two professionals from the investment and financial planning fields who briefed participants on the stock markets’ outlook for 2011 and explained how good financial planning would help achieve short and long term financial goals.
Chief executive officer of Meridian Asset Management Sdn Bhd, Nicholas Ng, presented the talk on ‘Stock markets supported by liquidity but entering high risk zone’.
Ng stated, “What we are seeing since November for the US dollar was a technical bounce. The US really needed to sort out its economy and the huge amount of borrowing and printing of money is actually very bad for the US.
“There’s very little justification for a strong US dollar due to the recent rebound which is attributed to the weakness of the euro. At some point in time, the US economy will go back down to a weaker half next year and that’s where I think it will be a real challenge for the US dollar,” he added.
In response to where the FTSE Bursa Malaysia KLCI (FBM KLCI) would be heading in the upcoming year, Ng commented that, “We have an index of roughly 1,643 and I think it will have an eight per cent upside next year.”
He pointed out that investors could still make money in Malaysia but relative to North Asia, the risk would go up and ratio would be higher next year. Nonetheless, he opined that growth in the merging market would not be an issue and Malaysia would be recording roughly 5.2 to 5.4 per cent growth in 2011.
“North Asian countries like China would probably come down a little bit but will be at seven to maybe 8.2 per cent. Generally, in Asia, growth will not be a major concern,” viewed Ng.
On the topic of investment options, Ng expressed that Sarawakians were more localised that they focused only on local markets.
He stated, “Ideally, the way going forward is to diversify their investments especially into Pacific Mutual funds.”
He proposed Malaysians to look beyond national equities and go offshore to diversify their investments.
When queried on what stocks would have more importance in the future, he said that the election theme would be one area that could be focused on. Investing in large caps, goodwill and high dividend stocks would continue to do well even if markets were to correct in the first half of next year.
The second speaker, Rajen Devadason, chief executive officer of RD WealthCreation Sdn Bhd, a Certified Financial Planner and a Securities Commission-licenced financial planner with MAAKL talked on ‘Financial planning, asset allocation and the future of your wealth’.
Devadason said, “Based on the world wealth report published by Capgemini and Merrill Lynch, there are five asset classes that the very wealthiest put their money into. These are equities, investment real estates, fixed income such as bonds, cash in the bank and alternative investments.”
“The smartest thing a normal individual can do is to see what the wealthiest people in the world are doing and learn their skills from them,” he added.
To answer whether foreign companies’ investment in FBM KLCI would have a positive effect, Devadason said that “If foreign companies come in and just pump money into Bursa Malaysia in a hurry, what happens is the market would take off like a rocket and this is hot money. So, Malaysians as serious investors should track and know the stocks. If we get to the point where the valuations are excessive, to get rich, you must buy low and sell high,” he enthused.
“If foreigners coming in pumped in lot money and our stock prices start to escalate, maybe it’s time for us to take some money off the table and to re-allocate. However, if the trend reverses, investors can get hurt badly. So, it can be a double-edged deal,” he pointed out further.
In conclusion, Ng noted that for higher risk-taking investors, alternative investments were good options. They included derivatives, options, futures or even arbitrage funds and commodities funds.
“There are lot of options and the most common with a cheaper entry cost is the exchange traded fund (ETF) that has also grown tremendously. There are many avenues now whereby new investors can take higher risks and at the same time use some of these instruments to hatch their underlined investments.”
