KWAP goes local, stocks tumble in the US and ‘please don’t resign’ news.

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I happened to read Financial Daily today. Take a look at the front page. Usually, the most interesting news would be highlighted on the front page. First up is the biggest one with photo. ‘KWAP GOES LOCAL.’  Basically what this tells us is that the KWAP pension fund thinks the domestic property market offers better returns compared to its investments outside Malaysia. It’s CEO Datuk Wan Kamaruzaman sais that KWAP has investments in 31 countries currently. (Hey, 31 countries and he is putting our domestic property market in first place. That’s a good endorsement, right?)  He said so because he said that when KWAP buys overseas properties and lease it back, it’s hard to achieve 5 percent returns. However, the local properties could. Some of its recent investments if we intend to follow? It bought 8 parcels of land in Seri Tanjung Pinang 2 (STP2A) in Penang. (Seri Tanjung Pinang is a popular property spot in Penang. STP 2 is an even bigger reclamation than STP 1). KWAP also bought a 1.25 acre land in Persiaran Stonor (KL yeah). It bought a 0.72 acre of freehold land from Guocoland in Jalan Changkat Kia Peng too. KWAP also shared many of its favourite investment targets. They include banks, telecommunications as well as technology sectors. Its current asset allocation is 46 percent for fixed income, 40 percent in equity and 14 percent in alternative investments. Property investments are parked under the alternative investments.

Source: wsj.com (dated 25th April 2018)

In the U.S, the stock markets tumbled because the US bond yields near 3 percent barrier. (If the unit trust offers 3 percent returns for me, I will prefer the BURSA instead. Well, this may be telling us that the stock market in the U.S. is overvalued, perhaps? Depends lah coz if our P/E is as high as them, we would already be considered super over-valued. Anyway, please do take a look at the latest P/E ratio for the stocks in the U.S. and we may understand a little bit more. Except for Dow Transportation, both the Dow Industrial and Dow Utility is already above the usual analysts’ consensus estimates. In terms of dividend yields, it ranges from 1.4 percent to 3.42 percent. In other words, a 3 percent yield in the U.S. bond is considered attractive because it’s a certainty while the stock market is not just uncertain but for many of the stocks, it may not even match the 3 percent offered. Now perhaps we understand why many investors are waiting for the financial results from the companies before going back into the market.

The last news “please don’t resign” is a wish by shareholders of Public Bank Bhd to its current founder and non-executive chairman Tan Sri Teh Hong Piow. A shareholder from Johor Bahru who was in Public Bank Berhad’s AGM said this, “As a younger-generation shareholder, I need someone to look up to and no one is as qualified as you.” Public Bank has announced in July 2017 that Teh would be retiring from the position effective Jan 1 2019. Its current managing director Tan Sri Tay Ah Lek shared, “the announcement of the new chairman will be made at an appropriate time.” Tay also shared that PublicBank would continue to focus on growing low-cost deposits by intensifying cross-selling activities and tapping into its internet banking platform. Public Bank will also be opening six new retail branches in Vietnam this year.

I have learnt that the local property market remains attractive even when compared to the world. Anyway, this is based on individual yeah, not necessarily that everyone would agree with KWAP’s CEO. Secondly, the stock market is only as attractive as how well the companies are doing. When companies do well and they give higher dividends, then the stock prices should inch upwards. Else, it would be considered over-valued and investors may invest elsewhere. Lastly, we learnt that sometimes the founder provides a huge goodwill to the company. This could be seen from many other corporate companies and not limited to just Public Bank. Everything is related to investment. Happy learning. Cheers.

written on 26 April 2018

Next suggested article:  There is no property bubble in Malaysia? Why it is so.



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