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Saturday, July 11, 2020

Financial scandals are pandemic too



QUESTION: What do Wirecard, Luckin and Hin Leong have in common, although all three are based thousands of miles apart in Munich, Beijing and Singapore respectively? Answer: Accounting and/or financial scandal?

That’s right, despite having seen numerous cases in the past with the likes of Enron, WorldCom, AIG, Lehman Brothers, Bernie Madoff and of course, our very own Transmile, the corporate world has not learnt its lessons as we continue to see scandal after scandal that rock markets and test investors’ nerves. Losses derived from these scandals are getting bigger and bigger, and is normally more obvious during trying times like an economic recession or at the height of an economic boom that has created a massive financial or stock bubble.

In the scheme of things that are related to financial or accounting scandals, it is common that they are carried out not just by one person but a host of others including third parties who are entrusted by shareholders to oversee the operations of a company.

This include potentially, not only the board of directors, but also lenders, auditors, investment bankers, regulators, employees and most often, the key management personal, especially the CEO, or other C-suite high-ranking officials.

In Wirecard’s case, the scandal was unearthed when the auditors could not locate some missing cash amounting to €1.9bil as it was trying to wrap up auditing the company’s finances for 2019. Kind of ironic when we think about it that Wirecard’s business model was in fact about transmitting monies electronically on behalf of banks to merchants as it was seen as a trusted source in the e-commerce space and yet it failed to account for its own cash.

Wirecard’s auditors in Germany, Ernst & Young (EY), had failed to obtain crucial banking information from a bank in Singapore. Interestingly, this was only revealed after Wirecard’s board actually commissioned a special audit as allegation of fraud was made by UK’s Financial Times in January. The newspaper said it suspected that Wirecard’s staff had inflated sales and profits to mislead its auditor, EY.

What was astonishing on Wirecard is how market had perceived the company. From a fintech start-up to one of Germany’s largest listed company with market capitalisation of €24bil. But despite its high profile status, short-sellers were going for the kill for years. Some of them have been shorting Wirecard since early 2000 while others at a later stage.

Even Germany’s financial regulator, BaFin, defended Wirecard against short sellers by investigating them on the grounds of market manipulation. Short sellers on Wirecard were confident that something was amiss on its financials and hence they were daring enough to take on large positions. However, it was only after the FT report, that BaFin turned around and started to investigate Wirecard instead. During this time, the auditors remained silent as they had vouched Wirecard’s financial statements for the previous years and right up to 2018. According to a Bloomberg report, EY accused its client of “an elaborate and sophisticated fraud” that allowed the monies to go missing.

In Hin Leong’s case, according to a PricewaterhouseCoopers (PWC) report, the company had overstated its assets by an “astonishing” sum of more than US$3bil, which consists of US$2.23bil in accounts receivables which have no prospect of recovery and another US$0.8bil in inventory shortfalls. The oil trading giant had also fabricated documents on a “massive scale” to conceal losses of some US$800mil accumulated over the past decade.

The PWC report also highlighted that despite posting losses in the past, the company paid out dividends totalling US$90mil in FY2017 and FY2018. Founded by tycoon, O.K. Lim, Hin Leong is one of Singapore’s oldest oil trading company but the volatility in oil prices especially in the Covid-19 environment probably resulted in them not being able to withstand the pressure.

By the time the company filed for bankruptcy on April 17, it was revealed that it owed US$3.85bil to 23 lenders. Despite the financial scandal and even after it had filed for bankruptcy, its auditors, Deloitte, stood firm on the quality of its audit carried out “based on the information provided to them at the time”.

From Beijing, Luckin is another scandal that rocked investors as the coffee chain store, a.k.a. China’s Starbuck, after an internal investigation, revealed that the company’s revenue and expenses were inflated. Its co-founder and Chairman, Charles Zhengyao Lu, had pledged shares of the company for a margin facility amounting to US$300mil and as the scandal unfolded, its share price collapsed. Luckin, founded just three years ago and deemed as one of China’s brightest young start-up, raised some US$645mil in its US initial public offering last year and was aggressive in its expansion programme. The company had also dismissed its CEO, COO and some other employees reporting to the C-suite officers.

We all know that scandals arose due to pure greed and this greed is driven by financial interest of persons involved either via the value of their shareholdings, or in the case of Hin Leong, a pure personal interest as the company was privately owned. In Luckin, the company’s ambitious plans to take on its number one rival was perhaps the very reason for its downfall while the pledging of his shares to bankers probably provided him an added reason to falsify the accounting statements, in order to sustain the company’s share price.

Auditors are just auditors

Every time a scandal erupts, it is not uncommon for people to ask questions like “where was the auditor?” or “what was the auditor doing?” Whether it was Wirecard, Hin Leong or even Luckin, we cannot blame the auditors entirely for financial scandals as there are more hands in play to conceal facts, documents, evidence.

The job of an auditor is to audit financial statements to ensure they represent a “true and fair” view of the financial affairs of the company based on acceptable and recognizably accounting standards, for example the Malaysian Financial Reporting Standards (MFRS) and International Financial Reporting Standards (IFRS). Auditors used what is known as approved standards in auditing In Malaysia as well as International Accounting Standards when auditing a company.

It is not an auditors’ job to do a 100% audit of a company but, of course, if there are reasonable ground to be suspicious of the accounting practices, the auditor is required to probe further to gain assurance of the company’s financial statements. The question is then, how can we avoid such scandals occurring time and again?

Governance and independence are keys

Auditors are paid by the company and so are the board of directors. Globally, this has been the practice but in order to move away from “dependence” of a particular audit job and the fees that come with it, there needs to be a change. Auditors play a crucial role to ensure they remain independent and if their fees are dependent on the unqualified opinion, then it is obvious their role as an auditor has been compromised.

Regulations and laws ought to be amended to have auditors to be paid out of a pool of funds managed by an independent body. The choice of auditors needs to be made by this independent body and not at the whims and fancies of a company while the duration of an auditor being engaged by a company should be restricted to a term not exceeding five years.

The audit profession has its own shortcomings as it tends to be a breeding ground for young graduates for a few years before they move to greener “non-audit” pastures. Audit firms ought to have better compensation schemes for young auditors to remain in the profession to enable them to gain more audit experience. The high turnover in the field of audit is another reason why auditors sometimes do not understand a client’s business model or as to how transactions, whether suspicious or otherwise, are carried out, resulting in accounting scandals that are not easily detectable.

As for board of directors, they owe a duty to stakeholders to ensure that the affairs of the company are carried out in the best interest of the company and not individuals. As this column has highlighted before, the need for independent directors to not only be independent in form but in substance, it is their duty to ask the right questions to the board in terms of the finances of the company to ensure they represent the true and fair representation of the affairs of the company.

Independent directors should ask the right questions
New disclosure rules required for board of directors/senior management

From Enron to WorldCom and from Transmile to Luckin, there are few things we could learn. First, is in relation to the company’s financial performance and meeting market expectations. We see in these cases where companies try very hard to show sustained revenue and earnings to ensure that stock price do not collapse or pull back as there are personal interest associated to certain individuals (board members or C-suite officers) of the company. These individuals could have margin facilities taken up as they have pledged their shares to the banks.

When the market eventually finds out the truth about the affairs of the company, it is likely too late to realize what causes it in the first place. But of course, investigations later would reveal the level of personal interest associated with the scandal itself as the persons have financial interest in ensuring the company’s stock price remains elevated.

To overcome this, regulators or even the Companies Act, 2016, should be amended to ensure full disclosures are made publicly as to the number of shares that are pledged by board members as well as C-suit personnel on a quarterly basis as this will provide some guidance to investors as to the level of personal interest involved and for the auditors to be more mindful and to probe further if the situation warrants it.

Of course, the investment research fraternity ought to take stock when recommending buy calls on stocks as they are led to believe the company’s expected performance in the future by the company itself. In the heydays of stocks like Aokam Perdana and Transmile, stock price target levels were raised rapidly by analysts on the believe that the company’s fortunes are made in heaven and the shares of these companies skyrocketed before reality set in.

Driven by either rising selling prices or simply capacity expansion and demand growth, analysts do sometimes get carried away with innovative valuation models to justify a higher and higher market price each round. We saw that in the 1990s, during the dotcom bubble and even specifically on individual stocks or sectors. Sounds familiar?

In conclusion, like a pandemic, financial scandals can easily spread especially in desperate times or in times when the going is too good. Financial or accounting scandals will always be there but it is the duty of stakeholders, i.e. board members, the auditors, the regulators, the legal framework and the investment fraternity to ensure they are able to keep up with the changing landscape and to provide the check and balance much needed to protect, not only the minorities, but also the potential rippling effect to the market and financial system as a whole.

The views expressed here are the writer’s own.

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Friday, July 10, 2020

Exercises for Stroke Patients

https://youtu.be/sFM-ip_WxTM
- Upper Limb Exercises
 

Generally, stroke can cause five types of disabilities:

• Paralysis, or problems controlling voluntary movement

• Disturbance of the senses, including pain

• Problems using or understanding language

• Problems with thinking and memory

• Emotional disturbances

7 stages of stroke recovery: Home rehabilitation is important

It is also imperative to know the severity of the stroke before deciding on the rehabilitation plan. There are seven recognised stages of stroke recovery through which most survivors progress through:

• Stage 1 – Flaccidity: No voluntary movement is observed.

• Stage 2 – Spasticity appears: Spasticity refers to the continuous contraction of muscles, which interferes with normal movement, speech and gait, and causes the arm or leg to make small involuntary jerky movements.

• Stage 3 – Increased spasticity: The e arm or leg becomes more spastic, and the muscles feel stiff and tight against external resistance.

• Stage 4– Decreased spasticity: Spasticity of the arm or leg decreases and the limb begins to move more easily.

• Stage 5 – Complex movement combinations: The movement of the limbs start becoming more coordinated and full movement begins to return.

• Stage 6 – Spasticity disappears: Muscle spasticity disappears and isolated joint movements are voluntary; however, spasticity may return if the patient is tired.

• Stage 7 – Normal function returns: Movements return to normal.

Each stage requires different types of approaches and exercises for rehabilitation.

Post Stroke Pain: Fake or Real?


https://youtu.be/fbM6C49YBPI

After Stroke This 1 Thing Is Key to Rehab Arm & Hand


https://youtu.be/_FsoZONjq8A

Best Hand Exercises for Stroke Patients at Home

https://youtu.be/i0JYsLyJEnE

Stretches For Hand Spasticity - Best Stroke Recovery Hand Exercises


https://youtu.be/dBWRuy_hdoc

Hand Recovery and Dexterity For Stroke, Injury & Musicians


https://youtu.be/d1g6YxQpJ-U

Passive Range Of Motion - How to Stretch Your Own Arm After Stroke


https://youtu.be/YReRjHbIngQ

Best Arm stretches after Stroke


https://youtu.be/YpwySCyAiZ4

Upper body Exercises after Stroke

https://youtu.be/ZCywA3DoExo


Best seated leg exercises


https://youtu.be/dRct62KQM3o

Seated Core Exercises


https://youtu.be/twZ1hnetOP8

Stroke: Exercise to Improve Walking


https://youtu.be/7O-MD5-DStA

Physical Therapist Shows How To Walk Correctly


https://youtu.be/-fD2TSL2s7I

Easy Leg Exercises for Stroke Patients (Guided by a Physical Therapist)


https://youtu.be/-rwby0zA6Vs

Stroke Recovery Arm Exercises: Shoulder

This video demonstrates post-stroke arm exercises. The focus of this video is the shoulder. And it is best for those with spasticity in the arm. Here are links to all the products I used in this video. I am an amazon affiliate and I would be so grateful if you use the link I provide :) Elbow immobilizer: https://amzn.to/2SDqaJW Nylatex Strap (blue strap): https://amzn.to/2Yl93gZ Pilates ring:https://amzn.to/2SNqxln
https://youtu.be/0e4AcS763Fk

Spasticity: Best Stroke Arm Stretches


https://youtu.be/SpRx_G4nfz4

How to keep the arm straight when walking


https://youtu.be/gct-2dqLObs

Standing after stroke: Assisted and unassisted


  https://youtu.be/rlrIa759sc0


Stroke Exercise: Regain knee control Part 2

https://youtu.be/YYP3Q9Ujf_0

Stroke Walking Exercise: Progression 3


https://youtu.be/su0i-iVwM4k

Advanced Balance and Walking Exercises


https://youtu.be/TnpiDHo8vjU

Standing and Walking after a Stroke: Progression Two


https://youtu.be/rliuArKMJm0

Arm Exercises for Stroke Patients (Best Tabletop Home Exercises)


https://youtu.be/kuuGlz_ddOM

Finger & Upper Extremity Stretches for Musicians


https://youtu.be/_jWxIPrBSdQ

Hand Exercises after Stroke

https://youtu.be/8gpQFbgqxUc

Stroke Rehabilitation: Use of electrical stimulation to help arm and hand recovery


https://youtu.be/qvbMUja6P8Q 
 
Stroke Rehabilitation: Use of electrical stimulation to help the fingers be able to open and close
 
 https://youtu.be/s516torEQrY
 
Stroke Rehabilitation: Use of electrical stimulation to help arm and hand recovery
https://youtu.be/qvbMUja6P8Q

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Thursday, July 9, 2020

Do we still need an office?

Millennials now make up over a third of the workplace and overwhelmingly value flexibility in where, when and how to work. And top talent has been increasingly clustering in dense urban areas and has been unwilling to commute to suburban office parks


The pandemic virus has dramatically accelerated a trend towards remote work that was already underway over the last decade.With social distancing, many of the office workers have not seen their desks for some time.

BUSINESSES depend on people and knowledge to operate successfully.

Office space is the primary place where the transfer of knowledge occurs, and it is second only to salaries as the largest expense for most organisations.

And that is rapidly changing even before the outbreak of Covid-19.

The rapid development of technology provided a significant impact on the way one operates today.

One can work from any location so long the individual can have access to cell phone signal.

Young people entering the work force are not using office space the way their seniors did.

Big office is no longer the perk it once was. Instead, what is important to the young generation is the quality of their interaction.

They increasingly are evolving today’s workplace by defining how, when, where, and with whom they want to work.

Meanwhile, the pandemic virus has dramatically accelerated a trend towards remote work that was already underway over the last decade.

With social distancing, many of the office workers have not seen their desks for some time.

Even when coronavirus lockdowns have started to ease, there may be fewer desks to return to.

Many may prefer to work from home out of caution or convenience. And businesses facing a sudden need to cut costs, it now appears that property portfolios look like a good place to start, especially with the businesses having adapted to remote set-ups.

By now it is clear that the pandemic virus will change the way we work in offices – perhaps indefinitely.

Less certain is the impact these physical and structural changes will have on corporate culture.

Anthony Dass
Anthony Dass

Besides, corporate culture can be described as the warm feeling employees have or the high expectations of a company’s management team.

Corporate culture is the essences that builds the loyalty and trust workers have for their employer and defines the nature of an organisation.

Up until recently, it was built within the confines of a company’s office.

But the pandemic virus is likely to bring about a turning point in corporate culture as businesses contend with a more remote workforce that lack the ability to connect in one room or even, in some circumstances, face-to-face.

While it may keep workers safe, it will likely feel more unproductive, less connected and perhaps involve fewer chances for employees to grow.

And so, the office of the future post-pandemic may resemble more of a place out of a movie, leaving some to worry this may have a massive impact on employee morale and corporate culture.

One aspect about work post-pandemic that appears to be universally agreed upon is that employees are unlikely to come back all at once.

They need to stage it in teams or staggered. This may create frustration.

It is going to be a long haul and will be difficult to keep people’s spirits up in the long-term, especially those who have been impacted by the illness.

There is risk of experiencing inefficiencies of working from home and missing the connectivity and productivity an office environment.

The daily work environment, the daily interaction, the social energy that is created and makes working for a company part and parcel of why one wants to get up every day and give it all is something that just cannot replicate working from home.

But others believe the new normal will be more positive.

And so, it is important to extend the office culture into the work-from-home culture.

By encouraging casual Zoom coffee breaks to check in and see how people are doing, or getting creative with birthday celebrations and events that might have played a big role in the company culture pre-Covid are ways to improve corporate culture.

And the question now is whether we need office?

The answer is, yes, but with a greater focus on flexibility, wellness, and collaboration.

As employees increasingly have a choice of where to work, the office must both coexist and compete with the safety of staying home, the comfort of a favorite cafe, or the convenience of a coworking space.

The result is much more variability in when and how offices are used along with increased employee expectations of the workplace.

Millennials now make up over a third of the workplace and overwhelmingly value flexibility in where, when and how to work. And top talent has been increasingly clustering in dense urban areas and has been unwilling to commute to suburban office parks.

Employees have come to expect the same level of technology in their personal and work lives.

For corporations, this poses a complex challenge. How to cost-effectively provide the right kind of office space. When and where it is needed. Solving this problem creates a wealth of opportunity for property-tech in several broad areas.

First is on the core needs where it creates big opportunities for innovation and allow rethinking of how building controllers are built, installed, and programmed with an emphasis on ease of installation and automated control.

Next is on the security systems control access to offices, elevators, turnstiles, data centres, and other secured spaces.

Focus will also have to be on the space needs.

Facing the twin pressures of providing high-quality space in expensive urban centers and supporting employees with flexibility in where they work, companies need new tools to understand how space is used, manage utilisation, and provide new locations cost effectively.

And lastly it is on the productivity needs. Engaged and inspired employees are more productive and drive better financial results.

The workplace plays a key role in employee engagement and employee productivity.

Workplace apps will extend to focus on even more aspects of our workday including fostering collaboration, building community and providing “quantified self” feedback on how we work.

The bottom line is that while Covid-19 has disrupted the real estate business today, it will largely accelerate trends and create more opportunities for property-tech as businesses reopen.

There are opportunities from broadly applicable core needs to higher-value productivity needs. And successful companies will emerge.

Office would have a future, albeit in different forms.

The views expressed here are the writer’s own.

Source link

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Be the bull in a bear market – stop procrastination

https://youtu.be/UzoZxKmLOAI

We’re almost well into the third quarter of 2020 – have you made headway in any of this year’s financial priorities and goals? Or perhaps you have been thrown off guard by the state of affairs in by the Covid-19? In a challenging environment like now, it is even more crucial to sit down and do a critical review of your latest financial status.
TIME flies by quickly when you’re going about your daily grind. We’re almost well into the third quarter of 2020 – have you made headway in any of this year’s financial priorities and goals?

Or perhaps you have been thrown off guard by the state of affairs in by the Covid-19? In a challenging environment like now, it is even more crucial to sit down and do a critical review of your latest financial status.

Loss of livelihood, pay cuts, unemployment, business closures, and a looming global recession – this is the trail of devastation left by a virus which has played havoc around the globe.

Interesting enough, if this health crisis is not enough to shake you into action to take charge of your finances, then what will?

According to the Oxford English dictionary, procrastination is defined as a postponement, “often with the sense of deferring though indecision, when early action would have been preferable, ” or as “defer[ing] action, especially without good reason.”

Throughout my experience as a licensed financial advisor, I have met many people who procrastinated over reviewing their financial status, let alone in growing their wealth. There are many reasons for this. Some lack the knowledge on where to begin, while others may cite the poor state of economy or our poor tax regime. However, the bigger reason usually lies in our tendency to procrastinate.

Procrastination is one of mankind’s biggest weaknesses – we have all procrastinated doing something important at some point. But in the world of finance, procrastination can result in an opportunity loss to mitigate risk and in growing wealth – sometimes an opportunity which can never be recovered. After all, it takes time for any investment to compound into a significant figure.

Yap ming Hui
Yap ming HuiYap ming Hui

In this article, I’m going to highlight some of the common reasons people use to put off taking actions on their financial matters.


> “I don’t have enough time to plan and invest”

This is a common reason people often say, when putting off investing. In today’s economy, most households require both spouses to work full-time jobs in order to afford the lifestyle that they desire. In the office, you’re stressing about deadlines, projects to complete, and deadlines to meet.

At home you’re likely seeing to your family, social life, and chores, and any leftover time is probably spent away vacationing to rejuvenate so you can rinse and repeat. Add kids to the equation, and you’ll barely have any time left to breathe.

Who really has the time to spend to research, plan and invest? After all, you still have 20 years headstart till your retirement, you should be able to put it off for later, right?

Wrong. Pushing things for later is comfortable, as you convince yourself that it will get done eventually. However, as most of us know by now, later is a concept that is never ending. There is always a “later” to convince yourself about. Before you know it, too much time would have passed and you’ll have too little time to play catch up to achieve the financial goals you could have well achieved if you started earlier.

What you need to do: Set a date and time and clear your schedule. If being at home is too much of a distraction with the family present, then find a place where you can be isolated to focus on your financial planning. Alternatively, outsource these efforts to an independent financial advisor who can review your financial status and manage the wealth for you.

> “I don’t have enough money to plan and invest”


Most people don’t realise it, but having enough money is a matter of perspective. If you don’t have enough money to invest when you’re earning RM5,000 a month, do you think you will have enough to invest when you’re earning RM50,000 a month? Believe it or not, I have met several people earning around RM50,000 or more per month and still lament about not having enough to save and invest.

We always think along the lines of “if only we make more money”, but once we actually start making more money, our expenses and lifestyle will also go up a notch.

The famous Parkinson’s Law coined by C. Northcote Parkinson in his book The Law and The Profits illustrates this concept best. The law says that work expands to fill the time that is allocated to complete it. In other words, if given a 24-hour deadline, a 20-minute job will take a day to complete.

He goes on to say that individual expenditure does not only rise to meet income but it tends to surpass it, and probably always will. So, if you’re waiting for a time when you feel you have enough money to save and invest, that time will never come.

What you need to do: Take a long hard look at your expenses. This is critical since we are now in challenging economic times. Mindfully track your spending habits for a month and cut back on luxuries that you can live without. If it helps, set up a standing instruction with your bank to automatically transfer a portion of your salary into another bank account. Use that to start investing. Every small portion helps, so don’t think that cutting back on a small luxury is insignificant.

> “I don’t really need to invest”

People won’t admit to thinking this, but they do. This fallacy of not needing to invest stems from the fact that when they retire someday, they will have their EPF savings to rely on. Technically, if you are earning a comfortable amount and do not make any EPF withdrawals before you retire, you may be right in thinking this.

However, this is hardly the case. EPF has reported that more than two-thirds (68%) of EPF members aged 54 had less than RM50,000 in EPF savings, while only 18% of its members had the minimum savings target of RM240,000 in their account by 55. This amounts to a monthly withdrawal of RM1,000 to cover basic needs for 20 years – sufficient if you want to live a basic retirement lifestyle, but nowhere near what is needed for a comfortable retirement in a middle-class lifestyle.

So if you’re thinking of relying mainly on your EPF savings, think again. Your EPF should act as an additional retirement fund on top of your other retirement savings, instead of being the only pillar in your retirement plan.

What you need to do: Start planning now for additional retirement savings. Before you invest, determine the lifestyle that you want to live when you’re retired and calculate how much you’d roughly need over the span of your retirement. Don’t know where to start?

Use a holistic financial planning app, like iWealth, to do a comprehensive calculation on your retirement and other major financial goals. Remember to factor in inflation.

While half of the year has flown by just like that, it’s never too late to examine your financial health and take the necessary steps to protect and grow your wealth.

Over the years I’ve shared many articles to inspire middle class folk like yourselves to take control of your financial destiny.

I certainly hope this knowledge has proven useful and relevant to your personal circumstances.

However, I also hope that you have begun putting into place some of these practices. Today, you may have gotten a better idea of what has been stopping you from investing properly.

Procrastination is a very human trait – but if you’re able to identify what’s been holding you back and take the necessary measures to monitor yourself and counter this, you’ll already have the upper hand on your future.

Remember, true power comes from knowledge. But knowledge without action, is useless.

During good times, there may not be an urgency to act. But we have now arrived at an unprecedented juncture where there will be a cost or consequence to our inaction. If this is not the time to take the bull by the horns, then when?

By Yap Ming Hui

The views expressed here are the writer’s own.

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Meanwhile, Michael Chang Wai Sing, chief investment officer for fixed income at RHB Asset Management (M), said investors could consider having an exposure in fixed income instruments such as bonds as well as foreign exchange (forex) instruments.

“Asian credits are a sweet spot as Asia, especially China, is recovering and is expected to recover further into the rest of the year and into 2021, ” - Michael Chang Wai Sing

PETALING JAYA: Investors should undertake a dynamic multi-asset allocation in managing their investment portfolio, in view of the current low interest rate and volatile market environment.

Diversification into the appropriate asset classes is key in managing risks and optimising returns, especially when uncertainty is rife in the market, according to panellists at the “Investing in Volatile Times: Stocks, Fixed Income or Multi-Asset?” webinar organised by RHB Asset Management.

According to Schroder Investment Management (S) Ltd South-East Asia head of multi-asset product Reginald Tan, investing in dividend yield stocks offer good and stable returns, at a time when the equity market is volatile.

While corporate earnings have taken a hit as a result of the Covid-19 pandemic and more companies have turned conservative in managing their cash, Tan believed that this is set to change moving forward as the global economy recovers.

“Companies experienced a short-term hit over the last one or two quarters due to Covid-19 and there were dividend cuts, but going into 2021, we will definitely see a rise in dividends.

“You cannot conserve cash forever, ” he said.

Tan added further that a low interest rate environment and a pick-up in economic activity are positive for high dividend yield stocks.

Meanwhile, Michael Chang Wai Sing, chief investment officer for fixed income at RHB Asset Management (M), said investors could consider having an exposure in fixed income instruments such as bonds as well as foreign exchange (forex) instruments.

Fixed income instruments are low-risk in nature and typically offer better returns than any average fixed deposits in banks, particularly at a time when interest rates have been lowered.

“Asian credits are a sweet spot as Asia, especially China, is recovering and is expected to recover further into the rest of the year and into 2021, ” said Chang.

However, he cautioned that investors should be selective as they invest into the credit space.

“There will also be opportunities in the forex space. If you have a certain view on forex, you can also use that to enhance your returns for the fixed income, ” stated Chang.

As for the opportunities in the equities universe, RHB Islamic International Asset Management Bhd CEO Mohd Farid Kamarudin told StarBiz that investors should consider stocks in sectors that are capable of evolving and adapting to the new economic environment. A potential sector is information technology (IT).

“Of course, we can also look at companies from different sectors that provide services to the IT-related players, ” he said.

Moving forward, Tan from Schroder said that investors will need to practice caution in the stock market, amid the rally that has continued since mid-March this year.

“A double-dip (in the stock market) is possible as fears of Covid-19 remains to be felt and investors engage in profit-taking.

“However, there are expectations that politicians, central bankers and governments will step in to help paper over the cracks, ” he said.

Over the past several months, Bursa Malaysia has enjoyed a rally fuelled by liquidity and a boom retail investor participation. This was in line with the rally witnessed across key stock exchanges globally.

Bursa Malaysia’s bellwether index, FBM KLCI, has surged by almost 30% since the year-to-date low in March after the market tumbled on Covid-19-induced panic.

Yesterday, the index gained by 1.07% or 16.78 points to 1,583.5 points as investor sentiment seemed to be boosted by Bank Negara’s 25 basis point-cut in the Overnight Policy Rate a day earlier.

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