Tuesday, October 2, 2012
Saturday, September 1, 2012
China’s Bear Market Lures Foreign Bids as Locals Pull Funds
International money managers are lining up to buy stocks in mainland China at a record pace, even as a third year of equity losses spurs local investors to empty trading accounts like never before.
While overseas firms were granted $6.9 billion of quotas to purchase mainland securities since December, more than in any full year since the government program began, the number of Chinese stock accounts containing funds dropped by 788,000 to 56.3 million in the year to Aug. 3, the most for a 12-month period. A record 110 million are empty or frozen, according to regulatory data compiled by Bloomberg.
Foreign funds from Taiwan Life Insurance Co. to Shinhan BNP Paribas Asset Management Co. say the 54 percent discount for companies in the Shanghai Composite Index to their 10-year average, and the lowest valuations relative to MSCI Inc.’s developing-nations measure make China shares irresistible. Local individuals, companies and institutions, which hold about 99 percent of mainland shares, are turning more bearish as the world’s second-largest economy slows.
“The value story is clearly emerging in China,” Kim Jun Sung, the chief investment officer for equities at Samsung Asset Management Co., which oversees about $100 billion and received a $150 million quota to buy mainland securities in 2010, said in an Aug. 7 interview in Seoul. “The economic outlook continues to be negative so the catalyst for growth is not yet there.”
State Support
At least 41 overseas institutions gained access to mainland stocks this year as China eased capital restrictions before a once-in-a-decade leadership transition in the ruling Communist Party. China Securities Regulatory Commission Chairman Guo Shuqing expanded the qualified foreign institutional investor, or QFII, program as part of a plan to restore confidence in the $2.8 trillion stock market.
The Shanghai Composite has tumbled 32 percent from its November 2010 high through yesterday, the most among benchmark equity gauges in 21 developing nations tracked by Bloomberg. PetroChina Co., the nation’s largest energy company, and Industrial & Commercial Bank of China Ltd., the biggest lender by market value, contributed most to the Shanghai Composite’s 631-day bear market, the longest in its two-decade history.
The gauge fell 1.1 percent to 2,118.95 at the 3 p.m. local- time close, extending its drop this year to 3.7 percent.
“We are keen on entering” China’s equity market, Chen Tai-shan, a Taipei-based vice-president at Taiwan Life, said by phone on Aug. 7. His company received a $100 million QFII quota in March and plans to invest as much as 60 percent of the money in stocks, favoring retailers and railways. “Shares have reached a bottom.”
Selling Out
The Shanghai Composite’s price-to-earnings (SHCOMP) ratio has dropped to 11.5 from an average 25 during the past decade and a 2007 high of 46, according to data compiled by Bloomberg. The MSCI Emerging Markets Index (MXEF) is valued at 12 times profit while the Bovespa index in Brazil, the second-biggest emerging market after China, trades for 14.6 times.
Falling valuations aren’t enough to entice Yao Lina, a 32- year-old accountant in Shanghai who sold all her stock holdings in February and withdrew 80,000 yuan ($12,580) from her trading account. She has no plans to invest in equities, saying the government may take as long as five years to fix “structural” challenges in the economy that have curbed growth.
“I have no confidence in the stock market,” Yao said by phone on Aug. 8.
Slowing Economy
Policy makers cut their expansion target to 7.5 percent from the 8 percent goal in place since 2005, Premier Wen Jiabao said on March 5. Wen, 69, is trying to reduce China’s reliance on exports and boost consumption as he hands power to a younger generation of leaders this year.
Gross domestic product rose 7.6 percent in the second quarter, the slowest pace since 2009. Retail sales growth fell to the lowest level since February 2011 last month, while industrial production expanded at the weakest rate in three years. The 1 percent increase in exports reported by the nation’s customs bureau on Aug. 10 trailed all 32 economist estimates in a Bloomberg survey.
Chinese industrial companies’ earnings fell for a third month in June, according to the government. Beijing-based Air China Ltd. (601111), the world’s second-biggest carrier by market value, said last month its first-half profit probably dropped more than 50 percent, while Tianjin-based China Cosco Holdings Co. (601919), the nation’s largest listed shipping firm, reported a loss.
Empty Accounts
As economic growth has slowed, the number of Chinese equity accounts that contained assets fell for 11 straight weeks through Aug. 3, the longest stretch of declines on record, according to the China Securities Depository & Clearing Corp.
Investors opened 322,851 new accounts to trade shares last month, the fewest since the clearing house began publishing the weekly data five years ago and down from a peak of 4.1 million in the four weeks to Sept. 21, 2007. The 110 million empty or frozen accounts are equivalent to about 8.5 percent of China’s 1.3 billion people and exceed the populations of Germany and the Philippines.
A gauge of sentiment towards Chinese stocks compiled by Credit Suisse Group AG, Switzerland’s second-biggest bank, sank for a third month in July, according to an Aug. 6 report. Seven percent of the 200 people surveyed said they invested in equities last month, compared with 27 percent who planned to purchase property.
Alternative Investments
Chinese real estate and fixed-income securities are luring residents from stocks as home prices rally and inflation slows. Yao used the proceeds from her share sales to help pay for a 400,000 yuan apartment.
Carrie Pan, a 29-year-old accountant in Shanghai who hasn’t purchased equities since April, plans to increase her 300,000- yuan holding of wealth-management products. The investments, comprised mostly of bonds and money-market securities, are arranged by banks and provide an average annual return of 4 percent, Pan said.
Wealth-management products in China were valued at 10.4 trillion yuan at the end of the second quarter, according to Fitch Ratings. The amount is about 60 percent of Chinese companies’ market value, data compiled by Bloomberg show.
Prices for Chinese homes rose for a second straight month in July, marking a “turning point” in the property market after nine months of declines, SouFun Holdings Ltd., the country’s biggest real estate website owner, said on Aug. 1.
Shifting Assets
An index of local-currency debt in China compiled by JPMorgan Chase & Co. has returned 2.6 percent this year as consumer price increases slowed to a 30-month low of 1.8 percent last month. The benchmark one-year savings deposit rate is 3 percent, the highest versus inflation since December 2009.
Pan is waiting for the Shanghai Composite to fall to 2,000, about 7 percent below yesterday’s closing level, before she considers adding to holdings.
Some local individuals and companies are moving assets overseas, Hao Hong, the Hong Kong-based managing director for research at Bocom International Holdings Co., said in an Aug. 7 phone interview.
China reported a capital-account deficit of $71.4 billion in the second quarter, the widest gap since at least 1998. Residents with at least 10 million yuan of assets surveyed by the Hurun Report have 19 percent of their holdings overseas, while more than 60 percent have emigrated or plan to leave the country in the near future, according to a July 31 statement from the Shanghai-based firm, which tracks China’s rich.
QFII Boost
“Local investors are seeing things the foreigners are not,” said Hong, the only strategist among 13 brokerages surveyed by Bloomberg at the start of the year to forecast declines for Chinese stocks in 2012. “There are structural issues in the economy that are hard to resolve.”
Policy makers are taking steps to revive confidence in the stock market and boost economic growth. Guo, the chairman of the CSRC, has reduced transaction fees on equity trades by 20 percent, urged listed companies to pay more cash dividends and changed how initial public offerings are priced. The government also more than doubled allotments under the QFII program in April to $80 billion from $30 billion.
“During the application, the government encouraged investors to put more into stocks,” said Stan Lee, the head of financial and investor relations at Taipei-based Shin Kong Financial Holding Co., which received a $100 million quota to invest in China in March. Shin Kong plans to put as much as 70 percent of the money in equities, Lee said by phone on Aug. 7.
Looser Restrictions
About 75 percent of total QFII assets are invested in yuan- denominated stocks, known as A shares, with the rest in bonds and deposits, according to a CSRC statement in April. There are 176 foreign firms with approval to buy securities under the QFII scheme, which was set up in 2002. Of those, 147 have been given a combined quota of $28.5 billion, State Administration of Foreign Exchange data as of July 20 show. That’s about 1 percent of locally-listed Chinese equities’ total market value, according to data compiled by Bloomberg.
“In the medium to long term, we believe the Chinese market is going to do very well,” Mark Mobius, the executive chairman of Templeton Emerging Markets Group, said in an e-mailed response to questions yesterday. Templeton has a $300 million QFII quota, according to SAFE data.
China has also loosened restrictions on the yuan, doubling its daily trading band in April. The government is promoting greater use of the currency in international trade and investment. Sales of yuan-denominated bonds in Hong Kong climbed 25 percent to 121.9 billion yuan this year, after quadrupling in 2011, according to data compiled by Bloomberg.
Growth Outlook
China’s central bank cut interest rates in June and July, the first reductions since 2008, and lowered lenders’ reserve requirement ratios three times since November to boost lending and support growth.
The economic expansion will accelerate in the second half of this year and into 2013 as the government’s stimulus efforts take effect, Goldman Sachs Group Inc. economists including Hong Kong-based Cui Li said in a research report this month. The measures will increase foreign confidence in the stock market, Shin Kong Financial’s Lee said.
China’s leaders have adopted “pro-growth” policies as they seek a smooth political transition following the suspension of former Chongqing Communist Party Secretary Bo Xilai from the ruling Politburo in April, Bill McCahill, a managing director at Religare Capital Markets in Beijing, wrote in an Aug. 2 report.
Murder Trial
Bo was stripped of his post after his former police chief fled to the U.S. consulate in Chengdu in February with evidence implicating Bo’s wife in the murder of a British businessman, according to U.S. officials briefed on the matter. Gu Kailai confessed to the crime during a seven-hour trial on Aug. 9, the state-run Xinhua News Agency reported. The court has yet to announce its ruling.
GDP will increase at an average annual pace of about 8.7 percent during the next five years, the second-fastest rate among the 70 largest economies after Iraq, according to April estimates from the International Monetary Fund. China has $3.2 trillion of foreign exchange reserves, the world’s biggest holdings, data compiled by Bloomberg show.
“China has a lot of firepower to respond to threats to long-term growth,” Julie Dickson, a London-based product manager for equities at Ashmore Investment Management Ltd., which has $60 billion of assets in emerging markets, said in a phone interview on Aug. 10. Ashmore has a $250 million QFII quota, according to Dickson.
Profit Projections
The Shanghai Composite may rally 25 percent in the next 12 months, according to more than 3,000 share-price estimates for companies in the index compiled by Bloomberg. Earnings will probably jump 32 percent during the period, compared with an 18 percent gain for the MSCI emerging-markets index, projections compiled by Bloomberg show.
ICBC, which traded at a record-low of 5.9 times reported earnings last month, may advance 23 percent in Shanghai, according to the average of seven analysts’ estimates. PetroChina (601857), Asia’s largest company by market value, is poised to gain 14 percent, projections compiled by Bloomberg show. Both companies are based in Beijing.
“Most of the negatives are already priced in, and chances of further decline from the current level are low,” said Park Jae Wu, a Hong Kong-based fund manager at Shinhan BNP Paribas Asset Management, which received a $100 million QFII quota in March and favors consumer companies. “Once the Chinese government announces more aggressive measures to support the economy, the market’s recovery trend will set in.”
Pan, the Shanghai accountant, said she isn’t so sure after the value of her equity investments lost 30 percent since last year. “Stocks have never halted declines.”
--Richard Frost, Weiyi Lim, Zhang Shidong, Michael Patterson, Saeromi Shin and Allen Wan. With assistance by Jun Luo in Beijing. Editor: Darren Boey
Source:http://www.bloomberg.com/news/2012-08-14/china-bear-market-lures-record-foreign-bids-as-locals-pull-funds.html
While overseas firms were granted $6.9 billion of quotas to purchase mainland securities since December, more than in any full year since the government program began, the number of Chinese stock accounts containing funds dropped by 788,000 to 56.3 million in the year to Aug. 3, the most for a 12-month period. A record 110 million are empty or frozen, according to regulatory data compiled by Bloomberg.
Foreign funds from Taiwan Life Insurance Co. to Shinhan BNP Paribas Asset Management Co. say the 54 percent discount for companies in the Shanghai Composite Index to their 10-year average, and the lowest valuations relative to MSCI Inc.’s developing-nations measure make China shares irresistible. Local individuals, companies and institutions, which hold about 99 percent of mainland shares, are turning more bearish as the world’s second-largest economy slows.
“The value story is clearly emerging in China,” Kim Jun Sung, the chief investment officer for equities at Samsung Asset Management Co., which oversees about $100 billion and received a $150 million quota to buy mainland securities in 2010, said in an Aug. 7 interview in Seoul. “The economic outlook continues to be negative so the catalyst for growth is not yet there.”
State Support
At least 41 overseas institutions gained access to mainland stocks this year as China eased capital restrictions before a once-in-a-decade leadership transition in the ruling Communist Party. China Securities Regulatory Commission Chairman Guo Shuqing expanded the qualified foreign institutional investor, or QFII, program as part of a plan to restore confidence in the $2.8 trillion stock market.
The Shanghai Composite has tumbled 32 percent from its November 2010 high through yesterday, the most among benchmark equity gauges in 21 developing nations tracked by Bloomberg. PetroChina Co., the nation’s largest energy company, and Industrial & Commercial Bank of China Ltd., the biggest lender by market value, contributed most to the Shanghai Composite’s 631-day bear market, the longest in its two-decade history.
The gauge fell 1.1 percent to 2,118.95 at the 3 p.m. local- time close, extending its drop this year to 3.7 percent.
“We are keen on entering” China’s equity market, Chen Tai-shan, a Taipei-based vice-president at Taiwan Life, said by phone on Aug. 7. His company received a $100 million QFII quota in March and plans to invest as much as 60 percent of the money in stocks, favoring retailers and railways. “Shares have reached a bottom.”
Selling Out
The Shanghai Composite’s price-to-earnings (SHCOMP) ratio has dropped to 11.5 from an average 25 during the past decade and a 2007 high of 46, according to data compiled by Bloomberg. The MSCI Emerging Markets Index (MXEF) is valued at 12 times profit while the Bovespa index in Brazil, the second-biggest emerging market after China, trades for 14.6 times.
Falling valuations aren’t enough to entice Yao Lina, a 32- year-old accountant in Shanghai who sold all her stock holdings in February and withdrew 80,000 yuan ($12,580) from her trading account. She has no plans to invest in equities, saying the government may take as long as five years to fix “structural” challenges in the economy that have curbed growth.
“I have no confidence in the stock market,” Yao said by phone on Aug. 8.
Slowing Economy
Policy makers cut their expansion target to 7.5 percent from the 8 percent goal in place since 2005, Premier Wen Jiabao said on March 5. Wen, 69, is trying to reduce China’s reliance on exports and boost consumption as he hands power to a younger generation of leaders this year.
Gross domestic product rose 7.6 percent in the second quarter, the slowest pace since 2009. Retail sales growth fell to the lowest level since February 2011 last month, while industrial production expanded at the weakest rate in three years. The 1 percent increase in exports reported by the nation’s customs bureau on Aug. 10 trailed all 32 economist estimates in a Bloomberg survey.
Chinese industrial companies’ earnings fell for a third month in June, according to the government. Beijing-based Air China Ltd. (601111), the world’s second-biggest carrier by market value, said last month its first-half profit probably dropped more than 50 percent, while Tianjin-based China Cosco Holdings Co. (601919), the nation’s largest listed shipping firm, reported a loss.
Empty Accounts
As economic growth has slowed, the number of Chinese equity accounts that contained assets fell for 11 straight weeks through Aug. 3, the longest stretch of declines on record, according to the China Securities Depository & Clearing Corp.
Investors opened 322,851 new accounts to trade shares last month, the fewest since the clearing house began publishing the weekly data five years ago and down from a peak of 4.1 million in the four weeks to Sept. 21, 2007. The 110 million empty or frozen accounts are equivalent to about 8.5 percent of China’s 1.3 billion people and exceed the populations of Germany and the Philippines.
A gauge of sentiment towards Chinese stocks compiled by Credit Suisse Group AG, Switzerland’s second-biggest bank, sank for a third month in July, according to an Aug. 6 report. Seven percent of the 200 people surveyed said they invested in equities last month, compared with 27 percent who planned to purchase property.
Alternative Investments
Chinese real estate and fixed-income securities are luring residents from stocks as home prices rally and inflation slows. Yao used the proceeds from her share sales to help pay for a 400,000 yuan apartment.
Carrie Pan, a 29-year-old accountant in Shanghai who hasn’t purchased equities since April, plans to increase her 300,000- yuan holding of wealth-management products. The investments, comprised mostly of bonds and money-market securities, are arranged by banks and provide an average annual return of 4 percent, Pan said.
Wealth-management products in China were valued at 10.4 trillion yuan at the end of the second quarter, according to Fitch Ratings. The amount is about 60 percent of Chinese companies’ market value, data compiled by Bloomberg show.
Prices for Chinese homes rose for a second straight month in July, marking a “turning point” in the property market after nine months of declines, SouFun Holdings Ltd., the country’s biggest real estate website owner, said on Aug. 1.
Shifting Assets
An index of local-currency debt in China compiled by JPMorgan Chase & Co. has returned 2.6 percent this year as consumer price increases slowed to a 30-month low of 1.8 percent last month. The benchmark one-year savings deposit rate is 3 percent, the highest versus inflation since December 2009.
Pan is waiting for the Shanghai Composite to fall to 2,000, about 7 percent below yesterday’s closing level, before she considers adding to holdings.
Some local individuals and companies are moving assets overseas, Hao Hong, the Hong Kong-based managing director for research at Bocom International Holdings Co., said in an Aug. 7 phone interview.
China reported a capital-account deficit of $71.4 billion in the second quarter, the widest gap since at least 1998. Residents with at least 10 million yuan of assets surveyed by the Hurun Report have 19 percent of their holdings overseas, while more than 60 percent have emigrated or plan to leave the country in the near future, according to a July 31 statement from the Shanghai-based firm, which tracks China’s rich.
QFII Boost
“Local investors are seeing things the foreigners are not,” said Hong, the only strategist among 13 brokerages surveyed by Bloomberg at the start of the year to forecast declines for Chinese stocks in 2012. “There are structural issues in the economy that are hard to resolve.”
Policy makers are taking steps to revive confidence in the stock market and boost economic growth. Guo, the chairman of the CSRC, has reduced transaction fees on equity trades by 20 percent, urged listed companies to pay more cash dividends and changed how initial public offerings are priced. The government also more than doubled allotments under the QFII program in April to $80 billion from $30 billion.
“During the application, the government encouraged investors to put more into stocks,” said Stan Lee, the head of financial and investor relations at Taipei-based Shin Kong Financial Holding Co., which received a $100 million quota to invest in China in March. Shin Kong plans to put as much as 70 percent of the money in equities, Lee said by phone on Aug. 7.
Looser Restrictions
About 75 percent of total QFII assets are invested in yuan- denominated stocks, known as A shares, with the rest in bonds and deposits, according to a CSRC statement in April. There are 176 foreign firms with approval to buy securities under the QFII scheme, which was set up in 2002. Of those, 147 have been given a combined quota of $28.5 billion, State Administration of Foreign Exchange data as of July 20 show. That’s about 1 percent of locally-listed Chinese equities’ total market value, according to data compiled by Bloomberg.
“In the medium to long term, we believe the Chinese market is going to do very well,” Mark Mobius, the executive chairman of Templeton Emerging Markets Group, said in an e-mailed response to questions yesterday. Templeton has a $300 million QFII quota, according to SAFE data.
China has also loosened restrictions on the yuan, doubling its daily trading band in April. The government is promoting greater use of the currency in international trade and investment. Sales of yuan-denominated bonds in Hong Kong climbed 25 percent to 121.9 billion yuan this year, after quadrupling in 2011, according to data compiled by Bloomberg.
Growth Outlook
China’s central bank cut interest rates in June and July, the first reductions since 2008, and lowered lenders’ reserve requirement ratios three times since November to boost lending and support growth.
The economic expansion will accelerate in the second half of this year and into 2013 as the government’s stimulus efforts take effect, Goldman Sachs Group Inc. economists including Hong Kong-based Cui Li said in a research report this month. The measures will increase foreign confidence in the stock market, Shin Kong Financial’s Lee said.
China’s leaders have adopted “pro-growth” policies as they seek a smooth political transition following the suspension of former Chongqing Communist Party Secretary Bo Xilai from the ruling Politburo in April, Bill McCahill, a managing director at Religare Capital Markets in Beijing, wrote in an Aug. 2 report.
Murder Trial
Bo was stripped of his post after his former police chief fled to the U.S. consulate in Chengdu in February with evidence implicating Bo’s wife in the murder of a British businessman, according to U.S. officials briefed on the matter. Gu Kailai confessed to the crime during a seven-hour trial on Aug. 9, the state-run Xinhua News Agency reported. The court has yet to announce its ruling.
GDP will increase at an average annual pace of about 8.7 percent during the next five years, the second-fastest rate among the 70 largest economies after Iraq, according to April estimates from the International Monetary Fund. China has $3.2 trillion of foreign exchange reserves, the world’s biggest holdings, data compiled by Bloomberg show.
“China has a lot of firepower to respond to threats to long-term growth,” Julie Dickson, a London-based product manager for equities at Ashmore Investment Management Ltd., which has $60 billion of assets in emerging markets, said in a phone interview on Aug. 10. Ashmore has a $250 million QFII quota, according to Dickson.
Profit Projections
The Shanghai Composite may rally 25 percent in the next 12 months, according to more than 3,000 share-price estimates for companies in the index compiled by Bloomberg. Earnings will probably jump 32 percent during the period, compared with an 18 percent gain for the MSCI emerging-markets index, projections compiled by Bloomberg show.
ICBC, which traded at a record-low of 5.9 times reported earnings last month, may advance 23 percent in Shanghai, according to the average of seven analysts’ estimates. PetroChina (601857), Asia’s largest company by market value, is poised to gain 14 percent, projections compiled by Bloomberg show. Both companies are based in Beijing.
“Most of the negatives are already priced in, and chances of further decline from the current level are low,” said Park Jae Wu, a Hong Kong-based fund manager at Shinhan BNP Paribas Asset Management, which received a $100 million QFII quota in March and favors consumer companies. “Once the Chinese government announces more aggressive measures to support the economy, the market’s recovery trend will set in.”
Pan, the Shanghai accountant, said she isn’t so sure after the value of her equity investments lost 30 percent since last year. “Stocks have never halted declines.”
--Richard Frost, Weiyi Lim, Zhang Shidong, Michael Patterson, Saeromi Shin and Allen Wan. With assistance by Jun Luo in Beijing. Editor: Darren Boey
Source:http://www.bloomberg.com/news/2012-08-14/china-bear-market-lures-record-foreign-bids-as-locals-pull-funds.html
Sunday, July 22, 2012
Monday, July 16, 2012
Hedge Funds - Mastered by the universe
Jul 11th 2012, 16:16 by Buttonwood
..IT IS turning into another difficult year for the hedge fund industry. Data from GlobeOp found that, in June, funds suffered the largest withdrawals in assets since October 2009. Eurekahedge found that hedge funds suffered their fourth consecutive month of negative returns in June; in the first half of the year, they eked out a return of 1.3%, compared to a 3.7% gain for the MSCI World index. That follows a 3.6% decline in 2011. for those investors who picked a fund-of-funds, with the accompanying extra layer of fees, a 0.4% return this year followed a 5.4% loss in 2011. In short, investors have lost money over the last 18 months.
The marketing claims of hedge funds have changed over the years. In the 1990s, the glory days of George Soros and Michael Steinhardt, it was argued that hedge fund managers were the "smartest guys in the room" who could produce superior returns. In the 2000s, as equity markets faltered, it was claimed that hedge fund managers delivered absolute returns; they tended not to lose money. But then they lost almost 20% in 2008. So now people talk about the uncorrelated returns hedge fund managers achieve.
There are lots of claims, and counter-claims; in this area; lots of studies that try to account for factors such as survivorship bias and volatility. But a few things seem pretty certain.
1. Many hedge fund managers are smart, and some managers may be a lot smarter than the average investor. The difficulty is in identifying those investors in advance.
2. There are some generally uncorrelated strategies but these niches can be quite small, and consist of illiquid assets. As a result, the lack of correlation with the big asset classes may be partly caused by the slowness of price adjustment in such assets, since deals are less common. But the corollary is that it is difficult to exit such strategies in a crisis, with the result that there are occasional steep drops in valuations.
3. For the bulk of the industry there is likely to be a reasonable correlation with indices such as the S&P 500. As the industry gets larger, this correlation is likely to increase and it will be harder for the average manager to outperform.
4. Hedge fund managers will thus be subject to the same constraint as mutual fund managers; that returns are equal to the index minus costs. And since their fees are higher, the result will be disappointing returns for the average investor.
« The economy: Creeping inflation
Source :
http://www.economist.com/blogs/buttonwood/2012/07/hedge-funds
..IT IS turning into another difficult year for the hedge fund industry. Data from GlobeOp found that, in June, funds suffered the largest withdrawals in assets since October 2009. Eurekahedge found that hedge funds suffered their fourth consecutive month of negative returns in June; in the first half of the year, they eked out a return of 1.3%, compared to a 3.7% gain for the MSCI World index. That follows a 3.6% decline in 2011. for those investors who picked a fund-of-funds, with the accompanying extra layer of fees, a 0.4% return this year followed a 5.4% loss in 2011. In short, investors have lost money over the last 18 months.
The marketing claims of hedge funds have changed over the years. In the 1990s, the glory days of George Soros and Michael Steinhardt, it was argued that hedge fund managers were the "smartest guys in the room" who could produce superior returns. In the 2000s, as equity markets faltered, it was claimed that hedge fund managers delivered absolute returns; they tended not to lose money. But then they lost almost 20% in 2008. So now people talk about the uncorrelated returns hedge fund managers achieve.
There are lots of claims, and counter-claims; in this area; lots of studies that try to account for factors such as survivorship bias and volatility. But a few things seem pretty certain.
1. Many hedge fund managers are smart, and some managers may be a lot smarter than the average investor. The difficulty is in identifying those investors in advance.
2. There are some generally uncorrelated strategies but these niches can be quite small, and consist of illiquid assets. As a result, the lack of correlation with the big asset classes may be partly caused by the slowness of price adjustment in such assets, since deals are less common. But the corollary is that it is difficult to exit such strategies in a crisis, with the result that there are occasional steep drops in valuations.
3. For the bulk of the industry there is likely to be a reasonable correlation with indices such as the S&P 500. As the industry gets larger, this correlation is likely to increase and it will be harder for the average manager to outperform.
4. Hedge fund managers will thus be subject to the same constraint as mutual fund managers; that returns are equal to the index minus costs. And since their fees are higher, the result will be disappointing returns for the average investor.
« The economy: Creeping inflation
Source :
http://www.economist.com/blogs/buttonwood/2012/07/hedge-funds
Sunday, July 15, 2012
OV Night
Dear all OV members,
Here we are, the long awaited publication of our night - THE INTERNATIONAL NIGHT! Proudly organised by One Vision!
CONGRATULATIONS ON YOUR NATIONAL SALES CONVENTION ACHIEVEMENT!
Lets break for food!
THE BEST DRESS PARTICIPANTS OF THE NIGHT!
CONGRATULATIONS TO ALL THE PROMOTEES & NSC ACHIEVERS, WE WILL SEE YOU NEXT YEAR ON THE STAGE AGAIN!
Here we are, the long awaited publication of our night - THE INTERNATIONAL NIGHT! Proudly organised by One Vision!
Hey! We are no more baby!
We are 10 years old already!
 Let's celebrate! |
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| The main entrance to the night! |
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| The Management Team with our Present & Immediate Past President |
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| MC of the Night! |
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| Organising Chairlady's speech by Ms Alice Chung |
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| Speech by Mr Henry Wong, the IPP |
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| The Current President, Ms Lau Lee Peng |
CONGRATULATIONS ON YOUR PROMOTIONS!
CONGRATULATIONS ON YOUR NATIONAL SALES CONVENTION ACHIEVEMENT!
Lets break for food!
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| The Best Dress Costume Winners for the night! |
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| Ooh! We have lucky draw for the night too! |
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| Dancing section lead by a Professional Coach, Ms Ruby |
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| Game Time! |
Sunday, July 1, 2012
Congratulations On Your Promotion
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My Motto For Success : - 1) FOCUS 2) ATTENDING TRAINING 3) ACTIVITIES My Message For OV : - YOU ARE ALWAYS BESIDES ME & HOLD ME ALONG MY WAY TO PROMOTION! THANK YOU FOR YOUR GUIDANCE! |
2012 3rd Quarter Training Schedule
Dear Members,
Make full use of it for your personal as well as your team development! See you every Monday 7.30pm!
Business Opportunity Preview
Dear members,
Besides providing field experience sharing & skills transfer, we help you to recruit new members too!
We are enjoying ourselves with the financial freedom, funs, benefits & lots of enjoyment .. Of course, you too if you are always with us!
Besides providing field experience sharing & skills transfer, we help you to recruit new members too!
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| 1st Speaker of the night, GAM, Yvonne Lim |
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Proudly presented by One Vision |
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| We help people to handle their financial issues |
Sharing by AM, Lianne
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| Lianne shared on the benefits she enjoys here... |
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| Sharing by AM, Anita Ng |
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| Life is full of funs & enjoyments by choosing the right career for Anita! |
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Sharing by GAM, Ooi Ah Chai |
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| Mr Ooi : You are the captain of the ship YOU DECIDE YOUR OWN FUTURE |
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| Oh, not forgotten of our MC of the night, Mr Goh |
We are enjoying ourselves with the financial freedom, funs, benefits & lots of enjoyment .. Of course, you too if you are always with us!
Thursday, June 28, 2012
Mark Mobius - Your 10 Questions
Mark Mobius
Templeton Emerging Markets Group executive chairman answers....
1) After having made so much money doing the work you love which means you are having fun most of the time and not really working at all what is your idea of happiness? Linsay Koh, PJ
Who says one can't work and be happy at the same time? Yes, I enjoy my work, and therefore, am happy most of the time since I am working most of the time. Our work involves constant learning and I have a very active curiosity so it is quite enjoyable. Of course, there is stress because we want to make money for our clients and that is not easy since no one can predict how prices are going to move from one moment to the next. I'm someone who enjoys his work and receives great satisfaction and happiness from helping my investors make money in emerging markets.
2) Now that you have reached the pinnacle of your success as an investor and have millions to your name, while at the same time managing over US$50bil of someone else's money, what more in life do you want to achieve and why? Martin Tan, JB
Thanks for the compliment but I don't think anyone can ever reach the “pinnacle” of success, particularly in the investment management business. Since the markets are constantly moving and changing there is no guarantee that a success last year will translate into a success this year. Yes, I have been fortunate enough to achieve some success in the emerging markets. I am very content because I enjoy what I do on a daily basis travelling around emerging markets looking for the best investment bargains for my clients. If anything, I wish there were more hours in the day so that I had more time to carry out my search. What more in life do I need? Time!
3) Do you enjoy the creative challenges and the exercise your brain synapses get in the process of wealth creation, or is the outcome of having more wealth the only motivating factor? Kumar Mahendran, Ipoh
Without a doubt, I would have to say it's the challenges and opportunity to learn and explore emerging markets that motivate me. My tastes are relatively simple and I realise that having a lot of money means nothing if you don't have your health and if you are not happy. So the motivating factor is to learn more. Even after spending more than 40 years in these markets, I am still fascinated by how much there is to learn.
4)Having written The Little Book of Emerging Markets you really must believe in this region. What are the fundamentals which brought about this belief? Do you think the next big thing will come from emerging markets? Marcus Ho, Penang
Emerging markets are an attractive investment opportunity because of their strong economic growth. This is particularly true of Asia where the growth has been remarkable. I studied in Japan in the 1960s, when it was an emerging market. That's when I got hooked. It was so exciting to see the changes and the way people worked. I then realised that I wanted to make emerging markets my life's work. Strong economic growth is accompanied by good corporate earning and good corporate earnings are accompanied by good stock prices. Therefore, emerging markets are the place to be.
The next big thing is already here and it's called frontier markets. Frontier markets are typically smaller and less developed than emerging markets but are growing at a fast pace and could become tomorrow's emerging markets. By offering investors the opportunity to invest in a “younger generation of emerging markets”, frontier markets provide an attractive investment opportunity. Frontier markets are found all over the world in Latin America, Africa, Eastern Europe, and Asia.
5)Apart from investing in the stock market, writing and being a public speaker, what are your other hobbies? What do you do for fun? Faridah Ali, Penang
My hobbies include cycling and generally keeping physically fit through exercise. I go to the gym daily and try to cycle as much as I can during my travels. In fact, I have a portable bicycle that I take on all my trips so that I can explore the cities and the countryside where my work takes me.
6) What do you think are some of the characteristics investors should change to become better investors? Mah Koh Kheng, PJ
Some of the most important characteristics include patience, taking a long-term view, willingness to go against the crowd, discipline, hard work, humility, common sense, creativity, independence and flexibility. And of course, it is necessary to be optimistic. The fact remains that there have always been problems and there will continue to be so in the coming years throughout the world. However, with higher income and living standards, better communications and technology, improved travel, greater international trade, and generally better relations between nations, emerging-markets investors have the perfect opportunity to capitalise on the benefits. However, in order to take advantage of the opportunities it's necessary to look beyond today or tomorrow and patiently research each and every company so that when a decision to invest is made that decision is strong and can withstand the market fluctuations.
7)Your tertiary education started with a Bachelor of Arts, and then a Masters in Communication, followed by a PhD in Economics from MIT in 1964. Does this mean you were unsure of what you wanted to do? At what point did you decide you wanted to go into fund management? Suraya Mah Kamariah, PJ
Yes, it is true that only until I was working on my PhD did I finally get some idea of what specifically I wanted to do. However, ever since I was a child, I was interested in everything and wanted always to learn something new. My diverse educational background gave me that opportunity. It was when I was writing my PhD thesis at the Massachusetts Institute of Technology on communication satellites that I had my first taste of good returns in the stock market. I was studying both the technical and political aspects of the Comsat Corporation and ended up applying for the first share subscriptions of the Comsat Corporation. I made money and I was hooked. But it wasn't until I joined a British brokerage firm in Hong Kong, Vickers da Costa, that I became involved in the financial services industry from the inside. At that time I was researching companies in Asia. Then I moved to Taiwan to open Vickers' office in Taipei, and subsequently, was asked to become President of International Investment Trust, the joint venture between Vickers, Citibank, Lazard, Flemings, and a number of Taiwan banks. That company started the very first investment fund for foreign investors in Taiwan The Taiwan ROC Fund. We then started the very first open-ended public mutual fund in that country. In 1987, Sir John Templeton asked me to join his organisation to start the very first emerging markets fund, the Templeton Emerging Markets Fund, which is still in existence.
8) You've talked about the next big financial crisis. How will that affect the emerging markets, which you have been pretty bullish about? Gan Kheng Kim, KL
Taking a short-term or immediate view, a financial crisis in this day and age of rapid communications and global flows of money will naturally affect markets globally, both emerging and developed markets. Volatility is increasing globally but during times of crisis, volatility increases and results in panics. Of course, the extent to which emerging markets are affected will depend on the location and gravity of the crisis. And, not all emerging markets will be affected in the same way. This is why it's important to take a long-term view, diversify and be prepared to take advantage of volatility by purchasing at low prices and selling at high prices.
A long-term view enables investors to look at a crisis as an opportunity to invest at more attractive prices. Emerging markets are in a strong position and should be able to overcome any financial crisis. These economies have strong economic growth rates, high foreign reserves and low debt levels factors which should enable emerging countries to overcome short-term crisis and recover. Looking back over the years, we have seen this hold true over and over again, whether it was the Asian contagion, the Latin American “tequila” effect, or the US subprime crisis, emerging markets bounced back stronger and higher. Hence, it's important to keep in mind that you're going to find the most and the best bargains during hard times, when the news is bad and when everyone else wants to sell.
9) What has Asia taught you as an international investor and as a person? Li Man Foong, JB
Living in Asia has taught me the importance of understanding different cultures but more importantly, it has taught me humility and patience. The cultures in Asia are very old and embedded in those cultures are lessons learned over centuries and are reflected in the people's behaviour. I've been able to learn from that.
10)You have seen the Asian financial crisis, the global financial crisis and now problems in Europe. What should investors learn from each crisis and what are the warning signs to watch out for? Delila Abdullah, Penang
The first and most important thing to learn from a crisis is patience you've got to be willing to wait for the market to return and go in when they are at the bottom. For example, the beginning of 2009 and end of 2008, was a wonderful time to be investing. Some investors made the mistake of getting out when the panic was at its peak and thus sold at very low prices. If they had, instead, bought more stocks their profits would have been substantial. So I would say patience and a willingness to go against the crowd is very, very important.
Here are some warning signs, by which you can sometimes tell if a boom is about to go bust:
● The nation's current account is perilously low. A current account takes the payments a country must make to outsiders, and compares them to all the revenues it's taking in. If the account is out of balance, that's a bad sign. And if the balance skews way toward the net outflow column, that's when global investors start getting nervous.
● Inflation is rising. If the inflation rate starts rising far and fast in any country, take it as a major red flag because the usual central bank response is to raise interest rates, which could create an economic downturn.
● Companies are taking out huge loans in foreign currencies thinking they could easily repay them when the local currency is healthier. Companies do this because the interest rates could be lower on foreign currency loans than on loans in their own currency.
● Everyone, including all your relatives and friends, are excited about the market and are investing eagerly without doing any in-depth research and ignoring earnings and dividend growth.
Source : -
http://biz.thestar.com.my/news/story.asp?file=/2012/6/2/business/11385270&sec=business#1339748194626123&if_height=585
Templeton Emerging Markets Group executive chairman answers....
1) After having made so much money doing the work you love which means you are having fun most of the time and not really working at all what is your idea of happiness? Linsay Koh, PJ
Who says one can't work and be happy at the same time? Yes, I enjoy my work, and therefore, am happy most of the time since I am working most of the time. Our work involves constant learning and I have a very active curiosity so it is quite enjoyable. Of course, there is stress because we want to make money for our clients and that is not easy since no one can predict how prices are going to move from one moment to the next. I'm someone who enjoys his work and receives great satisfaction and happiness from helping my investors make money in emerging markets.
2) Now that you have reached the pinnacle of your success as an investor and have millions to your name, while at the same time managing over US$50bil of someone else's money, what more in life do you want to achieve and why? Martin Tan, JB
Thanks for the compliment but I don't think anyone can ever reach the “pinnacle” of success, particularly in the investment management business. Since the markets are constantly moving and changing there is no guarantee that a success last year will translate into a success this year. Yes, I have been fortunate enough to achieve some success in the emerging markets. I am very content because I enjoy what I do on a daily basis travelling around emerging markets looking for the best investment bargains for my clients. If anything, I wish there were more hours in the day so that I had more time to carry out my search. What more in life do I need? Time!
3) Do you enjoy the creative challenges and the exercise your brain synapses get in the process of wealth creation, or is the outcome of having more wealth the only motivating factor? Kumar Mahendran, Ipoh
Without a doubt, I would have to say it's the challenges and opportunity to learn and explore emerging markets that motivate me. My tastes are relatively simple and I realise that having a lot of money means nothing if you don't have your health and if you are not happy. So the motivating factor is to learn more. Even after spending more than 40 years in these markets, I am still fascinated by how much there is to learn.
4)Having written The Little Book of Emerging Markets you really must believe in this region. What are the fundamentals which brought about this belief? Do you think the next big thing will come from emerging markets? Marcus Ho, Penang
Emerging markets are an attractive investment opportunity because of their strong economic growth. This is particularly true of Asia where the growth has been remarkable. I studied in Japan in the 1960s, when it was an emerging market. That's when I got hooked. It was so exciting to see the changes and the way people worked. I then realised that I wanted to make emerging markets my life's work. Strong economic growth is accompanied by good corporate earning and good corporate earnings are accompanied by good stock prices. Therefore, emerging markets are the place to be.
The next big thing is already here and it's called frontier markets. Frontier markets are typically smaller and less developed than emerging markets but are growing at a fast pace and could become tomorrow's emerging markets. By offering investors the opportunity to invest in a “younger generation of emerging markets”, frontier markets provide an attractive investment opportunity. Frontier markets are found all over the world in Latin America, Africa, Eastern Europe, and Asia.
5)Apart from investing in the stock market, writing and being a public speaker, what are your other hobbies? What do you do for fun? Faridah Ali, Penang
My hobbies include cycling and generally keeping physically fit through exercise. I go to the gym daily and try to cycle as much as I can during my travels. In fact, I have a portable bicycle that I take on all my trips so that I can explore the cities and the countryside where my work takes me.
6) What do you think are some of the characteristics investors should change to become better investors? Mah Koh Kheng, PJ
Some of the most important characteristics include patience, taking a long-term view, willingness to go against the crowd, discipline, hard work, humility, common sense, creativity, independence and flexibility. And of course, it is necessary to be optimistic. The fact remains that there have always been problems and there will continue to be so in the coming years throughout the world. However, with higher income and living standards, better communications and technology, improved travel, greater international trade, and generally better relations between nations, emerging-markets investors have the perfect opportunity to capitalise on the benefits. However, in order to take advantage of the opportunities it's necessary to look beyond today or tomorrow and patiently research each and every company so that when a decision to invest is made that decision is strong and can withstand the market fluctuations.
7)Your tertiary education started with a Bachelor of Arts, and then a Masters in Communication, followed by a PhD in Economics from MIT in 1964. Does this mean you were unsure of what you wanted to do? At what point did you decide you wanted to go into fund management? Suraya Mah Kamariah, PJ
Yes, it is true that only until I was working on my PhD did I finally get some idea of what specifically I wanted to do. However, ever since I was a child, I was interested in everything and wanted always to learn something new. My diverse educational background gave me that opportunity. It was when I was writing my PhD thesis at the Massachusetts Institute of Technology on communication satellites that I had my first taste of good returns in the stock market. I was studying both the technical and political aspects of the Comsat Corporation and ended up applying for the first share subscriptions of the Comsat Corporation. I made money and I was hooked. But it wasn't until I joined a British brokerage firm in Hong Kong, Vickers da Costa, that I became involved in the financial services industry from the inside. At that time I was researching companies in Asia. Then I moved to Taiwan to open Vickers' office in Taipei, and subsequently, was asked to become President of International Investment Trust, the joint venture between Vickers, Citibank, Lazard, Flemings, and a number of Taiwan banks. That company started the very first investment fund for foreign investors in Taiwan The Taiwan ROC Fund. We then started the very first open-ended public mutual fund in that country. In 1987, Sir John Templeton asked me to join his organisation to start the very first emerging markets fund, the Templeton Emerging Markets Fund, which is still in existence.
8) You've talked about the next big financial crisis. How will that affect the emerging markets, which you have been pretty bullish about? Gan Kheng Kim, KL
Taking a short-term or immediate view, a financial crisis in this day and age of rapid communications and global flows of money will naturally affect markets globally, both emerging and developed markets. Volatility is increasing globally but during times of crisis, volatility increases and results in panics. Of course, the extent to which emerging markets are affected will depend on the location and gravity of the crisis. And, not all emerging markets will be affected in the same way. This is why it's important to take a long-term view, diversify and be prepared to take advantage of volatility by purchasing at low prices and selling at high prices.
A long-term view enables investors to look at a crisis as an opportunity to invest at more attractive prices. Emerging markets are in a strong position and should be able to overcome any financial crisis. These economies have strong economic growth rates, high foreign reserves and low debt levels factors which should enable emerging countries to overcome short-term crisis and recover. Looking back over the years, we have seen this hold true over and over again, whether it was the Asian contagion, the Latin American “tequila” effect, or the US subprime crisis, emerging markets bounced back stronger and higher. Hence, it's important to keep in mind that you're going to find the most and the best bargains during hard times, when the news is bad and when everyone else wants to sell.
9) What has Asia taught you as an international investor and as a person? Li Man Foong, JB
Living in Asia has taught me the importance of understanding different cultures but more importantly, it has taught me humility and patience. The cultures in Asia are very old and embedded in those cultures are lessons learned over centuries and are reflected in the people's behaviour. I've been able to learn from that.
10)You have seen the Asian financial crisis, the global financial crisis and now problems in Europe. What should investors learn from each crisis and what are the warning signs to watch out for? Delila Abdullah, Penang
The first and most important thing to learn from a crisis is patience you've got to be willing to wait for the market to return and go in when they are at the bottom. For example, the beginning of 2009 and end of 2008, was a wonderful time to be investing. Some investors made the mistake of getting out when the panic was at its peak and thus sold at very low prices. If they had, instead, bought more stocks their profits would have been substantial. So I would say patience and a willingness to go against the crowd is very, very important.
Here are some warning signs, by which you can sometimes tell if a boom is about to go bust:
● The nation's current account is perilously low. A current account takes the payments a country must make to outsiders, and compares them to all the revenues it's taking in. If the account is out of balance, that's a bad sign. And if the balance skews way toward the net outflow column, that's when global investors start getting nervous.
● Inflation is rising. If the inflation rate starts rising far and fast in any country, take it as a major red flag because the usual central bank response is to raise interest rates, which could create an economic downturn.
● Companies are taking out huge loans in foreign currencies thinking they could easily repay them when the local currency is healthier. Companies do this because the interest rates could be lower on foreign currency loans than on loans in their own currency.
● Everyone, including all your relatives and friends, are excited about the market and are investing eagerly without doing any in-depth research and ignoring earnings and dividend growth.
Source : -
http://biz.thestar.com.my/news/story.asp?file=/2012/6/2/business/11385270&sec=business#1339748194626123&if_height=585
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