Wednesday October 8, 2008 MYT 12:16:31 PM
NEW YORK: Gold prices kept rising Tuesday, approaching US$900 an ounce after another day of turmoil in financial markets encouraged buying of safe-haven assets. Silver also rose.
Investors remained skittish even after the Federal Reserve announced it would ramp up emergency efforts to clear obstructed credit markets and revive the economy.
The central bank said it would buy massive amounts of short-term commercial debt and in a speech Tuesday, Fed Chairman Ben Bernanke hinted that it might cut interests rates as well.
The measures, which follow last Friday's approval of a $700 billion financial bailout, failed to console Wall Street.
The Dow Jones industrials fell more than 500 points.
With few safe places to put money, investors flocked to gold.
The December contract jumped $15.80 to settle at $882 an ounce on the New York Mercantile Exchange, after earlier rising as high as $893.70.
On Monday, gold shot up $33 to $866.2 an ounce.
Gold, long considered an attractive investment during rough economic times, has seen a resurgence of late as the spreading credit crisis weighs down equity markets across the globe.
"This bailout plan has not been the magic bullet that many people hoped it would, so gold is catching some of the safe-haven bid from that,'' said Matt Zeman, head trader at LaSalle Futures in Chicago.
December silver rose 9.5 cents to settle at $11.38 an ounce on the Nymex, while December copper fell 15.55 cents to settle at $2.5345 a pound.
A slightly weaker dollar Tuesday also supported gold.
A falling greenback encourages investors to buy precious metals as a hedge against inflation or weakness in the U.S. currency.
In energy markets, oil prices rebounded from the previous day's big drop as investors halted selling to see whether the economic bailout can gain traction and stem a widening global downturn.
Light, sweet crude for November delivery rose $2.25 to settle at $90.06 a barrel on the Nymex, after earlier trading as high as $93.02.
In other Nymex trading, heating oil rose 3.17 cents to settle at $2.5057 a gallon, while gasoline futures rose less than half a penny to settle at $2.0628.
In agriculture trading, major grain prices traded mixed on the Chicago Board of Trade.
Wheat for December delivery rose 8 cents to settle at $6.0325 a bushel, while December corn fell 7 cents to settle at $4.17 a bushel.
November soybeans added 4 cents to settle at $9.26 a bushel.
http://thestar.com.my/news/story.asp?file=/2008/10/8/business/20081008083918&sec=business
Thursday, October 9, 2008
Local insurers may get hurt if crisis widens
Wednesday October 8, 2008
PETALING JAYA: The credit crunch that is causing havoc in the US and European financial markets has little impact so far on local insurance companies but their performance may take a knock if the financial crisis worsens, industry players said.
“If the credit crunch persists, it may affect the performance of insurance companies as it will have an impact on the local economy, hence affecting spending,” an insurer said.
Already, Kurnia Asia Bhd has felt the whiplash from the global financial hurricane.
It posted a net loss of RM301.79mil for the financial year ended June 30 due to an underwriting deficit and a significant reduction in total investment income due to the poor performance of stock markets.
Kurnia Asia executive chairman Tan Sri Kua Sian Kooi claimed that despite the loss, the company was stronger than ever.
The company recently raised RM400mil via a capital injection and currently has a total capital base of RM600mil.
“Our claims reserves have strengthened to more than RM1.88bil from RM1.66bil in the last financial year,” Kua told StarBiz. “This places the company in an excellent position and confidently allows us to meet our commitments to our policyholders, agents and stakeholders.”
With the new capital, Kurnia would be able to “move forward, expand and strengthen our network,” he said.
Allianz Malaysia Bhd chief executive officer (CEO) Alexander Ankel said the current credit crunch had minimal impact on the company because its exposure to the local stock market had been reduced. Allianz also had “minimal exposure in foreign investments,” he added.
Anker said it was difficult at this juncture to predict the outcome should the credit crisis persist.
Manulife Insurance Bhd president and CEO Peter Robertson said the credit crunch might slow growth but sales would continue to grow.
Hong Leong Assurance Bhd group managing director and CEO Charlie E Oropeza said the company anticipated its business to grow despite the challenges because economic downturns created a need for insurance protection.
“The company’s investments are mainly in the local markets and we do not have exposure to collateralised debt obligations and exotic instruments,” he said.
“Our investments are well diversified and exposure to the stock market has been kept to a minimum and in sound dividend-yielding stocks.’’
http://thestar.com.my/news/story.asp?file=/2008/10/8/business/2211456&sec=business
PETALING JAYA: The credit crunch that is causing havoc in the US and European financial markets has little impact so far on local insurance companies but their performance may take a knock if the financial crisis worsens, industry players said.
“If the credit crunch persists, it may affect the performance of insurance companies as it will have an impact on the local economy, hence affecting spending,” an insurer said.
Already, Kurnia Asia Bhd has felt the whiplash from the global financial hurricane.
It posted a net loss of RM301.79mil for the financial year ended June 30 due to an underwriting deficit and a significant reduction in total investment income due to the poor performance of stock markets.
Kurnia Asia executive chairman Tan Sri Kua Sian Kooi claimed that despite the loss, the company was stronger than ever.
The company recently raised RM400mil via a capital injection and currently has a total capital base of RM600mil.
“Our claims reserves have strengthened to more than RM1.88bil from RM1.66bil in the last financial year,” Kua told StarBiz. “This places the company in an excellent position and confidently allows us to meet our commitments to our policyholders, agents and stakeholders.”
With the new capital, Kurnia would be able to “move forward, expand and strengthen our network,” he said.
Allianz Malaysia Bhd chief executive officer (CEO) Alexander Ankel said the current credit crunch had minimal impact on the company because its exposure to the local stock market had been reduced. Allianz also had “minimal exposure in foreign investments,” he added.
Anker said it was difficult at this juncture to predict the outcome should the credit crisis persist.
Manulife Insurance Bhd president and CEO Peter Robertson said the credit crunch might slow growth but sales would continue to grow.
Hong Leong Assurance Bhd group managing director and CEO Charlie E Oropeza said the company anticipated its business to grow despite the challenges because economic downturns created a need for insurance protection.
“The company’s investments are mainly in the local markets and we do not have exposure to collateralised debt obligations and exotic instruments,” he said.
“Our investments are well diversified and exposure to the stock market has been kept to a minimum and in sound dividend-yielding stocks.’’
http://thestar.com.my/news/story.asp?file=/2008/10/8/business/2211456&sec=business
Local banks remain resilient
Wednesday October 8, 2008
PETALING JAYA: Local banks have remained resilient amid the global financial crisis thanks to the stringent measures adopted by Bank Negara after the Asian financial crisis of 1997.
Deputy Finance Minister Datuk Kong Cho Ha said the banking and financial system was reformed in such a way that local banks were not exposed to any US subprime effects.
“We are very fortunate because our economic fundamentals are still very sound, especially our banking industry, and I would say that our banks are still very resilient,” he said after a press conference on the 2nd Global Bio-Herbs Economic Forum, which will be held from Nov 15 to Nov 17.
On the downward trend of the local stock exchange, Kong said “any investors would now adopt a wait-and-see attitude.”
“The current performance of the US and major European stock markets, as well as the East Asian markets including Japan and Hong Kong, will inevitably cause loss of confidence among the investors.
“However, as in any economic crisis, there are vast opportunities for investors to look into,” he said.
Kong said investors would have to decide for themselves on the right time for the right investment opportunities.
Although Malaysia would be affected by the fallout, as with other countries, Kong said it would not actually affect the economic fundamentals of the country.
“Our stock market downturn is not as bad as some other major markets in the world and that shows that our market is actually very healthy at comfortable price-to-earnings of about 11 or 12 times.”
http://thestar.com.my/news/story.asp?file=/2008/10/8/business/2211463&sec=business
PETALING JAYA: Local banks have remained resilient amid the global financial crisis thanks to the stringent measures adopted by Bank Negara after the Asian financial crisis of 1997.
Deputy Finance Minister Datuk Kong Cho Ha said the banking and financial system was reformed in such a way that local banks were not exposed to any US subprime effects.
“We are very fortunate because our economic fundamentals are still very sound, especially our banking industry, and I would say that our banks are still very resilient,” he said after a press conference on the 2nd Global Bio-Herbs Economic Forum, which will be held from Nov 15 to Nov 17.
On the downward trend of the local stock exchange, Kong said “any investors would now adopt a wait-and-see attitude.”
“The current performance of the US and major European stock markets, as well as the East Asian markets including Japan and Hong Kong, will inevitably cause loss of confidence among the investors.
“However, as in any economic crisis, there are vast opportunities for investors to look into,” he said.
Kong said investors would have to decide for themselves on the right time for the right investment opportunities.
Although Malaysia would be affected by the fallout, as with other countries, Kong said it would not actually affect the economic fundamentals of the country.
“Our stock market downturn is not as bad as some other major markets in the world and that shows that our market is actually very healthy at comfortable price-to-earnings of about 11 or 12 times.”
http://thestar.com.my/news/story.asp?file=/2008/10/8/business/2211463&sec=business
Saturday, September 27, 2008
AFB to tie up with local, foreign Islamic banks
Friday September 26, 2008
It wants to be lead adviser for corporate financing
KUALA LUMPUR: Asian Finance Bank Bhd (AFB) has ambitious expansion plans, especially in Islamic banking, despite its small capital base.
AFB has a paid-up capital of RM355mil and an authorised capital of RM1bil.
“We believe that the way for us to grow and expand is by forging strategic collaborations with the Islamic investment banking fraternity in Malaysia and abroad,” chief executive officer Datuk Mohamed Azahari Kamil told StarBiz in an interview.
“Through this, we can syndicate financing and become lead adviser for corporate financing activities."
Building strategic partnerships and an ability to offer innovative products that focus on customer needs would be important foundations for the bank’s success, he said.
Azahari said ADB would leverage on the vast Islamic banking experience of its Middle Eastern shareholders comprising Qatar Islamic Bank (QIB) as well as associates RUSD Investment Bank Inc and Global Investment House.
QIB, a leading Islamic bank in Qatar, has expertise in financing syariah-compliant public and private sector projects.
RUSD Investment Bank is a member of the RUSD Group based in Jeddah, Saudi Arabia. It is part of the RUSD Group that owns a number of Islamic insurance and finance companies and also provides financial planning products and services for a global clientele.
Azahari said moving into niche markets, particularly when servicing institutional investors, would be another key area for the bank, both domestically and abroad.
This was because AFB could act as a bridge for local companies to venture into the Gulf Cooperation Council (GCC) countries and vice-versa, he added.
He said the bank had identified about five Malaysian companies involved in oil and gas, power generation and infrastructure activities in the GCC countries for which it could provide funding and advice.
AFB recently opened a second branch in Johor Port, Johore Baru, and was looking at setting up two more - one each in the north and east of the peninsula.
It was also looking to set up a wealth management division to meet the growing needs of high net worth individuals.
On the international front, Azahari said apart from Indonesia, the bank was also eyeing Brunei.
“Once we have proven our success in Indonesia, we will look into Brunei by setting up a representative office there,’’ he said.
http://biz.thestar.com.my/news/story.asp?file=/2008/9/26/business/2100954&sec=business
It wants to be lead adviser for corporate financing
KUALA LUMPUR: Asian Finance Bank Bhd (AFB) has ambitious expansion plans, especially in Islamic banking, despite its small capital base.
AFB has a paid-up capital of RM355mil and an authorised capital of RM1bil.
“We believe that the way for us to grow and expand is by forging strategic collaborations with the Islamic investment banking fraternity in Malaysia and abroad,” chief executive officer Datuk Mohamed Azahari Kamil told StarBiz in an interview.
“Through this, we can syndicate financing and become lead adviser for corporate financing activities."
Building strategic partnerships and an ability to offer innovative products that focus on customer needs would be important foundations for the bank’s success, he said.
Azahari said ADB would leverage on the vast Islamic banking experience of its Middle Eastern shareholders comprising Qatar Islamic Bank (QIB) as well as associates RUSD Investment Bank Inc and Global Investment House.
QIB, a leading Islamic bank in Qatar, has expertise in financing syariah-compliant public and private sector projects.
RUSD Investment Bank is a member of the RUSD Group based in Jeddah, Saudi Arabia. It is part of the RUSD Group that owns a number of Islamic insurance and finance companies and also provides financial planning products and services for a global clientele.
Azahari said moving into niche markets, particularly when servicing institutional investors, would be another key area for the bank, both domestically and abroad.
This was because AFB could act as a bridge for local companies to venture into the Gulf Cooperation Council (GCC) countries and vice-versa, he added.
He said the bank had identified about five Malaysian companies involved in oil and gas, power generation and infrastructure activities in the GCC countries for which it could provide funding and advice.
AFB recently opened a second branch in Johor Port, Johore Baru, and was looking at setting up two more - one each in the north and east of the peninsula.
It was also looking to set up a wealth management division to meet the growing needs of high net worth individuals.
On the international front, Azahari said apart from Indonesia, the bank was also eyeing Brunei.
“Once we have proven our success in Indonesia, we will look into Brunei by setting up a representative office there,’’ he said.
http://biz.thestar.com.my/news/story.asp?file=/2008/9/26/business/2100954&sec=business
Wednesday, September 24, 2008
Munich Re sees double-digit increase in insurance rates
Tuesday September 23, 2008
FRANKFURT: Munich Re sees opportunities to push through double-digit price increases following the rescue of American International Group (AIG) by the US government, a Munich Re board member said.
The world’s biggest reinsurer is targeting price increases that were “clearly in the double-digit percentages” for the risk cover it provided to insurers in 2009, Torsten Jeworrek told the Financial Times Deutschland newspaper in an interview conducted on Friday.
Insurers, who pass on some of their risks to reinsurers in exchange for part of the premium, will hammer out contracts in the coming weeks on the price and extent of risk cover for 2009.
“We have a situation in the reinsurance market that is similar to that after Sept 11, 2001,” Jeworrek said in the interview published yesterday.
“The market is significantly different from a week ago,’’ he said. “From now on it’s a hard market. The soft market is behind us.”
Reinsurers refer to periods of high prices and favourable conditions for them as a “hard market.” - Reuters
http://thestar.com.my/news/story.asp?file=/2008/9/23/business/2093275&sec=business
FRANKFURT: Munich Re sees opportunities to push through double-digit price increases following the rescue of American International Group (AIG) by the US government, a Munich Re board member said.
The world’s biggest reinsurer is targeting price increases that were “clearly in the double-digit percentages” for the risk cover it provided to insurers in 2009, Torsten Jeworrek told the Financial Times Deutschland newspaper in an interview conducted on Friday.
Insurers, who pass on some of their risks to reinsurers in exchange for part of the premium, will hammer out contracts in the coming weeks on the price and extent of risk cover for 2009.
“We have a situation in the reinsurance market that is similar to that after Sept 11, 2001,” Jeworrek said in the interview published yesterday.
“The market is significantly different from a week ago,’’ he said. “From now on it’s a hard market. The soft market is behind us.”
Reinsurers refer to periods of high prices and favourable conditions for them as a “hard market.” - Reuters
http://thestar.com.my/news/story.asp?file=/2008/9/23/business/2093275&sec=business
Better ways to handle bad debt
Tuesday September 23, 2008
Malaysia reacted quickly during the 1997 financial crisis and avoided an otherwise costly bad-debt plan
IT is no use crying over spilt milk. But the US could have averted an extremely costly bad debt plan, otherwise referred to as “toxic assets dumpster,’’ by taking quick pre-emptive measures.
Not that Malaysia wants to blow its trumpet, but it bit the bullet very fast during the 1997 Asian financial crisis.
“We knew it (the contagion) was coming here," said Datuk Seri Hamidy Hafiz, CEO of Affin Bank Bhd. Once a stern decision was taken, a thorough investigation of banking assets and loans in Malaysia was conducted.
“Action must be taken when (the problem) is first detected. And it cannot be done via instalments," said Hamidy, former managing director of Pengurusan Danaharta Bhd, the asset management company formed to take over and restructure bank debts at that time.
Broadly, the basic steps had involved:
* Stress testing to see how the banks would withstand any stock or property market meltdown;
* Every bank providing a list of accounts to Danaharta for analysis;
* Danaharta offering to buy over the assets at market value, and banks having to take a haircut;
* In cases of insufficient capital, Danamodal Nasional Bhd came in to inject capital and take up a stake in the bank;
* If the loan exceeds the amount of security available, the bank will be paid in government bonds and given five years to amortise the outstanding amount.
“We put the discipline into the banks," said Hamidy.
“Danaharta organised the disposals in an orderly manner without impacting the markets and there was no element of public subsidy."
Nevertheless, the world banking community heaved a sigh of relief when the US decided to embark on an estimated US$700bil to deal with the mortgage and non-mortgage-related debts of large institutions caught in the subprime tailspin.
Just that if it had made the decision earlier, it might have only involved housing loans. Not only are the costs escalating, the price to pay for erosion in confidence is getting higher. Having occupied pole position in the world for so long, US banks would probably find it hard now to raise credit lines overseas.
Prior to its set-up, Danaharta had studied various debt plans such as Securum (Sweden, 1992) and FOBAPROA (Mexico, 1995).
Based on the restructuring model, Securum had successfully managed and sold mostly real estate assets within a relatively short time.
However, the transfer of loans by FOBAPROA did not succeed as capital deficiency was said to be underestimated.
FOBAPROA was set up based on the rapid disposal model whereby banks were cleaned up and assets sold or recovered as quickly as possible.
The US Resolution Trust Corp, which succeeded in resolving 747 thrifts with assets of US$465bil, was also based on the rapid disposal model. The danger with rapid disposal is that assets are sold or recovered so quickly that it can “crash" the market.
In Danaharta’s case, the asset management model entailed rehabilitation of assets and loans that could be saved, and selling off the balance.
As it stands, the world market is still awaiting details of the massive US bailout plan and how its debts are going to be sold off or restructured.
The method used will be important for people to gauge the orderliness and lasting impact to markets worldwide.
http://thestar.com.my/news/story.asp?file=/2008/9/23/business/2093962&sec=business
Tuesday, September 23, 2008
AIA first to get international takaful operator licence
Tuesday September 23, 2008
PETALING JAYA: American International Assurance Bhd (AIA) has received Malaysia’s first international takaful operator (ITO) licence from Bank Negara.
The licence would allow AIA’s wholly owned subsidiary AIA Takaful International Bhd (ATIB) to carry out composite (family and general) takaful and re-takaful businesses in international currencies.
ATIB has been operational since Sept 15.
AIA Bhd chief executive officer and ATIB director Khor Hock Seng said in a statement: “We are delighted to be granted the licence as we are now able to offer takaful solutions for the middle and affluent segments of qualified residents and non-residents in Malaysia.
“It is a significant step for AIA as we enter the growing Islamic financial market as a niche player offering consumers the choice of takaful solutions in international currencies, something that has not been largely available locally.”
He added that it would enable the company to tap the growing takaful global market and contribute to the expansion of ATIB’s takaful infrastructure. It would also establish Malaysia as a regional centre of excellence for AIA.
As one of the few players in Malaysia offering takaful solutions in international currencies, ATIB is well positioned to benefit from the steady growth of the global and domestic Islamic finance sector and the Malaysia International Islamic Financial Centre’s (MIFC) initiative to promote Malaysia as a major hub for international Islamic finance.
The MIFC initiative positions Malaysia as an international Islamic financial hub for international takaful, sukuk origination, Islamic wealth and fund management, international Islamic banking and human capital development.
“From an organisational perspective, ATIB is also strategically positioned to leverage on the established infrastructure of AIA as it adopts the shared services model which will help ensure overall efficiency and effectiveness,” said Khor.
Another notable key strength of ATIB lies in the wealth of knowledge possessed by the distinguished members of its syariah committee, which has been approved by Bank Negara.
“The committee comprises recognised syariah scholars who will guide us in ensuring all our takaful solutions are in line with established syariah principles,” he said.
http://biz.thestar.com.my/news/story.asp?file=/2008/9/23/business/2092990&sec=business
PETALING JAYA: American International Assurance Bhd (AIA) has received Malaysia’s first international takaful operator (ITO) licence from Bank Negara.
The licence would allow AIA’s wholly owned subsidiary AIA Takaful International Bhd (ATIB) to carry out composite (family and general) takaful and re-takaful businesses in international currencies.
ATIB has been operational since Sept 15.
AIA Bhd chief executive officer and ATIB director Khor Hock Seng said in a statement: “We are delighted to be granted the licence as we are now able to offer takaful solutions for the middle and affluent segments of qualified residents and non-residents in Malaysia.
“It is a significant step for AIA as we enter the growing Islamic financial market as a niche player offering consumers the choice of takaful solutions in international currencies, something that has not been largely available locally.”
He added that it would enable the company to tap the growing takaful global market and contribute to the expansion of ATIB’s takaful infrastructure. It would also establish Malaysia as a regional centre of excellence for AIA.
As one of the few players in Malaysia offering takaful solutions in international currencies, ATIB is well positioned to benefit from the steady growth of the global and domestic Islamic finance sector and the Malaysia International Islamic Financial Centre’s (MIFC) initiative to promote Malaysia as a major hub for international Islamic finance.
The MIFC initiative positions Malaysia as an international Islamic financial hub for international takaful, sukuk origination, Islamic wealth and fund management, international Islamic banking and human capital development.
“From an organisational perspective, ATIB is also strategically positioned to leverage on the established infrastructure of AIA as it adopts the shared services model which will help ensure overall efficiency and effectiveness,” said Khor.
Another notable key strength of ATIB lies in the wealth of knowledge possessed by the distinguished members of its syariah committee, which has been approved by Bank Negara.
“The committee comprises recognised syariah scholars who will guide us in ensuring all our takaful solutions are in line with established syariah principles,” he said.
http://biz.thestar.com.my/news/story.asp?file=/2008/9/23/business/2092990&sec=business
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