Connecting Markets East & West

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24 September 2014

CONCURRENT SESSION E - "HOW CAN

MALAYSIANS AND MALAYSIAN COMPANIES

BEST PREPARE FOR A FINANCIAL CRISIS?"

Rejina Rahim

Country Head/Managing Director

Nomura Asset Management Malaysia Sdn. Bhd. (748695-A)Suite 16.2 Level 16, Menara IMCNo. 8 Jalan Sultan Ismail, 50250 Kuala Lumpur. Malaysia.

“NEVER INNOVATE TO COMPETE, INNOVATE TO CHANGE THE RULES OF THE GAME”

David O. Adeife-Innovation Author

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KLCI index dropped only by 35% as compared to

S&P (53%) and HSI (56%) during the crisis.

Performance of the KLCI

KLCI index recovered well post crisis, hitting the pre-crisis price level in early

2010.

KLCI index has been on an upward trend since its rebound in early 2009, ending at a higher price level than the HSI index.

Overall, the KLCI index performed relatively well

due to low external borrowings, low NPLs, the lack of major players, and

the intervention of the government.

Malaysia learnt a good lesson from the Asian

financial crisis to keep the external borrowings low.

The regulatory framework and instruments have kept

the NPLs low.

MYR is not a complete free float as before the AFC

(1) 3 reasons to explain the lack of bearish run on the stock market

Improve access to SME

Establishment of SME Credit Bureau under the CGC

(2) Government intervention during the crisis

Small Debt Resolution Scheme

Micro Enterprise Fund

BNM-driven SME Assistance Guarantee Scheme

Introduction of Merdeka Savings Bond

Restructuring the economy and improving

its competitiveness

Liberalise 27 services sub-sectors

Removal of 30% Bumiputra perticipation quota in certain businesses

Deregulation of the Foreign Investment Committee guidelines

Source: ISIS and UM Report, The Global Financial Crisis and the Malaysian Economy Nov. 2009

Great for the Malaysian Economy BUT What About ME???

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• For most of us salaried workers, we want 3 basic things in life:

• A roof over our heads

• A car to get from Point A to B as public transport is not as connected as we want it to be

• A good education for our kids

• BUT with rising inflation and our wages not rising in tandem, what are our options?

• Going to the stock market directly is not for the faint hearted

• Unit trust funds are a good way because you cannot time the market

• What are the lessons you can learn from the big institutional investors?

• They stay invested all the time and they invest in different asset classes

• Dollar cost averaging is a good way to start and invest in different types of UTFs

• Property is a common investment vehicle but can be illiquid

• Investment time frame for each investment needs to be long term

What can me and you do?

• Cash is king but what happens if you don’t have enough of it?

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• The investment strategy that needs to be taken must take into account:

• What kind of business and operational cash flows you have

• You need to match your investment horizon accordingly

• You need to determine what your investment risk tolerance is

• If you have a lot of overseas exposure, you may want to consider hedging but foreign currency hedging is expensive and may be

counter productive

• Cash, money market and bond unit trust funds provide a tax benefit as the income derived from such funds are tax free

• Equity might be too risky and not in line with your investment appetite

• If however you are able to invest in equities, test your tolerance first, invest in Malaysian equities before venturing overseas as the

dynamics and volatility may not be something you are able to tolerate

• BUT investing locally too may have its fair share of risks as the Malaysian market is not a closed economy and it does take cues from

global and regional markets.

What if I am an entrepreneur or a SME?

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Disclaimer

This material contains information that has been prepared by Nomura Asset Management Malaysia Sdn. Bhd. (Nomura Asset Management ). However, the views or opinions expressed in this material represent the personal views of the presenter and do not necessarily reflect the opinion of Nomura Asset Management. This material does not make any representation that the views or opinions expressed herein are endorsed by Nomura Asset Management .

This material is for information purposes only. Whilst the contents of the presentation are believed to be correct and not misleading, no representation is made to that effect. Unless otherwise stated, all statements, figures, graphs and other information included in this presentation are as of the date of this presentation and are subject to change without notice. To the extent permitted by law,  Nomura Asset Management does not accept liability for any statement, opinion, information or matter (express or implied) arising out of, contained in or derived from, or any omission from this presentation, whether negligent or otherwise. The contents of this material are not intended in any way to indicate or guarantee future investment results. Further, this presentation is not intended as a solicitation or recommendation with respect to the purchase or sale of any particular investment. This material may not be copied, re-distributed or reproduced in whole or in part without the prior written approval of Nomura Asset Management