Why is there a lack of interest in the market?

Personal Investing - By Ooi Kok Hwa

THE FTSE Bursa Malaysia KL Composite Index (FBM KLCI) finally touched 1400-level again. Despite high index level, the overall daily traded volume remained low at about 700 million-800 million. We believe, except for certain fund managers and day traders, not many retail investors were excited about the market. In this article, we will look into the reasons why investors are not investing at the moment.

We believe one of the main reasons is that many investors are still quite worried about the global economic recovery. Given that a lot of newspaper articles, media as well as some investment gurus have been saying that the global economy still has the possibility to have “double dips” or slip into recession again. Nevertheless, at this point in time, we believe nobody will know for sure whether the economy will enter into recession.

However, we notice that the current high FBM KLCI level was mainly driven by high stock prices of some key blue-chip stocks or fund favourite stocks. Investors need to understand that even though the FBM KLCI is surging to reach the recent 2008 peak of 1500-level again, there are still plenty of stocks selling at very cheap valuation.

A lot of second- and third-liners are still selling at 2008-09 low but with good values, i.e. price/earnings ratio of about six times, dividend yield of above 5% as well as selling below the owners’ costs (or selling below net tangible asset).

Despite the cheap valuation for lower liner stocks, not many investors are aware of their values. For those who may be aware of the values, not many are willing to inject fresh money into the stock market. One of the main reasons is many may still be holding poor quality stocks and these stocks are selling at 2008-09 low.

Given that they are not willing to cut their losses and worried about losing more money in the stock market, they prefer to stay sidelined while waiting for their existing poor quality stocks to recover one day.

In behavioral finance, we name this phenomenon as “snake-bite” effect.

Unfortunately, in most instances, the moment the prices of these poor quality stocks start to recover, this may indicate the end of the recent market rally because most fund managers, company owners and experienced traders will take the opportunity to liquidate their holdings to these retail investors.

Apart from the above reasons, some investors are quite worried over corporate governance issues in some Malaysian listed companies.

Incidents, like some companies being abandoned by their key owners, companies defaulting on their loan repayments, increasing number of companies being classified under Practice Note 17 and later failed to regularise their companies, are affecting the overall market sentiment. As a result, retail investors are quite careful in investing in new companies lately.

Except for Malaysia and a few other countries in the emerging market, the stock market performance of most overseas markets was weak since April this year.

Retail investors were quite concerned over the financial crisis in some European countries, the weak euro currency, weak US economic indicators as well as asset bubble in China. As a result, the retail participation in these markets, including Malaysia, was quite low. Hence, the current low buying interest from our retail investors is in line with the overall global market phenomenon. The buying interest will only come back when the global stock market starts to show signs of recovery again.

Another reason why investors are not buying stocks is that most retail investors have invested quite a big sum of money in unit trust funds. Even though they still have some savings to invest directly in the market, they prefer to keep those excess savings in fixed deposits rather than to buy stocks directly.

This phenomenon also happens in most developed countries where investors prefer to put money in unit trust funds rather than investing in the stock market. As a result, the fund size managed by unit trust companies grows faster every year.

Hence, we notice that the stock prices for fund managers’ favourite stocks or stocks covered by research analysts are surging to new high whereas the performance of the neglected firms remain low.

Unless investors are holding those fund favourite stocks, they will complain that they have not benefited from the recent market rally.

As mentioned earlier, we still have a lot of second or third liner stocks with strong fundamentals that are selling at cheap valuations. Investors are encouraged to do their own research to discover those companies.

● Ooi Kok Hwa is an investment adviser and managing partner of MRR Consulting.

SPEED READING: Pick up your pace quickly

"read faster and comprehend better with essential reading techniques"

In today's fast paced, information-based business world, successful results often depend on your ability to read and process information quickly.

We are all faced with overflowing inbox full of emails, enquiries, reports and proposals. Then there are faxes, letters, minutes and other documents. It is easy to feel overwhelmed by the huge volume of material we need to read and process.

Speed reading can help you to read and understand written information more quickly, making it an essential skill in today's business environment.

Many people seems to have many misconceptions about speed reading. Here are the most most frequently asked questions:

1. Is it really possible to read faster?

The answer is YES!. The average reading speed of most people is only about 200 to 250 word per minute (wpm). If you use effective speed reading techniques, it is possible to double or even triple your reading speed to 500 to 700 wpm.

In 2007, the six-time World Champion Speed Reader Anne Jones read Harry Porter Hallows in a record breaking 47 minutes and one second - or 4,251 words per minute. It is possible to double your reading speed in just one day

2. Does speed reading spoil the enjoyment of reading?

If anything, speed reading enhances the enjoyment of reading because you will be able to concentrate for longer periods and you will have fewer problems that are usually caused by bad reading habits.

3. If I read faster, does my comprehension go down?

If you eliminated bad reading habits, it is possible to maintain your comprehension - and even comprehend better - while you read faster.

What are the bad reading habits you should be aware of?

# Reading one word at a time. We have always been taught to read word by word to understand the information better. However, this exactly the reason why people read slowly. Speed readers train their eyes to view more words at a single glance, thereby increasing their "eye span".

# Re-reading what you have just read. This is called "regression". Many people either consciously or sub-consciously re-read what they have just read, just to make sure if they read it correctly! This is a huge waste of time and energy.

There are other bad reading habits, too, like sub-vocalisation and eye fixations.

Now that we have cleared up the misconceptions about speed reading, let's see what can be done to improve your reading speed and maintain your comprehension. Here some action points:

# Measure your current reading speed. Most people don't have a clue about their current reading speed. If you want to increase your reading speed, you should know your current reading speed. Take any article. Count the number of words. Time yourself. Divide the number of words with your time (in seconds). Multiply this with 60 to get your speed in words per minute.

# Read widely. Most of us tend to read similar type of reading material all the time. If you want to improve your reading speed, your must be comfortable with reading any kind of material: fiction, non-fiction, journals, novels and so on.

# Increase your eye span. Draw four parallel vertical line on the article you are reading, so that your have three to four word (one chunk) between two lines. Try to focus and read the whole chunk at one glance, instead of reading word by word.

Once you are comfortable with this, draw three parallel lines to increase the size of the chunk. This way you will increase your eye span. Remember that you don't have to draw lines forever. You have to do this initially to train your eyes to increase their span.

# Avoid distractions. Once you are distracted, you don't usually start from where you left off. You tend to re-read a few sentences (or sometimes a few paragraphs) to remind yourself of the context. Try to read during those times when the chances of distraction are minimal. And yes, you can turn off the email alert sounds on your computer!

# Read with an objective. Setting your objectives at the beginning of the reading session maximises your time and effort. Are you reading to fish out particular information? Are you reading to prepare for an exam? Are you reading for pleasure?

Depending on the objective, you may have to either read something slowly or skim through it. Frame questions starting with "why, who, what, where, when and how" to set your objectives. This will save a lot of time and help you increase your reading speed.

Source: ST/ANN. Article by Nishant Kasibhatla, a wolrd-record holder and the only Grand Marter of Memory in Singapore. The Star 24 August 2010

A NEW BREED OF CIVIL SERVANTS

AT YOUR SERVICE (The Star, 14 August 2010)
By DATUK SERI DR MOHD NASIR MOHD ASHRAF,
Ministry of Health Secretary-General

The Administrative and Diplomatic Service (PTD) is expected to lead the way in ensuring that civil servants are not only administrators but managers, specialists, professionals and technocrats.

SINCE Independence, the Malaysian public service has assumed a multitude of roles in meeting the needs and expectations of the public and other stakeholders in the country.

Over the years, it has been credited for playing a key role in Malaysia’s development and modernisation and recognised as one of the best in the region.

In its efforts to meet the expectations of the National Vision Policy, New Economic Model (NEM) and 1Malaysia, the Malaysian public service will continue to redefine itself.

Through various guiding principles or mantras such as “No Wrong Door Policy”, “Business is not as Usual” and the creation of PEMUDAH for improving the public service delivery system by reducing bureaucratic obstacles and providing productive, creative and innovative services, it aspires to become a strong partner with different sectors of the economy in creating wealth for the nation.

The Public Service Department (PSD), being the torchbearer of the public service, has been pragmatically evolving with time and demands. The PSD has and continues to strategically reposition the public service machinery to ensure government policies are implemented effectively.

This task is shouldered by civil servants who are experts in their respective fields. They are innovators and creators who can think and perform well. The challenge is for the PSD to constantly upgrade its human capital by recruiting the best people while training and retraining them into experts.

For the NEM to be successful, the PSD has to work hand in hand with the private sector and the community. The PSD has to facilitate the working of the NEM and to ensure the civil service possesses the right attributes with the relevant knowledge and skills.

The role of the Administrative and Diplomatic Service (PTD) officers in the civil service has also evolved and changed dramatically to meet these radical new developments in the country’s landscape. Some of these new developments can be attributed to the following:

The increasing technocratic skills and professionalism of political leaders;

The development of more complex socio-economic and political challenges in managing the country;

The increasing demand by the public for greater transparency and accountability;

The increasing and expanding scope of the government’s involvement and activities, and

The changing landscape of the administrative system with a widening range of functions of the civil service.

The role and size of the Government has expanded rapidly in the last 50 years after Independence, leading to a rapid expansion of the civil service and the PTD, in particular. Today, the Government recruits about 400 officers annually into the PTD and the total strength is approximately 8,000-strong.

The challenge now is to ensure quality and that these new recruits are up to the mark. This is important in order to strengthen the PTD which is the backbone of the civil service. Recent developments in the recruitment of PTD have indeed moved in that direction where entry into the PTD now requires applicants to go through a written test and stringent assessment process with only those who have good leadership potential selected.

With the policy on right-sizing the public sector, the Government may review the number of PTD being recruited. We may see some of the less complex functions of management within the Government, better served by more experienced but academically less qualified personnel.

Recruitment into the PTD will be conducted on a much more selective and competitive basis. The time has come to give preference to the best graduates who are first class honours or 2nd class upper honours graduates and particularly those with academic disciplines which carry greater relevance to the challenges of complex modern management in the public sector.

The PTD scheme of service should cater to a wider range of academic disciplines such as engineers, scientists, lawyers, system analysts, town planners, accountants, and financial analysts.

The time has come for the PTD to do away with generalists. The PTD scheme of service should provide for them to become specialists amongst others in personnel management, finance, business administration, economics and trade as well as land administration.

PTD training has to be developed along more specialised and professional paths with emphasis on modern management. PTD officers need to be grounded and exposed more to economics, finance, business management and information technology, in keeping with the latest techniques and complexities in modern management.

The new breed of PTD officers will be IT savvy, forward looking and forward thinking, as well as good in engaging and networking.
To further meet the challenges of a globalised environment, the new breed of PTD officers have to be broadminded to think and act in a global context; able to respond quickly as well as being multi-lingual.

The Prime Minister has mooted the idea of having a cross-fertilisation programme and giving priority to those who have shown diligence, are capable and have performed well in their respective departments or ministries to further enhance the public service, particularly the PTD.

We will also see greater cross-posting of officers to agencies outside Malaysia to further expose future leaders to international affairs and gain a wide global perspective.
However, we should not forget where PTD has done well in the past. There will be re-emphasis on the very strong traditional values of service to the country and the professional pride that have been the hallmark of the Malaysia Public Service and the PTD.

In conclusion, for PTD officers to remain relevant and current they must benchmark not only against the best in the region but the rest of the world as well. At the same time, we need to self-appraise continually and to be constantly reminded of our calling to serve the rakyat and the significance of being in the elitist branch of the civil service.

Besides being the President of the Administrative & Diplomatic Service Association, Datuk Seri Dr Mohd Nasir Mohd Ashraf is also the secretary-general of the Health Ministry.

EXCLUSIVE:  Most of the readers will not miss to read the article below. A very insightful words written by a PTD on How to become a PTD, How a PTD thinks, speaks, teamwork, leads and handling the pressures. A must read if you are interested in becoming a respectable PTD!

PTD aspirants WAJIB/MUST read this PTD The Premier Service and Glamour Civil Servant