MALAYSIA’S ECONOMIC OUTLOOK: 2013 THE CAUTIOUS YEAR?
With GE13 in Malaysia over now, things are finally settling down but not with consumers who are holding onto their consumption pattern. People are a bit scared taking into account the global bloodbath and manipulation of the financial markets by the developed countries economic decision makers.
We are heading towards an epoch of monetary dumping or competitive devaluation or Quantitative Easing by US and Japan, protectionist policies to secure local industries from competi- tion by the western countries and procuring of natural resources by the big players as the landscape of geo-politics changes rapidly.There is an element of uncertainty among the Malaysian consumers which is bad for the economy. Uncertainty is like a depreciating asset and challenge for the government.
Never in history, has a country succeeded in meeting her fiscal balance by increasing tax rates. GST is a consumption oriented tax which will hurt the consumers spending at the retail level. Thus, consumers would hold onto their consumption. The best way to increase the revenue structure and to improve the fiscal side of the country’s balance sheet is to increase the size of the GDP. Once you increase the size of the GDP, the taxes will grow automatically thus bolstering the strong fiscal side. SME sector growth is the key to grow the size of the GDP in Malaysia. They are the backbone of the economy.
INVESTMENT STRATEGIES FOR TURBULENT TIMES
The art of asset allocation is the most important driver that can determine the asset portfolio sustainability. This can provide strong returns or would give investors sleepless nights with positioning audit of their portfolio every month. My job is to find game-changing ideas that alter the way of life and to help the readers / savvy investors make big money from investing in them before the crowd gets in or main stream media breaks the news. Some of the alternative investment strategies for smart and savvy investors are:
COMMODITY —-SILVER IS A POOR MAN GOLD.
My first question to my valued investors is, have you insured your wealth? The replies are: No, How do we do it? Buying gold and silver is the easiest way to get insurance of your wealth.
Silver isn’t like most metals, which are spread around the world. Silver mines are highly concentrated in six countries. Mexico, Peru, China, Australia, Chile and Bolivia accounted for 66% of mankind’s silver production last year. If any of these countries suffers strife, floods, nationalization, or revolution… it wouldn’t take much to constrict the supply of new silver to market… and ignite a fire under its price.
According to research firm CPM, in 1900 there were 12 billion ounces of above-ground silver on the planet. By 1990, it was down to 2.2 billion ounces. Today, it is down to about a billion ounces.
That’s a 92% drop. A vital material prized by man since the time of the Pharaohs is literally disappearing before our eyes.
According to New Scientist maga- zine, at the current rate of use, all known silver reserves will be mined
out in 26 years. Keep in mind that 33 years ago silver spiked to over $100 in today’s dollars. And every supply/demand factor we can find is exponentially more bullish now than it was back then.
The move it is seen coming gives average investors the chance to make a small fortune. You’ll find the best way to profit in the coming weeks. I am buying Silver.
NATURAL GAS WILL BE THE SUPER STAR IN 2013 & 2014
Known oil reserves are going down. Investors should allocate some portion of their wealth in oil [known oil reserves are declining], natural gas and energy market game changer i.e. shale gas. These energy commodi- ties and stocks of these energy companies provide huge wealth generation opportunity for champion investors who are looking to make a killing in their asset portfolio. Oil will remain the world’s top energy source, led by 70% growth in liquid petroleum demand in Non OECD nations. The fastest-growing major energy source will be natural gas, with global demand rising by about 60 % from 2010 to 2040. By 2025, natural gas will have risen to become the second most widely used source of energy worldwide.
THE ART MARKET —-GROWING WEALTH PRESERVATION ASSET.
Investors are taking keen interest in buying painting and have them in their asset portfolio. The Art market is becoming a big investment for rich and savvy clients globally. One of my good friends and very famous artist/painter Fareen Butt who is based in New York, USA has done remarkably well in a very short span of time. She shared with me that respect for contemporary art is growing among investors because it is a form of wealth protection in times of financial repression.
The attitude and reception towards contemporary art to new investors in such a society is a direct reflection of a society’s true understanding and respect for creative culture.
Contemporary Art today signifies a sophistication of culture, as well as investment savvy. In today’s investor landscape, art is a highly respected and high-value-yielding asset class, sought after by a smart investor with a discerning eye for taste and the finer things in life. The dynamics of value-growth in contemporary art can be compared to the dynamics of investing in luxury real estate. It is a hard asset, and can be collected both as a passion and as housed in part of a larger private equity/luxury real estate portfolio.
Fareen’s early experiences taught her about the fine balancing act of keeping the integrity of her creativity, at the right price and in the collec- tions of the right collectors.
From an investment point of view, Fareen’s paintings in 2006 sold for $5,000. In 2008 several sold for $10,000 each; in 2009 they sold for $12,000 each. Today a work can be acquired for $75,000-$90,000. In eight years, the value of her work appreciated by 18 times. Further- more, there is an interest in future commissioning of works by specific unique collectors for an even higher price. Aside from an obviously healthy value appreciation, collectors gain joy from being the early part of a prolific, young artist’s lifetime of creative works.
Fareen’s works have often been compared by her Asian collectors to Zhang Daqian, China’s Picasso, whose auction record surpassed Picasso’s auction revenue record in 2011 at an astounding $508 million. According to Skate—a valuation firm, the Chinese market is getting big as
rich Chinese clients are buying painting of famous painters to have in their assets. Market potential of art paintings stands between $257 billion and $636 billion in Asia Pacific.
LUXURY GOODS, VINEYARDS AND YACHTS
According to my friend and founder of Luxury of Love Rola Ezzedine, this new form of asset class is a major breakthrough development and protection in her analysis for the wealthy investors who prefer luxury goods. This asset class without any form of arts contains no meaning or for that matter there would be no culture. Therefore saving and investing in luxury goods is like a preservation of wealth of the country’s culture for future genera- tions to diversify their growth and heritage development which is so vital for the country’s identity.
There is no depreciation for arts and luxury. Art is an influential medium on our mind set, emotional knowledge and in-depth process of know -how
bring arts in that new business age. Wine not only brings high value to it when it’s more mature but also flirts with agriculture, a major future form of wealth protection.
Investors are taking keen interest in vineyards in South Australia, New Zealand, USA and France. Chinese investors are spreading their wings globally with smart investment moves. Last year, few Chinese investors have invested in Australia, in mining and just parked US$15 million in a South Australian winery area. Australia and New Zealand are witnessing major interest in winery from Chinese investors. The invest- ment in wineries in Oz, especially within the last 2 years from the Chinese has gone up dramatically. Investment of US$10 million for Stonehaven Winery in South Australia and $20 million for Ferngrove Vineyard, Western Australia was made by them. This investment from the Chinese reflects that savvy investors are looking to alternative investments to preserve the wealth for their future genera- tions.
Yachts……With an influx of new wealth comes a more refined lifestyle. Asset investments such as art, wine, and design can be housed and showcased for further exclusive visibility aboard yachts of various sizes. Friends, family, and business relationships can be entertained in luxury and style. Yachts are consid- ered the ultimate extension of luxury connoisseurship, owned by the most discerning, discreetly glamorous, and sophisticated of the wealthy.
These asset classes would provide smart investors to look beyond equities and fixed income investment for their wealth protection. The volatility in financial markets will continue till 2015 or even beyond. Happy investing in these asset classes for wealth protection in a prudent and structured way.