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Coffee with Raymond Ng: 8.5% yield? Don't play play.

Friday, January 9, 2015

UPDATE (18 Jan 17):
The Singapore dollar climbed to a new record high against the Malaysian ringgit early Wednesday morning (Jan 18), reaching as high as S$1 to RM3.1474, showed Bloomberg data. Source: TODAY.
--------------------------

Raymond is a very diligent investor who regularly makes very sensible and balanced comments in ASSI and on my FB wall.

In relation to my last blog post, he made a series of comments on my FB wall with attachments that we had trouble transferring to the comments section here.

Hence, this guest blog which is a compilation of Raymond's comments on my FB wall and more:

Don't play play with Malaysia G fund..... the G is bankrupting soon.

"The more than US$11 billion (RM38 billion) debt-ridden 1MDB, claiming it has assets worth more than RM48 billion, has twice failed to settle only RM2 billion in loans? Common sense, what does that tell you? Why would potential investors want to risk their money on such a super heavy debt-ridden 1MDB?"  
(1MDB = 1Malaysia Development Berhad)
Source:
http://theantdaily.com/Main/Zeti-led-BNM-to-go-after-1MDB-Don-t-joke


The 8.5% yield is not attractive if we compare to MY FD rate.

In 1990+, the FD is 7~8%, so the yield spread is less than 2% but with lots of uncertainty. 


Even for 2010+, its FD rate is ~3.5%, so the spread is slightly attractive.

MY FD Rate from 1980~2009
Another consideration is SG/MY exchange... MY ringgit is depreciating against SG. You will lose out if you use SG dollar to invest.

Source: Yahoo Finance.
Tony Pua spoke about the Malaysia G poor handling of Malaysian Sovereign fund. That's why I said MY G is bankrupting soon.
Good 40 mins. MY bond is not like SG AAA rating.

Raymond provided food for thought.
Related post:
A steady dividend payer with yield of 8.5% since 1990.

6 comments:

MSAPersonalFinance said...

Based on what I know, Singaporean is not allowed to buy in this. So, there's no need to worry about the depreciation of Ringgit as well as the fund is bankrupting or not.

Everyone knows that the fund is bankrupting soon! On the other hand, since it is backed by the government and proven long history of good dividend, the local still bet their money in, hoping that this can beat the high inflation, stagnant salary, depreciation of Ringgit etc.

AK71 said...

Hi MSA,

My blog has quite a following in Malaysia, apparently, and this was a response from another reader to emails sent to me by a reader there.

So, you also think that the fund is going bankrupt soon? I certainly hope that the locals are more careful with where they park their hard earned money. -.-"

RayNg said...

Hi MSA,

You are right that only Malaysian are allow to buy this investment.

There are many Malaysian here in SG who is PR and they are eligible to invest.

IMO, they are better off invest in SG than invest into MY GIC.

AK71 said...

BESIEGED by relentless attacks over its laundry list of doubtful investment moves, Malaysia's state-backed fund 1Malaysia Development Berhad (1MDB) is full throttle on defensive mode.

Source:
http://www.businesstimes.com.sg//companies-markets/1mdb-needs-a-new-script

Teo said...

Just like when we invest on a company, instead of following tips, we should be doing our own homework and fact checking before making such claims.

I am not smart enough to tell who is lying, or to be able to decipher all these accounting/financial terms (still a long way to go), but I wish that people should take the initiative to try to read/understand before making such claims, especially when it comes to the reputation of a country (Malaysia). Malaysians have the tendency to spread negative news (exaggerated 10x, regardless whether it is true or false rumours), especially to foreign friends (or on facebook) on how bad Malaysia is.

Lack of trust on the government, lack on trust among fellow Malaysians, lack of patriotism, racism, make us an easy target to attack, to divide, to conquer (not necessarily war, but economic, political wise). Thankfully we are still intact, so far no terrorist attacks, no civil war, yet. I don't know what will happen in the future but I sure hope that our next generations will be much more well informed.

1. Oppositions (DAP to be exact) has been saying that Malaysia will bankrupt since 30 years ago:
https://www.facebook.com/lim.siansee/posts/1878743519011100

2. Regarding IMDB 2 bil loans, which I have trouble to comprehend.
https://www.facebook.com/lim.siansee/posts/1616320741920047

3. Tony Pua, 8 years ago I used to believe what he said (I was young, naive, and rebellious) and cheered for him when he won parliament seat......because of his credentials (cough *oxford* coughs) and eloquent English speaking. Now? I will double, triple check with different sources on whatever he said.

Some extra information on Tony Pua (he used to list a company on SGX SESDAQ):
https://www.facebook.com/lim.siansee/posts/1567540500131405
https://www.facebook.com/lim.siansee/posts/1591465094405612

4. 1MDB from a different perspective
https://www.facebook.com/lim.siansee/posts/1630089297209858
https://www.facebook.com/lim.siansee/posts/1632561246962663
https://www.facebook.com/lim.siansee/posts/1570086739876781

I have used the same person as source because this person bothered to read those 1mdb audited statements, long US DOJ documents, of course he/she has been criticised being pro BN.
http://limsiansee.blogspot.sg/2015/06/all-audited-financial-statements-for.html

5. Najib, is actually not a bad prime minister, compared to Mahathir, despite all the bad press. Among opposition leaders, I cannot imagine who will be more suitable than him, Mahathir's son??? Only time will tell. I do admit that his wife "contributes" to damage his reputation further.

6. A lot of Singapore funds actually invest in Malaysia, because it is more liquid and still have space to grow. I am not expert in investing but for fellow Malaysians who are into growth investing, KLSE has more choices, beware of traps and eaten by sharks and big fishes though. If dividend investing, my return from SGX is much much more better than KLSE. Of course, must thank you AK very very very much for the insights.

This is getting long, I feel that as a fellow AK fan, as a Malaysian, I should provide more information for you and your readers, to see things from different perspectives. Of course I can be very wrong, our country is not too bad actually.

PS: I still love you sifu.

AK71 said...

Hi Teo,

This was a guest blog by a regular reader. I am clueless about what is going on in Malaysia. ;p

Always good to have another perspective, especially a thoughtful and well written one like yours. Thanks for the contribution. :)

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