Financial literacy and technology are key factors, will attract young investors

 

 Building LONG TERM WEALTH with Stocks & Avoid FAKE GURUS | FIRL Podcast 36

Ng Zhu Hann of Tradeview.my shares his journey from London School of Economics, to becoming a long term stock investor and the author of Once Upon a Time Bursa. He passionately writes on his blog, Tradeview.my to educate retail investors on investing and to avoid fake gurus. He also mentions that retail investor participation is at all all time high in 2020. However, he makes the most wealth during the bear market and says dividend yields, earnings and cash flow are time tested theorem that generate wealth and not short term goals.

 

More effort needed to educate the young investing

With thousands of new and young retail investors participating in the local bourse in the last two years, more effort is needed from capital market regulators and the private sector to improve financial literacy, particularly among the youth, say market observers.
`
Ng Zhu Hann, who is the CEO of Tradeview Capital and author of “Once Upon A Time In Bursa”, told StarBiz that brokerages and investment banks could not afford to neglect providing first-time retail investors with “the tools to understand the stock market”.
`
“Once you lose money, or whatever savings that you have, you would never return to participate in the stock market because you may think the market is rigged against you. That is human nature,” he said.
`
According to the Securities Commission’s (SC) annual report 2021 , an investor survey focused on the youth found that only 3% of youths have a high-risk appetite regarding the level of risk they were willing to take for investments.

“This may suggest that risk aversion has set in due to the pandemic,” said the SC survey.
`
The Nielsen Company (M) Sdn Bhd was commissioned by the SC to conduct the survey on its behalf.
`
However, on capital market products and their associated risks, the survey showed that respondents viewed investments in Amanah Saham Bumiputera (ASB) as low-risk.
`
“In comparison, 70% of the respondents perceived stocks and shares to be high-risk. Overall observations suggested that respondents perceived the capital market products as high-risk and this perception was consistent across the demographic profiles,” said the SC survey.
`
Ng also noted that according to Bursa Malaysia, following a similar trend in 2020, 63% or about two-thirds of the new 223,249 individual central depository system accounts opened in 2021 were by millennial investors (aged 26 to 45 years of age).
`
He pointed out that many of the new millennial investors had lost money when they got caught up in the penny stock or glove stock mania in the last two years.
`
“They had no prior investing experience, and lost money, and that becomes a problem. That is why more should be done in terms of investor education,” said Ng.
`
Meanwhile, Rakuten Trade head of equity sales Vincent Lau noted that the regulators of the Malaysian capital markets have made many efforts to educate retail investors, in an era where investing via new and innovative digital platforms is the norm.
`
“Online resources like Bursa Marketplace have been very crucial in educating new retail investors, which increased tremendously in numbers during the pandemic-related lockdowns in the last two years,” he said.
`
Lau also pointed out that with the younger generation pivoting towards buying, selling and storing crypto currencies, Malaysian regulators have been staying in tune with the demands of the digital era with the approval of crypto currency platforms like MX Global, Tokenize and Luno.
`
“Digital banks are also coming, and new fintech will enable and attract the younger generation to explore various investment options,” he said.
`
Lau pointed out that Rakuten Trade, as an online stock trading platform, has been actively holding corporate and investment webinars.
`
Ng said it was not surprising that the youth would view investments in ASB and fixed deposits as low-risk, compared with equities. 

 “If you invest in equities by yourself, without the proper understanding and knowledge, it is just like gambling, right? But I think that equities in fact, is not the most high risk asset class. 

I am seeing a very unhealthy trend of youngsters, who have never even invested in equities in their life, actually jumping into crypto currencies,” he said.
`
The SC’s annual report also said RM21bil in investment in digital assets are across all registered digital asset exchanges (DAX) in 2021.
`
Digital asset accounts jumped 300% to 760,000 in 2021 (from 190,000 in 2020).
`
About 62% of investors in crypto currencies on the DAXs are below the age of 35, according to the SC as at end-2021.
`
The regulator also observed that last year, non-fungible tokens (NFTs) became a hot trend among artists and collectors.
`
Ng pointed out that unlike crypto currencies which are not regulated, there is a lot of regulation, oversight and transparency when it comes to investing in equities.
`
“Compared with less developed markets, I believe Bursa ranked among the best, along with Singapore Exchange and the Hong Kong Stock Exchange, in terms of the regulators,” said Ng.
`
In the SC’s annual report, the survey also showed that investment decisions of the youth were not based on fundamentals, but mainly driven by socio-economic status, family, friends, influencers as well their perceptions of the products and brands.
`
It also revealed that there was also familiarity bias among the respondents, choosing to invest in products that they were already familiar with.
`
Ng said while there was plenty of information available on company websites and annual reports, first-time investors may not know how to decipher or dissect the data.
`
“They would go for financial investment talks and hope that the guru would teach them, which is very dangerous. The problem is there are many fake gurus today in the market, who just want to make money, and they are not even licenced,” he said.
`
Ng suggested regulators could allocate more resources in disseminating financial information via social media, and also working with professional or non-profit organisations to improve financial literacy among the youth.
`
“Under the Continuing Professional Development (CPD) framework, perhaps a revision can be done where CPD points can be earned by contributing pro bono, or helping society in terms of improving financial literacy,” he said.

Source link

 

Related posts:

 

Securities Commission’s (SC) annual report 2021: SCAMMERS ON THE LOOSE

    Opening Keynote Address by Datuk Syed Zaid Albar, Chairman SC Malaysia at ESG Corporate Summit. Scams have been increasing in the Mala...

 

Talent, salary & wage growth and Koi’s law

http://my.gelife.co/scholarship ` SOCIAL media has been abuzz on the new minimum wage policy of RM1,500 announced by the government, wh...

The rail economics of East Coast Rail Link (ECRL)

Rail link seen as game changer but cost is a concern.

TOK Bali, a fishing village in Kelantan with its beautiful sandy beaches and pristine blue waters has long been a hidden gem among well-travelled backpackers. But that may soon change. The idyllic town is one that is touted to potentially become a tourist hotspot, as it sits along the alignment of the East Coast Rail Link (ECRL), a multi-billion infrastructure project that promises many economic spin-offs.

After almost a decade in planning, ECRL was launched with great pomp this week.

Touted as a key game-changer for the east coast states of Peninsular Malaysia, the interstate ECRL is expected to help the economy of the four states that it covers by an additional 1.5% per year over the next 50 years.

On a micro level, more employment opportunities, particularly skilled jobs, will be made available to Malaysians. Domestic industry players especially in the construction sector, can now anticipate construction contracts to the tune of RM16bil, at least.

   

Another milstone:Najib checking out a train model at the ground-breaking ceremony this week.He called ECRL 'another milestore in the country's land public transport history".

The ECRL is expected to benefit freight transport because it would link key economic and industrial areas within the East Coast Economic Region such as the Malaysia-China Kuantan Industrial Park, Gambang Halal Park, Kertih Biopolymer Park and Tok Bali Integrated Fisheries Park to both Kuantan Port and Port Klang.

Prime Minister Datuk Seri Najib Tun Razak called it “another milestone in the country’s land public transport history”.

Despite the much highlighted economic benefits from the rail network, the venture is attracting its own share of controversies from the way the contract was awarded to the price of contract.

For one, China’s state-owned China Communications Construction Company (CCCC) has been appointed for the construction of ECRL via a direct negotiation method.

Detractors have labelled ECRL – at a cost of RM80mil per kilometre – as the world’s costliest rail project. Note that, the Gemas-Johor Baru double-tracking stretch costs RM45mil per km.

ECRL, however, will go over hilly terrain and has several tunnels to be built.

There are questions on whether the 688km rail venture, at RM55bil, will be financially feasible.

Sources say the price tag is unlikely to have included land acquisition costs.

They indicate that close to half of the land plots required for the rail link sit on private land and would require land acquisition. At this point, the total land acquisition cost is unknown.

No money in rail

The concerns of the critics are understandable, given the fact that public infrastructure projects, namely rail projects are usually not commercially viable.

A quick check on the finances of Malaysia’s very own Keretapi Tanah Melayu Bhd (KTMB) and a number of major rail operators abroad, affirms the fact that rail projects do not promise easy money.

The loss-making KTMB which was corporatised in 1992, has not been able to financially sustain itself, resulting in the deterioration of its level of service despite attempts to turn around the company.

According to the railway service operator’s latest publicly available audited report for financial year 2013, the group registered a total net loss of RM128.2mil. However, note that, the net loss had narrowed by 46% from RM238.5mil in the previous year.

Had it not been for the government’s subsidy which kept it afloat, KTMB would find it difficult to continue its operations without a further raise of its fare.

In India, where railway is a favoured mode of transportation, the Indian Railways has been incurring losses on passenger operations every year. Earlier this year, the lower chamber of the Indian parliament was told that the state-owned rail operator recorded a loss of Rs359.18bil (RM24.04bil) in the period of 2015 to 2016.

This was slightly higher than its loss of Rs334.91bil (RM22.42bil) in the period of 2014-2015.

On the other hand, China’s state-owned rail operator, China Railway Corp, was reported to have recorded a 58% increase in earnings last year despite huge losses in the first nine months. However, a zoom into its finances reveals that the high profit made was only possible due to a significant annual government subsidy.

Similarly, Singapore’s SMRT Corp which manages the city-state’s rail operations posted a profit of S$7.4mil (RM23.33mil) in its financial year of 2016. This was on the back of a revenue of S$681mil (RM2.15bil), which rose by 4.1% year-on-year.

While the rail operations saw higher ridership in that year, SMRT Corp would have registered a loss of S$9.6mil (RM30.26mil) for its rail business, if not for the net property tax refund of S$17.1mil (RM53.9mil).

Considering the lack of commercial viability in such rail projects, ECRL would ultimately require assistance from the government in ensuring smooth operations, while maintaining an affordable service for its users. This is akin a crucial trade-off, to complement the government’s move to provide an integrated transportation system in Malaysia, which is long overdue.

AmBank Group’s chief economist Anthony Dass tells StarBizWeek that for every ringgit spent on capital projects such as transportation, it generates a return or multiplier effect of around 5% to 20%.

In his estimation, he says the ECRL should create around RM50-55bil in terms of gross domestic product.

“The impact of this project to the economy will be multilevel. Impact on the respective states’ GDP and national GDP will be evident, though the magnitude of the impact on the respective states is poised to vary.

“On a longer term, once the entire project is completed, we expect strong benefits seeping into services related activities. Properties in the major towns is likely to enjoy more especially the port-connected towns, driven by logistics- and trade-related businesses.

“Other areas would benefit from the movement of tourism. As for the smaller towns, they are more likely to enjoy from the spillovers of this connectivity through movement of people commuting to work and new areas of business growth especially in areas like the small and medium businesses,” says Anthony.

High cargo projections

By the year 2040, an estimated 8 million passengers and 53 million tonnes of cargo are expected to use the ECRL service annually as the primary transport between the east coast and west coast.

By 2040, ECRL is projected to support a freight density of 19 million tonnes.

The freight cargo projections of the rail network stands in stark contrast to the total cargo volume running through the entire Malaysian railways today.

As of 2015, the entire Malaysian railways operations handled a sum of 6.21 million tons of cargo, according to a study related to the ECRL.

To note, the revenue from the operation of the venture is projected to be obtained through a transportation ratio of 30% passengers and 70% freight.

If the projections of ECRL are anything to go by, the planners are anticipating a ballistic growth in volume of cargo being moved along the tracks.

Is this realistic?

Socio Economic Research Centre executive director Lee Heng Guie remains concerned on the details of the project financing, albeit the expected trickle-down benefits of ECRL.

“While ECRL has been identified as a high impact public transport project that will connect east coast states with the west coast, especially Greater KL and Klang Valley, the high cost of RM55bil requires further justification. More clarity on the cost structure and terms and conditions of the loan is needed to ease public genuine concerns.

“It must be noted that the high costs, low profits and long gestation periods of transportation projects do not always make them financially viable. The financial viability of the ECRL would depend on the revenue generated to cover operating cash flow, including interest expenses.

“As the loan will have a seven year moratorium, the bunching of loan repayment together with interest payment will be substantial in the remaining 13 years,” he says.

Lowering cost the key

In terms of funding, 85% of the total project value of RM55bil would be to be funded by Exim Bank of China’s through a soft loan at a 3.25% interest.

The balance 15% would be financed through a sukuk programme by local banks.

There is no payment for the first seven years, and the government starts paying after the seventh year over a 13-year period.

At 3.25% interest per annum, the interest servicing bill for the project is huge.

“Hence the main challenge to this project will be to bring down cost as low as possible. The lower the cost, the lesser it would be the burden on the government’s balance sheet,” says an industry player.

Echoing a similar view, Lee noted the ERCL project loan is expected to be treated as “contingent liability” as it will be taken by Malaysia Rail Link Sdn Bhd, a special purpose vehicle owned by the Ministry of Finance.

This is also to ensure that the Federal Government will not breach the self-imposed debt to GDP ratio of 55%.

As at end-March 2017, the Federal Government’s debt stood at RM664.5bil or 50.2% of GDP.

At the end of the day, despite the concerns on the possible cost overrun in the ECRL project, proper management and efficiency in project delivery could lead to cost savings and ultimately lower overall expenditure for ECRL.

History has shown that Malaysian companies can lower the cost, especially on rail projects compared to foreign players.

In the late 1990s, a consortium of India and China state-owned companies were awarded the contract to build a double track electrified railway system from Padang Besar to Johor Baru. The cost was estimated at RM44bil and paid through crude palm oil.

However, an MMC Corp Bhd-Gamuda Bhd joint venture managed to win the job in 2003 with a RM14.3bil proposal. However this project was shelved and subsequently continued after a lull of few years.

ECRL is a seven year project to be built in stages. Many factors can come into play in that period like delay in construction and rise in material costs.

However in the bigger picture, the infrastructure venture should not merely be seen from a commercial-viable lens alone. The trickle-down benefits on the economy and the Malaysian population should also be factored into the calculations.

The lower the cost, the higher the multiplier effect.

Source: The Star by ganeshwaran kanaandgurmeet kaur

Related Link:

Debate on ECRL

Related posts:

Rail link a huge economic boost, big news for small towns in Malaysia

  Boom time is here for railway towns, little places that dot the route of the RM55bil East Coast Rail Link from Port Klang to Kota Bar...

The rail economics of East Coast Rail Link (ECRL)

Rail link seen as game changer but cost is a concern.

TOK Bali, a fishing village in Kelantan with its beautiful sandy beaches and pristine blue waters has long been a hidden gem among well-travelled backpackers. But that may soon change. The idyllic town is one that is touted to potentially become a tourist hotspot, as it sits along the alignment of the East Coast Rail Link (ECRL), a multi-billion infrastructure project that promises many economic spin-offs.

After almost a decade in planning, ECRL was launched with great pomp this week.

Touted as a key game-changer for the east coast states of Peninsular Malaysia, the interstate ECRL is expected to help the economy of the four states that it covers by an additional 1.5% per year over the next 50 years.

On a micro level, more employment opportunities, particularly skilled jobs, will be made available to Malaysians. Domestic industry players especially in the construction sector, can now anticipate construction contracts to the tune of RM16bil, at least.

   

Another milstone:Najib checking out a train model at the ground-breaking ceremony this week.He called ECRL 'another milestore in the country's land public transport history".

The ECRL is expected to benefit freight transport because it would link key economic and industrial areas within the East Coast Economic Region such as the Malaysia-China Kuantan Industrial Park, Gambang Halal Park, Kertih Biopolymer Park and Tok Bali Integrated Fisheries Park to both Kuantan Port and Port Klang.

Prime Minister Datuk Seri Najib Tun Razak called it “another milestone in the country’s land public transport history”.

Despite the much highlighted economic benefits from the rail network, the venture is attracting its own share of controversies from the way the contract was awarded to the price of contract.

For one, China’s state-owned China Communications Construction Company (CCCC) has been appointed for the construction of ECRL via a direct negotiation method.

Detractors have labelled ECRL – at a cost of RM80mil per kilometre – as the world’s costliest rail project. Note that, the Gemas-Johor Baru double-tracking stretch costs RM45mil per km.

ECRL, however, will go over hilly terrain and has several tunnels to be built.

There are questions on whether the 688km rail venture, at RM55bil, will be financially feasible.

Sources say the price tag is unlikely to have included land acquisition costs.

They indicate that close to half of the land plots required for the rail link sit on private land and would require land acquisition. At this point, the total land acquisition cost is unknown.

No money in rail

The concerns of the critics are understandable, given the fact that public infrastructure projects, namely rail projects are usually not commercially viable.

A quick check on the finances of Malaysia’s very own Keretapi Tanah Melayu Bhd (KTMB) and a number of major rail operators abroad, affirms the fact that rail projects do not promise easy money.

The loss-making KTMB which was corporatised in 1992, has not been able to financially sustain itself, resulting in the deterioration of its level of service despite attempts to turn around the company.

According to the railway service operator’s latest publicly available audited report for financial year 2013, the group registered a total net loss of RM128.2mil. However, note that, the net loss had narrowed by 46% from RM238.5mil in the previous year.

Had it not been for the government’s subsidy which kept it afloat, KTMB would find it difficult to continue its operations without a further raise of its fare.

In India, where railway is a favoured mode of transportation, the Indian Railways has been incurring losses on passenger operations every year. Earlier this year, the lower chamber of the Indian parliament was told that the state-owned rail operator recorded a loss of Rs359.18bil (RM24.04bil) in the period of 2015 to 2016.

This was slightly higher than its loss of Rs334.91bil (RM22.42bil) in the period of 2014-2015.

On the other hand, China’s state-owned rail operator, China Railway Corp, was reported to have recorded a 58% increase in earnings last year despite huge losses in the first nine months. However, a zoom into its finances reveals that the high profit made was only possible due to a significant annual government subsidy.

Similarly, Singapore’s SMRT Corp which manages the city-state’s rail operations posted a profit of S$7.4mil (RM23.33mil) in its financial year of 2016. This was on the back of a revenue of S$681mil (RM2.15bil), which rose by 4.1% year-on-year.

While the rail operations saw higher ridership in that year, SMRT Corp would have registered a loss of S$9.6mil (RM30.26mil) for its rail business, if not for the net property tax refund of S$17.1mil (RM53.9mil).

Considering the lack of commercial viability in such rail projects, ECRL would ultimately require assistance from the government in ensuring smooth operations, while maintaining an affordable service for its users. This is akin a crucial trade-off, to complement the government’s move to provide an integrated transportation system in Malaysia, which is long overdue.

AmBank Group’s chief economist Anthony Dass tells StarBizWeek that for every ringgit spent on capital projects such as transportation, it generates a return or multiplier effect of around 5% to 20%.

In his estimation, he says the ECRL should create around RM50-55bil in terms of gross domestic product.

“The impact of this project to the economy will be multilevel. Impact on the respective states’ GDP and national GDP will be evident, though the magnitude of the impact on the respective states is poised to vary.

“On a longer term, once the entire project is completed, we expect strong benefits seeping into services related activities. Properties in the major towns is likely to enjoy more especially the port-connected towns, driven by logistics- and trade-related businesses.

“Other areas would benefit from the movement of tourism. As for the smaller towns, they are more likely to enjoy from the spillovers of this connectivity through movement of people commuting to work and new areas of business growth especially in areas like the small and medium businesses,” says Anthony.

High cargo projections

By the year 2040, an estimated 8 million passengers and 53 million tonnes of cargo are expected to use the ECRL service annually as the primary transport between the east coast and west coast.

By 2040, ECRL is projected to support a freight density of 19 million tonnes.

The freight cargo projections of the rail network stands in stark contrast to the total cargo volume running through the entire Malaysian railways today.

As of 2015, the entire Malaysian railways operations handled a sum of 6.21 million tons of cargo, according to a study related to the ECRL.

To note, the revenue from the operation of the venture is projected to be obtained through a transportation ratio of 30% passengers and 70% freight.

If the projections of ECRL are anything to go by, the planners are anticipating a ballistic growth in volume of cargo being moved along the tracks.

Is this realistic?

Socio Economic Research Centre executive director Lee Heng Guie remains concerned on the details of the project financing, albeit the expected trickle-down benefits of ECRL.

“While ECRL has been identified as a high impact public transport project that will connect east coast states with the west coast, especially Greater KL and Klang Valley, the high cost of RM55bil requires further justification. More clarity on the cost structure and terms and conditions of the loan is needed to ease public genuine concerns.

“It must be noted that the high costs, low profits and long gestation periods of transportation projects do not always make them financially viable. The financial viability of the ECRL would depend on the revenue generated to cover operating cash flow, including interest expenses.

“As the loan will have a seven year moratorium, the bunching of loan repayment together with interest payment will be substantial in the remaining 13 years,” he says.

Lowering cost the key

In terms of funding, 85% of the total project value of RM55bil would be to be funded by Exim Bank of China’s through a soft loan at a 3.25% interest.

The balance 15% would be financed through a sukuk programme by local banks.

There is no payment for the first seven years, and the government starts paying after the seventh year over a 13-year period.

At 3.25% interest per annum, the interest servicing bill for the project is huge.

“Hence the main challenge to this project will be to bring down cost as low as possible. The lower the cost, the lesser it would be the burden on the government’s balance sheet,” says an industry player.

Echoing a similar view, Lee noted the ERCL project loan is expected to be treated as “contingent liability” as it will be taken by Malaysia Rail Link Sdn Bhd, a special purpose vehicle owned by the Ministry of Finance.

This is also to ensure that the Federal Government will not breach the self-imposed debt to GDP ratio of 55%.

As at end-March 2017, the Federal Government’s debt stood at RM664.5bil or 50.2% of GDP.

At the end of the day, despite the concerns on the possible cost overrun in the ECRL project, proper management and efficiency in project delivery could lead to cost savings and ultimately lower overall expenditure for ECRL.

History has shown that Malaysian companies can lower the cost, especially on rail projects compared to foreign players.

In the late 1990s, a consortium of India and China state-owned companies were awarded the contract to build a double track electrified railway system from Padang Besar to Johor Baru. The cost was estimated at RM44bil and paid through crude palm oil.

However, an MMC Corp Bhd-Gamuda Bhd joint venture managed to win the job in 2003 with a RM14.3bil proposal. However this project was shelved and subsequently continued after a lull of few years.

ECRL is a seven year project to be built in stages. Many factors can come into play in that period like delay in construction and rise in material costs.

However in the bigger picture, the infrastructure venture should not merely be seen from a commercial-viable lens alone. The trickle-down benefits on the economy and the Malaysian population should also be factored into the calculations.

The lower the cost, the higher the multiplier effect.

Source: The Star by ganeshwaran kanaandgurmeet kaur

Related Link:

Debate on ECRL

Related posts:

Rail link a huge economic boost, big news for small towns in Malaysia

  Boom time is here for railway towns, little places that dot the route of the RM55bil East Coast Rail Link from Port Klang to Kota Bar...

Bitcoin must not in your retirement financial planning portfolio

Bitcoin investments have undeniably become a trend among savvy investors in search of the golden goose, but one financial planner is against the use of it as part of the financial planning portfolio for retirement.

Max Growth Wealth Education Sdn Bhd managing director Nicholas Chu said one should not use bitcoin as part of the retirement portfolio and the public must be well aware of the risk in bitcoin trading before getting in.

“It is not asset-backed, it is very unsecure. It is, basically, you want to participate in the future changes. It’s not a proper financial planning way. It is just an experimental thing that you want to go through in this era, but it is not a proper investment product,” he told SunBiz.

“I definitely don’t agree if they use this for their financial planning. But for those who are able to try new ventures, they can go ahead provided they have extra money. If this doesn’t affect their existing financial planning, then I’ll leave it to them. We need to tell them the pros and cons of this investment. It’s up to the clients to do the final decision,” he said.

Chu cautioned on the uncertainties of bitcoin trading, which is driven by market forces. “It is beyond anybody’s control, all the participants contribute to the bitcoin value. From that, I can say that there are a lot of uncertainties in the future,” he said.

Nonetheless, with the setting up of a few bitcoin exchanges, Chu noted that there will be demand and supply with tradeable markets available.

Bitcoin was the best-performing currency in 2015 and 2016, with a rise of 35.8% and 126.2% respectively.

Year to date, bitcoin prices have leaped more than three times. It stood at US$2,840 (RM12,140) as at 5pm last Friday.

Bitcoins are by the far the most popular cryptocurrency, which exists almost wholly in the digital realm and has no asset backing it. Bitcoin generation, known as mining, while open to anyone with a “mining application” on their computer, needs a great deal of computing power to solve complex algorithms which are later verified with the entire bitcoin network.

Colbert Low, founder of bitcoinmalaysia.com, said the recent spike in bitcoin prices could be partly due to the legalisation of bitcoin by the Japanese government.

He is unsure if the sharp rise in bitcoin prices will create a price bubble, but stressed that one cannot judge its price movement based on the “old economic theory”.

“This is a new economy based on a different model. It’s very hard to say,” Low opined, noting that there has been a growing number of retail outlets that accept bitcoin.

He foresees the usage of bitcoin propagating, especially in different types of payment methods.

However, Low opined that there will not be any “big movement” in the local market if the regulators do not regulate bitcoin.

“Our new Bank Negara governor is forward thinking and he is very much into fintech, technology and innovation. So there would definitely be improvement,” Low said.

The positive development of blockchain will be a catalyst for the growth of bitcoin, he added.

“Blockchain is a real thing that will change the way the IP system is architectured. We need to go down to a deeper level to see how blockchain can change the current problem and solve it.

“There are a lot of projects right now, over 500 companies are looking at this (blockchain) right now. Even IBM, HP and Microsoft are looking at it.”

Blockchain refers to distributed database that maintains a continuously growing list of records, called blocks, secure from tampering and revision. Bitcoin is just an application or software that runs on blockchain technology.

“If you look at blockchain technology, government agencies like the United Nations, the World Bank and the International Monetary Fund are looking at it. This is the best way to secure your data,” Low said, noting that the usage of bitcoin will help reduce operating cost.

Currently, there are about 16 million bitcoins in the market and the number is capped at 21 million.

Bank Negara has said that it does not regulate the cryptocurrency and advised the public to be cautious of the risks associated with the usage of such digital currency.

Source: By Lee Weng Khuen sunbiz@thesundaily.com

Related Links:

• Property in a digital era (Part 3)
• Property in a digital age: Part 4

Related posts:

Bitcoin, digital currencies rally, caution prevails; virtual currency in property

On Mcoin, Bitcoin and points of investment

  Millennials Will Destroy Bitcoin

What is a BitCoin? Explained - Tech Tip Irrational exuberance is alive and well. A textbook bubble in Bitcoin prices is developing... 

Bitcoin must not in your retirement financial planning portfolio

Bitcoin investments have undeniably become a trend among savvy investors in search of the golden goose, but one financial planner is against the use of it as part of the financial planning portfolio for retirement.

Max Growth Wealth Education Sdn Bhd managing director Nicholas Chu said one should not use bitcoin as part of the retirement portfolio and the public must be well aware of the risk in bitcoin trading before getting in.

“It is not asset-backed, it is very unsecure. It is, basically, you want to participate in the future changes. It’s not a proper financial planning way. It is just an experimental thing that you want to go through in this era, but it is not a proper investment product,” he told SunBiz.

“I definitely don’t agree if they use this for their financial planning. But for those who are able to try new ventures, they can go ahead provided they have extra money. If this doesn’t affect their existing financial planning, then I’ll leave it to them. We need to tell them the pros and cons of this investment. It’s up to the clients to do the final decision,” he said.

Chu cautioned on the uncertainties of bitcoin trading, which is driven by market forces. “It is beyond anybody’s control, all the participants contribute to the bitcoin value. From that, I can say that there are a lot of uncertainties in the future,” he said.

Nonetheless, with the setting up of a few bitcoin exchanges, Chu noted that there will be demand and supply with tradeable markets available.

Bitcoin was the best-performing currency in 2015 and 2016, with a rise of 35.8% and 126.2% respectively.

Year to date, bitcoin prices have leaped more than three times. It stood at US$2,840 (RM12,140) as at 5pm last Friday.

Bitcoins are by the far the most popular cryptocurrency, which exists almost wholly in the digital realm and has no asset backing it. Bitcoin generation, known as mining, while open to anyone with a “mining application” on their computer, needs a great deal of computing power to solve complex algorithms which are later verified with the entire bitcoin network.

Colbert Low, founder of bitcoinmalaysia.com, said the recent spike in bitcoin prices could be partly due to the legalisation of bitcoin by the Japanese government.

He is unsure if the sharp rise in bitcoin prices will create a price bubble, but stressed that one cannot judge its price movement based on the “old economic theory”.

“This is a new economy based on a different model. It’s very hard to say,” Low opined, noting that there has been a growing number of retail outlets that accept bitcoin.

He foresees the usage of bitcoin propagating, especially in different types of payment methods.

However, Low opined that there will not be any “big movement” in the local market if the regulators do not regulate bitcoin.

“Our new Bank Negara governor is forward thinking and he is very much into fintech, technology and innovation. So there would definitely be improvement,” Low said.

The positive development of blockchain will be a catalyst for the growth of bitcoin, he added.

“Blockchain is a real thing that will change the way the IP system is architectured. We need to go down to a deeper level to see how blockchain can change the current problem and solve it.

“There are a lot of projects right now, over 500 companies are looking at this (blockchain) right now. Even IBM, HP and Microsoft are looking at it.”

Blockchain refers to distributed database that maintains a continuously growing list of records, called blocks, secure from tampering and revision. Bitcoin is just an application or software that runs on blockchain technology.

“If you look at blockchain technology, government agencies like the United Nations, the World Bank and the International Monetary Fund are looking at it. This is the best way to secure your data,” Low said, noting that the usage of bitcoin will help reduce operating cost.

Currently, there are about 16 million bitcoins in the market and the number is capped at 21 million.

Bank Negara has said that it does not regulate the cryptocurrency and advised the public to be cautious of the risks associated with the usage of such digital currency.

Source: By Lee Weng Khuen sunbiz@thesundaily.com

Related Links:

• Property in a digital era (Part 3)
• Property in a digital age: Part 4

Related posts:

Bitcoin, digital currencies rally, caution prevails; virtual currency in property

On Mcoin, Bitcoin and points of investment

  Millennials Will Destroy Bitcoin

What is a BitCoin? Explained - Tech Tip Irrational exuberance is alive and well. A textbook bubble in Bitcoin prices is developing... 

Never-ending money games - from fixed return to split schemes

  The Cryptocurrencies—Regulation, Taxation, and Consumer Protection

The allure of money game schemes (or money games) seems not to have diminished despite the collapse of many recently.

Instead, there has been a switch in investors’ focus from fixed-return games to split games, which are deemed “more sustainable”.

Fixed-return schemes generally refer to those that give a consistent percentage of return every month or week. However, most of them have collapsed lately.

Investors’ attention is now centred on split games, even though this means they have to wait for a longer period in order to get back their capital.

Mcoin, which is undertaken through MBI International Sdn Bhd and MFace International Sdn Bhd, is an example of a split game based on units of which the value keeps increasing and then split after a certain time.

However, with the raid of MBI’s flagship mall – M Mall in Penang – by the regulators recently, its days look to be numbered, and the sustainability of such schemes is now a big question.

Another prominent split game – Mama Captain, which has a similar business model to that of Mcoin – has also been red-flagged by Bank Negara last Thursday under the Financial Consumer Alert List. An additional 14 companies have been added to the list, bringing the total number of unapproved and unlicensed companies/schemes to 334 as at June 29.

Besides the local ones, there are several foreign schemes in the market, which investors expect to have more staying power than the fixed-return schemes. Two such schemes from China – Smart Traders Ltd and Centennial Coin of Prosperity – have been in operation in Malaysia since last year. However, it is understood that they have stopped distributing returns to their investors.

This, however, appears not to have deterred those who are lured by the promise of fast money. This is evidenced by the huge crowd seen at an event organised by a split game company a few weeks ago in Shah Alam. It was estimated that over 2,000 participants were present and most of them were Chinese investors.

A number of booths were set up at the venue, and investors were able to redeem a variety of stuff, including vouchers, health products, apparels and many more.

An investor whom SunBiz spoke to at the event said he is unfazed by the collapse of money games and is optimistic about the prospects of the split game that he is involved in.

The investor said he has been in the scheme for more than nine months and now it has started to bear fruit.

“Generally, it takes about two months to split once and we can start generating money after it splits for four times. Now I start to get money from the scheme. While you’ve to wait for some time before getting any return, I think it is still worth to join,” he opined. It is understood that the scheme has tied up with a few product operators to increase its attractiveness. Another investor, Alan Mu, said he was amazed by the event. “The gala dinner is so grand and there are so many products that I can redeem by participating in this scheme,” he said.

Another scheme that has caught the market’s attention is SV International (SVI), a company that Yong Tai Bhd has denied having links to. Yong Tai alleged that SVI circulated photos taken during a signing ceremony on SVI’s website as well as the social media, for which there was no official agreement entered into between the two parties thereafter.

Yong Tai also refuted speculation that SVI has a stake in its Impression City and Impression Melaka projects.

By Lee Weng Khuen sunbiz@thesundaily.com

Related Links

Monetary enforcement authorities raid MBI International's Penang office (Updated)

Mcoin, proponents added to Bank Negara's alert list

Riding the Mcoin wave

Investors of illegal financial schemes face severe penalties: Bank Negara governor

Yong Tai: We have no links with SVI, they're not our major shareholder

Related posts:

Money game scourge

Easier option: Poor experience with regulated investment product providers may be the reason for investors to go for ‘alternative’ Po...

Bitcoin, digital currencies rally, caution prevails; virtual currency in property

A collection of bitcoin tokens.   Bloomberg—Bloomberg via Getty Images Digital currencies rally, but caut...

Never-ending money games - from fixed return to split schemes

 

The Cryptocurrencies—Regulation, Taxation, and Consumer Protection

The allure of money game schemes (or money games) seems not to have diminished despite the collapse of many recently.

Instead, there has been a switch in investors’ focus from fixed-return games to split games, which are deemed “more sustainable”.

Fixed-return schemes generally refer to those that give a consistent percentage of return every month or week. However, most of them have collapsed lately.

Investors’ attention is now centred on split games, even though this means they have to wait for a longer period in order to get back their capital.

Mcoin, which is undertaken through MBI International Sdn Bhd and MFace International Sdn Bhd, is an example of a split game based on units of which the value keeps increasing and then split after a certain time.

However, with the raid of MBI’s flagship mall – M Mall in Penang – by the regulators recently, its days look to be numbered, and the sustainability of such schemes is now a big question.

Another prominent split game – Mama Captain, which has a similar business model to that of Mcoin – has also been red-flagged by Bank Negara last Thursday under the Financial Consumer Alert List. An additional 14 companies have been added to the list, bringing the total number of unapproved and unlicensed companies/schemes to 334 as at June 29.

Besides the local ones, there are several foreign schemes in the market, which investors expect to have more staying power than the fixed-return schemes. Two such schemes from China – Smart Traders Ltd and Centennial Coin of Prosperity – have been in operation in Malaysia since last year. However, it is understood that they have stopped distributing returns to their investors.

This, however, appears not to have deterred those who are lured by the promise of fast money. This is evidenced by the huge crowd seen at an event organised by a split game company a few weeks ago in Shah Alam. It was estimated that over 2,000 participants were present and most of them were Chinese investors.

A number of booths were set up at the venue, and investors were able to redeem a variety of stuff, including vouchers, health products, apparels and many more.

An investor whom SunBiz spoke to at the event said he is unfazed by the collapse of money games and is optimistic about the prospects of the split game that he is involved in.

The investor said he has been in the scheme for more than nine months and now it has started to bear fruit.

“Generally, it takes about two months to split once and we can start generating money after it splits for four times. Now I start to get money from the scheme. While you’ve to wait for some time before getting any return, I think it is still worth to join,” he opined. It is understood that the scheme has tied up with a few product operators to increase its attractiveness. Another investor, Alan Mu, said he was amazed by the event. “The gala dinner is so grand and there are so many products that I can redeem by participating in this scheme,” he said.

Another scheme that has caught the market’s attention is SV International (SVI), a company that Yong Tai Bhd has denied having links to. Yong Tai alleged that SVI circulated photos taken during a signing ceremony on SVI’s website as well as the social media, for which there was no official agreement entered into between the two parties thereafter.

Yong Tai also refuted speculation that SVI has a stake in its Impression City and Impression Melaka projects.

By Lee Weng Khuen sunbiz@thesundaily.com

Related Links

Monetary enforcement authorities raid MBI International's Penang office (Updated)

Mcoin, proponents added to Bank Negara's alert list

Riding the Mcoin wave

Investors of illegal financial schemes face severe penalties: Bank Negara governor

Yong Tai: We have no links with SVI, they're not our major shareholder

Related posts:

Money game scourge

Easier option: Poor experience with regulated investment product providers may be the reason for investors to go for ‘alternative’ Po...

Bitcoin, digital currencies rally, caution prevails; virtual currency in property

A collection of bitcoin tokens.   Bloomberg—Bloomberg via Getty Images Digital currencies rally, but caut...

Millennials Will Destroy Bitcoin

What is a BitCoin? Explained - Tech Tip

Irrational exuberance is alive and well.

A textbook bubble in Bitcoin prices is developing right now.

And it has everything to do with Bitcoin's investors.

I'm probably not going to gain any friends with this perspective. But there are inarguable factors that suggest Bitcoin's own buyers are irrationally driving up prices. And their exuberance is setting the market up for a crash.

The Secret Gold Market They're NOT Telling You About This hidden playground is completely OFF LIMITS to retail investors... But it holds a secret that can help you predict spikes in gold with mysteriously uncanny accuracy... Here's how you can piggyback off it for gains of 468%, 935%, 1,657%, and more... Click here now for full details.

Let me clear one thing up about Bitcoin before I explain why I think prices are eventually headed for a crash...

As I argued before, Bitcoin is a legitimate form of money. But for the time being, it's being treated as a speculative investment.

Money is typically used in exchange. And while Bitcoin can be used in exchange, it's largely not. Gary Schneider, Professor of Accounting at California State University, says only about 10% of Bitcoin is held by people who use it as currency. The large majority are speculators hoping to sell at higher prices.

The fact that the market is dominated by speculators is not necessarily the problem for Bitcoin. And here's where I'm sure to piss some people off... The problem for Bitcoin is its buyers.

Who are they?

Well, according to a recent survey, approximately 60% of Bitcoin owners are under 35 years old.

In short, most Bitcoin buyers are millennials. And that's all we need to know about them to make an inarguable point (told you I wouldn't be making any friends here).

The fact is this: A 35-year-old speculator intrinsically has much less experience in risk management than a 60-year-old. And remember, most Bitcoin owners are mostly speculators, as opposed to users of the product.

AND remember they're speculating on a currency, which is among the most volatile of financial instruments.

AND remember they're speculating on what essentially amounts to a new, experimental currency.

All this considered, Bitcoin looks to me as one of the (if not the) most speculative financial instruments available...

Expect for Bitcoin's derivatives, of course.

Yes, believe it or not, Bitcoin has a futures market. And there are products that offer even more risk. On its Perpetual Bitcoin/USD Swap Contracts, BitMEX offers up to 100x leverage!

But to really understand why I think Bitcoin is eventually headed for a crash, let's consider the most famous market bubble in history...

Dutch Tulip Mania

In the 17th century, formal futures markets developed in the Dutch Republic, providing the infrastructure for a massive bubble in the price of tulip bulbs.

The tulip first became fashionable in France, where early modern ladies of the aristocracy began sporting the flower on their dresses. From there, the tulip became the flower to show off social status and wealth. The demand for bulbs subsequently skyrocketed, and prices immediately followed.

At the peak of Tulip Mania in 1637, a single tulip bulb could cost as much as 10,000 gilders, the price of a nice middle-class townhouse in Amsterdam. According to one author, 12 acres of land was once offered for one rare bulb. For a flower bulb!

The Semper Augustus was the most coveted of all Dutch tulips.

Of course, the bubble eventually burst. The price of tulip bulbs collapsed, and fortunes in perceived value disappeared over night.

My team of researchers recently uncovered a key patent that exposes a major chink in Tesla’s armor... This patent describes a groundbreaking technology that could simply blow Elon Musk, and frankly the entire solar industry, out of the water. We’ve managed to uncover the tiny company with exclusive rights to this technology. It trades at less than $0.15 a share, but don’t expect it to stay there for long. Over the next several years, I believe the value of this firm could absolutely explode... by my calculations, upwards of 4,600%. I’ve included the patent filing and everything you need to know about this small company in this brief, free video presentation.

Here's what I really want you to take away from this story...

If we consider whom the people were who took part in Dutch Tulip Mania and compare them to the majority of Bitcoin owners, it seems both groups share the same shortcomings.

First, we know both groups are speculators betting on the hot new product. But I think we can also make good assumptions to compare the investment sophistication of the Dutch tulip investors and today's Bitcoin buyers.

Because formal futures markets were only recently developed, the Dutch tulip buyers were inherently unsophisticated investors. All of them. They simply didn't have the experience.

The majority of today's Bitcoin buyers are generally younger, so they share the same inexperience. For many Bitcoin buyers, I imagine it represents their first real investment. They simply don't have experience in risk management. And I think that's pretty clear considering some are buying products with 100x leverage!

Bitcoin could be the tulip of the 21st century with the development of a textbook bubble. And I think could be setting itself up for an eventual crash.

Now, even though I've been talking about a crash in Bitcoin prices, there's an epilogue to the Dutch tulip story that's often overlooked... and that actually provides a bullish outlook for the technology.

Truth is, the Dutch tulip bubble never really ended... it evolved. The price of tulip bulbs collapsed in the 17th century. But the flower industry at large eventually recovered and has never been bigger. Global floral production value is currently estimated at $55 billion.

People still pay thousands for rare flowers. In fact, an anonymous buyer paid over $200,000 for a rare orchid in 2005. And that's not even considered the most expensive flower in the world. Rose breeder David Austin spent 15 years and $5 million to develop Juliet rose.

My point is, the tulip as an individual product lost favor. But the collapse of the tulip market didn't completely kill the flower market. In the same way, I don't expect a collapse of Bitcoin prices to completely kill the blockchain-based currency market.

Bitcoin is simply one product of many blockchain-based currencies. A crash in Bitcoin would throw a wrench in the blockchain-based revolution. But there is little doubt that blockchain technologies are the future.

As we speak, every major central bank and large financial institution is researching how to implement blockchain into its own systems. It has already been proven to eliminate verification redundancies and improve security, and new applications are being tested every day.

So while I think Bitcoin itself could eventually be headed for a crash, the blockchain technologies that are supporting all these digital currencies seem set for unprecedented growth.

Until next time,

Luke Burgess

Related Links:

Is Bitcoin Money?

Related posts:

Bitcoin, digital currencies rally, caution prevails; virtual currency in property

A collection of bitcoin tokens.   Bloomberg—Bloomberg via Getty Images Digital currencies rally, but caut...

Two virtual coin get-rich schemes red-flagged by Malaysian Central Bank

With the inclusion of the two investment schemes run by a company with international investors, there are now 302 firms in Bank Negara’s...

Millennials Will Destroy Bitcoin

What is a BitCoin? Explained - Tech Tip

Irrational exuberance is alive and well.

A textbook bubble in Bitcoin prices is developing right now.

And it has everything to do with Bitcoin's investors.

I'm probably not going to gain any friends with this perspective. But there are inarguable factors that suggest Bitcoin's own buyers are irrationally driving up prices. And their exuberance is setting the market up for a crash.

The Secret Gold Market They're NOT Telling You About This hidden playground is completely OFF LIMITS to retail investors... But it holds a secret that can help you predict spikes in gold with mysteriously uncanny accuracy... Here's how you can piggyback off it for gains of 468%, 935%, 1,657%, and more... Click here now for full details.

Let me clear one thing up about Bitcoin before I explain why I think prices are eventually headed for a crash...

As I argued before, Bitcoin is a legitimate form of money. But for the time being, it's being treated as a speculative investment.

Money is typically used in exchange. And while Bitcoin can be used in exchange, it's largely not. Gary Schneider, Professor of Accounting at California State University, says only about 10% of Bitcoin is held by people who use it as currency. The large majority are speculators hoping to sell at higher prices.

The fact that the market is dominated by speculators is not necessarily the problem for Bitcoin. And here's where I'm sure to piss some people off... The problem for Bitcoin is its buyers.

Who are they?

Well, according to a recent survey, approximately 60% of Bitcoin owners are under 35 years old.

In short, most Bitcoin buyers are millennials. And that's all we need to know about them to make an inarguable point (told you I wouldn't be making any friends here).

The fact is this: A 35-year-old speculator intrinsically has much less experience in risk management than a 60-year-old. And remember, most Bitcoin owners are mostly speculators, as opposed to users of the product.

AND remember they're speculating on a currency, which is among the most volatile of financial instruments.

AND remember they're speculating on what essentially amounts to a new, experimental currency.

All this considered, Bitcoin looks to me as one of the (if not the) most speculative financial instruments available...

Expect for Bitcoin's derivatives, of course.

Yes, believe it or not, Bitcoin has a futures market. And there are products that offer even more risk. On its Perpetual Bitcoin/USD Swap Contracts, BitMEX offers up to 100x leverage!

But to really understand why I think Bitcoin is eventually headed for a crash, let's consider the most famous market bubble in history...

Dutch Tulip Mania

In the 17th century, formal futures markets developed in the Dutch Republic, providing the infrastructure for a massive bubble in the price of tulip bulbs.

The tulip first became fashionable in France, where early modern ladies of the aristocracy began sporting the flower on their dresses. From there, the tulip became the flower to show off social status and wealth. The demand for bulbs subsequently skyrocketed, and prices immediately followed.

At the peak of Tulip Mania in 1637, a single tulip bulb could cost as much as 10,000 gilders, the price of a nice middle-class townhouse in Amsterdam. According to one author, 12 acres of land was once offered for one rare bulb. For a flower bulb!

The Semper Augustus was the most coveted of all Dutch tulips.

Of course, the bubble eventually burst. The price of tulip bulbs collapsed, and fortunes in perceived value disappeared over night.

My team of researchers recently uncovered a key patent that exposes a major chink in Tesla’s armor... This patent describes a groundbreaking technology that could simply blow Elon Musk, and frankly the entire solar industry, out of the water. We’ve managed to uncover the tiny company with exclusive rights to this technology. It trades at less than $0.15 a share, but don’t expect it to stay there for long. Over the next several years, I believe the value of this firm could absolutely explode... by my calculations, upwards of 4,600%. I’ve included the patent filing and everything you need to know about this small company in this brief, free video presentation.

Here's what I really want you to take away from this story...

If we consider whom the people were who took part in Dutch Tulip Mania and compare them to the majority of Bitcoin owners, it seems both groups share the same shortcomings.

First, we know both groups are speculators betting on the hot new product. But I think we can also make good assumptions to compare the investment sophistication of the Dutch tulip investors and today's Bitcoin buyers.

Because formal futures markets were only recently developed, the Dutch tulip buyers were inherently unsophisticated investors. All of them. They simply didn't have the experience.

The majority of today's Bitcoin buyers are generally younger, so they share the same inexperience. For many Bitcoin buyers, I imagine it represents their first real investment. They simply don't have experience in risk management. And I think that's pretty clear considering some are buying products with 100x leverage!

Bitcoin could be the tulip of the 21st century with the development of a textbook bubble. And I think could be setting itself up for an eventual crash.

Now, even though I've been talking about a crash in Bitcoin prices, there's an epilogue to the Dutch tulip story that's often overlooked... and that actually provides a bullish outlook for the technology.

Truth is, the Dutch tulip bubble never really ended... it evolved. The price of tulip bulbs collapsed in the 17th century. But the flower industry at large eventually recovered and has never been bigger. Global floral production value is currently estimated at $55 billion.

People still pay thousands for rare flowers. In fact, an anonymous buyer paid over $200,000 for a rare orchid in 2005. And that's not even considered the most expensive flower in the world. Rose breeder David Austin spent 15 years and $5 million to develop Juliet rose.

My point is, the tulip as an individual product lost favor. But the collapse of the tulip market didn't completely kill the flower market. In the same way, I don't expect a collapse of Bitcoin prices to completely kill the blockchain-based currency market.

Bitcoin is simply one product of many blockchain-based currencies. A crash in Bitcoin would throw a wrench in the blockchain-based revolution. But there is little doubt that blockchain technologies are the future.

As we speak, every major central bank and large financial institution is researching how to implement blockchain into its own systems. It has already been proven to eliminate verification redundancies and improve security, and new applications are being tested every day.

So while I think Bitcoin itself could eventually be headed for a crash, the blockchain technologies that are supporting all these digital currencies seem set for unprecedented growth.

Until next time,

Luke Burgess

Related Links:

Is Bitcoin Money?

Related posts:

Bitcoin, digital currencies rally, caution prevails; virtual currency in property

A collection of bitcoin tokens.   Bloomberg—Bloomberg via Getty Images Digital currencies rally, but caut...

Two virtual coin get-rich schemes red-flagged by Malaysian Central Bank

With the inclusion of the two investment schemes run by a company with international investors, there are now 302 firms in Bank Negara’s...