Google My BLOG


CIMB EGF declares 5 sen per unit income  

Wednesday, 20 February 2008

CIMB EGF declares 5 sen per unit income

KUALA LUMPUR: CIMB Wealth Advisors Bhd has declared a gross income distribution of five sen per unit for holders of its CIMB-Principal Equity Growth Fund (EGF).
“This amounts to 6.15% of the fund's net asset value per unit as at Jan 22, 2008,” said CIMB Group in a statement.
The fund provides long-term capital growth, and invests a minimum of 70% in equities with capital growth prospects. – Bernama

Source : Tuesday February 19, 2008

AddThis Social Bookmark Button

Making a debut - Equity-linked structures to be listed on Bursa after festivities  

Making a debut
Equity-linked structures to be listed on Bursa after festivities

BURSA Malaysia will see the debut of equity linked instruments when the Bull ELS (Equity-Linked Structures) of Sime Darby (Sime-SA) and IOI Corp (IOICorp-SA), both issued by CIMB, are listed (as scheduled) right after the Chinese New Year holidays.
Contrary to the term Bull ELS, these securities do not benefit much from a rally in the share price of the underlying securities.
In fact, investors of such instruments would hope for the underlying share price to remain neutral or come off slightly from the spot price during the tenure of the ELS.
Bull ELS is also known as Discount Certificate, a more appropriate name, in some jurisdictions.
When subscribing for Bull ELS, investors have a chance to own the underlying share at a discount to the spot price. Spot price is the underlying share price on price fixing date.
In the case of Sime-SA, subscribers have a chance to own Sime shares at a 5% discount (RM11.21, the exercise price) from the share price of RM11.80 on price fixing date.
Subscribers would in fact pay only RM11.107, the issue price.
However, investors in Sime-SA would only be able to own Sime shares if the closing share price of Sime the day before expiry date (March 5 2008) is below the exercise price.
Otherwise, Sime-SA holders will receive a cash settlement amount equivalent to the exercise price of RM11.21 less exercise expenses.
Subscribers of Sime-SA at issue price therefore give up the upside of the underlying share price for a maximum gain of RM0.103 or 0.927% over the 35 days period of the ELS.
This works out to an annualised yield of 9.67%.
However, Sime-SA holders have to assume the downside risks of the underlying share if the share price drops below the exercise price on expiry.
Sime-SA in some way is an opposite product of the underlying share’s structured call warrants. If an investor buys into a call warrant of Sime, he will enjoy unlimited upside and limited downside of the share price.
An investor of Sime-SA will however have a limited upside and downside which is similar to the underlying share.
For IOICorp-SA, initial subscribers have a chance to own IOI Corp shares also at a 5% discount from the share price of RM7.30 on price fixing date.
However, investors will only receive IOI Corp shares on settlement date if the closing share price on March 4, 2008 is below RM6.935.
If IOI Corp share price is equal or above RM6.935, IOICorp-SA will receive cash settlement price of RM6.935. For investors who managed to get IOICorp-SA during the private placement prior to listing, this represents a yield of 1.122% over 35 days.
Nevertheless, IOICorp-SA holders will also face downside risk similar to shareholders if the share price drops more than 5%.
Subscribers of IOICorp-SA have a slightly better yield of 1.122% compared with Sime-SA.
This may be due to the issuers having a higher implied volatility for IOI Corporation as compared with Sime.
As both the share prices of IOI Corp and Sime are now above the spot prices on price fixing date, Sime-SA and IOICorp-SA are expected to be quoted above the issue price on listing date if the underlying share prices remain firm.
However, it will not be logical to buy these Bull ELS at issue price or above from the market.
This is because the maximum yield of Sime-SA and IOICorp-SA are only 0.927% and 1.122% respectively based on the issue prices.
As the brokerage fees for retail purchase is already 0.6% to 0.7%, buying these Bull ELS at one bid higher than issue price will probably make these investment not profitable at all.
The only reasonable way to play listed Bull ELS is to buy it after the underlying share price suffers a big drop below the exercise price and trading at significant discount to the underlying share.
But if the issuer is active in making market, such scenario is not likely to occur.
After all, warrants issuers like CIMB are just trying to hedge some of the call warrants risks they carry by transferring them to Bull ELS buyers.
Alan Voon of Warrants Capital Sdn Bhd can be reached at

Source : Saturday February 9, 2008

AddThis Social Bookmark Button

Designing a wealth distribution plan  

Designing a wealth distribution plan

Many may find wealth distribution a difficult process, so one tends to procrastinate or find convenient ways to distribute wealth without giving due consideration to the objectives. In this final article in the series, CIMB Private Banking and CIMB Trustee Services provide an insight on how a well-structured plan can ensure that the family wealth will be enjoyed for generations.
A FEW weeks ago, Barron Hilton, 80, announced that he would give away a staggering 97% of his wealth of US$2.3bil to charity, thus leaving 3% to be shared among his heirs.
The press had a field day with reports that Paris Hilton, one of the heirs to the Hilton fortune, who stood to inherit an estimated US$100mil, will now receive only about US$5mil.
Of course, US$5mil is not a small sum of inheritance. However, for those who have never been trained to handle money or never had to earn a living, they will struggle at managing such a small fortune.
The great debate was on whether Grandpa Hilton had planned too much too late. If he had made his plans earlier, would we have had the chance of being entertained by the notoriety of young Paris?
This is one of the dilemmas which parents constantly worry about when faced with questions about their wealth distribution: “If I let my children know too much, or if my children realise how much we have, will it destroy their motivation to make something of themselves?”

Paris Hilton will only receive US$5mil from grandfather Barron HiltonThe steps to achieving a suitable wealth distribution plan need not be difficult or arduous. The easiest part of the planning process is to determine which wealth distribution tools are suitable.
Generally, it is best to consider the use of a trust together with a will for a complete wealth distribution structure
A will is a basic necessity to ensure that the order of probate can be granted without any delays, and also to enable one to decide and state how his wealth is to be distributed.
However, in order to create a legacy and to enable systematic distribution to the next generation, it is also important to consider the use of a trust.
Trusts are commonly used by families for the preservation of wealth and to ensure that young children are taken care of.
The benefits of a trust include the ability for family members to receive immediate access to funds for emergency purposes after the death of the founder.
However, more importantly, as a legacy-planning tool, trusts can be used to delay distributions until the children are old enough to handle the wealth.

Considerations when designing a wealth distribution plan
Once the distribution tools are chosen, one needs to set out the wealth objectives and determine the structure while giving consideration to the interconnecting family dynamics.
In setting out the objectives, it is best to consider whether to create a legacy asset, or whether to merely address the issues of additional protection and systematic distribution for the children who may still be young.
It is also important to consider whether the objective of the distribution to the next generation is merely to provide them with a head start in life or to provide them with a piggy bank which can be drawn upon at any time.
Once the objectives have been determined, the next stage is to understand one’s own wealth structure and the asset classes owned.
For example, if the fixed deposit account is held in joint names, then the surviving account holder will automatically inherit the deposit, without the need to address this in the will.
As mentioned in the previous article, many choose to undertake this route of using joint accounts for convenience without due consideration as to whether this forms part of the bigger wealth distribution plan.
If the founder has a family business, he will have to address several issues – how the shares of the existing family company are legally held, and whether they are held by the founder and his spouse or whether there are minority shareholders that are made up of non-family members such as business partners.
Without the understanding of these circumstances, one ends up planning in a vacuum and can create problems for future heirs or even business partners.
If the bulk of the assets held by the founder are liquid assets, they are generally considered easier to divide and distribute, whereas real properties and family businesses are not that straightforward.
It is important to have liquid assets, which can be tapped into by family members for any emergency in the case of the sudden death of the decision-maker. However, due to the liquidity, such assets can be dissipated quickly if not structured properly.
Finally, after laying down the objectives and understanding how the assets are legally owned, the next phase is to consider the various factors which will determine the distribution plan for these assets.
The age of the beneficiaries is always an important factor when considering the distribution of assets to one’s family members.
One of the constant dilemmas which parents face is deciding when is the right time to distribute as they may end up distributing to their children either too early or too late.
In determining when the heirs should inherit, one should consider other factors such as how wealth can impact characters of the beneficiaries and how their motivation may be affected, as well as how to then maintain their values through a properly structured plan.
The other main factor to consider is which assets to distribute to the heirs.
All parents plan to be fair to their children. Some will just divide the assets equally and ensure that all children receive equal shares of what they own.
However, this may not always be the best plan.
Take this scenario: If a person owns a family business, 15 properties and some liquid assets, the easiest and most convenient plan for a person is to divide all the assets into three equal shares for his three children. This may not be a bad plan if the situation warrants it.
However, a situation may arise where one of his children is an artist and is not business savvy, one is a doctor, and only the last child is directly involved in the family business. In this scenario, it may be difficult to slice the family business into three equal slices.
For the child who is an artist and not involved in the family business, it may be a burden to him to be involved in a business which he does not understand. The properties, on the other hand, are simpler to deal with.
Conventional wisdom states that each child should inherit different properties so as to avoid any future disputes amongst the siblings.
Contrary to conventional wisdom, however, dividing the properties into three equal parts with each child owning one-third of each property may not be a bad distribution plan either.
The family dynamics which comes into play here may be the driving factor, especially if the three children are on good terms and where the more financially and business-savvy child would be in a better position to take care of the interests of his less savvy siblings. That is, of course, if the family dynamics warrant it.
This, however, may not be a long-term plan as the children may have their own families and interests, which may at times conflict with the interests of their siblings or their siblings’ family.
As such, a longer term plan, especially if these property assets are considered as prime assets and forms the bulk of the family’s wealth, it may be more suitable to consider holding these assets in a family trust.
The dilemmas for those who have managed to acquire wealth can be deeply worrisome, especially in wanting to preserve and enhance their hard-earned wealth and balancing that with preserving the family’s harmony and unity for future generations.
In creating a legacy and preparing subsequent generations to be responsible stewards of wealth, it is therefore important to plan early, and avoid choosing easy options of wealth distribution purely for convenience.

CIMB Private Banking provides a wide spectrum of wealth management services, including wealth structuring and trust services through CIMB Trustee Services.

Source : Thursday February 7, 2008

AddThis Social Bookmark Button

CIMB Investment unveils first Bull ELS warrant  

CIMB Investment unveils first Bull ELS warrant

KUALA LUMPUR: CIMB Investment Bank Bhd has launched Malaysia's first listed Bull equity-linked structure (Bull ELS), a short-term structured warrant allowing investors to purchase underlying shares at a discounted price.

CIMB Investment equity derivatives director Lim Jong Hau said the Bull ELS would be listed on the call warrants board of Bursa Malaysia and issued on shares of plantation giants Sime Darby Bhd and IOI Corp Bhd.

“We are focusing on stocks of Sime Darby and IOI Corp because there is a bullish sentiment on the plantation sectors at this point in time,” Lim told reporters at the launch of Bull ELS yesterday.

He said the warrants would be issued on up to 20 million shares each from Sime Darby and IOI Corp.

Lim Jong Hau
“The Bull ELS would be set at a 5% discount to the share price of Sime Darby and IOI Corp,” he said.

The exercise and subscription prices of the Bull ELS were determined at the close of the first trading session at 12.30pm yesterday and would be fixed during the entire duration of the offer, which expires on March 5.

According to Lim, investors' return at maturity would depend on the performance of the underlying shares at the expiry date of the Bull ELS.

“If the closing price of the shares is at or above the exercise price, investors would receive a cash settlement comprising their subscription amount with interest.

“However, if the closing price is below the exercise price, investors would receive the number of underlying shares equivalent to the number of Bull ELS held,” he added.

Shares in Sime Darby and IOI Corp closed at RM11.80 and RM7.30 at the end of the first session yesterday.

A CIMB statement said the exercise price of the Bull ELS for Sime Darby and IOI Corp was set at RM11.210 and RM6.935 respectively.

The subscription price was set at RM11.107 and RM6.858 respectively, representing a respective yield to maturity of 9.68% and 11.71%.

The Bull ELS is scheduled to be listed on Feb 14.

Source : Wednesday January 30, 2008

AddThis Social Bookmark Button

CIMB-Principal eyes potential in Mid East and North Africa  

CIMB-Principal eyes potential in Mid East and North Africa

KUALA LUMPUR: CIMB-Principal Asset Management Bhd sees good investment opportunites in the Middle East and North Africa. Chief executive Datuk Noripah Kamso said: “We want to give Malaysian investors the opportunity to invest in these markets, which have usually been overlooked.

“They have great potential partly because of their encouraging economic growth, low correlation to world markets and attractive valuations,'' she told a press conference.

Societe Generale Asset Management fund manager (emerging market equities) Mark Krombas said: “Economies in these markets grew more than 5% in each of the past three years and their real gross domestic product (GDP) expanded 6.3% in 2006, one of the region's best years since the 1970s.

“On a per capita basis, the region grew at an average of 4.2% in 2006, the highest level recorded in at least two decades, hence providing attractive investment opportunities in these markets,” he said.

According to Krombas, domestic demand would continue to be the dominant force behind the current growth momentum.

Non-oil GDP growth (including agriculture, construction, manufacturing and services) was expected to have risen between 7% and 8% in Qatar, Bahrain and Saudi Arabia in 2007.

There was also strong demand for consumer and financial products as well as real estate, in addition to the upcoming government investment programmes worth US$1.5 trillion (from 2007 to 2011), he added.

Source : Friday January 18, 2008

AddThis Social Bookmark Button