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Malaysia and global market summary for August 2024.



Global


  • The Bank of Japan’s (central bank of Japan) surprise interest rate hike to 0.25% led to a sharp appreciation in yen (JPY).

  • Global markets experienced a sell-off due to forced margin selling from carry trades (borrowing in yen to invest in higher-yielding assets) & US labour data causing recession fears.


US


  • US unemployment numbers increased (4.3%) and slowing manufacturing initially raised concerns about potential recession.

  • US Feds statements indicate high likelihood of interest rate cuts as inflation heads downwards.

  • USD declined -4% as markets price in the rate cuts.

  • US mega cap tech companies (aka Magnificent 7) declined to become less dominant with other US stocks rising instead.

 

Malaysia


  • Ringgit (MYR) strengthened to 4.3 against the USD influenced by global dollar weakening and stronger growth outlook in Malaysia with Malaysia's exports growing the fastest in close to 2 years.

  • Malaysian stock market also rising with local institutional buying, foreign funds inflow, and a stable government amidst political instability in Southeast Asia. 

  • Malaysia’s credit rating may also be upgraded with improving economic growth and reduced fiscal debt according to the Malaysian Institute of Economic Research (MIER).

 

China


  • People's Bank of China rate cuts underscore the urgency to support the slowing economy with prolonged property market slump, and weak consumer spending.

  • Overall growth is continuing its upwards trajectory with a 5% growth in 2024 1H, & local state-owned entities to convert unsold property into affordable public housing.


Alternative Investments


  • Bitcoin & Ethereum rise as investors grow confident Fed will cut rates with Bitcoin ranged tightly between USD57,000 & USD61,000.

  • Gold hovered above the US$2,500 per-ounce level on expectations of imminent US rate cuts & lingering concerns about the Middle East conflict.


Overall


Investment markets were highly volatile in August, but markets started recovering as recession fears abate, and the Bank of Japan will not rush to raise interest rates (although it will continue to monitor and raise rates as long as it meets their views of inflation).


The recent volatility presented a potential buying opportunity with investors regularly investing and/or investing additional funds during the market dip. US interest cuts are viewed as positive with investment funds expected to come out from USD cash as rates drop and flow globally including into Asia Pacific. Markets are expected to further recover although to expect a bumpy ride ahead and keep an eye out for known risks such as ongoing regional conflicts.


The answer is yes, but it doesn't have to be that way.

Business succession planning is a strategic process where companies prepare for future leadership transitions by identifying and developing potential successors. This ensures that the business continues to operate smoothly when key leaders leave, retire, or pass away. The process involves evaluating essential roles, identifying suitable candidates, and providing them with necessary training and development opportunities. This plan helps maintain stability and continuity within the organisation, safeguarding against disruptions and ensuring that critical positions are always filled with qualified individuals​


A well-crafted succession plan helps protect executives, investors, employees, and customers by providing a clear strategy for leadership transitions. This preparedness reduces uncertainty and disruption, allowing the business to maintain its vision and operations without interruption. Without a succession plan, companies face the risk of decreased business value and potential closure if key leaders leave unexpectedly.


This proactive approach not only enhances leadership capabilities but also boosts employee morale and retention by showing that the company values and invests in its workforce's career growth.


#1. Start planning from the day you start the business 


An ideal succession plan requires laying the foundation many years in advance—some experts even recommend starting the exit strategy from the day you start the business. This involves identifying the right talent, ensuring knowledge transfer, keeping up with organizational change, and securing buy-in from all levels. This proactive approach ensures that the organization is always ready for unexpected changes.



#2.  Do Not Assume Your Family Will Take Over the Business


This is a very important point to consider, especially if you want your family members to inherit your business. While many children may want to take over the business, some might not. It’s critical to talk with them about their future vision and if the business is part of that. You can encourage them to work in the business, but do not push them if they don’t want to. It’s not fair to them, and it will probably be a disaster for the business if you try to force them into a career they do not want. Once your succession planning is in order, you can decide if your family members will be able to inherit the business or pursue other avenues if necessary, such as selling to valued employees or an outside buyer.

#3.  Determine the Talent to Run the Business


If you decide to divide the business equally among heirs, it could lead to conflicts due to different skills and visions among them. Ultimately, one child will need to run the company. Planning in advance helps to determine which heir has the talent and desire to run the business. If none of your heirs are interested, devise a way to leave non-business assets such as shares and insurance.




#4. Give Real Authority to the Heir


Do not wait too long to give genuine responsibility and authority to the potential heir. If you wait until you retire, you may find that the heir is not ready for the role. Involve them in the decision-making process and let them build relationships with partners, vendors, employees, and clients. Trusting them with real authority can instill confidence and prepare them to run the business. Mistakes are inevitable but will make the learning experience more fruitful.



#5. Be Open About Your Succession Planning


The sooner you inform the heirs about your succession plan, the sooner they can make their own plans. It also gives you time to modify the plan, if necessary. Keep them informed through periodic family meetings. If the succession plan is kept secret, it may lead to conflict and disservice to the heirs.





#6. Utilize Data and Regular Reviews


Regularly review and update the succession plan based on performance data, employee feedback, and changing business needs. This helps keep the plan relevant and effective. Using data-driven insights ensures that decisions are based on accurate information and helps identify any gaps that need to be addressed​.





#7.Start Thinking About Your Retirement Plan


Start planning for your retirement. This may be difficult for small-business owners because their business often becomes the all-consuming center of their life and personal identity. Planning for retirement can give a clear sense of what you want to do during retirement and help avoid drifting back to the family business, which can frequently cause tension in business and family relations.





#8. Consult with Experts


Business succession planning is complicated, which is why outside experts can be invaluable, particularly someone who can lead family meetings and ease family conflicts through their knowledgeable and objective perspective.



Conclusion


Incorporating these considerations into your succession plan ensures a comprehensive approach that addresses potential legal, financial, and human resource challenges. By doing so, businesses can safeguard their future and ensure a smooth transition of leadership​. With the assistance of financial planner, they can help to evaluate the financial health of the business and plan for potential tax implications, funding requirements and liquidity events. Financial planner can assist in structuring the business to minimise tax liabilities and ensure a smooth financial transition.


About The Author


Felicia is Licensed Financial Planner attached with Wealth Vantage Advisory. As an accounting graduate, her dual certification helps her serve multi-cultural clients better. With the technical skills & knowledge on various solutions on hand, she can differentiate her positioning and role to the client. Felicia's approach is always to act on the client’s interest first and it has been embedded in her diagnosis & solutions which is the root cause of the issue to be solved for the benefit of a client.

Updated: Jul 30

By Kean Seng Lim


What causes the public to fall prey to scammers? Learn more of few common ones causing this serious disadvantage.



More often than not, we have read articles after articles in the media about people young and old, falling prey to scammers. In the first half of this year, there are so many reports of such incidents, yet people never seem to learn from it.


The saddest group of victims are those that are about to or have already retired. These people may no longer have any more active income and as such any loss to scams can be devastating. Their entire life may be ruined due to this.


To protect ourselves and loved ones better, let us have a look at the potential causes of falling prey to scams.

#1. Greed


Everyone wants to always have more than what they currently have. Who can blame them? With the savings rate below 1% per annum, it is extremely difficult for most people to be able to sustain their livelihood.


Hence, we get attracted to products which offer a higher rate of return. Do note that such products may not necessarily be scams. A detailed understanding of such products needs to be investigated and relevant checks made before delving into such products.


As licensed financial planners, we can help our clients by doing the due diligence on the products for them. We can then, depending on the clients’ risk appetite, provide unbiased feedback on such products. It is then up to the client to decide whether to take up such products or not.


#2. Fear of not having enough


Is this not the same as greed? No, this is where there is a fear that the amount we have accumulated for our retirement seems inadequate to fund our retirement life. Therefore, we try to find ways to make up for the anticipated deficits in the funds required in retirement. If there is adequate time for this deficit to be overcome, it may not be cause for concern.


But if one is already nearing retirement, the deficit may be insurmountable. This is when either unnecessary risk is taken to try to overcome the deficit, or an unregulated/unapproved investment which may lead to potential losses instead of gains can be undertaken by the client.


A better way to overcome this fear is to delay retirement until the desired retirement amount is desired. The deferment of retirement may either be via the existing employer agreeing to re-employ the employee for an extended period of time, or by the employee finding employment opportunities elsewhere.


#3. Fear of Missing Out


More commonly known as FOMO, this happens when there is a rush to be part of a new product that has been introduced and everyone is jumping on the bandwagon. The fear of being left out can sometimes make one blind to the red flags that tells you that this product may not be genuine.


Do not allow this fear to cloud your decision making. I always advocate the maxim of “If it is meant to be, it will be. If it is not meant to be, just let it be”. In other words, it means that there will always be another opportunity for you.


#4. You only live once


Similar to the above FOMO, the You Only Live Once (YOLO) term seems to imply that we must enjoy ourselves while we can. But doing so does not mean we can just jump into whatever comes along.


Do your own proper due diligence before parting with your hard-earned money. You do not want to regret later if things do not go the way it said it would.



#5. Financial Independence, Retire Early


This is a recent phenomenon more commonly known as F.I.R.E. The aim is to be able to accumulate as quickly as possible the retirement pot so that one can achieve financial independence and then retire early. In the quest for Financial Independence, one needs to grow one investment assets as quickly as possible. Just being able to put aside more than 50% of your income is not going to do much, if the monies are not growing quickly too.


Hence, one can be enticed to invest in dubious schemes that promises high returns over the shortest time frame. If no due diligence is done to verify the legitimacy of such schemes, the possibility of being scammed rises tremendously.



#6. Financially Illiterate


Unfortunately, this is currently the most prevalent cause of people falling for a scam. Financial literacy is a subject that has been misunderstood. Some equate financial literacy to the ability to make decisions that require logical thinking, while some relate it to the ability to decide how to invest to make lots of money.


Being financially illiterate makes one act irrationally especially with couples with the fear of missing out on an opportunity.



#7. Keeping up with the Joneses


This is definitely something we should avoid at all costs. It is not a scam, but it is something that will definitely affect one’s financial resources.


Why is there a need to have everything your neighbours have? It does not make sense financially, unless you have so much money it does not impact you at all. But will you really appreciate and enjoy these items? Or will there comes a time when these will be discarded and replaced with the new things your neighbours have bought?


Think carefully and understand the benefits to you if you used your money more beneficially. Do not fall into the category of “We buy things we don't need, with money we don't have, to impress people we don't like – Dave Ramsey”. As a result of this, we may end up selling things we really need in order to be able to continue this “keeping up with the Joneses”.


Conclusion


In essence, a combination of psychological impulses and insufficient financial literacy creates an environment where scams can flourish. Addressing these issues through education and cautious financial planning is crucial to reducing the incidence of scams.

 

Have you ever encountered a scam before? Share with us below! 

 


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