New Apple Innovation – iYuan

Apple has begun accepting payment in Chinese yuan for purchases in its online App Store, the company’s latest expansion in what has become a key growth market.

Will this change everything? Apple’s acceptance Chinese Yuan in its App Store may start the snowball effect of wide adoption of Chinese Yuan for international transactions. It does make sense for corporations with sizeable manufacturing done in China to transact in Chinese Yuan. With Apple’s acceptance, China may be one step closer to expanding trading of of its currency outside of mainland.

Read about this in WSJ.

HK’s Convoy offers to buy IPP Financial Advisers for S$25m

Convoy Financial Services, the largest independent financial adviser firm in Hong Kong, is offering to buy Singapore’s IPP Financial Services Holdings, which is the parent company of IPP Financial Advisers, for S$25m in cash.

According to the agreement, the payment will be made in two tranches. The first tranche will be a maximum of S$10m, whilst the second tranche will be of a maximum of S$15m.

Under the terms of the sale, IPP Financial Services has guaranteed to generate net profits of at least S$4m in any four consecutive quarters within the 24-month period from 1 January 2012 to 31 December 2013.

In the event the profit guarantee is not met and there is a shortfall in such guaranteed consolidated after-tax net profit, the second tranche will be refunded to the Convoy in accordance with the agreed formula.

The net asset value of IPP Financial Services was approximately S$3.67m, by the end of last year. The firm recorded S$181,786 audited consolidated net loss after taxation and extraordinary items by the end of last year.

Find out at Professional Adviser Singapore and more details of the offer announced by Convoy Financial Services.

Many Singaporeans still underinsured

Only one in ten Singaporeans have adequate life insurance coverage and very few even regard it as important

One in four are willing to forgo vacations for insurance premiums

Four in ten Singaporeans (42 per cent) expect their dependents to downgrade their current living standards should anything unexpected happen to them

Insurance need not be expensive, find help to make informed decisions. More interesting survey findings on this AIA white paper.

Japan’s earthquake will cause a global financial aftershock

The cost of insurance and rebuilding could cause global markets to falter – and the Japanese economy to boom.

Earthquake insurance is hard to get for most households in Japan, so much of the cost – estimated at $100bn – will have to come from a mountain of ordinary savings held in Japanese financial institutions, much of it invested overseas. For anything that is insured, possibly amounting to between $10bn and $15bn – the situation is complicated. Japanese insurers will also have to sell overseas assets, but they will be spared the full cost because they have reinsured a lot of their risk with overseas insurance firms, who in turn have reinsured it with other insurers. This insurance trail is a global labyrinth. Japan’s risk, it turns out, is the world’s risk.

An insight to how the history lessons from previous earthquakes may be affect global financial market in this commentary from Guardian News.

Here’s why those New Year resolutions are so hard to keep

Old Habits die hard. Bad Habits die harder:

http://www.todayonline.com/World/EDC110105-0000193/Heres-why-those-New-Year-resolutions-are-so-hard-to-keep-,,,

“Why are bad habits stronger? You’re fighting against the power of an immediate reward,” says Dr Nora Volkow, director of the National Institute on Drug Abuse and an authority on the brain’s pleasure pathway. “We are hard-wired that way, to give greater value to an immediate reward as opposed to something that’s delayed.”

This is the same for bad financial habits. Short-term, “immediate” gains are often favored for long-term, “delayed” gains. Temptation is often hard to fight and bad habits difficult to change.

Says Prof Nordgren: “People have this self-control hubris, this belief they can handle more than they can.”

How then can one stop from repeating bad financial habits? Will professional financial advise be useful?

I think so. and that is just one of the many things everyone should have – A financial ally by their side.

Maybe add “Find my financial ally” in 2011 list.

Top Picks for 2011 and Super-Cycles

There are 2 interesting articles in Business Times today.

One elaborates on Bank Strategists’ top picks for 2011 – commodities and emerging and Asian equities, with a focus on quality on the latter. You can read more about it here.

The other article touches on super-cycles:

This is a period of historically high global growth, lasting a generation or more. There are several fundamental factors driving this, including rising trade, high rates of investment, rapid urbanisation and technological innovation. Super-cycles are also characterised by the emergence of economies enjoying rapid growth, such as China, India, Indonesia, the Middle East and several African economies now.

The world economy has twice enjoyed super-cycles before. The first, from 1870 to 1913, saw a significant pick-up in global growth, with the world growing on average each year by 2.7 per cent, a full one per cent higher than previously seen. That cycle was led by the emergence of the US and saw increased trade and greater use of technologies from the Industrial Revolution. The second super-cycle, from 1945 to the early 1970’s, saw growth averaging 5 per cent and was characterised by the post-War reconstruction and catch up across large parts of the globe. It saw the emergence both of a large middle class in the West and of exporting nations across Asia, led by Japan.

Find out whether we are now on a third super-cycle here.

Life Insurance Cover: S’pore 5th in Asia

A month after he said Singaporeans were under-insured, Senior Minister Goh Chok Tong gave figures that show how Singapore compares with other economies.

Singapore ranks fifth in Asia and 17th in the world in terms of the penetration rate of life insurance cover. This rate measures the total life insurance premiums paid as a proportion of the economy’s gross domestic product.

Read more here.

Thailand in Technical Recession

(Reuters) – Thailand’s economy slipped into a technical recession in the third quarter, reinforcing signs of an Asia-wide slowdown as export growth cools, manufacturing ebbs and the impact of massive government stimulus spending fades.

Southeast Asia’s second-biggest economy shrank 0.2 percent in the third quarter after a revised 0.6 percent contraction in the second, data showed on Monday, reducing chances of another interest rate rise next month.

Read more here.

DBS offers S$500m preference shares

The above headlines was used in Straits Times to report DBS’s preference share issue to retail investors. This is good news to retails investors who could not participate in the S$1.7 billion preference shares offered to institutional investors in Oct 2010. The dividend yield of 4.7% per annum for 10years is attractive and we can expect this offer to be oversubscribed.

However, I found the article alittle disturbing. It started the report with:

RETAIL investors looking for a product yielding far more than bank deposits have a new option to consider.

and they go on in the article comparing it to bonds and bank deposits:

The shares, which operate in a similar manner to bonds, pay an attractive dividend of 4.7 per cent a year for 10 years – well above the 0.125 per cent interest that a saver currently gets on a POSB savings account.

The discerning investor may find the article somewhat misleading. Preference shares are not bonds, and should not be compared to deposits because it is an investment.

You should consider the following risks before buying:

• The dividend yield is not guaranteed as it is conditional on the DBS making a level of profit sufficient to pay the dividend.
• The shares are non-cumulative, so dividend payouts that are missed will not be paid retrospectively when financial conditions improve.
• There is the possibility that investors receive less than the principle amount if the preference shares are sold on the open market. A possible scenario is when market interest rates rise significantly.

If you find this investment a good complement to your portfolio, after considering the risks, go get it. It is already open for sale from now till 12.00 noon on 18 November 2010 via DBS, UOB or OCBC ATMs. And like we said earlier, we can expect this offer to be oversubscribed.

Man Group Sells AHL Fund to Retail Investors

MAS approved the sales of Man AHL Trend, the first managed futures fund offered to retail investors, giving them a new asset class to complement a traditional portfolio mix of equities and bonds. In the fund prospectus, the investment objective is to

achieve medium-term capital growth targeting double digit annualised returns for a target annualised volatility of around 15% over the medium term.

And this is achieve by entering

into one or more financial derivative instrument(s) in the form of swaps which allow variable exposure of the Subfund to a financial index, the AHL Trend Index™ and may also (as an alternative to or in combination with the above) invest all or part of the net proceeds of the issue of Shares in transferable securities issued by (i) financial institutions or corporates, (ii) sovereign states that are OECD Member.

AHL is a world leading quantitative investment manager with an impressive 22-year track record of performance and innovation. AHL was established in 1987, has offices in London, Oxford and Hong Kong and is part of Man Group plc., a global alternative investment business listed in FTSE 100 Index of the largest UK companies.

AHL primarily adopts a systematic, ‘trend-following’ approach to investing, meaning that it seeks to identify and profit from both upwards and downwards movements in prices. To do this, AHL analyses more than 4,000 prices every day in over 200 international markets. The trading system developed makes investments around-the-clock, using sophisticated electronic trading algorithms.

Find out more of the performance and expertise of AHL Diversified Program, a fund with a similar underlying investment strategy to Man AHL Trend, here.