UNCTAD World Investment Report

UNCTAD (United Nations Conference on Trade and Development) World Investment Report 2008:
PDF report
(Wow, a 411-page PDF report)

The 2008 report emphasizes on FDI (foreign direct investment), TNC (transnational corporation), infrastructure industries, policy challenges and options.

The "Methodological Notes" portion is a good resource on how and where to get FDI data for different countries: inflows, outflows, inward stocks, outward stocks.

FDI statistics are also available from:

Linked Notes, structured debt (2) - Malaysia

Linked Notes that are linked to Lehman Brothers have caused big losses to investors in Hong Kong, Singapore and other more financially advanced countries.

Caveat Emptor (buyer bewares) is often the rule. However, information asymmetry often disadvantaged the investors, especially when the investors are of lower educational level, not knowing English and under excessive sales gimmicks..

Sellers had the advantages. Sales pamphlet’s facts may be selectively presented; prospectus may be available only after the sales; high risk product (like LNs) be recommended to low risk investors etc..

I just wonder whether these Linked Notes are marketed in Malaysia to the general public and what the regulator’s standpoint on Linked Notes.

Found this "Guidelines on the offering of structured products" (2007) from Securities Commission of Malaysia:
PDF file

The above guidelines are applicable to :
Equity LN, Bond LN, Index LN, Currencies LN, Interest Rate Linked Notes, Commodity LN, Credit LN etc..

In my opinion, the requirement that makes a difference and gives investors’ extra protection are the "suitability and fair dealing requirements".

Excerpts of some of the notable points inside (refer to the PDF file for details):
(bracketed text below is my comment)
1. ....primary seller shall adopt fair dealing best practices when dealing, marketing and selling structured products to investors…. (this puts the responsibility to the seller)

2. ....different standards of fair dealing in relation to institutional investors and investor individuals…
(this sets a more stringent requirement to sales to investor individuals)

3. ...giving an investor individual who invests in structured products during an offer period, the option to obtain a full refund of his principal investment sum within three working days of such investment or the remaining offer period
(a cooling off period; good for investors who are bombarded with sales gimmicks)

4. A primary seller should endeavour to make an investor understand the risks in relation to investing in structured products before marketing and selling structured products to that investor.
(this again puts the responsibility to the seller)

i. know your client: ……primary seller should take all reasonable steps beforehand to assess the client’s financial position, investment experience and investment objectives.
(not only puts responsibility to the seller, it also sets the proper sequence of the sales process)

ii. duty of care: …..financial risks and potential losses that may arise from investing in structured products are fully explained to clients before the client makes his investment decision

iii. sales personnel: …. specifically identified personnel who have a financial background and possess adequate knowledge and understanding of structured products, particularly when dealing with investor individuals….. (only peoples with adequate product knowledge can sell)

iv. provided risk disclosure statement: …..risk disclosure statement is to be provided separately from the application form or other document constituting a contract between an Eligible Issuer and the investor, and is to be furnished to the potential investor together with other promotional and sales documents, before any binding contract is entered into by the investor….

v. confirmation of disclosure by client: …..primary seller should invite the client to read the risk disclosure statement, ask questions and take independent advice if the client so wishes….client should be requested to sign a confirmation..

vi. investors individual: …primary seller should ensure that a higher standard of diligence is exercised when dealing with investor individuals… (this sets a higher standard for sales to investor individuals)

I hope these guidelines have helped reducing/eliminating misrepresentation in LN sales in Malaysia and Malaysian investors are not affected by these LNs.
If that is the case, special thanks should be given to the Securities Commission. It has safeguarded the investors’ interest.

FT/Goldman Sachs book award 2008

Many new investment/business/management/economics books are published each year. Too many until we can’t keep track of them. We may therefore won’t know which may be a good book.

We can take a look on "FT/Goldman Sachs book award" to look for ideas of a good book.

The book "When Markets Collide: Investment Strategies for the Age of Global Economic Change" by Mohamed El-Erian won the "FT/Goldman Sachs book award 2008".

Excerpts from the website:
Five of the other finalists were:
The Snowball, the biography of Warren Buffett, the investor;
Remix, on copyright and the internet generation;
Mc­Mafia, about globalisation and organised crime;
Cold Steel, on the Arcelor/Mittal takeover; and
A Splendid Exchange, a history of free trade.

Some of the past winners:

2007 Award Winner
The Last Tycoons,
a vivid account of the tumultuous evolution of investment bank Lazard

2006 Award Winner
China Shakes the World,
A gripping exploration of the economic and business implications of China’s breakneck growth.

2005 Award Winner
The World is Flat,
book by Thomas Friedman, an exuberant account of the challenges and benefits of globalisation.

Wonder whether these are really good books. Maybe will check them out during next visit to bookshop :-)

National Bureau of Statistics of China

National Bureau of Statistics of China

Statistical data is available monthly.

The Chinese version website has more information compared to English version.

Found this 改革开放30年经济社会发展成就系列报告 in Chinese version only.
A great read.

Quite a lot of information on 统 计 分 析:
For examples:
农 产 品 价 格
工 业 品 价 格

Though the information may still lag the real situation, there are still good reads.

changes in PIDM’s deposit guarantee

On 23 Oct 08, Malaysia Deposit Insurance Corporation (PIDM) has temporarily (said to be until December 2010) changes its depositor protection measures to preserve confidence in Malaysia’s financial systems.


List of financial institutions guaranteed under govt deposit guarantee:
(list of Commercial Banks, Islamic Banks, Investment Banks, International Islamic Bank, Deposit-taking Development Financial Institutions):


Sovereign Wealth Funds (SWF)

Sovereign Wealth Funds had grown in importance due to its size and closed link to government.

Some resources on SWF:

SWF Institute

A good resource on SWF. There are website links to various SWFs, fund rankings, statistics & research.

Some of the important parameters for SWFs are size, SWF-to-foreign-exchange-reserve ratio and transparency. The transparency index for SWF is called Linaburg-Maduell Transparency Index. We can find these parameters of SWFs from fund rankings.

Singapore’s SWFs are GIC and Temasek Holding (Temasek itself claims that it is not a SWF).
Malaysia’s SWF is Khazanah.

International Working Group (IWG) of Sovereign Wealth Funds (SWF) has published a set of 24 voluntary principles to ensure an open international investment environment.

Generally Accepted Principles and Practices (GAPP)for SWF (called Santiago Principles)
pdf file

SWF Radar:
We can look for updated SWF news here.

Ethics on financial/investment field (2) - CFA Institute Standards of Professional Conduct

Both CFA Institute and CAIA are using CFA Institute Standards of Professional Conduct.

Let’s explore what is inside.

The portion more related to clients/customers are Professionalism; Duties to clients;
Investment analysis, recommendations and actions; Conflicts of interest.

For details, refer to the following files:
Code of Ethics and Standards of Professional Conduct

Standard of Practice Handbook
(we can find many Guidances, Recommended Procedures, Applications etc.)

CFA Institute Standards of Professional Conduct:
1. Professionalism
a. knowledge of the law
b. independence and objectivity
c. misrepresentation
d. misconduct

2. Integrity of capital markets
a. material nonpublic information
b. market manipulation

3. Duties to clients
a. loyalty, prudence and care
b. fair dealing
c. suitability
d. performance presentation
e. preservation of confidentiality

4. Duties to employers
a. loyalty
b. additional compensation arrangement
c. responsibilities of supervisors

5. Investment analysis, recommendations and actions
a. diligence and reasonable basis
b. communication with clients and prospecting clients
c. record retention

6. Conflicts of interest
a. disclosure of conflicts
b. priority of transactions
c. referral fees

7. Responsibilities as a CFA Institute member or CFA candidate
a. conduct as members and candidates in the CFA program
b. reference to CFA Institute, the CFA designation and the CFA program

Ethics on financial/investment field (1)

Ethics are very important in financial/investment professionals, especiallly to those that are advising customers/investors directly. Whenever there are financial scandals, questions related to ethics will be asked, especially by investors that are "victimised".

What are the ethics relevant to financial/investment professionals ?
Are ethics incorporated into curriculums ?
Are there laws/regulations governing ethics of financial/investment professionals ?
Can they be sued ? Can we recover the losses ?
… the list goes on…

Many of the questions are too big for me. Let’s explore..

Let’s take a look whether Ethics materials are included in curriculum of financial/investment professionals and what the aspects of Ethics are.

I look for the curriculum of financial/investment professionals from websites mentioned in my previous post.

CFP’s curriculum:
Code of Ethics and Professional Responsibility and Disciplinary Rules and Procedures,
Financial Planning Practice Standards,
Disciplinary Rules and Procedures.

CFA Institute’s curriculum:
Code of Ethics and Standards of Professional Conduct,
"Guidance" for Standards I-VII

CAIA’s curriculum:
CAIA is using CFA Institute Standards of Professional Conduct

FRM’s curriculum:
couldn’t find material on ethics from its website.
Maybe because risk management is more of technical work and involves less direct dealings with customers/investors.

Financial Times presentation on financial crisis

Financial Times’ website has few interactive presentation showing timeline of financial institutions affected in The Financial Crisis and governments’ intervention.

Bank Street:
I think this is creative ! It shows someone walking through Bank Street, showing sequences of financial institutions having problems and their outcomes.

Governments’ intervention:

We can actually select types of governments’ intervention:
liquidity and lending guarantees,
interest rate moves,
bank deposit guarantees,
bank recapitalisation
asset purchase,
short selling crackdown.

Cool !

Euromoney Institutional Investor

Euromoney Institutional Investor

This website is a great resource on news for investment/financial industry.
We can find updated news on asset management, banking/brokerage, capital markets, derivatives, hedge funds, legal/regulatory… etc..

It also has various rankings & awards showing the top ranks/rising stars of the investment/financial industry. Maybe we can learn from their insights.

Haha, hopefully one day my friends in investment/financial industry are on the top ranks :-)

Email newsletter is available from the website.
It is a good way to let the information go directly to your doorstep (in this case "Inbox") when it is available.

Its "Events Calendar" may be useful if you are in the investment/financial industry.

It has also offered me once free subscription of its magazine.

The Medici Effect (1)

Came across this book "The Medici Effect" by Frans Johansson.
It is a great book on innovation (by intersection of fields/disciplines/cultures to generate new ideas).

Below are some resources available online:

What a surprise ! The PDF file of the book is available from the website.
book in pdf format

Medici Effect blog

time value of money (2)

2. Discounted cashflow (DCF)

From FV = PV * (1 + r) ^n,
rearranging, we get:
PV = FV/ [(1 + r)^n]

Inversely, using the same examples from previous post,
$105 of 1 year later,
$110.25 of 2 year later,
$115.76 of 3 year later,
$162.89 of 10 year later
are all equivalent to $100, respectively.

It makes future value be able to "discount" back to present value.
If we convert all cashflow that we can get in the future to present,
we are using "discounted cashflow (DCF)".

time value of money (1)

If I’m to choose only one concept that is most important in investment, I will choose the concept of time value of money.

It can be used to elaborate a lot of important concepts in investment.
It is not difficult: its maths is learnt in secondary school.
I really hope this concept of time value of money can be taught in secondary school.

FV = PV * (1 + r) ^n
FV: future value
PV: present value
r: rate
n: number of years

1. Power of Compounding

To illustrate, $100 now, put in bank, at interest rate of 5%.
1 year: FV = $100 * (1+ 5%) ^ 1 = $105
2 year: FV = $100 * (1+ 5%) ^ 2 = $110.25
3 year: FV = $100 * (1+ 5%) ^ 3 = $115.76
10 year: FV = $100 * (1+ 5%) ^ 10 = $162.89
See how the value increases. This explains the power of "compounding effect".
(to be continued)
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The opinion post on this blog is personal and is not an inducement to buy or sell any investment products. The author of this blog will NOT be held responsible for any losses incurred due to the reliance on any content of this blog for investment decisions.