24 September 2014

1. CONCURRENT SESSION E - "HOW CAN MALAYSIANS AND MALAYSIAN COMPANIES BEST PREPARE FOR A FINANCIAL CRISIS?" 24 September 2014 Rejina Rahim Country Head/Managing Director Nomura Asset Management Malaysia Sdn. Bhd. (748695-A) Suite 16.2 Level 16, Menara IMC No. 8 Jalan Sultan Ismail, 50250 Kuala Lumpur. Malaysia.

2. “NEVER INNOVATE TO COMPETE, INNOVATE TO CHANGE THE RULES OF THE GAME” David O. Adeife-Innovation Author

3. Performance of the KLCI KLCI index dropped only by 35% as compared to S&P (53%) and HSI (56%) during the crisis. KLCI index recovered well post crisis, hitting the pre-crisis price level in early 2010. KLCI index has been on an upward trend since its rebound in early 2009, ending at a higher price level than the HSI index. Overall, the KLCI index performed relatively well due to low external borrowings, low NPLs, the lack of major players, and the intervention of the government.

4. (1) 3 reasons to explain the lack of bearish run on the stock market The regulatory framework and instruments have kept the NPLs low. Malaysia learnt a good lesson from the Asian financial crisis to keep the external borrowings low. MYR is not a complete free float as before the AFC (2) Government intervention during the crisis Improve access to SME Establishment of SME Credit Bureau under the CGC Small Debt Resolution Scheme Micro Enterprise Fund BNM-driven SME Assistance Guarantee Scheme Introduction of Merdeka Savings Bond Restructuring the economy and improving its competitiveness Liberalise 27 services sub-sectors Removal of 30% Bumiputraperticipation quota in certain businesses Source: ISIS and UM Report, The Global Financial Crisis and the Malaysian Economy Nov. 2009 Deregulation of the Foreign Investment Committee guidelines

5. Great for the Malaysian Economy BUT What About ME???

6. What can me and you do? For most of us salaried workers, we want 3 basic things in life: • A roof over our heads • A car to get from Point A to B as public transport is not as connected as we want it to be • A good education for our kids BUT with rising inflation and our wages not rising in tandem, what are our options? Going to the stock market directly is not for the faint hearted Unit trust funds are a good way because you cannot timethe market What are the lessons you can learn from the big institutional investors? They stay invested all the time and they invest in different asset classes Dollar cost averaging is a good way to start and invest in different types of UTFs Property is a common investment vehicle but can be illiquid Investment time frame for each investment needs to be long term Cash is king but what happens if you don’t have enough of it?

7. What if I am an entrepreneur or a SME? The investment strategy that needs to be taken must take into account: • What kind of business and operational cash flows you have • You need to match your investment horizon accordingly • You need to determine what your investment risk tolerance is • If you have a lot of overseas exposure, you may want to consider hedging but foreign currency hedging is expensive and may be counter productive • Cash, money market and bond unit trust funds provide a tax benefit as the income derived from such funds are tax free • Equity might be too risky and not in line with your investment appetite • If however you are able to invest in equities, test your tolerance first, invest in Malaysian equities before venturing overseas as the dynamics and volatility may not be something you are able to tolerate • BUT investing locally too may have its fair share of risks as the Malaysian market is not a closed economy and it does take cues from global and regional markets.

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