Khamis, 3 Oktober 2013

The Star Online: Business

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The Star Online: Business

Gold, the new way to make money in Malaysia


"All that glitters is not gold" goes the well-known adage, but the glitter of gold never fails to attract. Some like to adorn themselves with it and some hoard it in the form of bullions in their vaults, while there are yet others who like to trade in gold futures.

Indians from India are said to be the biggest hoarders of gold, as about 20,000 tonnes are in private hands. India remains the biggest importer of gold from Malaysia.

Last year, Malaysia exported RM7.1bil worth of finished jewellery, with Dubai as the biggest buyer. And up to July this year, RM4.6bil worth of finished jewellery has been exported. The figure could double for the full year.

Where gold bullions are concerned, RM9bil was exported in non-monetary form last year, and this year, it could scale up to RM12bil. Gold bullions are used to make jewellery and also function as an investment tool.

For an investor who wants to diversify his portfolio from fixed deposits, stocks and bonds, gold is an option. It is seen as a safe haven in volatile situations.

Hence, it comes as no surprise that there are many investment trading schemes involving gold in the country. However, some have fallen foul of the authorities, as they are seen to be illegal deposit-taking companies.

One such case involves gold trading company Genneva Malaysia Sdn Bhd, whose directors have been slapped with a record number of 926 charges for money-laundering and illegal deposit-taking charges, among others. A total of RM5.5bil in deposits had been received by Genneva from 35,000 depositors. This gives us a glimpse of the demand for gold in the country.

This is why come Monday, gold futures will, for the first time, be traded on Bursa Malaysia. It is a historic moment for Bursa, but Malaysia is really a latecomer in gold futures trading. It should have been introduced a long time ago.

Gold futures and options are trading across several markets, including the United States, Britain, Singapore, Thailand, Taiwan and Hong Kong. Gold for immediate delivery was being traded at about US$1,313.85 (RM4,198.41) an ounce as of yesterday.

To get retail investors interested in gold futures, Bursa is offering small-sized contracts of 100 grams. However, traders who want to hedge can trade in multiple lots. One just needs RM1,000 to be able to start trading in gold futures.

As the ringgit-denominated contracts are cash-settled, there would be no physical deliveries. So, if you are worried about stocking up gold bars in your vault, diffuse that fear, as this is all about paper-shuffling.

The gold futures contracts allow market participants exposure to international gold price movements at a lower entry cost, and you can go short and long when prices go up and down. To get started, open a gold futures account with any one of the 19 registered futures brokers with Bursa. Brokers would want some form of collateral as in all derivatives and stocks, and there is a transaction cost for every transaction. The minimum price fluctuation for a gold futures contract is five sen per gram or RM5 per tick.

While this may be one way of diversifying your investment portfolio, the key to futures trading is your investment objective and risk appetite – essentially money-management skills. What this means is that you have to set limits for your gains and losses, stick to it and not let greed overcome you.

A futures broker with 17 years of experience says that "futures trading is easy to play, but it requires a strong discipline in money management". Rule No. 1, he says, is money-management skills, while Rule No. 2 is to remember Rule No 1. If you do this, you can make money.

Gold has remained the hottest topic since the 1900s and its glitter has not faded. Bursa's launch of its gold futures is the first step towards trading in precious metals, as it continues to add depth to the market. Next on the list would be gold options and silver futures, but whatever it does, it has to move faster.

Business editor (news) B K Sidhu says gold may be hot, but her nasi kandar today will be hotter.

Gold prices seen to stabilise this year


KUALA LUMPUR: Gold prices are likely to stabilise and trade between US$1,250 (RM3,875) and US$1,400 (RM4,340) this year after a volative period which saw the commodity dropping 22% on a year-to-date basis, said MKS Precious Metals Sdn Bhd country manager Joseph Ng.

On recent trends, Bursa Malaysia Derivatives Bhd senior executive vice-president, product and market development, Jeffrey Tan Seng Hui said there had been a steady flow of physical gold from institutional holders to the retail public.

"The biggest importer is India, where the public is estimated to hold more than 20,000 tonnes in private hoards. Also, European or American retail buyers tend to purchase when prices are rising, while Asian buyers' interest increases when prices are falling," he said.

Ng and Tan said this after the launch of Bursa Gold Futures (BGF) contract yesterday.

At gold's current price of US$1,308.35 (RM4,055), it has seen a spike from its 34-month low of US$1,200.65 (RM3,722) in June 26. Gold price was at US$1,673.78 (RM5,189) in January this year.

Meanwhile, Malaysia's first precious metal futures contract would begin trading on Bursa Malaysia from Monday, targeted mainly at domestic retail investors, said Bursa Malaysia Derivatives chief executive officer Chong Kim Seng.

The BGF contract will be available to all market participants, particularly domestic retail investors, to trade gold on the derivatives exchange of Bursa Malaysia. It will be traded under the code "FGLD".

The ringgit-denominated contract would be traded in small sizes of 100 grams, enabling investors to trade in small quantities, thus making each transaction affordable to all, whether professional traders or the public at large, said Bursa Malaysia in a statement.

Gold jewellers, manufacturers and stockists are anticipated to be active users of the BGF contract to hedge their gold inventory risks and their forward gold purchases.

"The advantages of BGF is that it is marginable to about 8% of the contract value, and participants can both long and short this instrument. You would be trading under a transparent and regulated environment and BGF would be traded only through Bursa's licences and regulated futures brokers," said Tan.

Chong said the BGF contract would be cash-settled based upon the London AM Fix Price in US dollars. "This provides confidence in price transparency, making it as close as possible to the true price of gold," he said.

Samsung Electronics record Q3 guidance beats analyst estimates


SEOUL: Samsung Electronics Co Ltd estimated its July-September earnings rose 25 percent to a record $9.4 billion as a strong recovery in memory chip prices helped counter a slowdown in the South Korean company's smartphone business.

The maker of the Galaxy S4 said its third-quarter operating profit likely increased to 10.1 trillion won ($9.4 billion). The guidance, released ahead of full quarterly results due out by Oct. 25, was better than the average forecast of 9.96 trillion won in a poll of 34 analysts by Thomson Reuters I/B/E/S.

The South Korean firm estimated its third-quarter sales rose to 59 trillion won, versus a market forecast of 60 trillion won.

Samsung, which has reported record earnings every quarter since 2012 except the first three months of 2013, is expected to post another round of record earnings in the current quarter as chip prices extend their gains.

The global memory chip market has rallied since late 2012 due to a supply crunch caused by years of cautious investment to support prices, and conversion of factory capacity to produce more profitable chips used in smartphones and tablets.

The semiconductor market further tightened after a fire in early September at a China plant owned by the world's No.2 memory chipmaker SK Hynix.

"The semiconductor and mobile divisions may have performed better than expected in the third quarter, helping Samsung post better-than-expected earnings," said Choi Do-yeon, an analyst at Kyobo Securities.

"We expect earnings to improve to 10.7 trillion won in the current quarter, as computer memory chip prices are rising thanks to the fire at the Hynix plant."

Samsung's mobile devices business, which accounts for around two-thirds of the company's total profit, is struggling with weakening growth as the high-end segment of the smartphone market saturates, pushing sales of its flagship Galaxy S4 lower.

Analysts estimate S4 sales dropped to around 16 million sets in the third quarter from some 20 million in the two months following the smartphone's late April launch.

Profits at the mobile division may face further pressure in the current quarter as the company increases marketing expenses in the run-up to the year-end holiday shopping season, analysts say. - Reuters


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