Penang Properties News

With values across all asset types having diminished significantly, it may be wise to review one’s portfolio of investments and assess how they can free up cash (by liquidating some assets) to scoop up some good bargains which may provide healthier returns once recovery takes place. But this needs to be done with caution because it is hard to judge how much further asset values will drop, be it equities, properties or bonds.

“Ultimately, the whole idea is to free up cash and deploy it more efficiently. With fixed deposit rates at such low levels, money not put to better use seems wasted,” says CTLA Financial Planners Sdn Bhd managing director Mike Lee.

Indeed, investors are the best judge of what is good or bad for their portfolios. Lee says it may be an opportune time to rebalance investments, but it has to be done with caution since losses may be incurred in the near term.

“Investors may consider letting go of properties that are not performing, assuming they have a portfolio of properties. But they’ll have to really strategise how to do this because the property market has softened,” he says.

Investing in shares or unit trusts should also always be on the radar but the focus ought to be on fundamentals, more so now than ever. To do this, it is important to think forward and not the current situation as the picture may be slightly distorted if everything is based on current circumstances. “Every bust will be greeted by a boom. With that in mind, investors should scour for bargain opportunities that have great upside when the market recovers,” says an analyst.

So, the question is: Are there investment opportunities lurking around the corner for the financially sound and those privileged with stable jobs amid a looming recession?

No doubt times are bad and getting worst if recent economic indicators are anything to go by. But no one will argue that even in such times, there are investment opportunities. “You just need to look a lot harder,” says an analyst.

Having cash in hand during a crisis is always preferred. Similarly, settling one’s debt before making an investment is also a wise decision.

For those who have adequately addressed their liabilities, they may choose to take calculated risks in the equity markets or keep their cash in bonds, if they prefer to play safe.

The KL Composite Index is down 4.66% since the beginning of the year and while most equity research chartists will recommend “sell on strength” because the market has not bottomed out and the situation is “still fluid”, there may be a few gems out there.

Risk-averse investors can invest in government savings bonds although the returns may not be as good. The government has announced that RM5bil worth of three-year bonds with an annual return of 5% will be made available this year.

There are also a number of funds investors can invest in depending on their risk appetite, while properties are always a good bet for those who want to invest in something tangible.

Not too long ago, HwangDBS Vickers Research Sdn Bhd said it expects the average transacted prices to fall 10% this year to RM230,000 while the property sales volume is anticipated to shrink by 18% to 280,000 units. A more recent report by Kenanga Research says prices of luxury condominium units and serviced apartments may retrace to near 2006 price levels by the first half of 2010, based on the current downward momentum.

It adds that for the first two months this year, the average capital values could slide a further 20% to 21% due to the completion of 11,000 units over the next two years.

Could this be a signal for a potential buy?

Abacus Advisory Sdn Bhd chief executive officer Carol Yip says the logical answer is “yes” to investments if funds are available, provided all the debts have been taken care of.

However, she adds that investors will have to be extra vigilant about what they invest in because the overall climate for investment is riskier.

“I always believe in asset allocation depending on the type of investment and conditions,” Yip says.

By FINTAN NG of The Star Newspaper