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WEDNESDAY, NOVEMBER 9, 2011WEDNESDAY, NOVEMBER 9, 2011

CORPORATE MALAYSIACORPORATE MALAYSIA

ThE MAlAYSiAN RESERVEThE MAlAYSiAN RESERVE

SP Setia launches exclusiveresidential project in AustraliaMinisterof Housing and Lo-cal government Datuk ChorChee Heung officially launchedSP Setia Bhd Group's multi-mil-lion residential project, FultonLane in Melbourne on Monday.

It was witnessed by about 200guests and prominent Malay-sian government officials, in-cluding Consul General DrMohd Rameez Yahaya.

Located between Franklinand A'Beckett streets, the 4,300sq m site was bought last yearand SP Setia moved quickly toestablish Fulton Lane as a pre-mium address in the CBD (cen-tral business district).

Designed by Fender Katsalid-

is, headed up by award-win-ning architect and current pres-ident of the Architects Instituteof Australia, Karl Fender, theA$470 million (RM1.52 billion)Fulton Lane comprises two tow-ers made up of 700 apartmentsand is expected to complete in2014.

A short walk from iconicQueen Victoria Market andclose to RMIT, La Trobe Univer-sity and Melbourne University,Fulton Lane presents an attrac-tive location for youngsters pur-suing tertiary education.

SP Setia president and chiefexecutive officer Tan Sri LiewKee Sin said SP Setia came to

Australia to invest as much asto learn.

The group has close workingrelations with the Lend LeaseGroup of Australia through itsSetia City Mall joint-ventureproject in Malaysia.

Liew said the partnership hasexposed and attracted SP Setiato "the very professional andhighly transparent Australianworking and business culture".

Melbourne is SP Setia's thirdoverseas venture after Vietnamand Singapore. Liew said it wasa logical choice as there wereclose to 30,000 Malaysian-bornpeople living in Melbourne. Bernama

Asian bonds are luring investors

by FARAH SAAD

in resPOnse to the worsen-ing economic conditions in Eu-rope and t he US, investors havebecome unwilling to accept thevolatility usually associatedwith mutual funds, and areturning towards Asia for a so-lution in the form of absolutereturn funds.

These investors have beenseeking alternatives to falling

markets, with absolute returnfunds garnering serious assetsas a result of an increased fo-cus on capital preservation,said Schroder InvestmentManagement Ltd head of Asianfixed income Rajeev De Melloin his report.

Absolute return funds offerinvestors steady and modestreturns over a given time peri-od regardless of the marketconditions, and Asian bondsare starting to receive increas-ing levels of attention.

"For a start, if you look at thefiscal position of countries inAsia, it is far stronger thanthose of developed markets,with far lower debt to gross do-

mestic product (GDP) ratios. Atthe same time, the GDP growthforecast for the Asia-Pacific re-gion far outstrips those of theeurozone, US, Japan and even

Latin America," said De Mello.A head of research with a lo-

cal research house agrees withDe Mello on the attraction fac-tor of Asian absolute returnfunds.

"Asia GDP remains strongand resilient despite slowdown

in the US and EU (EuropeanUnion)," he said.In spite of Asian markets'

notorious volatility, the Asianbond universe is composed of

highly rated countries such asSingapore and Hong Kong,which are rated AAA by Stand-ard and Poor's (S&P).

"At the same time, foreigncurrency reserves held bycountries in the Asia region,excluding Japan, are around

the US$5 trillion (RM15.3 tril-lion) mark, providing a consid-erable cushion to foreign inves-tors," said De Mello.

What makes Asian bonds

even more attractive is how lit-tle has been allocated to thesector in relation to its in-creased size and influence inglobal markets.

"The aim is to search forbonds that have very low cor-relation to Europe," said Bond

Pricing Agency Malaysia SdnBhd chief executive officerMeor Amri Meor Ayob.

Asian bonds only accountfor 2.4% of the main global

bond index, despite having 8%of the world's outstanding do-mestic debt securities, said DeMello.

Although past performanceis not indicative of future re-turns, data shows that Asianlocal currency bonds have

shown a better risk return ratioover 10 years than other majorasset classes, including UStreasuries, Asian US dollarbonds and European equities.

"The Asian bond yield is

generally higher than the USbond given our relatively high-er interest rate. We do not havesuch high bond default and re-structuring risks. Therefore,Asian bonds have relativelyhigh risk return trade off," saidthe analyst.

Asian local currency bondsalso provide the additional"kicker" of currency apprecia-tion, said De Mello.

"For absolute return manag-ers, this means a wealth of op-portunities for currency trades;playing one currency againstanother and hedging variousexposures while having thestability of bond returns un-derneath," he said.

From a corporate angle, Asiacompanies tend to not be sad-dled with too much debt andhave decent levels of cash, fol-lowing lessons learned in theAsian financial crisis a decadeago, he said.

Overall, the outlook forAsian bonds is "promising".

"With slower growth aheadand peaking inflation, expecta-tions for interest hikes (whichwould be negative for bonds)in Asia have been reduced,while currencies look under-valued.

"Furthermore, the recentmarket turbulence has seencredit markets suffering andhas brought about some inter-

esting opportunities as valuehas emerged in certain areas ofthe market, such as govern-ment-backed investment gradecredit," said De Mello.

Malaysia is now ready to join the league of economiesthat have made eco-businesssurvivable through govern-ment's direct promotion of eco-products in the country, Energy,Green Technology and WaterMinister Datuk Seri Peter Chinsaid yesterday.

He said his ministry in col-laboration with the FinanceMinistry is developing a set ofgreen procurement guidelinesto serve as a reference for sup-pliers and purchasers on envi-ronmental-friendly productsand services.

"We will speed up the criteriadocuments to increase the listof eco-products or services," he

said when opening the CurtinUniversity Science and Engi-neering International Confer-ence.

Chin said his ministry

would also provide technicaland advisory services to raiselocal entrepreneurs' compli-ance on eco-labelling criteria,increasing programmes on ca-pacity-building and awarenesson the importance of environ-mentally friendly productsand services.

"Currently, we are finalisingthe implementation mechanismfor the national eco-labellingprogramme," he said.

Speaking to reporters later,Chin said Standards and Indus-trial Research Institute of Ma-laysia Bhd would be i nvolved inworking out the eco-labellingcriteria and standardisation ofeco-products.

While it would take sometime before eco-labelling re-quirements could be enforced,he said that it would be cover-ing both the domestically-pro-

duced and imported products.On the conference themed

"Innovative Green Technologyfor Sustainable Development",Chin said that it is relevant toaddress the escalating energyneeds worldwide.

"Malaysia is no exception,with its fast-growing industrialand commercial sectors cater-ing to the needs of its increasingpopulation and contributing toits economic growth," he said.

Chin said the conferenceaugured well with the plan tomake Miri as the northern edu-cation hub in Sarawak.

"It provides an excellent fo-rum to share research and de-velopment findings and initiate

further collaborative researches(among participating research-ers)," added Chin, who is alsoMiri member of parliament. Bernama

Malaysia all set to join league ofeconomies promoting eco-products

Asian absolute returnfunds becoming mainattraction as investorsseek new havens

for their money

InnovatingMalaysia

Learn how the National Biomass Strategy

can turn oil palm biomass into things you know.

November 21st to 23rd @ BioMalaysia 2011

www.innovation.my

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De Mello says that the Asian bond universe is composed of highly rated countries such as Singapore and Hong Kong, which are rated AAA by S&P

Bloomberg