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To contact the authors of this blog, please call telephones (679) 3342719, (679) 3544897 or e-mail

Monday, July 20, 2009

Tips for Investment

There are many tips on investment that one could consider before investing or during the time of investing in a particular investment instrument.

Here are some that I found on one blog, :
  1. “Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars”, quoted Warren Buffet.
  2. Look at the fundamentals of the company and check its previous track record.
  3. Find out the management of the company whether it is professionally run or not?
  4. What are the plans, prospects and expansions it is undertaking.
  5. Does the company have good will and brand image in the corporate world?
  6. Are there any related and unrelated diversifications, acquisitions or mergers etc?
  7. Closely observe the promoter holding and track record of its dividend, EPS, P/E ratio.
  8. Does the company have any other sister concern companies? Is the company financial sound or not?
  9. Look at both the fundamental analysis and technical analysis and check for its consistency and complementary.
  10. Read various business magazines, journals and newspaper before investing.
  11. From Mutual Fund Fact sheet find out the investment pattern and you can learn the percentage of the investment and the companies the Mutual Funds have invested.
  12. Pick up the scrips that have consistent growth and appreciation as well as giving handsome returns.
  13. Avoid penny stocks.
  14. Don’t overtrade as overtrading kills. Ultimately it is the broker who gets commissions against each transaction.
  15. Don’t speculate but invest.
  16. Never borrow and invest. Cut the cloth as per the coat.
  17. Treat volatility as your friend not as a foe.
  18. Always look at the margin of safety.
  19. Above all, read between the lines.

For investment and portfolio management advice in Fiji, call our office on (679) 3342719 or (679) 3544897 or email

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Friday, July 17, 2009

UK banks to disclose remuneration of top earners?

A recent study of UK banks has recommended that banks need to disclose information on the pay and bonuses of all their top earners, in addition to board members.

The Report also recommended that a bank's Remuneration Committee should extend its responsibility for pay policies to the entire firm rather just the board, particularly for staff members whose remuneration exceeds the median level remuneration of executive directors.

It also stated that the UK financial sector regulatory body, the Financial Services Authority (FSA), should have a bigger role in monitoring the corporate governance of the financial institutions, from hiring new directors to scrutinising pay and risk management policies.

In Fiji, only locally incorporated financial institutions are required to have in place boards. Branches of overseas incorporated financial institutions do not have boards in Fiji, except for management committees that oversee the Fiji operations.

Whilst all financial institutions publish Key Disclosure Statements which provide audited information on their Balance Sheets, Income and Expenditure Statements and selected other prudential ratios, no specific information on executive remuneration is provided.

Should this be required would be a question for the authorities to answer. However, given that fees and charges of financial institutions are a topic of interest in Fiji, when a bank does pay extraordinary levels of remuneration would have an impact of the level of charges which are then passed onto a financial institution's customers.

Financial institutions that require a review of their risk management framework can contact our company on telephone (679) 3342719, (679) 3544897 or email We also offer services in the areas of :
  • strategic and corporate planning,
  • capacity assessments,
  • business continuity planning,
  • investment advice and portfolio management and on
  • any financial institutions or financial sector issues.

Read below the article from The Telegraph.

"Banks urged by Walker Report to publish pay of all top earners, by Louise Armitstead

Sir David Walker's recommendations that British banks should publish the pay and bonuses of all their top earners, not just board members, has been welcomed by the Gordon Brown.

His far-reaching review on corporate governance in the British financial sector, which was commissioned by the Prime Minister in February, recommends a public and regulatory scrutiny of pay practices across financial institutions in order to curb the excesses that brought the financial system to close to collapse.

The Prime Minister told MPs on the House of Commons Liaison Committee that he welcomed Sir David's call for tougher non-executive directors to crack down on boardroom excesses.

Mr Brown told MPs he remained "angry" over the inflated pay and reckless speculation indulged in by some bankers and said Sir David made "some very clear recommendations" which he believed would be adopted.

"The general recommendation that the role of chairman and the role of executive directors and non-executive directors in particular in banks is going to change. It's one that we support wholeheartedly, " he said. "You cannot have non-executive directors, as we've seen at some of the financial institutions, who do not understand the risks their company is taking."

"There have been excesses, it is seen by the public as irresponsible and unfair, we have got to take the action," he said, as he defended his response to the banking crisis and insisted Britain had set a model for the rest of the world to follow.

Sir David's report recommends an overhaul of City pay practices as well as a radical shake-up of boardroom practices and conventions.

The report is broken down into 39 Recommendations of which 12 are dedicated to pay.

He argued that the remit of the Remuneration Committee at banks should be extended to take responsibility for pay policies of the whole firm rather just the board, in particular the staff whose pay exceeds the median level of the executive directors.

The pay levels of these staff, of which he said he found a “surprising number”, should be published in bands rather than by name.

All pay should be heavily linked to performance and the payout of bonuses for top earners should be staggered over five years.

In addition, the chairman of the remuneration committee should automatically stand for re-election if more than 25pc of investors vote against his report.

Sir David said: “The recommendations on remuneration are as tough or tougher than anything to be found elsewhere in the world. An important and urgent challenge is to promote adoption of similar approaches internationally.”

His recommendations focus particularly on boosting the responsibility and accountability of board members.

The report argues for the creation of a new role of Chief Risk Officer, answerable only to the board, as well as a new Risk Committee.

With strong references to Royal Bank of Scotland’s ill-fated acquisition of ABN Amro, Sir David argues that the Risk Committee should be particularly responsible for challenging strategic transactions.

Sir David also envisages a far more robust chairman at the head of financial institutions, responsible for challenging the work and plans of the chief executive and the rest of the board.

The chairman will be subject to new levels of scrutiny from regulators and from shareholders including annual re-election.

In an interview with the Daily Telegraph, Sir David said: “One very experienced chairman said to me, “But this will make chairmen a lightning conductor for all that’s perceived to be wrong.”
My answer to that is: absolutely right.”

The report also demands a radical shake-up of non-executive directors. He included recommendations that directors should spend more time doing their jobs – between 30 and 36 days a year – and have more professional and structured support including regular “business awareness sessions.”

In addition, the FSA should be actively involved in both the appointment and ongoing suitability of directors.

The Walker report also recommends an overhaul of the role of institutional shareholders whose role as “absentee landlords’’ is highlighted as a factor in the failure to curtail excesses in the banking system.

Investors should have to engage with companies more actively and, to make sure they do, they should sign up to principles with which they must either “comply or explain” why not. The new shareholder Code should be monitored by the Financial Reporting Council. In addition, voting records should be published for scrutiny.

The FSA will have a far greater role in monitoring the corporate governance of the financial institutions, from hiring new directors to scrutinising pay and risk management policies.

Although Sir David’s remit was originally just to recommend changes in the corporate governance of banks but this it was expanded to financial institutions. He said the principles could almost all be adopted by other companies, with the exception of the ones regarding risk which are specifically financial.

Sir David, a senior adviser to Morgan Stanley, is a respected City and Westminster veteran. Through a career that has spanned nearly half a century he has held roles including a directorship of the Bank of England in 1981 and deputy chairman of Lloyds, the banking group.

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Wednesday, July 15, 2009

Colonial National Bank reduces variable lending rates

In its latest interest rates published on 14 July 2009, Colonial National Bank has reduced its variable lending rates for residential home loans and investment property loans by 0.25% to 9.25%, from 9.50%.

There has been no changes to the bank's deposit rates.

This follows the Reserve Bank of Fiji's recent directive for banks to reduce their lending rates to the levels they were at end December 2008 and for each bank's interest spreads to be not more than 4% after a certain time period given to them.

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Colonial National Bank Interest Rates (Updated 14.7.09)

Schedule of interest rates released by Colonial National Bank are as follows:
  • Business Banking Base Rate – 9.20%;
  • Residential Property Loan : Variable Rate – 9.25%, 1 Year Fixed Rate – 7.50%;
  • Investment Loan : Variable Rate – 9.25%, 1 Year Fixed Rate – 7.50%;
  • Retail Term Deposits: 9 months - 3.00%, 1 year - 3.50%, 1.5 Years - 3.75%, 2 Years - 4.00%, 3 Years - 4.50%.

Interest rates are on a per annum basis and may be varied by the bank without prior notice.

Individuals and groups that need investment advice and investment portfolio management services, can use our company, Gilbert & Samuels Company Limited.

We also do strategic planning, business continuity planning and capacity assessment consultancies. Our contacts are: telephones (679) 3342719, (679) 3544897 or e-mail:

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Tuesday, July 14, 2009

ANZ to reduce interest rates further

ANZ will reduce interest rates further on 29 July 2009.

The reduction in interest rates come about as a result of the Reserve Bank of Fiji's policy for banks to reduce their lending rates to the levels they were as at end December 2008 and for interest spreads to be not more than 4%.

ANZ has also announced that the reduction in interest rates comes together with a raising of the risk preferences that the bank have. The bank has said that it will be more comfortable now with lower risk loans and customers that it would otherwise have been.

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Moving on from a global crisis: business as usual or an inflection point?

Read below comments by the Director-General of the World Bank's Independent Evaluation Group, Dr Vinod Thomas on what the global crisis would mean for countries.

Dr Thomas does note that countries that are open were more vulnerable to the effect of the crisis. He also added that for the financial sector, deregulation (which had been the trend before the crisis) coupled with sensible regulatory policies that are targeted at containing excessive risk taking at the "expense of other people's money" would be advisable for countries.

The article follows.

"Speaking at the Institute of Policy Studies in Singapore on June 19, 2009, Dr. Vinod Thomas, Director-General and Senior Vice-President of the World Bank’s Independent Evaluation Group (IEG), described the current global economic turmoil as a triple crisis comprising the global economic downturn; rising poverty; and climate change. Thomas said that this crisis provides a moment to reflect on the past and actions for the future.

“One can think of this crisis as one that can be solved and we can then move on. We can also think of this as an inflection point where some deep uncertainties about how the ways in which countries have developed and been growing over the last 10-15 years are just not going to happen anymore and that it’s not sustainable.”

The end of globalization?

With those countries most connected to the global economy having been worst hit by the crisis, questions have arisen about whether high levels of globalization will spell doom moving forward. “This crisis adds a certain degree of empirical evidence to an observation that the more you are connected, the more a crisis such as this affects you.”

Thomas also notes that trade has been a mechanism for transmitting the recession to so many countries—Singapore included—demonstrating that there really has been no decoupling. “Asia cannot, as people had imagined, go a separate way from the rest of the world economy, even if the crisis was initiated by the OECD countries.”

Trade and openness remain the policy prescriptions, however; as past experience shows that it is these same globalised economies which have stronger recovery of GDP growth. “In a crisis such as this, those with greater trade shares are hit harder. That does not mean that being connected to the rest of the world is a bad idea, because as the recovery takes place and opportunities show up, those that are more connected to the global economy, with greater shares of trade and investment in their GDP, benefit much more.”

Warning against the trend of rising protectionism, Thomas said that “coming out of the crisis, if the recovery means greater restrictions on trade, then the future growth trajectory will definitely look different from the past. The past growth rates—the honeymoon really—lasted as long as it did because of the increasing openness of the global economy.”

Crisis response

In addition to trade, policy responses have also focused on financial reform, fiscal spending, poverty alleviation, and the environment.

Discussing reforms needed in the financial sector, Thomas noted that “if regulation had a bad name in the past, today it is clear that deregulation- much needed in many economies- needs to be coupled with sensible regulatory policies.”

Thomas also warned against abandoning new or highly innovative financial instruments because of the benefits that they provide: “You need to keep in mind that the intermediation, the leveraging, and the access to credit for large numbers of people can be augmented by many of these instruments… The lesson though is that those need to be matched by a regulatory framework that avoids extraordinary risk-taking at the expense of other people’s money.”

As countries worldwide put in place unprecedented fiscal expansion packages, Thomas noted that we should put a premium on quality over quantity. “You will see huge variations two years from now, with the same dollar producing widely different impacts in terms of the growth recovery, and that will differentiate those who come out of this recovery well, compared to those who don’t.”

The crisis of rising poverty- 150 million more people in poverty in 2008, and 50 million more set to fall below the poverty line in 2009- with its risk of social instability and loss of welfare, is closely linked to employment. The recovery in employment is expected to be slower than economic recovery as employers wait to see if the recovery is real; and as efficiency gains may result in a shift in employment patterns.

While the environment may have been an issue placed on the backburner in previous crises, Thomas said that that is no longer an option, and that climate change means that “the kind of growth that we have gotten used to isn’t feasible going forward. The numbers that are coming out on climate change are just absolutely frightening and if even a part of that is true, then investing in a different way would seem to be a high priority…In 20-30 years, with business as usual, we may be living in an ice-free world. If you think about it, that should be enough to spur action, but that does not spur action anywhere close to what you would like.”

This does not mean, however, that countries should be expected to reduce carbon emissions while they are still developing. “No country has developed rapidly without increasing their carbon footprint. So we have to be realistic. That is the only way development has taken place.”

There is, however, huge room for improvement in the carbon efficiency of development, said Thomas. “A sevenfold variation exists in how carbon intensive you need to be for any given income…so, yes, growth goes with a greater carbon footprint, but, no, it’s not automatic or preordained. There’s huge room for adjusting this as you go forward.”

Uncertainty is at an all time high, and Thomas said that there is a sense that the past is not going to be the best predictor of the future this time around; that the incremental changes that we are comfortable with may miss out on the big picture, especially in terms of risks and opportunities. In this context, Thomas emphasized the importance of flexibility in crisis responses.

“Action waits until there is a crisis”

This crisis does provide for an opportunity to make necessary changes. “We could be at an inflection point as opposed to returning to business as normal. This crisis could be turned into an opportunity to take action on three fronts: economic, social, and climate.”

Citing the examples of fiscal reform in Korea, Thailand, China and Brazil, Thomas said that all of these could be linked to a crisis; and that there are many fronts—human capital, greater competitiveness, social inclusion, infrastructure, public sector governance, new forms of green investment—on which this crisis can spur action."

To read more, click on this link.

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World Bank Group Significantly Boosts Support to East Asia and Pacific

The World Bank has announced last week that it has adjusted its regional strategy and massively increased its financial and technical support for the region, to address the impacts of the global financial crisis.

Whether Fiji qualifies for this assistance, we are not sure but Government officials could look into it. There will certainly be conditions to be met by the Fiji Government should they wish to access any assistance.

At this stage as well, no detailed study has been done as to the extent that the global crisis has affected the Fiji economy, aside from the effect of the domestic political crisis on the country itself. This would really be an interesting study to do.

Read the World Bank Press release below.


"The World Bank Group responded quickly to the impacts of the global financial crisis on the countries of the East Asia and Pacific region in fiscal year 2009 with over US$9 billion in financing for development. This represents a significant increase on the amount of financing of the previous year. The World Bank Group also ramped up its technical assistance to help governments in the region address the social and economic impacts of the crisis.

“Although growth in East Asia and Pacific still compares favorably with that of other regions, the poor and the vulnerable have been deeply affected by the global economic crisis,” said World Bank Group Vice President for the East Asia and Pacific Region, James W. Adams “In this region alone, more than 10 million people who would otherwise have moved out of poverty are expected to remain below the poverty line. We have adjusted our regional strategy and increased resources for the region to help countries weather the economic crisis and ensure priority programs remain on track. This includes investments in infrastructure, education, health, agriculture, and social safety nets.”

Many countries in the region were just beginning to recover from the food and fuel crisis of 2008 when the global financial crisis hit. The World Bank Group responded by increasing its support --in loans, grants, equity investments and guarantees-- to help countries and private-sector firms deal with the devastating effects of the global financial meltdown.

Commitments from the International Bank for Reconstruction and Development (IBRD)—which provides financing, risk management products, and other financial services to middle-income countries— increased in FY09 to $6.9 billion, up from $2.7 billion the previous year. The International Development Association (IDA), which provides interest-free credits and grants to the lowest-income countries, provided $1.2 billion in support in FY09.

As the largest provider of multilateral financing for the private sector in the developing world, the Bank Group’s private sector arm –the International Finance Corporation (IFC)— also increased its support to help boost private sector-led recovery. In FY2009, preliminary results indicate that IFC generated $1.1 billion of new business in 45 projects, seven of these are located in conflict-affected countries and regions, while one in every five projects has a climate change component.

Karin Finkelston, IFC’s Director for East Asia and Pacific, said “To help the region navigate the financial crisis, we focused our efforts on the poorest and most vulnerable countries. We are pleased that we were able to increase our financial commitments to IDA countries to nearly $400 million from around $200 million in 2008.”

The Multilateral Investment Guarantee Agency (MIGA) supported infrastructure development in south-west China, where fast urbanization and industrial growth have led to severe wastewater issues. The agency issued guarantees of $75.3 million to support two water projects, which will promote improved water quality as well as better environmental practices.

“As the leading international institution promoting foreign direct investment (FDI) in emerging and transition economies, MIGA can help investors mitigate risks in these uncertain times and play an important role in helping countries attract FDI,” says MIGA’s Executive Vice President Izumi Kobayashi. “MIGA can act as a stabilizing influence in the market.”

The Bank Group’s support in FY2009 in the East Asia and Pacific region by sector is as follows :
  • Agriculture and Rural Development, USD520 million;
  • Education, USD797 million;
  • Energy and Mining, USD526 million;
  • Economic Policy, USD2,792 million;
  • Financial and Private Sector Development, USD160 million;
  • Public Sector Governance, USD460 million;
  • Social Development, USD322 million;
  • Social Protection, USD215 million;
  • Transport, USD855 million.

Read more on this link.

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How Developing Countries are coping with the Global Crisis : World Bank

Read below an excerpt from a World Bank and IBRD March 2009 Report on "How Developing Countries are coping with the Global Crisis". Fiji has a double issue to contend with : both the impact of the global crisis and its own domestic crisis.

"The sharp global contraction is affecting both advanced and developing countries. Global industrial production declined by 20 percent in the fourth quarter of 2008, as high income and developing country activity plunged by 23 and 15 percent, respectively. Particularly hard hit have been countries in Eastern Europe and Central Asia and producers of capital goods. Global GDP will decline this year for the first time since World War II, with growth at least 5 percentage points below potential. World trade is on track to register its largest decline in 80 years, with the sharpest losses in East Asia, reflecting a combination of falling volumes, price declines, and currency depreciation.

Financial conditions facing developing countries have deteriorated sharply. The World Bank estimates that developing countries face a financing gap of $270-$700 billion depending on the severity of the economic and financial crisis and the strength and timing of policy responses. Even at the lower end of this range, existing resources of international financial institutions would appear inadequate to meet financing needs this year. Should a more pessimistic outcome occur, unmet financing needs will be enormous.

The financial crisis will have long-term implications for developing countries. Sovereign debt issuance by high-income countries is set to increase dramatically, crowding out many developing country issuers (private and public). Many institutions that have provided financial intermediation for developing country clients have virtually disappeared. Developing countries are likely to face higher spreads, and lower capital flows than over the past 7-8 years, leading to weaker investment and slower growth in the future.

The challenge facing developing countries is how, with fewer resources, to pursue
policies that can protect or expand critical expenditures, including on social safety nets, human development and critical infrastructure
. This will be especially difficult for LICs: the slowdown in growth will likely deepen the degree of deprivation of the existing poor, since large numbers of people are clustered just above the poverty line and particularly vulnerable to economic volatility and temporary slowdowns. Many of the most affected LICs are heavily dependent on official concessional flows, which will be under pressure in donor countries facing their own fiscal challenges.

There is a therefore a strong need to expand assistance to LICs to protect critical
expenditures and prevent an erosion of progress in reducing poverty
. Attention must be directed to protecting the poor through targeted social spending, including expanded safety nets, and to maintaining and expanding the infrastructure assets that will be critical to restoring growth following the crisis. A concerted effort is also needed to support the private sector, especially SMEs, which are essential to a resumption of growth and job creation in developing countries. Creation of a global Vulnerability Fund, financed with a modest portion of advanced country stimulus packages, could go a long way to providing the resources necessary for these efforts."

You can get more of this report on this link.

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Wednesday, July 01, 2009

Westpac Interest Rates (updated 1.7.09)

Schedule of interest rates released by Westpac Fiji are as follows:
  • Business Lending Rate (effective 22.6.09) - 9.99%;
  • Residential Property Loan (effective 22.6.09) : Variable Rate – 9.00%, 1 year Fixed Rate – 8.50%;
  • Investment Loan (effective 22.6.09) : Variable Rate - 9.50%, 1 year Fixed Rate - 8.50%;
  • Retail Term Deposits (effective 30.3.09) : 6 to less than 9 months - 2.25%, 9 months to less than 1 year - 3.00%, 1 year to less than 1.5 Years - 3.50%, 1.5 years to less than 2 Years - 3.75%, 2 years to less than 3 Years - 4.00%.

Interest rates are on a per annum basis and may be varied by the bank without prior notice.

Individuals and groups that need investment advice, or advice with regard to capital markets issues, can use our company, Gilbert & Samuels Company Limited. We also do strategic planning, business continuity planning and capacity assessment consultancies. Also contact us if you require investment portfolio management services.

Our contacts are: telephones (679) 3342719, (679) 3544897 or e-mail:

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