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Newsletter

2007 1st Edition (Other Editions)

(A) Investment strategy over inflation

In the past few months, central banks have been raising short term interest-rates in fighting inflation. The current conviction tends to favour deflation, which is a major shift from the runaway-inflationary fears present not so long ago. In our view, it is not true as we are still living in a highly inflationary environment. Although the rate of inflation in the US has dropped since 2002, bank credit grows rapidly. So, there is no lack of money and credit today. Money-supply growth has contracted somewhat due to rising short-term interest rates, but this has been compensated by a surge in bank credit, thereby making the monetary tightening ineffective.

Monetary inflation is now a global phenomenon, and undoubtedly the purchasing power of your savings will be dispossessed. Despite monetary tightening, the supply of money grew rapidly over the past year. Consequentially the response of the central banks will accelerate the supply of money and credit to unprecedented levels. We suspect that the next bout of inflation is not far away, the current trough in asset-prices will end when it occurs.

As investors living in an endless supply of money, we must not underestimate the inflationary powers of the central banks. A good strategy is to use the current weakness in asset-prices and take positions in commodities and the emerging stock-markets. Over the coming decade, we expect this trend to accelerate, which will probably cause the prices of commodities to rise benefiting the resource-rich economies in the emerging world.

(B) MPF preserved accounts and planning for a comfortable retirement

As the number of MPF preserved accounts grows, some of our customers already have had more than one MPF account. Consolidation of your assets for easy management and maintenance is very important. So, if your want a simple, flexible and comprehensive program for your MPF preserved accounts, please contact us for more information

Besides, retirement should be the happiest time of your life, spending quality time with family and friends, traveling and enjoying life to the full. The average life expectancy in Hong Kong is rising, we must fund a retirement that could last 20, 30 years or more. MPF accounts for only a small portion of our retirement need. To set you on the right track, an extra saving plan that supplements your existing MPF contribution can help you achieve a comfortable retirement