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Phuket Business: Now is the time to structure your financial investments

Legacy Phuket Gazette

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Phuket Business: Now is the time to structure your financial investments | The Thaiger
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PHUKET: Now that 2012 is in full swing and no doubt many of the New Year’s resolutions have been thrown out of the window, it’s time to get a hold of the purse strings and have a set plan for the forthcoming year.

I have already given my views on what I believe we can expect from the year ahead. The financial rollercoaster ride is certain to continue for the next 12 months, so what would be the best way to survive the turbulence?

One thing that recently seems to have become a lot more popular is the rise of an investment called a structured note. So what is a structured note and what are the positives and also the negatives of this?

Firstly, let me explain what a structured note is.

The concept of a structured note is that in times of volatile markets it will enable you to benefit from good stock market performance while at the same time protecting you against bad market performance. In most cases a selection of stocks will be chosen. This tends to be in specific geographical areas or industries. Each structured note is likely to have an investment time frame from 12 months to 5 years and will have an initial valuation date and a final valuation date.

That’s the easy bit explained. Now the note will provide a pre-determined level of capital protection. In most cases this tends to be 50%. During the life of the note, the investor receives interest on a quarterly basis. What this means is that should none of the stocks selected fall by 50 per cent, the note will pay the interest. Again, this is valued on a quarterly basis.

Structured notes also have the ability to be autocalled. This normally means that should all the stocks selected be above their initial 100% level on the quarterly valuation date, the note will “autocall” and a full return of capital is given plus any interest that has been earned. Sound good?

Don’t get me wrong; as well as good points there are downsides to this and I advise anyone considering investing in one of these notes to do their research or seek professional advice.

So what are the disadvantages?

Well, a structured note is provided by an investment bank, so do your homework on the bank that is providing the note or the capital protection of the note, as we know banks have not had the easiest of rides over the last few years.

Due to structured notes having fixed terms they tend not to be very liquid, so if markets are falling dramatically, selling out of these can be quite hard.

The notes having a maximum return, in rapidly rising markets your growth can also be limited and stock markets may return more than the interest the note provides.

Also, be aware that should any of the underlying stocks within the note fall by more than 50%, on the final valuation day you will only receive the performance of the worst performing stock no matter how well any of the other stocks have performed.

So are they a good thing or a bad thing?

Well, this type of structured investment certainly has its good points and also its bad points. As with any investment, these should be held as part of a larger portfolio and I wouldn’t advise putting all your eggs in one basket.

As markets are volatile, the concept of the note is generally good. However you need to take into account the type of stocks the notes are based on, as well as the quality of investment bank issuing the notes.

For advice or information on structured notes, please contact: alyman@montpeliergroup.com.

— Athony Lymann

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Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

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The social media giants in battle with ‘old’ media and world governments | VIDEO

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The social media giants in battle with ‘old’ media and world governments | VIDEO | The Thaiger

“The rules signal greater willingness by countries around the world to rein in big tech firms such as Google, Facebook and Twitter that the governments fear have become too powerful with little accountability.”

India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social.

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The companies are also being made to publish a compliance report each month with details about how many complaints they’ve received and the action they took.

They’ll also be required to remove ‘some’ types of content including “full or partial nudity,” any “sexual act” or “impersonations including morphed images”

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told.

The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

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Turbulence ahead for Thailand’s aviation industry | VIDEO

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Turbulence ahead for Thailand’s aviation industry | VIDEO | The Thaiger

When the airlines, in particular, were asking the government to put their hands in their pockets for some relief funding in August last year, it was genuinely thought that international tourists would be coming back for the high season in December and January. At the very least local tourists and expats would head back to the skies over the traditional holiday break. And surely the Chinese would be back for Chinese New Year?

As we know now, none of that happened. A resurge in cases started just south of Bangkok on December 20 last year, just before Christmas, kicking off another round of restrictions, pretty much killing off any possibility of a high season ‘bump’ for the tourist industry. Airlines slashed flights from their schedule, and hotels, which had dusted off their reception desks for the surge of tourists, shut their doors again.

Domestically, the hotel business saw 6 million room nights in the government’s latest stimulus campaign fully redeemed. But the air ticket quota of 2 million seats still has over 1.3 million seats unused. Local tourists mostly skipped flights and opted for destinations within driving distance of their homes.

As for international tourism… well that still seems months or years away, even now.

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Domestic air passenger numbers double those of January

Maya Taylor

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Domestic air passenger numbers double those of January | The Thaiger
PHOTO: Vietjet

Passenger numbers on domestic flights within Thailand have doubled within a month, rising from 4,000 in January to over 10,000 this month. Having nearly recovered to pre-pandemic levels, domestic travel plummeted once more when Covid-19 resurfaced late last year.

Apirat Chaiwongnoi from the Department of Airports says 15 of Thailand’s 29 airports are now operating domestic flights, with more expected to follow. He believes the aviation sector will continue to recover further in the coming 6 months, bolstered by the national vaccine rollout.

Around 120 domestic flights a day are now operating, which is twice the number that were operating at the lowest point in the crisis. Prior to the resurgence of the virus in December, domestic passenger numbers had recovered to 30,000 – 40,000 a day, around 80% of pre-pandemic numbers.

The DoA says airports must continue to adhere to the Covid-19 hygiene measures put in place by the Health Ministry and the Civil Aviation Authority of Thailand.

SOURCE: Bangkok Post

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