Avoid investing in politically-tied firms
Published on: Tuesday, November 13, 2018
Kota Kinabalu: The Malaysia China Chamber of Commerce (MCCC) Youth Entrepreneurs recently held a seminar on investing in public listed companies to upskill its members' business acumen.The seminar was conducted by the CEO of Inter-Pacific Asset Management Sdn Bhd, Lim Tze Cheng, who is a chartered accountant by training. He had joined Capital Dynamics as an analyst in 2003 after a short stint as an accountant at BDO Malaysia.Lim talked about the importance of taking a business-centric approach to investing and to not be overly influenced by market trends.
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But that's what investors tend to forget, which is that investing in shares is actually investing in businesses."If you think about it, a lot of people are investing in the stock market and not doing the research. I'm not saying it's not the right way, but they regard it more like a gambling den or they invest based on rumours, for example what's the hottest thing in the market?Lim has held positions as analyst, fund manager, head of research, and head of equity at both local and global asset management houses.Lim told Daily Express that he avoids investing in companies that were dependent on political connections and government contracts in business.
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He wrote his first book 'What I Learnt as an Analyst' to teach the public especially those who are new to investing and those looking to refresh their understanding of the basics."Avoid investing in these kinds of politically connected business. Look for companies with growth potential based on their own core business and which have good management teams with integrity."
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"My portfolio is very manufacturing-centric. I won't touch things I don't understand. I need to see and touch them if I want to invest in them," he says.Lim's book comes at an opportune time as the growth of financial technology is giving individual investors greater flexibility and responsibility to invest on their own without relying on intermediaries."A lot of people don't really understand what the stock market is. Even if they're keen to know how to analyse companies before they invest, they don't really know how. I wanted to write something for the layman with no accounting or finance background but who really wants to invest. It's something for them to read and to understand what the stock market is about," Lim says.There are many books about investing strategies available but some are very technical in nature and others focus too much on profiling the author. Lim aims to equip readers with the basic skills of analysis without being too technical or personal."In hindsight, I can say I made the right call but who knows, it could be plain luck. By telling you what successes I've made, how does that help you? You can't repeat the same thing with other stocks because, really, investment is an art. If you read my book, you'll notice there is nothing about me. I didn't mention anything about me or about what I got right. It's about which tools you can use," he says.His motivation for spreading financial literacy through writing partly comes from his observation of how the two financial crises in 1997 and 2008 claimed the lives of people he knew after they suffered severe losses in the stock market.While Lim has a positive view on the tech and consumer product sectors, he is actually sector and capitalisation-neutral. It is a company's business that matters."I am very business-centric. As long as your business is good, I will invest in it. Companies that are properly managed and have good earnings growth tend to be in the small and mid-cap categories," he says.Lim boasts a solid track record of turning around negative-performing funds and is also the architect of two award-winning, high-performing funds: the InterPac Dynamic Equity and its Shariah-compliant counterpart, the InterPac Dana Safi.Throughout his career, Lim Tze Cheng's success at managing funds has been due to his ability to ignore market uncertainty and fear. This has enabled the CEO of Inter-Pacific Asset Management Sdn Bhd (InterPac) to identify investment opportunities and outperform his peers.Lim is not new to Sabah as he has been here on various occasions to visit companies that his company was considering investing in.He had to conduct thorough research before visiting a company. He also had to meet up with the company's management and key players and all the relevant regulators to understand the industry's regulations.Then, he had to talk with the representatives of government agencies to gain knowledge of government incentives and investment flows. He also had to meet with the competitors of the particular company as well as its suppliers.Lim aims to equip MCCC youth entrepreneurs with the skills and tools to properly evaluate businesses. The lessons are gleaned from his experience as a fund manager, analyst and head of research in local and global asset management firms over the years. Stay up-to-date by following Daily Express’s Telegram channel.
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