A Growing Investment
Agroforestry Group following a review of its plantings, has announced that it will begin increasing its planting of Black Thorn durian as a result of increased demand across Malaysia and neighboring Singapore. Black Thorn durian is a relatively new Malaysian durian which has seen a spike in popularity as international travel has resumed following COVID restrictions.
Mr. Paul Martin, Agroforestry Group’s MD stated “We have seen an influx of interest directly from consumers and wholesalers interested in purchasing Black Thorn recently. Much of this demand has come from Singapore, which due to our strategic location in Johor we are perfectly positioned to capture.”
According to Malaysia’s Tourism, Arts and Culture Ministry, Singaporean’s accounted for 56% of all tourist arrivals in Malaysia in the first seven months of 2022. Singapore is also the world’s second largest consumer of durian per person, following Malaysia.
Mr. Martin added, that Agroforestry Group is constantly reviewing and monitoring market developments and believes Black Thorn durian supplements its existing Musang King durian operations and business model nicely. Although Black Thorn is very expensive in Malaysia and Singapore, it is not as well known as Musang King elsewhere but Agroforestry Group expects this to change in the coming years.
Black Thorn durian was officially registered as D200 by the Department of Agriculture in Malaysia (Jabatan Pertanian) in 2015. It is slowly coming to rival Musang King in terms of taste and price regionally. It is known for its dark yellow and orange color, sweet and custardy flavor. Due to limited supply, prices for Black Thorn reach up to 25 USD/KG (100 RM/KG) within Malaysia and Singapore.
Black Thorn durian goes by a variety of names across South East Asia but it is most commonly known as Duri Hitam in Malay and Ochee in Chinese. Duri Hitam translates into “Black Thorn” in English, while Ochee translates into “Black”.
About Agroforestry Group
Established in 2015, Agroforestry Group have applied their thirty years of private forestry management into the establishment and commercial development of durian and agarwood plantations, product distribution and sales. As an asset class, agriculture and forestry has expanded rapidly over the last decade due to interest from risk-averse private investors attracted by the green credentials of the industry and the long-term high returns of agroforestry.
What makes gold 5 most useful commodity for investment?
While investing in commodities is inevitable for most investors, here we take a look at how gold performs in comparison to other commodities both in the short and long run to help
Gold is a reliable store of value
From salt to tobacco to seashells, all kinds of soft agricultural commodities have been used as currencies at some point in history. But over time, the use of these soft commodities came to a halt for a variety of reasons:
- They were only grown in certain markets or geographies, making them hard to trade. For example, Tobacco was not grown in all parts of USA
- They could not retain value when moved from one region to another. For example, salt could not be used in parts of Africa where it rained. Even today, for example, oil production is geographically more concentrated in certain regions of the world; for example, more than 50% of proven reserves of oil are currently located in the Middle East.
- Using them as currencies would take them away from their primary use i.e. human consumption
After these soft commodities, metals began to be used as currency. Copper, iron and silver were in circulation across different parts of the world. However, these metals too fell short because of similar reasons:
- A metal like silver or copper, for example, has several industrial uses, so using it as a currency takes it away from its primary use
- All metals other than gold lose value over time because they tarnish or rust
While gold too is superior by virtue of being a more malleable and ductile metal that is also a great conductor of electricity, it is too valuable, expensive and rare to be used industrially. Additionally, gold is chemically inert meaning it does not tarnish over time and retains its lustre and shine. Thus, because gold is almost indestructible, all the gold that has ever been mined still exists in one form or another. While other metals are unable to absorb shocks and shortages in primary production, recycled gold comprises a larger share of supply than for any other metal.
As a result, gold is also a much more effective portfolio diversifier than other precious metals like silver and platinum. When the market is doing well, gold and these other metals perform well, and their correlation is positive. But when the market takes a downward turn, the performance of metals like silver and platinum suffers because their demand depends largely on industrial demand.
Gold, with such few industrial uses, has no such issues, so its value persists even when the market is down.
ue to these reasons, it made sense that gold played the role of a currency anchor till 1971, when the US, and the world, moved past the gold standard to paper money. But even today, gold continues to play a major role in determining a country’s wealth in the form of gold reserves, which are increasing year on year. In 2018 alone, central banks purchased more gold than at any time since the end of the gold standard – and that trend continued through the first half of 2019.
Over the long-term, currency and other assets may see periods of declining value. Gold, on the other hand, has maintained its value for ages. Since ancient times, gold has been used as a way to preserve and transfer wealth from one generation to another.
Diversification that counts, because gold is stable when other assets decline
The correlation between gold and other assets, including commodities, is dynamic i.e. gold behaves differently in correlation to other assets in different economic situations. Like other commodities, gold is positively correlated to stocks during periods of economic growth; when equity markets rise, so does the price of gold. But unlike commodities, gold also performs well during times of stress to the economy, including deflation, and any other events which can negatively impact wealth or capital. Gold is seen as a crisis commodity as it tends to hold its value even during geopolitical turmoil. For example, gold prices saw a major price movement this year in response to uncertainties around Brexit.
Gold and oil prices are not correlated, contrary to the popular belief- their performance sometimes moves in the same direction but at other times can be completely opposite.
Oil tends to behave as a risky asset while gold behaves as a risk-off asset.
Gold as a hedge against inflation
One of the most common reasons for investing in portfolios is protection against the risk of inflation, a time when commodities perform much better than other assets. But, historically, specifically in the long run, gold outperforms them all.
Economist Vivek Kaul opines that inflation is a very real risk in the times we live in. “When a government prints a lot of money, you have a large amount of money chasing the same set of goods and services, which leads to very high inflation. So, the paper money that you hold tends to become worthless over a period of time, “says Kaul, quoting the example of Zimbabwe, where inflation is at 300% as of 2019, the highest in the world. To preserve one’s wealth in such situations of volatility, Kaul suggests dedicating 10-15% of one’s portfolio to gold, in any form. Watch the video on why should you invest in gold today.
Gold supply is limited, and demand is set to rise
Gold is just the right amount of rare, which ensures its continuing appeal. But the market size of gold is large enough to make it a relevant investment for a wide variety of institutional investors, including central banks. Other commodities usually face supple issues in the short term due to variable production rates, but gold production is evenly distributed amongst different continents which avoid supply shocks.
This helps to ensure that gold is much less volatile than other commodities.
The demand for gold is unshaken in a variety of economic situations. When the economy is doing well, people spend more on discretionary purchases such as jewellery and technological devices, which increases demand for gold. But even when the economy is down, when investors seek reliable, liquid assets to offset market losses, the demand for gold (and thus, its price) tends to increase.
One of the major opportunities for gold is the rapid increase in India’s middle class. The People Research on India’s Consumer Economy (PRICE) estimates that the middle class will increase from 19% of the overall Indian population in 2018 to 73% by 2048. Since gold demand increases by 1% with every 1% increase in income, it is no surprise that gold demand is set to increase.
While commodities other than gold undoubtedly have useful characteristics that make them important in portfolio diversification for both individual and institutional investors, gold has consistently outperformed these commodities due to its dynamic correlations to other commodities and assets that tend to make it a much safer investment for investors across risk profiles.
Residential property prices to surge after pandemic, says study
PETALING JAYA: Residential property prices are expected to surge in 2021 after stalling this year due to the Covid-19 pandemic, according to a nationwide study by real estate sales and media company Juwai IQI.
In its Q1 2020 Property Index and Survey for Malaysia, Juwai IQI predicted that residential property prices would stagnate in 2020 with an increase of only 1.1%.
Group executive director Kashif Ansari said the drop in number of property transactions due to the movement control order (MCO) was also causing property prices to stagnate.
“The industry is optimistic, however, about a post-pandemic recovery and expects residential prices to rise by 8.6% by 2021.
“Amid all the uncertainty, property is viewed as a relatively safe investment that can provide cash flow.”
He added that Bank Negara Malaysia’s six-month moratorium on interest and principal payments for loans had provided relief to property owners besides easing the pressure on the real estate market.
The survey, which was conducted among more than 340 real estate agents from Feb 7 to March 19, also revealed that rental rates are expected to rise by an average of 1.7% through the end of 2020.
“The findings showed that Sarawak has the highest forecast rental growth at 5.4% in 2020. Penang has the most negative forecast, with rental rates there expected to fall by 5.8% in 2020.
“But looking forward two years, agents are more confident about rental rates. Nationwide, agents expect rental rates to climb by 7.1% by January 2022,” Ansari said.
He added that property would likely remain attractive to foreign buyers due to the country’s strategic location.
“Its close proximity to countries such as Japan, China, Hong Kong and Singapore, which are the world’s largest cross-border property buyers, makes it even more appealing.
“For investors and first-time home buyers, now is definitely a good time to consider getting into the market, as there are attractive discounts offered by developers.”
About 61% of real estate agents who participated in the research expected first-time local buyers to make more property transactions in 2020 than in 2019. Meanwhile, 55% of agents expected foreign buyers to conduct more transactions.
The survey also revealed possible consumer changes in property buying, with greater use of online tools such as virtual reality, 3D rendering and live-streaming, to facilitate marketing, research, and purchasing of real estate due to Covid-19.
Investing during coronavirus: Is now the time to get into day trading?
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