This Week’s Top Headlines

i) The Malaysian Employers Federation (MEF) says that companies are facing difficulties in meeting the high salary expectations of fresh grads due to their lack of skills and experience. Are Malaysians demanding too much?

ii) RHB Bank announced a record-breaking dividend payout of 7.26% for the fiscal year 2022. The Employees Provident Fund (EPF) is the single largest shareholder of the group, reaping over RM695 million in dividends from RHB.

iii) Delving into ASB's annual report - what specific assets does the unit trust fund invest in? Understanding the composition of the fund's investments can provide valuable insights into its financial strategies and potential performance.

Scroll down to read the details.

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MEF: Employers are unable to satisfy the high salary expectations of fresh grads

The Malaysian Employers Federation (MEF) stated that fresh grads are asking for too high a starting pay for their salaries. Though youngsters are more tech savvy, their lack of experience and skills has made it difficult for companies to match their salary demands.

“Fresh graduates should be prepared to adjust their expected starting salary and review their own priorities and goals before beginning their career journey,” MEF president Datuk Dr Syed Hussain Syed Husman said.

But why do fresh grads want ever-higher starting salaries?

A recent study conducted by Employment Hero showed that almost half (45%) of Malaysian employees feel that their salaries did not catch up with inflation. Only 38% were satisfied with their current pay, while the remaining 17% were unsure.

Asked if they would be encouraged to stay with their employer, 43% of respondents wanted a salary increase, while 20% cited a desire for bonuses.

A similar trend was observed when it comes to recruitment.

Looking at the current employment status, there were 729,314 job vacancies between Jan 1 and April 14, with the highest number of empty seats in the manufacturing sector, according to the national employment services portal MYFutureJobs.

A significant majority of the job vacancies (60%), offered salaries ranging from RM1,500 to RM1,999.

11.4% offered salaries below RM1,500, while 15% offered between RM2,000 and RM2,999.

Approximately 4.8% fell within the range of RM3,000 to RM3,999.

When we extrapolate this data and compare it to the current minimum salary required to survive per month, you’ll understand why Malaysians are demanding ever-higher starting pay.

The Belanjawanku study, conducted by the Social Wellbeing Research Center (SWRC) and supported by the Employees Provident Fund (EPF), showed that Malaysians require a net salary of at least RM1,930 per month to survive. This is assuming that individuals are single and travel using public transport.

To own a car, the monthly expenses jump by 35% to RM2,600.

With only 20% of employers offering salaries above the minimum amount required to survive, it’s no wonder why we Malaysians feel that our pay is not enough.

So yes, I stand with employees on this one. Malaysia’s wage growth needs to be increased in order to keep up with the rising cost of living.

RHB Bank Pays Out All Time High Dividend

RHB Bank ended the 2022 fiscal year (FY22) with a surprise on the dividend front.

The bank distributed a dividend of 40 sen per share for FY22, representing a payout ratio of 62.5% and a dividend yield of 7.26%.

RHB said that the "absence of modification loss" and "lower allowances for credit losses on financial assets" have strengthened its performance.

The group, calling upon EPF as its largest shareholder, recorded a 22% y-o-y increase in its net profit during Q4 2022, from RM631 million to RM772 million.

EPF currently holds a 40.94% stake in RHB or a whopping 1.738 billion shares. The retirement fund has received RM695 million in dividends from RHB’s latest payout.

RM695 million is certainly a huge number, but it is tiny compared to EPF’s total assets.

As of December 2022, EPF’s total investment stood at RM1 trillion.

That’s trillion, with a t.

The retirement fund declared a 5.35% dividend for Conventional Savings and 4.75% for Syariah Savings in 2022.

The total payout amounted to RM51.14 billion.

RM700 million from RHB only equates to 1.368% of the dividend declared by EPF.

Still, it's more money for the rakyat, and I’ll take it if you don’t mind.

This is exactly why economists, financial planners, and even EPF themselves have discouraged people to withdraw early from EPF.

The performance and stability of the fund will be affected, resulting in less retirement money for the rakyat.

What Assets Does ASB Invest in?

*Amanah Saham Bumiputera (ASB) and Amanah Saham Malaysia (ASM) are unit trust funds managed by Amanah Saham Nasional Berhad (ASNB). I did a detailed breakdown on both products previously. Refer here if you missed it.

According to its 2022 annual report:

• 79.26% was allocated into equities.

• 8.09% were in fixed income investments.

• 11.12% was distributed to other investments.

As of December 2022, 10.6 million individuals had invested in ASB.

The fund size totaled RM186.24 billion, with the majority of it coming from people who contributed between RM50,000 and RM500,000.

ASB’s largest equity holding is Maybank.

The fund owns 3.84 billion Maybank shares, or a 31.86% stake, with a valuation of RM33.61 billion.

The next largest holding is Sime Darby Plantation Berhad.

ASB & ASB2 – what are the differences?

Both funds serve the same function with roughly similar annual returns. They are fixed-price assets sold at RM1 per unit and charge no upfront fees.

However, their allocations are slightly different.

Are they still good investments?

This would depend on your risk preference, time horizon, and investment goals.

ASB is a great option for those who have a lower risk preference, but if you’re looking for higher yield, exploring other alternatives may be a better option.

For further insights on ASB and ASM from financial experts,

Listen to our most recent podcast episode featuring RinggitPlus founder Hann Liew and Economist Sani Hamid here:

That’s all for this week’s newsletter!

Disclaimer: I am not a financial advisor. This newsletter is based on my own analysis and research. Do not take any of it as financial advice.

*This newsletter was written at 11.30 AM on 21st May 2023 and completed at 4.15 PM the same day. To get early access to our newsletter, be our patron for as little as $1/month!