Takaful myAfdhal Annual Performance Review 2009/2010 I Page 1 · Takaful myAfdhal Annual Performance Review 2009/2010 I Page 2 WE CONTINUE TO PROTECT YOU AND YOUR INVESTMENT Takaful

Takaful myAfdhal Annual Performance Review 2009/2010 I Page 1


WE CONTINUE TO PROTECT YOU AND YOUR INVESTMENT

Takaful myAl‐Afdhal plan is a 5‐year closed‐ended investment‐linked plan that allows

participants to invest in a Shariah‐compliant structured investment product. With its

principal‐protected feature, participants will enjoy coverage throughout the term while

profiting from investment returns in the form of Annual Profits* from their lump‐sum

Single Contribution.

The Shariah‐compliant structured investment portfolio is provided by Citibank Berhad

(“Citibank”) which has a credit rating of AAA/P1 financial institutional ratings, with a

stable outlook by RAM Holdings Berhad (“RAM”) as at 17th November 2009.

* Subject to the actual performance of the investment. The returns on the structured product investment will be based on the

performance of the Reference Assets whilst the principal will only be protected if investment is held to maturity.


DISCLAIMER: This report is for information purposes only. The opinion contained in this report is based on information obtained or derived from sources that we believe are reliable. Syarikat Takaful Malaysia Berhad makes no representation or warranty, expressed or implied, as to the accuracy, completeness or reliability of the information contained therein and it should not be relied upon as such.

* Sources of information: Reuters, Bloomberg, and Other Agencies


STATEMENT FROM THE GROUP MANAGING DIRECTOR

In the Name of Allah, the Most Compassionate, the Most Merciful

It is a pleasure to reach our valuable myAl‐Afdhal investors for its second annual performance review for the period ended 19 June 2010.

The previous year has generally been quite a challenging year for many investors, having to withstand the volatility arising from the effort to support the global economy from melting down due to the financial crisis. We observed that most investments with global asset exposure were not able to resist the battered sentiments trickling down from the poor performance of almost all asset classes be it equity or commodity markets. The fragility of performance caused by the slump in the asset prices has affected the performance of most funds including structured products.

Despite the challenging year, for the past one year the investment performance of myAl‐Afdhal have shown strong recovery in most of the Reference Assets. This recovery has been reflected in the Net Asset Value (NAV) reaching a high of RM0.972 on 3 December 2009 as compared to last year’s closing of RM0.896.

It is important to highlight that the declaration of annual profits is dependent on the performance of the ‘Growth Overweight’ or ‘Defensive Overweight’ portfolios. To recap, the Growth Overweight portfolio comprises of 60% weight on Growth Basket and the remaining 40% on Defensive Basket whilst the Defensive Portfolio consists of 60% and 40% weights on Defensive and Growth Baskets respectively.

During the period under review, the Defensive Basket with fixed 25% allocation into European Sovereign Fixed Income Index and 75% of Precious Metal Index has recorded positive return. Nevertheless, the positive performance has been eclipsed by the large negative performance from the Growth Basket which consists 50% of Copper, 25% of Asian Blue Chip Equity Index and 25% of Japanese REITs Index.

As a result, both Growth Overweight and Defensive Overweight portfolios recorded negative returns of 14.38% and 6.79% respectively as shown in the table below:‐


G r o w t h B a s k e t

A v e r a g eC u m u l a t i v e R e t u r n f o r 8

Q u a r t e r s

% w e i g h t i n t h e b a s k e t

P e r f o r m a n c e o f b a s k e t

C o p p e r S p o t ( 3 0 . 6 5 ) 5 0 %(2 9 . 5 5 ) A s i a n B l u e C h i p E q u it y I n d e x ( 2 2 . 3 3 ) 2 5 %

J a p a n e s e R E I T s I n d e x ( 3 4 . 5 5 ) 2 5 %

D e f e n s i v e B a s k e t

A v e r a g e C u m u l a t i v e R e t u r n f o r 8

Q u a r t e r s

% w e i g h t i n t h e b a s k e t

P e r f o r m a n c e o f b a s k e t

E u r o p e a n S o v e r e ig n F i x e d I n c o m e I n d e x 1 2 . 2 2 2 5 % 8 . 3 8

P r e c i o u s M e t a l I n d e x 7 . 0 9 7 5 %

P o r t f o l i o P e r f o r m a n c e 1

G r o w t h B a s k e t D e f e n s i v e

B a s k e t P e r f o r m a n c e o f

P o r t f o l io

G r o w t h O v e r w e i g h t P o r t f o l i o ( 1 7 . 7 3 ) 3 . 3 5 ( 1 4 . 3 8 )

6 0 % x ( 2 9 . 5 5 ) 4 0 % x 8 . 3 8 ( 1 7 . 7 3 ) + 3 . 3 5

D e f e n s i v e O v e r w e i g h t P o r t f o l i o ( 1 1 . 8 2 ) 5 . 0 3 ( 6 .7 9 )

4 0 % x ( 2 9 . 5 5 ) 6 0 % x 8 . 3 8 ( 1 1 . 8 2 ) + 5 . 0 3

Hence, with both portfolios recorded negative returns, no annual profit is available for distribution with the NAV of myAl‐Afdhal registered at RM0.940 for the financial year ended 19 June 2010.

Going forward, we have seen concerted efforts from governments all over the world putting in place necessary measures in bringing back the world economy into growth trajectory. It is positive that the world is currently on the track for recovery, in which International Monetary Fund (IMF) has projected the world output to grow by 4.6% in 2010 as opposed to a contraction of 0.6% recorded in 2009. Whilst we are optimistic with the recovery, economic uncertainties remain with major concerns on European sovereign debt crisis and change in economic policy in certain major economies especially China could affect the global economic growth.

We believe that your investment is able to withstand any challenges ahead considering that the capital is protected if it is held until maturity in 2013. In addition to that, you will also continue to enjoy our Takaful protection.


Thank you for your strong support and we will continue to give our best of service to you.

Let us invest in a better year ahead.

May Allah give us His guidance, Amin.

DATO’ HASSAN KAMIL Group Managing Director


0.800

0.850

0.900

0.950

1.00016‐Jul‐08

16‐Aug‐08

16‐Sep‐08

16‐Oct‐08

16‐Nov‐08

16‐Dec‐08

16‐Jan

‐09

16‐Feb‐09

16‐M

ar‐09

16‐Apr‐09

16‐M

ay‐09

16‐Jun‐09

16‐Jul‐09

16‐Aug‐09

16‐Sep‐09

16‐Oct‐09

16‐Nov‐09

16‐Dec‐09

16‐Jan

‐10

16‐Feb‐10

16‐M

ar‐10

16‐Apr‐10

16‐M

ay‐10

16‐Jun‐10

Highest NAV:

3 Dec 09 RM0.972

Lowest NAV:

10 Sept 08

RM0.850

Net Asset Value

(NAV)

FUND PERFORMANCE

Annual Fund Performance Review for the period ended 19 June 2010

myAl‐Afdhal entered into its second year with a great hope that concerted efforts by the global

economies to reduce interest rates and spur lending activities, as well as the introduction of

massive amount of stimulus package to support economic activities would support the

underlying assets to perform better and improve the net asset value of the fund. To recap,

myAl‐Afdhal is a 5‐year Shariah compliant capital protected investment link fund which

performance is linked to the international multi asset classes covering European sovereign

bonds, Asian equity market, precious metal, copper and Japanese property market. As such,

the performance of myAl‐Afdhal is determined by the state of global markets.

During the period under review, supported by those fiscal measures, major economies have

been back on their feet to steer the global economies into recovery track. Asian economies

especially China, appears to be on a fast trajectory mode and hailed as the leader in the

economic recovery process. Unfortunately, as global business and consumers’ confidence

being built up, the world was stunned by the emergence of European sovereign debt crisis early

this year, causing expectation that global recovery may be slower than expected and higher

market volatility.


Despite the challenging year, the investment performance of myAl‐Afdhal had shown recovery in most Reference Assets. This recovery has been reflected in the Net Asset Value (NAV) of my Al‐Afdhal which recorded its high of RM0.972 on 3 December 2009 before settling down for the year to close at RM0.940 which is an increase by 4.9% as compared to first year’s closing of RM0.896.

The Defensive Basket with fixed 25% allocation into European Sovereign Fixed Income Index and 75% of Precious Metal Index has recorded positive return during the period under review. Nevertheless, the positive performance has been eclipsed by the large negative performance from the Growth Basket which consists 50% of Copper, 25% of Asian Blue Chips Equity Index and 25% of Japanese REITs Index.

Growth Basket 60%

Defensive Basket, 40%

Growth Basket, 40%Defensive

Basket, 60%

Growth Basket

Defensive Basket

Performance of Portfolio

(17.73) 3.35 (14.38)

Growth Basket

Defensive Basket


(11.82) 5.03 (6.79)

Growth Overweight Portfolio

Defensive Overweight Portfolio


Performance of Underlying Since Inception

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

140.00%

160.00%

6/16/08 9/16/08 12/16/08 3/16/09 6/16/09 9/16/09 12/16/09 3/16/10

QW1A Index SPGCPMP Index DJTGR Index LOCADY Comdty TSEREIT Index

Base 100

Inception

At the close of the 2nd Anniversary, both Growth Overweight and Defensive Overweight Portfolios recorded negative performance of 14.38% and 6.79% respectively. It is important to highlight that the declaration of annual profits is dependent on the performance of the ‘Defensive Overweight’ or ‘Growth Overweight’ portfolios.

As the performances since inception of both portfolios are still negative, no annual profit is available for distribution for the period ended 19 June 2010.

Details of computation of each underlying are given in Appendix A and B.

Outlook

Various measures have been introduced globally in order to ensure that economic recovery

momentum is sustainable. It is thus expected for monetary policy to remain highly

accommodative across the globe, where low interest rate is likely to be maintained. In the US,

the Federal Open Market Committee (FOMC) in its recent meeting on 23 June 2010 maintained

its key short term lending rate near 0%, and reiterated that the rate would remain exceptionally

low for an extended period.


In the wake of the Europe’s sovereign financial crises, government in major economies is

already taking appropriate measures to restore fiscal disciplines. An obvious example would be

in the UK, where the new government unveiled the latest budget plan of £40 billion fiscal

tightening in order to provide the necessary support to the country. Consequently, the

European Governments may also have to reinstate its fiscal discipline by trimming or balancing

their budget deficits and containing further rise in borrowings.

In China, the People's Bank of China continues to tighten liquidity and signaled that it remains

focused on reigning in liquidity and stemming inflation in the effort to maintain a healthy state

of its economy.

With the appropriate monetary and fiscal policies in place, global economy is expected to

continue on its recovery. Economic forecast by the International Monetary Fund (IMF) on the

world output is on an uptrend where it is expected to increase to 4.6% in 2010 as opposed to a

contraction of 0.6% recorded in 2009.

Anticipation for a better performance of each asset classes has been built based on the

expectation that economic recovery would restore business and consumers confidence. As

such, the underlying assets that have lost more than 50% of its initial value may need more

uplift for it to off‐set the negative performance and in turn allow the Growth basket in

particular to record positive return. With the understanding that the underlying assets

performance move in tandem with the global recovery, hopes remains that the respective asset

classes will be able to restore its value beyond its initial level.

Going forward, it is hope that the concerted efforts from government all over the world would

be able to bring back the world economy into growth trajectory which is expected to bring

more positive momentum to performance of myAl‐Afdhal. On the other hand, while it is

positive on the global recovery momentum, economic uncertainties remain with major

concerns on sovereign debt crisis and changes in economic policy in some major economies

especially China, could lead to slower recovery than expected.

The performance review and outlook of each underlying asset classes is detailed out in

Appendix B of the report.


APPENDICES Appendix A

Detailed computation of portfolio performance

Appendix B

Performance review & outlook on individual asset class

1. European Sovereign Fixed Income Index

2. Precious Metal Index

3. Copper Spot

4. Asian Blue Chip Equity Index

5. Japanese REITs Index


APPENDIX A

The computation of performance payout is based on the average of cumulative return for 8 quarters starting from 16 September 2008 up to 16 June 2010.

Growth Basket

Average Cumulative Return for 8 Quarters

% weight in the basket

Performance of basket

Copper Spot (30.65) 50%

(29.55) Asian Blue Chip Equity Index (22.33) 25%

Japanese REITs Index (34.55) 25%

Defensive Basket


% weight in the basket

Performance of basket

European Sovereign Fixed Income Index 12.22 25% 8.38

Precious Metal Index 7.09 75%

Portfolio Performance1

Growth Basket Defensive Basket


Growth Overweight Portfolio (17.73) 3.35 (14.38)

60% x (29.55) 40% x 8.38 (17.73) + 3.35

Defensive Overweight Portfolio (11.82) 5.03 (6.79)

40% x (29.55) 60% x 8.38 (11.82) +5.03

1 The performance of each portfolio is calculated as the total of the performance of both baskets, calculated based on the weights of each basket for the portfolio.


100.00%

105.00%

110.00%

115.00%

120.00%

6/16

/200

8

7/16

/200

8

8/16

/200

8

9/16

/200

8

10/1

6/20

08

11/1

6/20

08

12/1

6/20

08

1/16

/200

9

2/16

/200

9

3/16

/200

9

4/16

/200

9

5/16

/200

9

6/16

/200

9

7/16

/200

9

8/16

/200

9

9/16

/200

9

10/1

6/20

09

11/1

6/20

09

12/1

6/20

09

1/16

/201

0

2/16

/201

0

3/16

/201

0

4/16

/201

0

5/16

/201

0

6/16

/201

0

Cha

nge

in in

vest

men

t val

ues

(%)

APPENDIX B

PERFORMANCE REVIEW & OUTLOOK OF INDIVIDUAL ASSET CLASS

1. EUROPEAN SOVEREIGN FIXED INCOME INDEX

Initial Strike

(16.06.08)

Quarter 1 (16.09.08)

Quarter 2 (16.12.08)

Quarter 3 (16.03.09)

Quarter 4 (16.06.09)

Quarter 5 (16.09.09)

Quarter 6 (16.12.09)

Quarter 7 (16.03.09)

Quarter 8 (16.06.10)

Average CumulativeReturn for 8 Quarters

143.84

149.89 (+4.21%)

156.25 (+8.63%)

157.90 (+9.78%)

158.94 (+10.50%)

164.51 (+14.37%)

166.48 (+15.74%)

168.59 (+17.21%)

167.75 (+17.32%)

+12.22%

* Percentage change of price in value is computed by comparing to the Initial Strike

Review

The European Sovereign Fixed Income Index recorded a positive average cumulative

return of 12.22%, reflecting its defensive nature to withstand the financial market

turbulence for the period under review. Despite the European sovereign debt crisis


sparked in Greece early 2010, the index performed considerable well even when

investors shifted their risk appetite and fled to safe haven assets. In tackling the current

crisis faced by Greece, European Central Bank (ECB) and IMF announced an

unprecedented package included up to 500 billion euro “European Stabilization

Mechanism” from Euro‐area governments with an additional International Monetary

Fund contribution of up to 250 billion euro.

Outlook

While the European Stabilization Mechanism and ECB asset purchases helped to contain

the spill‐over of the sovereign debt crisis, additional austerity measures in the fiscally

most strained countries will increase the GDP growth differentials between the euro

area countries in 2010.

Concerns remain over the long‐term solvency of sovereign borrowers in the Europe’s

periphery (notably Greece, Spain, Portugal and Ireland). It is expected for the index to

be resilience even though much effort need to be introduced by the European bloc as

poor competitiveness, weak growth and soaring public debts are not expected to be

fully addressed from the rescue package alone.


60.00%

80.00%

100.00%

120.00%

140.00%

6/16

/200

8

7/16

/200

8

8/16

/200

8

9/16

/200

8

10/1

6/20

08

11/1

6/20

08

12/1

6/20

08

1/16

/200

9

2/16

/200

9

3/16

/200

9

4/16

/200

9

5/16

/200

9

6/16

/200

9

7/16

/200

9

8/16

/200

9

9/16

/200

9

10/1

6/20

09

11/1

6/20

09

12/1

6/20

09

1/16

/201

0

2/16

/201

0

3/16

/201

0

4/16

/201

0

5/16

/201

0

6/16

/201

0

Cha

nge

in in

vest

men

t val

ues (

%)

2. PRECIOUS METAL INDEX

Initial Strike

(16.06.08)

Quarter 1 (16.09.08)

Quarter 2 (16.12.08)

Quarter 3 (16.03.09)

Quarter 4(16.06.09

)

Quarter 5 (16.09.09)

Quarter 6 (16.12.09)

Quarter 7 (16.03.09)

Quarter 8 (16.06.10)


137.08

114.77 (‐16.28%)

122.93 (‐10.32%)

135.46 (‐1.18%)

137.49 (0.29%)

151.96 (+10.85%)

167.27 (+22.02%)

164.88 (+20.28%)

179.72 (+31.10%)

+7.09%


Review

After plunging to its low during the second half of 2008, Precious Metal Index

rebounded and persistently on an upward trend as investors shifted to gold for safe

haven investments and recorded a positive average cumulative return of 7.09%. During

the financial crisis, gold continued to offer insurance for investors concerned about a

potential W shape recovery. For the period under review, the price of gold was well

supported driven by the USD weakness, demand from China and inflation expectations.

Late in 2009, World Gold Council released data which showed identifiable gold demand

improved by more than 10% quarter on quarter basis in 3Q09 driven primarily by the

strong jewelry demand.


Outlook

On the global front, it is expected for gold to remain resilient as concerns on the

sustainability of economic recovery with sovereign debt crisis remain an issue on the

European bloc. Supply is likely to remain tight given that expansion plans for mining

companies in Australia, the second‐largest gold producing nation, which will also benefit

the price for gold and hence the Precious Metal Index.

Economic wise, even though inflationary pressures cease to become a major issue

globally, prices for gold and other precious metal believed to maintain as strong as

investors shift preference to safe haven investment.


20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

6/16

/200

8

7/16

/200

8

8/16

/200

8

9/16

/200

8

10/1

6/20

08

11/1

6/20

08

12/1

6/20

08

1/16

/200

9

2/16

/200

9

3/16

/200

9

4/16

/200

9

5/16

/200

9

6/16

/200

9

7/16

/200

9

8/16

/200

9

9/16

/200

9

10/1

6/20

09

11/1

6/20

09

12/1

6/20

09

1/16

/201

0

2/16

/201

0

3/16

/201

0

4/16

/201

0

5/16

/201

0

6/16

/201

0

Cha

nge

in in

vest

men

t val

ues

(%)

3. COPPER SPOT

Initial Strike

(16.06.08)

Quarter 1 (16.09.08)

Quarter 2 (16.12.08)

Quarter 3 (16.03.09)

Quarter 4 (16.06.09)

Quarter 5 (16.09.09)

Quarter 6 (16.12.09)

Quarter 7 (16.03.09)

Quarter 8 (16.06.10)


8,255.00

6,841.00 (‐17.13%)

3,020.50 (‐63.41%)

3,690.00 (‐55.30%)

5049.00 (‐38.84%)

6,315.50 (‐23.49%)

6,946.00 (‐15.86%)

7,341.50 (‐11.07%)

6,592.50 (‐20.14%)

‐30.65%


Review

With the downtrend from its inception until the end of 2008, Copper Spot had rallied

and was exceptionally strong in the second half of 2009. In China, it was initially

observed that consumption has increase rapidly boosted by restocking. Weakening USD,

a flight to hard assets such as gold and precious commodities, fund investment and

leverage to the Organisation for Economic Co‐operation and Development (OECD)

recovery have all supported and propelled the price of copper. Nevertheless, US copper

futures have fallen in response to weaker than expected US jobs data and debt

contagion fears in the Euro zone has resulted in the Copper Spot to head south towards

the end of period under review.


Hence, Copper Spot registered an average cumulative return of negative 30.65%.

Outlook

The weak market is expected to continue going forward with the lower demand for

copper from the possible potential risk of the European debt issues to the copper

consuming regions. For example, a slower economic growth in China may dampen

industrial activities which are expected to stale the demand for copper and reflect a

downside impact to the Copper Spot price.

Based on the study undertaken by International Copper Study Group, an

intergovernmental organisation that serves to increase copper market transparency and

promote international discussions and cooperation on issues related to copper,

recognised that there is still much uncertainty imposed on the price of copper going

forward in consideration of the slower rate of the economic recovery especially in the

copper consuming regions that have experienced a severe recessions in the 2008‐2009

period.


40.00%

60.00%

80.00%

100.00%

120.00%

6/16

/200

8

7/16

/200

8

8/16

/200

8

9/16

/200

8

10/1

6/20

08

11/1

6/20

08

12/1

6/20

08

1/16

/200

9

2/16

/200

9

3/16

/200

9

4/16

/200

9

5/16

/200

9

6/16

/200

9

7/16

/200

9

8/16

/200

9

9/16

/200

9

10/1

6/20

09

11/1

6/20

09

12/1

6/20

09

1/16

/201

0

2/16

/201

0

3/16

/201

0

4/16

/201

0

5/16

/201

0

6/16

/201

0

Chan

ge in

inve

stmen

t val

ues (

%)

4. ASIAN BLUE CHIP EQUITY INDEX

Initial Strike

(16.06.08)

Quarter 1 (16.09.08)

Quarter 2 (16.12.08)

Quarter 3 (16.03.09)

Quarter 4 (16.06.09)

Quarter 5 (16.09.09)

Quarter 6 (16.12.09)

Quarter 7 (16.03.09)

Quarter 8 (16.06.10)


480.91

372.24 (‐22.60%)

292.10 (‐39.26%)

255.75 (‐46.82%)

356.03 (‐25.97%)

430.22 (‐10.54%)

438.74 (‐8.77%)

429.13 (‐10.77%)

413.99 (‐13.92%)

‐22.33%


Review

Asian Blue Chip Equity Index have shown an uptrend during the period under review

albeit with high volatility, as it tracked the positive rise in the US equity markets led by

positive data outflows from the US. The last two quarters in Asia (Q42009 and Q12010),

where growth predominantly surprised positively, saw a more meaningful upturn in

domestic demand across the region leading to the recovery of the index. Nevertheless,

the concern over the European sovereign debt crisis had caused the volatility and

weakness in the Asian equity market.

For the period under review, Asian Blue Chip Equity Index recorded an average

cumulative return of negative 22.33%.


Outlook

Generally, trading momentum from the Asia equity market could be affected by how

much confidence deteriorates and the broader implications on the financial systems

following concern over the impacts from European sovereign debt crisis.

With the Asian Blue Chip Equity Index composition consists of stocks mainly from Hong

Kong, Taiwan and Singapore, of which the latter two countries are among the biggest

exports contributor to the Europe in 2009, it is expected for the index to remain volatile

going forward. Nevertheless, subject to efficient measures being implemented by the

European bloc, investors’ confidence is also expected to improve further which would in

turn reflect a better performance for the Asian Blue Chip Equity Index.


45.00%

55.00%

65.00%

75.00%

85.00%

95.00%

105.00%

6/16

/200

8

7/16

/200

8

8/16

/200

8

9/16

/200

8

10/1

6/20

08

11/1

6/20

08

12/1

6/20

08

1/16

/200

9

2/16

/200

9

3/16

/200

9

4/16

/200

9

5/16

/200

9

6/16

/200

9

7/16

/200

9

8/16

/200

9

9/16

/200

9

10/1

6/20

09

11/1

6/20

09

12/1

6/20

09

1/16

/201

0

2/16

/201

0

3/16

/201

0

4/16

/201

0

5/16

/201

0

6/16

/201

0

Cha

nge

in in

vest

men

t val

ues

(%)

5. JAPANESE REITs INDEX

Initial Strike

(16.06.08)

Quarter 1 (16.09.08)

Quarter 2 (16.12.08)

Quarter 3 (16.03.09)

Quarter 4 (16.06.09)

Quarter 5 (16.09.09)

Quarter 6 (16.12.09)

Quarter 7 (16.03.09)

Quarter 8 (16.06.10)


1424.31

1177.84 (‐17.30%)

901.18 (‐36.73%)

782.05 (‐45.09%)

884.57 (‐37.89%)

1002.96 (‐29.58%)

866.54 (‐39.16%)

927.16 (‐34.90%)

915.32 (‐35.74%)

‐34.55%


Review

Signs of recovery in the Japanese property market continue to emerge during the period

under review, starting from the second quarter of 2009, in line with the better

performance in its GDP, from negative 8.9% year on year during the 1Q2009, to

negative 1.0% year on year during the 4Q2009. Nevertheless, the performance has been

quite volatile owed to the impact from the slowing down of global economic activities.

With the large negative performance recorded earlier, the Japanese REITs Index

registered a negative average cumulative return of 34.55%.


Outlook

The government’s stimulus package, coupled with strengthening in business profitability

and improvements in employment is expected to play a major part to boost the

domestic demand across all sectors including property. On this positive note, it was

reported that the Japanese economic growth is forecasted to be around 2.6% for the

year to March 2011, from an earlier projection of 1.4%, which would see Japan

achieving GDP growth of more than 2% for the first time since 2006.

The government also recently unveiled a long‐term fiscal management policy which

aims to achieve a primary balance surplus in fiscal 2020 in a bid to avoid a Greece‐style

debt crisis. With proper implementation of the policies introduced, positive outlook

remains for the Japanese economy to achieve GDP growth of more than 2% as

forecasted, hence supporting the property market to recover.

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