CNBC, May 11, 2009
Head of the YTL Group, Francis Yeoh was voted one of Asia Most Successful CEO's last year by Asia Money Magazine. He has a reputation for shrewd investments and picking up under valued assets. When our executive editor Alan Friedman sat down with him, he began by giving his take on the newly appointed Prime Minister in his home country of Malaysia.
Yeoh: The ruling coalition was started by his father. He was the founding father. And he would not like to be the person in the family that lost the coalition government in history. So I'm quite sure he's going to work his guts out.
We are quite sure that he is surrounded by Kim Chan types - Blue Ocean strategist people.
And people like us will back him up to the tilt, if he takes the courage, do the right things; bold blue ocean strategies, do four or five stuff that can fire the imagination of the people of this country. Four years is an eternity in politics. He could make it.
Alan Friedman : Two quick questions about America – what do you think of Obama's $800 bil stimulus programme? Is it enough?
Yeoh: No I think its not enough because the issues are very very big. But I do agree with Obama's broad strategy. And that is to invest a lot of this money in communications, like WiMAX type of communications. After all, he got voted in by the Facebook type technologies that got him in. He would understand all of that. This is where America's Google type (industries) can continue to thrive.
And secondly is, infrastructure. While Japan is always accused of building a bridge to nowhere, Americans have not spent money on infrastructure on their railroads, roads, and they could build infrastructure and give that a big boost.
So I would say, with all the knocking of these plans, two of them at least are focused and I think that can work.
Alan Friedman : Whats your forecast? Some people would go so far as to say large parts of America are actually bankrupt. But they don’t want to admit it. I'm not just talking about banks, but what’s your view, seen from Asia of where America is going, and what that means for you in Asia.
Yeoh: We hope America recovers and all but I think at the end of the day, people are always very emotional and overshoot their emotions. I think America has, in a nutshell, a strong economic base, they have a strong intellectual capital, and if they do not participate, in ‘myopism’ and close in on inward looking policies, America will still get out of this rut, faster than any other economy.
And I still believe, not withstanding what people are knocking America, they will get out of this in a couple of years.
Alan Friedman : What about world stock markets? Do you think with the Dow Jones, somewhere between 7 and 8 thousand and London and the whole world still down, in the gutter, you think we've reached the lows? You think it’s going to get worse?
Yeoh: No, I think fundamentally, this is a huge problem. I think the American economy has to re-gear and public sectors have to re-gear.
While traditionally American economy was okay, the government only got 50% of the GDP, they have to do 300% now. That's a lot of paper printing, so this will again introduce a new dynamic of the US dollar valuation in the future.
So put it all together, I think one of the more compelling reasons to invest in London now, and in Australia today is the implosion of the pound.
If you buy assets – British assets or Australian assets, there's a chance that the currency will appreciate in the future.
I’m seeing yields in different businesses, very attractive and some of them are above 10%. And the last time, yields like that in real estate, 10% or 8% yields and interest yields is 15%, for something is really gone asymmetrical in the world economy and there is totally a lack of logic in thinking now. There are a lot of opportunities.