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Showing posts from January, 2006
Time To Move From Sarawak

What's with the Bakun project? It was suppose to help alleviate the power shortage in Peninsular Malaysia... but that idea went belly-up... after spending about RM2 billion. Now, we can say enough is enough, cut the project.... or find a problem to the solution... The solution is Bakun can generate lotsa electricity... now how do we find the users for that ... now that transporting it to the Peninsular is not feasible.

The dam (damn) project is now expected to gradually generate electricity from late 2009. Shutting down the Bakun project seems to be a lost of face for the authorities... cannot let this happen... or else people will laugh at us (pssst... they already are laughing).

So they came up with aluminum smelting plants. These plants are big consumers of ... electricity... with soaring electricity tariffs and raw-material costs, many aluminum plants have closed shop in the United States and Europe. Major smelters are now searching the globe for place…
SYDS - Same Wolves, New Wool or New Wolves, Same Wool

Only in Malaysia and Singapore where the word "syndicate" has become a very much tainted word in our financial vocabulary. Even taxi drivers and hawkers can use the term to tout potential movers on the KLSE. The actual definitions of the word in a proper dictionary include:

1 a : a council or body of syndics b : the office or jurisdiction of a syndic
2 : an association of persons officially authorized to undertake a duty or negotiate business
3 a : a group of persons or concerns who combine to carry out a particular transaction b : CARTEL
2 c : a loose association of racketeers in control of organized crime
4 : a business concern that sells materials for publication in a number of newspapers or periodicals simultaneously
5 : a group of newspapers under one management

The funny thing is, to Malaysians and Singaporeans in general, when you mention syndicates, it probably means "a loose association of racketeers in control of…
US Dollar's On Prozac & Levitra

What does Bill Gates, George Soros and Warren Buffet have in common - all three predicted that the US dollar would correct in 2005, all betted against the dollar and lost.

If you follow an economics textbook, the US dollar would have, should have ... corrected by at least 30% by now to go anywhere close to solving their current account deficit. However, the US dollar looks likely to be thereabouts and thumb its nose at naysayers for the following reasons:

1) It is still the most popular reserve currency in the world. Go to any country for holidays and you cannot go wrong carrying US dollars. That reality is based on the convergence of some very important factors, and that perception will not go away overnight.

2) Somebody must be financing the deficit. Well, you now have the Middle East petrodollars being recycled to buy US Treasuries. China's emergence as an economic powerhouse have also recycled a lot of its savings into US assets.

The curren…
Finally The Sun Also Rises In Japan

In the early part of my career, I have the priviledge of working for the biggest broker in Japan, Nomura Securities. It was a wonderful experience as I got to sell stocks, convertibles and warrants (aahhh the Japanese warrants, what an instrument) to institutions in Australia and NZ, yet I get to travel to Tokyo extensively. It was a heady period. I was naturally a top sales guy as the Nikkei zoomed from 22,000 to 31,000 during my stay. An excessive bull run tend to make one believe that they are smart and near invincible. My bosses only chided me for not spending enough in my entertaining of clients - can you beat that, gotta love the Japanese work culture.

Thankfully I got out and went into equity research for Asia Pacific markets a year before the Nikkei started imploding. Naturally, markets would correct and they would come back after a few months or even a year or two, but the Japanese equity markets never recover that way. It was like it went i…
Stop Blaming China (Alone) For US Trade Deficit Problem

Bloomberg reported the following today: "People's Bank of China Assistant Governor Ma Delun said the market is determining the yuan's exchange rate, rejecting U.S. criticism that the government keeps the currency artificially weak to spur exports. Ma said currency policy wasn't to blame for the U.S. trade deficit. ``Workers' pay in China is 1/33rd of that of a U.S. worker,'' Ma said. ``The U.S. has to accept this global reallocation of industries.'' Senators Charles Schumer, a New York Democrat, and Lindsey Graham, a South Carolina Republican, are sponsoring legislation in Congress that would impose tariffs on imports from China unless the yuan is allowed to appreciate more rapidly. The U.S. government estimates the trade deficit with China widened to $185 billion in the first 11 months of 2005, up 25.4 percent from a year earlier. The yuan's value has risen 0.5 percent against the dollar s…
System Overload!! ... System Overload??

As reported in Bloomberg today: "The Tokyo Stock Exchange halted trading for just the second time in its history after a surge in orders overloaded computer systems. Trading on the world's second-largest exchange stopped at 2:40 p.m. Japan time, 20 minutes before the regular close. The exchange, which replaced its president last month after two computer breakdowns, said it may shorten trading hours tomorrow. Japan's Nikkei 225 Stock Average tumbled 2.9 percent to 15,341.18, extending a decline that wiped off more than $300 billion of market value this week. Tokyo Electron Ltd. and Toshiba Corp. were among technology-related stocks that dropped after earnings from Intel Corp. and Yahoo! Inc. fell short of estimates. The exchange halted trading after processing 4 million orders, the maximum it can handle. It earlier asked brokerages to pool client orders to reduce the number of transactions. The suspension may further undermine investo…
Enough Said, Please Read The Judgment

You can read it on Page 4 in NST and the front page of The Sun, ... but you will have to dig pretty hard to read it in The Star (tsk, tsk, used to be my favourite paper...) and then The Star had the audacity to leave out the names of the two corporate players. The case starring roles involved Metramac, Metro Juara, STKG, DBKL ... among others. Featuring Halim Saad and Annuar Othman. Special appearance by Justice Sri Ram. Revolves around selling a company for RM97.5m when it is due compensation of RM764m.

The greed, deception, trickery, arm twisting and collusion involved is as obvious as Lim Kok Wing's hair piece. Good thing is that cases such as these made the light of day. I thought these would be (once again) swept under the carpet of wishful thinking. It is embarassing to the country but it needs to be done, and maybe, just maybe, there will be less injustice, ... and more integrity in the financial , legal, political and economic system. It…
How To Make A Bad Thing Worse (Part 2) - Proton (Again??) & Volkswagen

As reported in The Edge Daily:
Share price of Proton Holdings Bhd fell as much as 19.6% or RM1.25 on Jan 13 in a knee-jerk reaction after Volkswagen (VW) scrapped joint-venture plans to build and sell VW brand cars for the local market. VW chief executive Bernd Pischetsrieder reportedly stated that there were differences in the proposed JV.
“We had a very specific idea how we wanted to proceed there. Unfortunately the Malaysian government, Khazanah (Nasional Bhd) and Proton had different ideas. Therefore what we wanted in the cooperation with Proton will not materialise,” chief executive Bernd Pischetsrieder told investors gathered in Dearborn, Michigan, on Jan 11. VW placed the presentation from a Lehman Brothers event on its investor relations website on Jan 12.

In a Bloomberg newsbite posted on Jan 12:
Proton's spokesman Yusri Yusof said the carmaker had not received formal notice of an end to the investmen…

EPF's Returns vs Armed Forces Fund's Returns

I was browsing through The Star paper and came across this letter to the editor from a Dr. Chang from Klang. He cited the impressive performance of the Armed Forces Fund, which recently announced a 15.75% payout to its contributors for the last financial year. The returns included a 7% dividend, a 3.75% bonus and a special bonus of 5% in the form of free unit trust units. Dr. Chang further compared that with the sedantary EPF which declared a dividend of 4.75% for 2004. Naturally, Dr. Chang implored EPF to shore up its performance to at least somewhere closer to the Armed Forces Fund.

EPF is a convenient punching bag for all. I think 4.75% last year from EPF is decent, not in the "very good" category, but decent. There are a few things that Malaysians who contribute to EPF must know:

1) EPF is very big, and the amount of fresh funds coming in every month is also substantial. To move those funds into appropriate assets is not easy.

2) It is a pension fund, not an equity fund or …

KLSE'S Low Market "Velocity"

A fellow professional and a close friend asked me today about KLSE's low market velocity. I was stumped at first because I did not know that a stock market has velocity. Velocity of money, I have heard of, but in a stock market?? Maybe its the time difference and distance when the client bangs his head against the wall after buying shares?!!

As an after thought, I think I understood his usage of the term. Its the low volume turnover on a daily basis relative to the market capitalisation. OK, granted that the fundamentals for 2005 have not been overly exciting but there are other Asian bourses which can register decent daily volume relative to their overall market capitalisation even in dull periods. Why not the KLSE??

My take:

a) Developed countries favour mutual funds investing rather than personal investing. For example, US investors are generally averse to invest in stocks themselves. Mutual funds are a preferred choice for most. As institutional funds control the market, it will …
Redtone's Tumble & Who's Next

As reported in The Edge Daily:

"REDtone International Bhd, whose share price fell to its historic low of 94 sen on Jan 6, has warned of lower earnings in the next two quarters as competition in the industry continues to intensify. Group chief executive officer Wei Chuan Beng said that its local business was operating under intense competition in the telecommunications market as major telecommunications companies were slashing their call rates. Wei also said the commercial rollout of its discounted call business in China this month would contribute to its earnings from March onwards. In Pakistan, since its commercial rollout last January, the operations have been showing monthly revenue of RM3 million. For the second quarter ended Aug 31, 2005, REDtone posted a lower-than-expected net profit of RM6.01 million. Analysts’ consensus estimates for the financial year ending Feb 28, 2006 is RM27.08 million net profit. "
To me, Redtone is easi…
The Questions On Transparency - Proton

Well, well, now we have questions on transparency on Proton's decision to sell "the thing" for 1 Euro. Part of the letter written by Tun Mahathir and Tengku Mahaleel is reproduced below:

"Who offered to sell or who offered to buy at one Euro?
Were there other bidders?
Was there an attempt to get the buyer to pay a higher price?
Was there an announcement that M.V. Agusta was up for sale?
If not did Proton approach only one bidder?
If other bidders were offered, did they reject?
Who in fact made the decision to sell?
Can Proton explain how selling an entity bought at Euro 70 million for one Euro would not cause Proton to lose money as is claimed?

Gevi S.p.A. is not a household name in the automotive industry. Is it a motorcycle company, confident that it can turn around M.V. Agusta, something that the sale by Proton implies that Proton has no capacity or ability to turn it around? Not having to pay Euro 70 million will be an advantage for …