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Showing posts from March, 2006

Car Prices In Asia-Pacific

Topping The Charts As The Costliest Place To Buy Cars

If you live in KL, Singapore, Bangkok or HK, time and again you will find some gwailo driving around in a beaten up car. We are talking about someone probably on an expatriate package driving around in a cheap car. Mostly its because they cannot envisage paying for a new car at those ridiculous local prices. They have bought and driven many cars in Australia, USA, UK or Europe but never could they imagine that cars in Asia-Pacific could cost so much. If you look at the average per capita income of these countries, you'd be surprised at how most Asians even manage to buy a car! Just have a look and compare the recommended retail prices of the following cars - the first price is in the local currency, followed by a converted price into USD for comparison sake. Not all prices or car models were available in all countries. I just selected from Malaysia, Australia, Singapore, HK and Thailand. And to think that the Malaysian governmen…
Have A Good Read
Interesting Business Books for First Half Of 2006

I have a confession here, I don't read fiction. Not that I don't like good novels, just that there is so much good non-fiction in business journalism, and the fact that I have to get through so many business magazines and breezing through some research reports, that there is just little time left to read well. My all time favourite business books are easy to size up, as they are standouts by themselves. Everyone with a hint of interest in the business world MUST read the following two books (my all time favourite reads):

1) Liar's Poker by Michael Lewis
From the eyes of a trader at Salamon Brothers during the most heady times in the 80s. How financial product success brings power, how power leads to excesses and poor management. Very funny and a genuine writer at heart. The characters are so flamboyant, colourful and charismatic, and real at the same time.

2) Barbarians At The Gate: The Fall of RJR Nabisco by B…

Temasek & GIC Singapore - "Cain & Abel", "Donny & Marie" or.. ?

Temasek has been hogging the headlines for the past few weeks, and seems not to be shying away from the over-exposure. First, the situation with the purchase of Thailand's Shin Corp, and before the dust even settles, Temasek announced the purchase of the much sought after 11.55% stake in Standard Chartered from the Khoo family. So what's with Temasek, and how come GIC is so laidback compared to Temasek? Ask every person in Singapore, and probably 9 out of 10 could not tell you the difference between Temasek and GIC - saying that the PM's wife (Ho Ching) runs Temasek does not count, OK! Even the rural PAS members in Kelantan know that!

Temasek is the investment arm of the Singapore government. Initially important stakes were held by Ministry of Finance (in various sectors such as shipbuilding and manufacturing). Temasek is owned by one shareholder, Singapore's Ministry of Finance. The Government of Singapore Investment Corp (GIC) invests only the government foreign rese…
Asian Currency Unit - Needs To Take Off
Rebalances Economic Power To Asian Economies

China has just overtaken Japan as the world's largest holder of foreign exchange reserves with US$853.7 billion at the end of February. China's reserves rose a sharp US$26.3 billion in January to 845.2 billion dollars, then added another US$8.5 billion in February. Japan's reserves at end of February stood at US$850.06 billion. China's foreign exchange reserves have grown remarkably in recent years - more than doubling from US$403.3 billion in 2003, thanks to strong fund inflows and a burgeoning trade surplus. This news comes at a time when plans to launch an Asian Currency unit (ACU) to help develop regional bond markets and promote regional monetary cooperation seems to be stalling.

The plan to launch the ACU is an important step to wrest some economic power to the Asian side. Of course the ACU will never be a a public currency like the Euro, but it is crucial to develop a substantive …

Stock Market Capitalisation - A Reality Show

Finding Your Space In The World

Sometimes when we talk about financial markets, we miss the bigger picture of how things are. One could be the minister of finance or a big hedge fund trader or a big shot analyst... in various countries in Asia or Australia for that matter, we tend to get lost and self absorbed in our own world, exaggerating our importance. Many Asian investors and management often wonder why foreign investing institutions or foreign investors do not buy more shares of Asian companies. Some government authorities try their darndest to drum up interest among the foreigners. Maybe if we look at comparative market capitalsations, we will get a better picture.

Market capitalisation is calculated by multiplying the number of outstanding common shares of the firm and the current price of those shares. The term capitalisation is sometimes used as a synonym of market capitalisation; more often, it denotes the total amount of funds used to finance a firm's balance sheet and i…
Mis-Steps By Khazanah, Bursa & GLCs
Things That Make Me Mad

In less than 24 hours after my glowing write up on the reintroduction of short selling, I have been inundated with disappointing news of what transpired over the last 2 days involving the headlined companies and institutions. Sigh...

Short Selling - Apparently after PM Badawi made the announcement, almost every single CEO of the local funds got a phone call telling them that short selling is not "permitted" for local institutions. So, short selling is only for foreign institutions, where is the logic?? Why handicap the local funds? Of course, the actual rules and regulations have yet to be announced, please.... be logical and have a bit of brains and allow short selling for ALL, including members of the public. You cannot have one set of rules for some, and another for the other group - this is not NEP, this is supposed to be a world class financial capitalistic market place!!!

KPIs - Apparently people in the Bursa …

Short Selling In KLSE

Wise, Farsighted Or A Mistake

The government introduced several measures to enhance the local bourse including allowing large Malaysian companies with foreign operations and foreign owned companies with foreign assets of at least RM1 billion in market capitalisation to seek listing on Bursa Malaysia, enabling dual listings and reintroducing short selling. The government said the measures were aimed at bolstering the stock market to be a world class capital market. Other than that, to realign the regulatory framework, the securities and futures laws are to be reconsolidated into a single omnibus legislation.The consolidation of these two laws would enable the introduction of a single licensing framework for market participants.

Besides that, regulated short selling (RSS) and securities borrowing and lending (SBL) will be reintroduced, the government said. To attract global talent, the processing of visas and work permits for foreign individuals in all aspects of the financial services se…

Fly Me To The Moon

Banned Airlines By E.U.

When you have the planes keep diving into the Red Sea or having pilots that don't take-off and land properly, you say enough is enough. Various EU countries have come up with their own list of banned airlines from their skies. While we in Asia are still generous to "errors/poor standard practices" by certain airlines (I mean a couple of pilots playing mahjong and putting the plane on auto-pilot is macho-bravissmo right?), it might be good for us to pay heed to traveling on the following banned airlines, particularly when you are on a budget or when you are the adventurous type.... Now, where is my Citation when I need it the most?!!

By France
Air Koryo (North Korea)
Air Saint-Thomas (US Virgin Islands)
International Air Service (Liberia)
Air Mozambique (Mozambique)
Transairways (Mozambique)
Phuket Airlines (Thailand)

By Belgium
Africa Lines (Central African Republic)
Air Memphis (Egypt)
Air Van Airlines (Armenia)
Central Air E…

Malaysia's Natural Resources & Its Future

Summertime, and the living is easy....

Malaysia is a lucky country as it has bountiful natural resources from rubber, palm oil, oil & gas, timber, etc... Maybe its the fact that things are so easy, that we have been lazy and have not been efficient and effective in using our natural resources. I tend to liken Malaysia to Australia - back in the 60s-70s, Australia was a very resource rich country (and still is). When a country can just dig up stuff and sell for tons of money, its easy. Surprisingly, Australia has managed to transform itself from a resource reliant country to one which has a pretty good work ethic, all in a matter of 10-15 years. Now, you find companies such as Macquarie Bank, Toll Corp, BHP ... going at it with international players, and winning.

The funny thing is, maybe not so funny, countries that lack natural resources have to dig deep to perform in the business world. Places such as Japan, Hong Kong, Singapore and even Taiwan are good examples. When Country A p…
Casino Royale In Singapore
and then there were 4...

Thanks to the debilitating requirements set by the Singapore government, the race for the two casino integrated resorts (IR) licenses now comes down to 4 parties. They are, in no order of preference:
a) MGM Mirage / CapitaLand
b) Las Vegas Sands
c) Harrah Entertainment / Keppel Land
d) Genting / Universal Studios / Ong Beng Seng / Star Cruise

The latest estimated cost is roughly RM7.4 billion (US$2 billion) for the slightly more sought after Marina Bay site, and RM5.5 billion (US$1.5 billion) for the Sentosa island site. One of the main considerations will be capitalisation. On this factor, MGM/CapitaLand has the edge as it has a combined cash hoard of US$1.65 billion. However, MGM also has a relatively high gearing itself of 3.8x, and that actually is more important than the cash hoard. You don't want a company to be stretched or strained on cash committments as the IRs are for a very long period - that will play a role in the final de…
Khazanah and PNB Should Follow Temasek
Further Sale Of SingTel Shares

Temasek continued with its efforts to sell down its stake in SingTel by raising S$2 billion by selling 770 million shares at S$2.66 or a 5% discount from the market price. The sale reduced Temasek's stake in SingTel from 61% to 56.3%. The deal was arranged and placed out by Goldman Sachs. The last sale was in November 2004 when Temasek sold 2% of SingTel.

Of course there could be plenty of reasons for the continued sale: boosting free float; reducing exposure to local assets in preference of overseas assets by Temasek; to help fund the purchase of Shin Corp; part of the trade deal with the US; diversifying away from telecommunications into banks, plantations and drug makers; etc... Still, PNB and Khazanah should take the lead by reducing stakes in government linked companies in Malaysia. As I have frequently argued before, you want more free float, not more control. I can understand if PNB/Khazanah do not want to s…

Modular Techcorp Cancels Deal With Blue-I Network

Justice Prevails

Back in 4 November 2005, I blogged on these two companies, was furious at the blatant disregard for business transaction fairness. I hoped I played a small part in getting them to nix the deal. On 28 February, management of Modular announced that the company would abort the deal with Blue-I. Compelled by minority opposition to the RM21.5 million purchase, the Malaysia's Securities Commission initiated a review of the proposal in November.

Part of what made me so furious is the shallowness in business thinking in coming up with the deal. If I am going to rape the company, I could have designed a much better scheme. These twerps don't deserve to get rich, not enough brain power la.

Yes, after all my complaints that powers higher up were not asking questions, the SC has stepped in well even though this kind of deal does not require SC's approval. You can view my earlier rant on Modular/Blue-I in my blog on 4 November 2005, enjoy!
Revolutionary Products & Market Bubbles

Generally, when there are market bubbles, it will be because of some over-hyped technology or revolutionary product that is predicted to change the world we live in. When these hypes or revolutionary ideas fail to rise to expectations, thats when bubbles deflate rapidly. Back about a year before the dot com bust in 2000, the renowned Barton Biggs (investment strategist for Morgan Stanley then) was at a conference thingee where he was supposed to give an address, sharing the stage with an academic (whose name I have forgotten now) who predicted that the Dow is undervalued and that in 1999/2000 was the last time to buy before it rockets to the next level - 36,000! Now, they were all in the midst of a dot com frenzy and internet-taking-over-the-world stuff. Naturally Biggs got slaughtered by the crowd's response as he mentioned that the dot com frenzy has led to stretched valuations and is bubble-like.

The interesting thing is that the Mr. 3…

Understanding Business Mentality In China, Taiwan & HK - The Zhang Zhiyi Experience

Boy, I am so happy to be able to talk about Zhang Zhiyi in my blog on Asian business. Can you imagine that? Zhang had a wonderful 12 months thanks to Memoirs of A Geisha, but suffered enormous criticism over her role, which involved being involved with a Japanese man... in a movie role. I am not even going to go into how low-brow and uneducated an opinion it is to be offended by that MOVIE ROLE. You'd think things would die down..., NO... Zhang appeared magnificently in the recent Oscars, and even presented and she spoke surprisingly well in English. Was that good enough for the media? Apparently not. The media in China, HK and Taiwan have plenty to say about Chinese actress Zhang Ziyi and most of it is downright vicious.Below are excerpts from an article in The Straits Times in Singapore today.

Hollywood was enthralled with Zhang's beauty in Memoirs Of A Geisha, but it was her turn in House of Flying Daggers that captivated my attention. After her role as a presenter in the Os…

Strategic Stakes Taken By International Funds

Malaysian Companies To Watch

The following are significant stakes taken up by some international funds with a decent investing record in Malaysia. I will also rate the attractiveness of their investment out of ten. Bears watching.

Newton Investment Management Ltd is a big UK based fund. The fund has bought 42 million shares, a stake of 8.2% in Bursa Malaysia (the exchange). Its last reported purchase was for 305,000 shares on March 3. The fund's buying could a be a momentum play following the takeover bid by Macquarie for London Stock Exchange last year. That was rebuffed and was topped by Nasdaq by offering nearly a bid nearly 80% higher than Macquarie's a few weeks back. Bursa is making good money despite being so-so managed currently, so the potential for higher returns are good. Readers of this blog know how I feel about Bursa's management - probably ruling myself out for a job offer from Bursa. Good medium term investment by Newton Investment Management Ltd. (Rating 7.5…