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Showing posts from January, 2007
Yen-Dollar Movements

The Mumbling Priest said...
Hi, saw this today from a Reuters article: "The dollar scaled four-year peaks against the yen on Monday amid expectations of strong U.S. economic data this week ..." "This week is make-or-break week for the U.S. dollar," said Kathy Lien, chief fundamentals analyst, at Forex Capital Markets in New York. "The foreign exchange market has turned very dollar-bullish after a series of upside surprises in economic data, causing a sharp plunge in rate cut expectations," she added. Dali, is this why the markets are down this morning? How would you interpret this?

For a mumbling priest, you sure don't sound like one. You have a couple of factors causing a sharp weakness in the yen and a corresponding uptick in the dollar:
a) yen carry trade - this is one of the newer terms created just to alienate the general public, a carry trade is borrowing in the currency and then converting it (selling) to invest in other asset…
Big Picture - Capital Flows
Tough At The Top

When equity markets are at all time highs, its tough for everyone. You don't want to miss it but you are wary of the short term correction. This current global bull run has captured almost every equity market into its grasp. If we were to look at it - this bull run looks quite tame, not much excessive exuberence. Which is good because it means there is less froth. Of course, I am refering to most of the European markets plus US and even Malaysia and Japan. Markets that look more frothy are the ones in HK, China and Singapore. FVrothy as in the sense of more speculative plays and margin plays. So, in a nut shell, on participation level markets still look "safe-ish".

On factors affecting capital flows - interest rates and interest rates expectations. ECB - flat or down. Federal Reserve - Flat with possible downside bias. Bank of Japan - Flat with upside bias. China Central Bank - Flat. Interest rate expectations is probably the mos…
Kinsteel's Fortunes

The Accidental Investorsaid...
Dali, Actually sold half the warrants at 2.65 (top for the morning session - hence causing resistance) for a nice piece of biz (+348% gain). If the rest of the warrants drop to zero, I am still holding on to close to 150% net profit. Not too shabby. Kinsteel is a story that is as yet unfolding. Analysts put it at a target price of 4x FY07 earnings at RM2.40. But I am not convinced. Already the last Q results with one month of Perwaja contribution was sensational -even though all Perwaja mills were not fully operational yet. I also believe that the analysts are wrong on the target EPS and it should be higher. And I don't think we should be valuing a market share leader at 4X earnings especially in an environment of rising steel demand and prices. Valuing is at a reasonable 8X PE for a market share leader (assuming EPS targets are correct) would actually lead to a valuation close to the RM5.00 you mentioned. This will be interesti…
Retail Participation - Part Deux

Rafeedah Bigbuns said...
Could it be possible that one of the reasons for the apparent lack of retail participation in the market is that a large number of them may have given up investing on their own and instead put their money into Unit Trusts and let others manage their money? Perhaps the Unit Trust companies and their sales people have done their job too well and successfully persuaded a great many people to invest via unit trusts instead of picking stocks themselves.This may be the current situation. I have a feeling that at a later date when unit trust investors find that their investment take too long to give a profit (maybe due to the initial load and management fees) they may well abandon unit trusts and return to investing directly in stocks themselves.

swifz said...
unit trust has done their advertisement well. Look at the 20% dividend that they declare. Sure more will rush in.

doraiddd said...
yusli doesnt think he's king of the world cos he…
Foot-In-Mouth Disease
Ramblings By Yusli

The head of Bursa Malaysia laid out the reasons why retail participation in the current bull run is low. My comments in blue.

Foreigners are more bullish on and have stronger interest in Malaysian stocks than local investors, according to Bursa Malaysia chief executive officer Datuk Yusli Mohamed Yusoff. Foreign fund managers are gung-ho on Malaysian stocks. However, local investors seem to have no faith in domestic companies.
Local investors have faith in the companies, just not so much faith in the ways of Bursa. Local investors are in the rally, just not at a level as the foreign investors' appetite. Yusli has to remember that we do not have contra trades like before; we do not have T+7 and contango deals like before - friend, you cannot have your cake, eat it and blame it on fat guy. When the restrictive rules are in place (which is good for the integrity and quality of the market), the changes are bound to be there. Blaming local investors…
Financial Jargon & Terminologies For The Current Times

This is largely a repost of some smart-ass definition for financial jargon.

Earnings Before I Tricked the Dumb Auditor

Earnings Before Irregularities and Tempering

Top-Down Investing
People with a bit of economics knowledge but scared shitless about accounting

Bottom-Up Investing
People who knows a bit about accounting but hates fiction

Unusual Market Activity
Something the management and directors always know NOTHING about

Averaging Down Investing
When you totally ignore the fact that you were wrong in the first instance

Doubling Up Investing
Making doubly sure that you are more than fully-invested when the stock eventually tanks

Chief Embezzlement Officer

Chief Fraud Officer

Second Board
What Second Board???

Margin Account
Shorter rope, tighter noose

Hedge Funds
"Institutionalised" margin accounts

Normal Andersen Valuation

Never Pay Any Tax

Eventual Prison Sentence

Federal Reserve Board
Bank of Japan on Prozac

Floods, Indian Ocean & Al Gore
No Happy Feet!

Floods In Malaysia & Indonesia - A bull market will turn even negative news into a positive market run story. For the first time in decades, the sothern part of Malaysia and parts of Indonesia have experienced unusual torrential sustained rainfall for the past 8 weeks. Hundreds of thousand have had to evacuate with many losing much of their belongings. Now that has turned into higher prices for timber and crude palm oil, both countries being big exporters of both products. Prices for timber have risen by at least 25% over the last few weeks.

Is this an abberation or the start of yearly cycle risk, much like El Nino and El Nina? Having read some reports, one by Prof. Dr. Ferdolin Tangang, an oceanographer at UKM, it looks likely that the situation was brought about by warmer ocean waters in Indian Ocean and partly due to melting ice caps. Chalk one up for Al Gore, the warmer waters could cause a lot of things - the Indian Ocean was sup…
The Effects Of A Bull Market

1) Delusion - May cause most investors to think that they are smarter than what they really are. A prolonged bull market may even cause some to elevate oneself to demi-god status. A normal market is like sitting for a test and answering an objective test with 4 choice answers, one of them being the correct one. A bull run is like sitting for the same test the only difference being three out of four choice answers happens to be the correct answer.

2) Coverting Temporary Events Into Annuity - All of a sudden some investors will find that they are making 5,000-20,000 a week. All at once, the investor will turn into an actuary specialist and calculate the fresh stream of income as an annuity (prolonged consistent rvenue for the longest time). This will give rise to euphoria in mind and cause the person to spend the net present value of the annuity in leveraged format.

3) Experts' Predictions - You can sift out the good experts and the merely qualified ones. W…
Market Strategy

This applies to all stock markets I guess. Its frustrating, isn't it? The market keeps rising but you cannot find anything to buy. Every day that the market closes higher makes you think about how it was during the last market collapse. You wonder how that will happen, will you be caught (again), ... This bull market is not a recent one, I have already said many times early last year that we are already in the midst of a global bull run, and many were not aware of it. What we are seeing is the last 25% of the bull run, where everything looks good and rosy. Interest rates going down, oil prices whacked down, earnings reports all solid,... The last few weeks have been more exciting for Asian bourses. The currency factor is a major impetus.

Have a look at the blue chips, most have gone past their anticipated fair values, who would want to buy more, how much higher can they go? Can Genting go to RM40? Can Maxis go to RM12? What about Resorts... RM18?? Seriously, these fi…
Fergetaboud Horror-Violent Movies

Movies can only try to capture reality. No matter how wonderfully expansive our imaginations are, reality always wakes us up to inhale the smelling salts of life. Described below is not something from Ichi The Killer but something which happened in Japan.

A woman was arrested for dumping husband's mutilated body in the park in Machida, Tokyo, where the victim's head was found. A 32-year-old woman has been arrested for abandoning the mutilated body of her husband late last year. Kaori Mihashi, from Tokyo's Shibuya-ku, stands accused of illegal abandonment of a body. She has confessed that she murdered and dismembered her husband, Yusuke Mihashi, 30, in December. Kaori allegedly put parts of the mutilated upper part of her husband's body in a bag and abandoned the bag in the Shinjuku district of Tokyo in December. She left the man's lower part in the garden of a house in Shibuya-ku. (Borat would say: Nice...)

Based on the woman's c…
Snippets, Snipes & Snides - 3rd Week Jan

MAS - Possibly the most expensive airline to fly. MAS fares are priced like the Patek Phillip is to watches, but in reality MAS offers a service level that is akin to Swatch. Fair enough that the new management have its work cut out for them thanks to the inefficient management of the past (with some still lingering around in the boardroom), and Jala will never get a better chance to turn this Titanic around with the current bull markets. So, I must tip my Aussie Baggy Green cap off to Jala for quickly coming out to sell shares to fund the turnaround - that was the smartest move since his appointment. Shares of Malaysian Airline System Bhd. fell sharply yesterday, a day after the company said it plans to sell 1.6 billion ringgit of shares to improve cash flow. MAS plans to sell 418 million new shares and an equal number of redeemable convertible preference shares, or RCPS, at a possible 45% discount to the ex-rights price. The share issue wi…
Star Cruises & Resorts World In Macau

Star Cruises was suspended late last week - ask anyone, when they heard of the suspension, the first thing on their minds was "fund raising exercise...again la". Only, this time its a bit different. Genting group has two "problems", the underperforming and capital hungry Star Cruises, and the excellent balance sheet and cash yielding but dormant Resorts World. Genting is solid with its power plants, gaming, etc... Genting International is the same with the integrated reorts.

Resorts World's only attraction is the world's biggest hotel and the sole highland casino in Malaysia. Its making money but growth is very limited. Star Cruises Limited, a 34.4% owned associate of Resorts World, is the third largest cruise line in the world with a fleet of 20 cruise ships. But Star Cruises has brought more funding problems than positive results. If Star Cruises continue to perform badly, it will eventually suck most of the cash of…
Possibly The Funniest Malaysian Posting In 2007

There had been some hoo-hah over the inclusion of some common but dubious "sayings" in the official Malay dictionary. The blogger linked below posting possibly the funniest blog for 2007... even this early. For those linguistically-challanged in the Malay language, I will attempt to translate bits of it (blue).

Mabuk Keling(dalam bahasa perancis: Indien ivre) (in French...)

Asal-usul: Ahli-ahli sejarah percaya bahawa fenomena 'mabuk keling' ini terjadi semenjak lahirnya todi dan Samy Vellu. Origin: Historians believed that the phenomena of mabuk keling came about with the invention of toddy and existence of Samy Vellu.

Maksud: Orang mabuk yang berperangai seperti bahlul+beruk+bangsat; sedangkan hanya minum segelas dua air haram. Perhatian: Adalah dinasihatkan supaya berhati-hati ketika menggunakan perkataan ini. Perkataan ini cukup sensitif sehingga boleh menyebabkan botol dibaling ke arah ke…
Asian Markets' Jitters

As reported in TheEdgeDaily - Asian stock markets fell and regional currencies weakened in the morning session today (Thursday) triggered by a series of negative news, including investment curbs in Thailand, Venezuela’s proposal to nationalise its utilities and the fall of oil prices to a 15-month low of US$55 (RM193) per barrel. Jakarta’s stock market was the worst hit, losing 3.96% or 70.51 points to 1,710.36 while the rupiah fell 0.55% to a two-week low on worries that Indonesia could also follow Thailand in imposing investment curbs. Japan’s Nikkei 225 fell 295.37 points to 16,942.4, Hong Kong’s Hang Seng Index was down 329.74 points to 19,568.34, Singapore’s Straits Times Index dropped 47.2 points to 2,961.15 and South Korea’s KOSPI lost 18.55 points to 1,355.79. However, the Stock Exchange of Thailand Index bucked the trend adding 0.71% or 4.39 points to 621.14, after falling 2.6% on Jan 9. On Bursa, the Kuala Lumpur Composite Index (KLCI) fell just 5.7…
Toll-Tally Out Of Order
As reported in Screenshots:
1 ) January 8, 2007: Litrak CEO responding to Malaysiakini in Kuala Lumpur:
Litrak CEO Sazally Saidi told Malaysiakini in a written response that issues raised with the revision of toll rate along the LDP should best be posed to the relevant authorities. “This is because all those issues had been thoroughly discussed between the company and the authorities, where details were tabled, audited and scrutinised. Thus, the authorities are the best parties to provide answers as this will prevent any misunderstanding or misrepresentation of information with regard to the issues,” he said.

2 ) January 9, 2007: PM Abdullah Ahmad Badawi responding to Bernama in Putrajaya : Abdullah said the decision to allow the recent toll increase was based on representations by the concessionaires on their toll collection. "And what they proved to us, to the government, was that the toll had to be increased," he said. Asked whether details of the toll…
Thailand Looking Shaky

There seems to be a sense of innocence among the new government of Thailand. Maybe its because they were largely from the military. You had a boo-boo by people at Bank of Thailand, which nearly collapsed the country's financial markets - OK, it was not the new government's direct fault. Reversal of the equity investment ruling for foreign funds was swift and applauded. Then the bombings from the south moved to Bangkok and Chiangmai.

The government came out saying they probably won't be able to find out the mastermind behind the new slate of bombings. Pretty naive, even if that is true, you can discuss about it in private not communicate that in public. Public confidence is important.

While all that is happening, foreign investors are preparing for a new blow: the possibility they will be forced to divest themselves of shareholdings in Thailand-based companies. Foreign business leaders say they are worried about recently disclosed plans by the military…
M&A = Private Equity Mania

The driver for the bullish undertone in KLSE stocks should be M&A activity. Why are so many Malaysian listed companies considering M&A exercises? Not due to the ingenuity of our under-powered merchant bankers for sure. Its directly correlated to the private equity boom over the last 24 months all over the world. The boom started in the US, rolled over to Europe and then into bigger markets in Asia.

Malaysia kinda missed the boat owing to "equity ratio thingee", the general fact that Malaysian companies are too small, and the fact that many of the "undervalued companies or under-managed companies" are GLCs (which would present a whole new set of issues when trying to take them private).

Still, I do believe that the smaller private equity funds will find their way via JVs into Malaysian markets sooner rather than later. Many savvy company owners would be able to see the trend and they'd better move to gobble up undervalued comp…
Email Contact

Jomaropol said...
Salvatore, I was wondering do you have any email which we can email you with, if we heard anything worthwhile?

Dear Visitors & Friends,

You may contact me anytime at:
What Are The Dangers For 2007

Everyone seems to be quoting the following article about US$22b being plowed into emerging markets:

Emerging market equity funds attracted US$22.4 billion (about RM77.6 billion) in 2006, of which US$11.2 billion or half of total inflows went into China related equity funds, according to Emerging Portfolio Fund Research (EPFR). The US-based EPFR - which tracks equity and bond fund flows of 15,000 international and emerging market funds with US$7 trillion in assets - said on Jan 3 it was another record setting year for flows into emerging market equity funds. “Strong fund flows for Asia ex-Japan and China Equity Funds in the latest week (final week of 2006) suggests that the ripples caused by Thailand’s recent imposition of capital controls have rapidly faded,” it said in a report. EPFR said global equity funds recorded inflows of US$29.7 billion, a 51% increase on the tally for 2005 and the third straight year that these funds had posted a record for inflows…