Thursday, May 31, 2007
Wednesday, May 30, 2007
Finally, the out of stock album by Paul Ponnudorai is finally back in stock as of today. Click on link below to sample some of the brilliant songs, and you can order straight away - cdbaby is a safe internet retailer, can use almost any credit card. Remember to buy a few, makes for an excellent Christmas present.
Tuesday, May 29, 2007
Monday, May 28, 2007
Saturday, May 26, 2007
Friday, May 25, 2007
HK Dollar, The New Carry Trade
The HK dollar has been experiencing heavy selling even within its allowed trading band. So much so, the yuan has already appreciated past the value of the HK dollar and going further ahead on its own. Last year the yuan was still some 5% cheaper than the HK dollar. The HK currency is pegged to the US dollar. The economy was almost ruined in 1998-2000 when the island state management refused to devalue the HK dollar despite all other Asian currencies dropping like flies around them. That had the effect of pricing all goods & services in HK to be totally unsustainable and unfeasibly high. The secondary effect was that many industries had to be relocated out of HK to southern China in order to remain competitive. Even big HK listed firms had to outsourced as much of operations as possible NOT to be in HK in order to cut costs.
HK was lucky to recover as fast as it did, not so much because they did not devalue their currency but because of its proximity to China. Over the last 10 years China has stepped up to the plate and turned itself into the outsourcing capital of the world. Growing demand for professional services by Chinese mainland firms have jump-started many of the services sub industry of HK. Richer mainlanders visited and spent ferociously in HK. Without China, HK would have been in the doldrums still. The growth in listings of H-shares in HK have boosted financial services both ways. The surge of property prices and projects have given many in the sector something to diversify into during the down days.
The selling in HK dollar is largely prompted by the disparity between HK interest rates and US interest rates. There is a gap (HK rates lower), and since it is pegged fully to the US dollar: savvy investors are borrowing in HKD to invest elsewhere, or just park in USD deposits to lock in the gains. There is an additional chance that the HK Monetary Authority might repeg the HKD cheaper, so the HK carry trades would get a super boost should that happens as well.
The local currency hit a 22-year low last Wednesday, trading at 7.8256 to the US dollar. HKMA is not certain for now how the market would react if the Hong Kong dollar continues to fall, and the authority will have to intervene with the market, ensuring the currency is traded between the convertibility zone of 7.75 to 7.85 against the greenback. The danger is that the market forces will probably force HKMA's hand. Imagine big asset holders getting more jittery, they would sell assets to convert their HKD to other currencies, in particular the yuan (if can find a bank to do it). Market forces can swiftly turn itself into a whirlwind and when sellers in properties and stocks start doing the same thing, the HKMA has to step in immediately. Talking about it now will only bring forward the inevitable. The HKD has been overvalued for way too long.
Plus, if the HKMA were to repeg to say 8.2, this would be a short sighted move. HKMA will have to:
a) disband with the pure peg to USD altogether because its trade portfolio is not entirely USD important now
b) free float, while excellent, it will not happen, case closed
c) repeg but to a basket of currencies more closely linked to trade profile of HK, e.g. 25% yuan, 25% USD, 25% euro, 25% yen as a start
If the HKMA were to repeg to 8.2 or 8.3 but still with the USD, they will have to redo it again very soon and the peg is not a true reflection of underlying economy. A mismatch here bring problems to the underlying industries in HK and plays havoc with their competitiveness. Hence even in a repeg to the USD, it is best to also widen the allowed trading band. For example, if the repeg was to 8.2, at the same time announce that the peg would be allowed to trade with a 0.3 HKD band either way. That means effectively the peg can be 7.9 to 8.5. It gives HKMA more room to move and manage their financial economics better.
We have to appreciate that the HKMA MUST always put up a front that they won't devalue (even if they are thinking about it). Just the hint that they are thinking of a devaluation would sent aunties selling stocks and properties and converting them to AUD, Euro or Canadian dollars. Current BLR is at 8.0% or even 8.25%, not exactly comforting. That's partly why HK properties did not mirror the surges in Japan, Singapore or China big cities. At 8.0% plus a weakening outlook for HKD, properties won't be going anywhere.
Wednesday, May 23, 2007
Tuesday, May 22, 2007
Been to many of his gigs around Malaysian pubs, shared many a Black Label on the rocks with the man. Know him only casually. As we both came from the same hometown, there was instant familiarity. Paul is easily the most gifted musician from Malaysia. Unfortunately the country is not ready to recognise greatness in his form of musicianship, neither is Singapore. I can also lump Indonesia, Thailand, South Korea, Japan and HK into the same group - all victims of pop culture to the detriment of recognising real musicianship and musical integrity. The only country in Asia which I think has a higher level and more varied base of appreciation is Taiwan. If Paul were to ply his trade in Australia, UK or US, I think he can achieve a similar level appreciation akin to John Legend or Norah Jones. Still, I think Paul would stand a better chance of getting the right exposure by playing at the various music festivals in Singapore. I believe great things will come for those who have been blessed with significant gifts at birth, at the proper time, in His time.
That's the thing, we need an international magazine like Time to highlight what we should know ages ago. Why do we need a foreign source to tell us that someone in our local shores is great? Is that the validation we need before we recognise real ability? Please don't be crass by awarding a Datukship to Paul now!
Readers in Singapore should try and catch his gigs, I think he might still be playing at Harry's Bar. Paul's brilliance is taking any song and making it different, new and refreshing. His guitar playing is like a pandora's box, its amazing to see what he can do with it. In 2002, lengendary trumpeter Wynton Marsalis showed up at a performance and was so taken by it, he grabbed his instrument and went onstage to play alongside a Paul. Marsalis said "Ever since I got off the plane I've been hearing about nothing but you". The pair jammed together for the next two nights.
Paul is a bit like Jose Feliciano coupled with Tommy Emmanuel, but with the jazzy dexterity of Earl Klugh. Plus he can sing as well, not the American Idol type, but from the heart. Available album, Right On Time. Go to cdbaby and have a listen to all the songs on his album, order a few and give them as gifts, your friends will love you for it. Listen to Killing Me Softly, an instrumental that haunts you even more without the words. The melody lines taken and the phrasing grab your heart and soul and demands to be listened in totality - you just have to surrender. Listen to his rendition of 500 Miles and you can feel that he has walked the bloody "500 Miles" on his own terms.
Article in Time magazine:
Monday, May 21, 2007
G-8 meeting this week in Germany. The finance ministers will be discussing 3 main issues: 1) how to make hedge funds more transparent; 2) aid to Africa; 3) climate change issues. There is apparently no mention of excessive valuations in financial markets or excessive money supply growth ... hmmm! They obviously think that market intervention is not the correct strategy, and also the current global bull run in stocks is OK. and within limits of sensibility. Other than that, better and stricter regulation on hedge funds is long overdue. The adoption of more regulations over hedge funds will go a long way to cushion the time bomb.
Wolfowitz finally out of the World Bank. Surprisingly, Henry Paulson will not be attending the G-8 meeting. Something more important on his calender, the Chinese visiting Washington on May 23 onwards. I don't think Paulson is giving a lot of face to the Chinese, rather I think he wants to stay around to help pacify the "anger and rants" by certain lawmakers on China's role to help redress the US trade deficit.
The hedge fund issue is contentious with some G-8 members. Britain, the United States and Japan are still uncertain over any strict guidelines. The systemic risks are getting higher as these funds can also leverage. At the end of 2006, around 9,400 hedge funds operated worldwide, controlling assets of some US$1.4 trillion. That's more than twice as many hedge funds as operated five years ago, while funds under management have nearly tripled during the same period. While I am basically for free markets, the developments of the global economy over the last 5 years have made each and everyone connected. When there appears significant players within a group with substantial capital and leverage, it could cause a systemic implosion, that is what we want to guard against.Already China's Vice Premier Wu Yi has already signaled some offerings prior to the visit by widening the trading band for the yuan. He also said that the China-U.S. business and trade relations are of win-win in nature., and that China's exports brings incontrovertible economic benefits to the U.S. Just to preempt the inevitable anger and protests, Wu noted that "attempts to politicize trade issues should be resisted." About half the cabinets of China and the US will meet in Washington tomorrow for their second in a series of meetings. And the focus will be on how to head off American pressure for a full-blown trade war with China. While there isn't much being written for the time being, I think certain members of the congress will make radical statements and even antagonistic claims against China over the trade issue. Mind you, they also need to stand out with the elections next year. I believe some American lawmakers will try to capitalise on the issue to win political points. Look for all presidential candidates to give their two cents on the issue - again, when placed against contenders, everyone will try to outshine the others, expect some fiery comments. It will not be an easy week for Wu Yi and Paulson. Morgan Stanley chief economist Stephen Roach told a hearing of three House of Representatives subcommittees last week that "by going after China, you in the Congress are playing with fire". Throwing the gauntlet down to China will result in the US imposing restrictions or duties on trades with China. China will still survive. The US needs to appreciate the delicate balance of a planned economy trying to adopt a capitalistic free market economy, with loads of inefficiencies still in the financial system. Got to work with, not against the big wigs. Roach rightly pointed out that Congress's case relied on flawed macro-economic analysis "focusing on a large bilateral trade deficit with China rather than on an unprecedented domestic savings shortfall that gives rise to a large multilateral trade deficit". Sanctions on China "could quickly impact the rest of Asia, which has become increasingly integrated into a China-centric pan-regional supply chain". Its high time address the US savings rate, and not just look at the external party to blame your woes on.
Naturally its not all "bad for the US", as a matter of fact China needs to address a few issues as well:
a) removal of state subsidies in the form of tax deduction and fuel costs
b) anti-dumping issues
c) much stricter imposition of patent, IT and trademarks
At the end of the day, the US congress has to realise that at least 60%-70% of the exports from China are funded or owned (or partially owned) by MNCs, many of them US companies. They are just relocating the production side to China and re-exporting back. You kill the outsourcing, you kill the cost savings for the MNCs (which I think is a significant factor driving profits for MNCs over the last 5 years). Its certainly not black and white, but many shades of grey.
Sunday, May 20, 2007
I have ranted that the horse blundered in Kentucky Derby and the jockey did a poor navigational job which only saw Curlin rattling home for 3rd. The second leg of the Triple Crown saw Curlin show its true colours. A depleted field meant little traffic problem this time for Curlin. Curlin nipped Kentucky Derby winner Street Sense by putting his head in front on the final stride, winning the Preakness Stakes in a riveting finish Saturday and ending any chance for a Triple Crown this year. Street Sense seemed to have the race won after another of his long rallies, taking the lead in the stretch. But the colt was unable to hold off Curlin's late charge thanks to a much better ride by Robby Albarado.
Curlin came into the Preakness with just four career starts, including a third-place finish in the Derby just two weeks ago. Curlin won his first three races by a combined 28½ lengths, and was well back in the field of nine. As Hard Spun swung into the lead with a three-wide move, Street Sense started to roll under Calvin Borel. Street Sense went to the outside in the stretch and moved into the lead, and the crowd began to cheer in anticipation of a Triple Crown bid in the making. But Curlin came flying along the far outside, and took dead aim at the Derby winner. He caught him on the final jump and, just like that, Street Sense was a beaten horse.
The likelihood now is Curlin will win the final leg, the Belmont Stakes as well. Even though its no Triple Crown, its amazing for a horse in his fourth start to achieve what he did, and it looks like Curlin is still learning to race well. The pity is that after the upcoming Belmont Stakes, there is a high chance that he might not run again to save him for stud duties. Thats because its difficult to have an entire (not gelded) that has won significant races. Colts are usually gelded to improve their performance, particularly if they perform badly in its first few races. Well, if somebody who can do horse talk lets them know their fate, I think they would try harder.
Curlin can basically print money by having sexual encounters day in day out. No more danger of running around the track on wafer thin legs, with the possibility of shattering any one of the legs everytime it runs - and then have its nice little brains blown to bits. The owners are unlikely to risk the horse by running him a few more times. Curlin can probably get US$25,000 to US$50,000 per successful mating. Why would you want to risk running him on the track? Plus if its early sons and daughters perform well on the track, Curlin's stud fee later on could balloon to even US$100,000. Of course, his stud fees would fall if its progenies fail. Currently some common stud fees for guaranteed live foal for some popular studs:
ARAGORN , 2002 Giant's Causeway--Onaga, by Mr. Prospector
2007 Stud Fee: US$30,000 Live Foal
DIXIE UNION , 1997 Dixieland Band--She's Tops, by Capote 2007 Stud Fee: US$50,000 Live Foal
DIXIELAND BAND , 1980 Northern Dancer--Mississippi Mud, by Delta Judge
2007 Stud Fee: US$50,000 Live Foal
GULCH , 1984 Mr. Prospector--Jameela, by Rambunctious
2007 Stud Fee: US$30,000 Live Foal
MINESHAFT , 1999 A.P. Indy--Prospectors Delite, by Mr. Prospector 2007 Stud Fee: US$100,000 Live Foal
ROCK HARD TEN , 2001 Kris S.--Tersa, by Mr. Prospector
2007 Stud Fee: US$50,000 Live Foal
SMART STRIKE , 1992 Mr. Prospector--Classy 'n Smart, by Smarten
2007 Stud Fee: US$75,000 Live Foal
Of course, first Curlin has to win the Belmont Stakes. If anyone knows horse talk and tells him what's in store should he win the Belmont Stakes as well, I bet he'd run like he has never ran before! Incentives, man!
Saturday, May 19, 2007
Friday, May 18, 2007
Rumblings At YTL Corp
Not many analysts like to research the group because they tend to keep too many things very close to their chests. A number of foreign research houses will only give a cursory view on the group, with little conviction going forward. As I am in favour of stocks with probable catalysts in the near term, I am beginning to warm to YTL Corp.
Suffice to say that the group is well managed. It would be a bit boring to hone in on the wonderful power generation, YTL-e's Wimax, YTL Cement's good outlook, etc... that everyone knows. The RNAV of the stock is anything between RM8.50-RM9.80 depending on which report you want to read. I can see two catalysts in the very near term:
a) Leveraging on Wessex Water's technical expertise to allow YTL Corp to get a foothold in Malaysia's water industry. There is estimated to be RM10bn worth of contracts to be announced soon for the water industry and the related fields. May get a a sizable bite there.
b) The on-off bullet train project. Catalyst timing looks very good now. Green light supposedly obtained from Cabinet already, only awaiting Singapore's green light. The meeting with Singapore PM last week caused a jump in IDR fervour, I tend to think that Badawi will not let such an opportunity go by without getting Singapore PM's nod for the bullet train.
Almost all reports do not include the bullet train project, fair enough, cause they haven't gotten it yet. However, surrounding circumstance and timing look good, and the project is around RM12bn. Construction net margins are estd. at 10% over a 5 year period. This could translate to an additional RM230m-240m profit a year. That works out to be at least 20%-25% jump in 2009 projected earnings.
Thursday, May 17, 2007
3. a group, combination, or association of gangsters controlling organized crime or one type of crime, esp. in one region of the country.
4. to sell shares in or offer participation in the financial sharing of (a risk venture, loan, or the like): to syndicate a racehorse among speculators; to syndicate a loan among several banks.
Tuesday, May 15, 2007
Monday, May 14, 2007
There is not much you can say about Nasdaq and Shanghai Index in the same statement. Not much you can say about the kind of companies in each of the exchanges. Looking at the chart, the trading pattern is eerily the same. Basically choosing the start dates are important. Some differences include some really spectacular earnings announced by a large number of Chinese companies in 1Q2007 (please read previous postings) while the Nasdaq Internet crazed was on hearsay and projections - but seriously folks, every excessive bull run will have their strong valid reasons at that point in time. Take from the chart what you will, or want to believe or conclude. To me, there are more similarities between the two markets than there are justifications for Shanghai index to break away from the fatalistic pattern of Nasdaq in 98-2000. When you look at the charts, it does not matter if it was Nasdaq to start with, it could be the chart for chillies or wagyu beef. What matters is the correlation, hence instead of finding justification for Shanghai index to move away from Nasdaq's fate, there are too much inherent similarities within both chart trends and underlying market forces. We have to be aware that sometimes we seek explanations and justifications for chart movements, which comes first? Many a times, the explanantions come after the chart movements.
Its important to know because it sent Hang Seng index up by more than 2.5% today. They stand for Qualified Domestic Institutional Investor. This will expand the investment scope of the QDIIs. Now the banks may use up to 50 percent of their existing QDII quotas to invest in overseas equity markets. H shares traded on the Hong Kong bourse are the ones which saw frenetic activity today. The move will take some heat off the A-share market as H shares will attract funds because most of them are trading at a substantial discount to their A-share counterparts. This move will narrow the discount gap, and that could very well propel Hang Seng index to 21,500 without much of a problem. This diversion could help release some steam from the bubbling Shanghai and Shenzen markets, and at the same time allow QDIIs to spread their risk better.
There is a bit of markets' self-validation by looking in the mirror currently. When the US markets look at Asia, they are up and running. When the US starts to fear for the Shanghai market at 4,000 Asian bourses stayed steady and Shanghai seems to doing more base building at 4,000 and looking to go even higher. Asian bourses look to the US for US interest rates, and they come back good (going lower soon). Each is feeding off each other's positive energy - can easily start a self-help book here.
The smarter ones would be able to spot that the central government are now resorting to fiscal measures to tame the China stockmarkets. By allowing QDIIs to invest outside (50%), it helps to spread the risks for QDIIs. However, before evryone jumps the gun, the scheme for QDII involves US$15bn and they can only invest in fixed income currently. Hence the QDII scheme is not that popular at the moment: with the new ruling wecan expect the full allocation to be utilised very quickly. Thus we can expect to see about US$7.5bn going primarily into H shares in HK. Not a lot but its a good start, and we should see more sums being allowed under QDII in the near future.
Friday, May 11, 2007
The combined total turnover of both bourses reached 310 billion yuan (HK$315.08 bn / US$40.38bn / RM137.3bn) yesterday. Despite the index rise slowing, new A-share account openings reached a record 4.78 million last month alone, surpassing the total number of new accounts opened for the whole of last year. The survey also revealed market capital locked in the A-share market amounted to 980 billion yuan as of end of last month, with both incoming and outflowing capital reaching record levels. Capital inflow per day has soared to 11.2 billion yuan (RM4.9bn), from 3.2 billion yuan (RM1.42bn) two months ago.
Standard Chartered chief economist Stephen Green said market capital is now worth more than 70 percent of China's gross domestic product. "This means there will be a major economic impact if there was a correction of 30 percent today, with the pain concentrated among small investors," Green said. He said the action taken will be more significant when the Shanghai Index moves toward 5,000, which he predicts can be reached in one month.
Naturally the bears have stated their case, but to be fair the bulls would have to have their say as well. Their main justification is absolute real earnings. If one looks at the valuation using the 2007 1Q results, one would see an entirely different picture. Out of the 1364 companies reported so far, the average earnings per share went up 78.1%. Big companies are carrying the flag waving with record profits being announced daily. Bao Steel last week reported a 154% earnings increase. China Life Insurance, CITIC Bank all reported record earnings. That's also why its easy to convince local Chinese investors to continue to pour funds into an overheated wok. This is also why it may not be so easy to kill the bull run, not when record new account openings are being registered each passing month. Willing sellers find even more new willing buyers, so much so the people who sold had to buy back again. Not a nice recipe, so enjoy while you can while the rest of the world watch Scary Movie 4, waiting for the shock (its coming, its a scary movie after all, it has to come.)
Thursday, May 10, 2007
Insider Selling 101???
The SC and Bursa must look into these developments of possible insider selling. Moola has thrashed this Megan issue to death (and very well deserved too). The question is when did the directors and management came to be aware of the likelihood of default. Surely things like this cannot happen overnight. Significant events and reasonable time till event are issues which must be weighed and to ascertain the "motives, knowledge possession" and the planning to act on "inside information". More stringent guidelines must be in place on lock up periods for selling/buying by "insiders". Is selling a month or two or even three month before a very significant event considered "legal" and above board?
We can all debate on this but we must continually improve the integrity and regulatory side of the markets to rise to global best practices. This is small when you talk of Megan, I hope not to discover similar questionable selling in Transmile ... anyway too tedious to do witch hunt, Moola can do it much better than me.
Yes or no, I hope the Bursa and SC will make a statement as to whether the selling below is considered OK by present standards.
TheEdgeDaily 07-05-2007: Megan Media down on RM49m trade loan default by Tamimi Omar
Megan Media Holdings Bhd's shares fell as much as 17.5 sen or 27.13% in early trade on May 7 after its subsidiaries defaulted on RM47.36 million maturing trade facilities. At 10.40am, it was trading at 51.5 sen, down 13 sen or 20.16%. There were 18.98 million shares done at prices ranging from 47 sen to 60 sen. The company announced on May 4 that its subsidiaries Memory Tech Sdn Bhd (MTSB) and MJC (Singapore) Pte Ltd were unable to meet these debt obligations by April 30, 2007. The company added “it was established that further impending maturities are also unlikely to be paid”. “MTSB and MJC are experiencing financial difficulties as a result of constraints on its current cash flow from its operations which are insufficient to service and repay amounts due to lenders. Principally, this has been due to an exceptional build-up of its trade debtors,” it said. Megan said the company had appointed a deputy chief executive officer and specialist advisory team to support an investigation into the underlying causes of the default and, if necessary, to formulate and initiate a comprehensive debt restructuring process. “This will likely entail meetings with regulatory authorities, lending institutions, rating agencies, trustees and other relevant parties as well as appointment of an appropriate investment bank, accounting and legal firms to facilitate the due process,” it said.
Megan Media Holdings Bhd's shares fell as much as 17.5 sen or 27.13% in early trade on May 7 after its subsidiaries defaulted on RM47.36 million maturing trade facilities. At 10.40am, it was trading at 51.5 sen, down 13 sen or 20.16%. There were 18.98 million shares done at prices ranging from 47 sen to 60 sen.
The company announced on May 4 that its subsidiaries Memory Tech Sdn Bhd (MTSB) and MJC (Singapore) Pte Ltd were unable to meet these debt obligations by April 30, 2007. The company added “it was established that further impending maturities are also unlikely to be paid”.
“MTSB and MJC are experiencing financial difficulties as a result of constraints on its current cash flow from its operations which are insufficient to service and repay amounts due to lenders. Principally, this has been due to an exceptional build-up of its trade debtors,” it said.
Megan said the company had appointed a deputy chief executive officer and specialist advisory team to support an investigation into the underlying causes of the default and, if necessary, to formulate and initiate a comprehensive debt restructuring process.
“This will likely entail meetings with regulatory authorities, lending institutions, rating agencies, trustees and other relevant parties as well as appointment of an appropriate investment bank, accounting and legal firms to facilitate the due process,” it said.
Based on the available information, the group’s total exposure to its subsidiaries amounts to MYR465 mln, comprising a US$40 mln loan that was extended by the parent company to a subsidiary, and an issue of Bai’ Bithaman Ajil Islamic Debt Securities (BaIDS) with guarantee from the parent company.
technically insolvent - total borrowings of MYR888 mln vs. total shareholders’ funds of MYR507 mln by end 3QFY07. High potential for bankruptcy.
YEO WEE SIONG (Director)
DATO' DR MOHD ADAM BIN CHE HARUN (Director)
a) Grab Food - I don't know about you but Uber Eats was fantastic. I don't know why that even after 4 weeks of Grab taking over...
Nobody is spooking anyone by revealing the level of debt the country is facing. Before we can properly address the debt, we have to be hone...
(Farah Ann Abdul Hadi) There are tons of financial newsletters but the only one I read religiously is Maudlin Economics. ...