Saturday, June 30, 2007
Its In My Top 10
One of the more under-rated restaurants in KL is Chalet Suisse. Its located inside Koreatown in Ampang. The food ranges from good to unbelievably good, and it does not cost you an arm and leg.
The place opened in May 1996 and all the wood paneling were constructed from old sea freight containers. The place is littered with real antiques sourced from Switzerland. It really feels like a swiss chalet near the alps, now all we need is snow outside the windows. Heinz Bauert, the owner, was born and educated in Horgen, by the Lake of Zurich. After his Chef training he attended the Hotel -Management School in Lucerne and left Switzerland soon after that for England and then to Thailand. Since 1969 he has been in the Hotel and Restaurant business in Asia and before coming to Kuala Lumpur, was the Franchise Holder of the Moevenpick Group in Singapore.
I am at this place at least once a month. There are a few dishes that must be sampled:
1) Chicken liver terrine with asparagus - at only RM16.50, its a steal but don't tell that to the chef. Goes very well on toast with any of his soups.
2) Sizzling Burgundy Snails - served in their shells in a garlic heavy pepper sauce.
3) Crab Bisque - Thick and flavourful
4) Truffle pasta with fresh duck liver - to me and many of the people who have dined there, this is probably the BEST DISH in the world under RM40.00. I know that sounds over the top, but you have to taste it and tell me it isn't so. All my friends who have had this dish rated it as very good or just unbelievably good, and its really just a simple dish. I cannot say anything greater than that. If I can eat this once a day for the rest of my life, that's as good as it gets. I tried replicating the dish, and it was about 60% there but it cost me RM40.00 and its just plain truffle pasta, no duck liver yet!!! So, I have given up making it.
There are tons of other items on the menu worth trying and keep an eye for his promotional items and specials. Bring you own wine and the entire experience will not cut a hole in your pocket.
Following Infernal Affairs & PTU
This has to be the best movie I have seen since the two cited in the headline. The movie is called Eye In The Sky, a magnificent film by any standard. It stars Tony Leung Ka Fai as the very smart and careful boss of a gang of robbers, but the role is a bit one-dimensional. Maggie Siu as the foul mouthed senior lady cop. The gangly and lumbering but extremely watchable Lam Suet as the always hungry robber point man even though he has less than ten lines of dialogue. Kate Tsui Chi San, the ex Miss HK, who actually shone in her role as Simon Yam's protege: pleasant surprise, she was able to infuse the eagerness / innocence of a freshie and had to decide between the "greater good" in priorities, quite good really, surpasses her one dimensional roles on TVB series. Top billing goes to Simon Yam as a dedicated, slightly jaded but unassuming group leader of a team of plainclothes cops.
This has to be the best acting for the entire ensemble cast. The story line grips you from the start, and the camera work was excellent as well as it was unobtrusive and pans around like a reality show. Kudos to the scriptwriter, producer and director, who else but the unmistakable Johnnie To Kei Fung, Au Kin Yee and Yau Nai Hoi. Following the violent Election series and the B-grade Running On Karma, The Mission... Johnnie To has returned to what he does best. This is Yau Nai Hoi's centerpiece actually as he co-wrote and directed the movie.
The brilliance in movies such as PTU and Infernal Affairs is getting the audience to identify and root for the characters. That's an art which lifts an average film-maker to creative genius. The characters were fleshed out brilliantly. In just an hour you seem to know the background and motivations of each of the main players. To me, Eye In The Sky is slightly better than Infernal Affairs and on par with the equally brilliant PTU. Touching, gripping, you don't know what will be unfolding in the next scene-kind of movie. The pacing and mood of the movie were well controlled. Must watch.
Friday, June 29, 2007
Thursday, June 28, 2007
Reweighting On Emerging Markets
There appears to be a growing shift in asset allocation for emerging markets and Asian equities for the second half of 2007. The trend is a recommendation to lower exposure to USD denominated emerging markets sovereign bonds. Probably based on a fear of some emerging markets potential downside on probable higher risk aversion mentality in the near future. While they are still bullish on emerging markets equities, some have scaled back the overweight to just slightly above the benchmark levels. That is to be expected as emerging markets have been performing very well, and it would be prudent to lock up some gains.
Some strategists are worried over the the impact of the sharp rise in global bond yields on the ex-ante equity risk premium of MSCI Emerging Markets over 10-year US Treasuries. The rise in 10-yr US Treasuries bond yields to 5.00%-5.20%, together with recent gains in the MSCI Emerging Markets price index, has compressed the equity risk premium to just 344 basis points currently. This is the lowest level since 2001 and is now within 150 basis points of the levels associated with the major MSCI Emerging Markets' peaks of 1997 and 2000.
For the second half of the year, countries getting promoted include: Japan, South Korea, Taiwan, Russia and Brazil. Countries which saw a reduction in weightings include: Malaysia, China, India and South Africa.
Current Market Turmoil
The fallout from Bear Stearns' hedge funds specialising in collateralised debt obligations (CDOs) has ratted nerves a bit. Bear Stearns bailed out one of the two funds suffering huge losses from the CDO play. Only the one with small losses go rescued not the one with -1 bn USD in losses. The world's bigges bond manager Bill Gross of PIMCO has lashed out at Moody's Investors Service and Standard & Poor as being duped by the make-up and "six-inch hooker heels" of CDOs, and investors now stand to lose all their money.
Sub-prime mortgage bonds made up about $US100 billion of the $US375 billion of CDOs sold in the US in 2006. CDOs are created by bankers and money managers who bundle together debt securities and divide them into slices with varying credit ratings. With defaults on those sub-prime loans rising, buyers of the BBB pieces of some CDOs stood to lose their entire investments.
Sub-prime mortgages are loans made to borrowers with poor or limited credit histories, or high debt burdens. Mortgages at banks with overdue repayments are at the highest level since 1994, according to first-quarter data compiled by the Federal Deposit Insurance Corp. The credit rating companies "were downgrading hundreds of these CDO structures in the last few weeks and that is an early indication of being fooled", Mr Gross added.
At least 60 mortgage companies have halted operations, gone bankrupt or sought buyers since the start of 2006, according to Bloomberg data. New Century Financial and Res Mae Mortgage were forced into bankruptcy. UBS, Switzerland's biggest bank, shut down its Dillon Read Capital Management LLC hedge fund unit after losses linked to turmoil in the mortgage-bond market. The question we have to ask is will this be the turning point of a rise in risk. It is easy to be negative but the subprime asset class has been suspect for moe than 6 months. The implosion in a few hedge funds playing the CDO market was due to over-leverage, and not the inherent risk of CDO itself. One of the Bear Sterns fud bought US$10bn in CDOs on US$600m in equity backing.
Its a bump on the road rather than a blockade. Markets shoud ride this out soon. The other significant news is the vote to be called on removing tax on interest income in China. While the actual impact may not be immediate, the act will signify more moves in store to cool the heated equity markets in China. Some volatiity ahead. Back in KL, some weakness in the ringgit may signify some cashing out by foreign funds on stocks, but its not at a worrying level yet. Hard to fault some funds locking in some gains when market is the second best performing bourse in Asia after Asia.
Tuesday, June 26, 2007
Monday, June 25, 2007
Saturday, June 23, 2007
Friday, June 22, 2007
Lift Your Spirits
There was a big hit show in the UK called Britain's Got Talent. It has unassuming people from all walks of life auditioning to a live audience. The final winner was a mobile phone sales guy called Paul Potts. You would never pick him for someone who looks like an entertainer. He has below average looks, a bit chubby, lack self-confidence and certainly does not look the part. Click on the youtube video on his audition, watch the judges faces when he says he was going to sing opera. Paul will lift your spirits to the heavens. A most unlikely thing will happen. Talent surpasses all things superficial. The best aria sung to perfection by the most unlikely guy. Tears will flow and they are good tears.
Besides Paul, the candidate who will also lift your spirits effortlessly is Connie Talbot (also competed in the same show). She is 6 and she is heavenly. She picked the right song for an angel to sing. A song of hope from a voice of innocence and purity. Her voice is effortless and ethereal. Some things are just beyond dreams!http://www.youtube.com/watch?v=XqVqJ1HLHNo
Thursday, June 21, 2007
Wednesday, June 20, 2007
MARC has assigned a BB- rating to OlympiaIndustries' (OIB) RM137.12 million redeemable unsecured loan stocks(RULS). The rating reflects the risks associated with the implementation of the group's restructuring scheme. OIB is involved in property investment, construction, stock broking andlotteries/number forecast.
OIB's lotteries/number forecast business resumed operations at the end of 2001 upon renewal of its licence. Its stock broking arm subsidiary, Jupiter Securities Sdn Bhd (JSSB), has been trading with restrictions since October 1998. The restructuring scheme involves, among others, a capital reduction, recapitalisation via a rights and special issue exercise, and a debtrestructuring. The debt restructuring, in turn, involves the issuance of the RULS andother debt instruments as settlement of OIB's debt obligations. The restructuring scheme also involved the divestment of OIB'sproperty-related companies to Mycom as several of OIB's subsidiariesholding land bank will be disposed off to Mycom.
OIB's property development projects namely Bandar Sri Duta (BSD) andK-Residence will be financed from the proceeds of the restructuring scheme. BSD, the 42:58 joint venture mixed-development project with Mycom, is located near the upmarket area of Sri Hartamas and will target the higher end of the residential market. The K-Residence development, on the other hand, is located in thevicinity of the KLCC, and comprises a condominium tower and a service apartment tower.
MARC assigned a BB- rating to Mycom's RM60.32m RULS. The rating category reflects significant uncertainties that could affect the ability of the issuer to adequately service debt obligations. Mycom is an investment holding company with subsidiaries engaged in property development and investment, plantations, manufacturing and plywood. The management has proposed to acquire property based companies from its related company, Olympia Industries Berhad in order to increase its project portfolio and landbank for future developments. The Group may eventually dispose certain non-core assets under its plantations and plywood businesses in order to supplement its cash coffers. Mycom’s property developments, Bandar Sri Duta (BSD) and the Duta Grand Hotels (DGH) projects will be financed from the proceeds of the restructuring scheme. The Group has recorded consecutive losses since 1998 resulting in negative shareholders funds of RM500.4 million as at FY2006. The Group’s past net cash flow position has been tight, plagued by the continued losses.
In May 2007, Pengurusan Danaharta Nasional Bhd has emerged as a substantial shareholder of Olympia Industries Bhd with 101.16 million shares or 13.85%. Olympia also saw the cessation of Tan Sri Lim Kok Thay as a substantial shareholder pursuant to the company's capital reduction exercise and rights issue. Lim is also no longer a substantial shareholder of Mycom Bhd as at April 27. Koperasi Polis DiRaja Malaysia Bhd too ceased to be a Mycom substantial shareholder the same day.
To revive both companies, the Yap family injected 73.4 acres of prime land. It looks like Mycom has the better hand of the deal with the prime landbanks. Jupiter Securities will not be able to have the capital to compete with the brokers in town and will die a natural death. Under the revamp, Mycom's debt of RM1.13 billion is restructured with the issuance of new shares and other debt instruments worth about RM790.6 million. The cash repayment portion is RM230.4 million. As for Olympia, its debts of RM1.68 billion will be converted into new term loans, while new shares and debt instruments worth about RM1.18 billion will be issued. The cash repayment portion is RM237 million.
The present run up looks like an exercise to offload / profit from the recent warrants and new shares subscription. Back in 2003 a circular by Mycom indicated that post-restructuring the diluted NTA will be between 81-85 sen. Since 2003, the company has had further losses, so one can do a guesstimate that the NTA should be around 50-60 sen now on the safe side. Mycom will rely on the development of the Mont'Kiara land to generate cash flow for the group. The development of the entire 73.44 acres of Mont'Kiara land will be done jointly by Mycom and Olympia. However, 58% of the share of the profit will go to Mycom as it will own a larger portion of the land. Stage one of the Mont'Kiara development will take 10 years, covering an area of 50.93 acres, with a total gross development value of RM2.9 billion. Mycom's 58% share of the profit is expected to be more than RM348 million over the 10 years from stage one. Other than the Mont'Kiara land, Mycom will also resume works on the Duta Grand Hyatt project situated at the corner of Jalan Sultan Ismail and Jalan Ampang. The project, in which Mycom owns a 51% stake, has a GDV of RM740 million. Other than a five-star hotel, there are plans to build serviced apartments, retail units and other components on the same site. Mycom also owns a small piece of land measuring some 20,000 sq ft next to the Ampang LRT station, but there are no concrete development plans yet. In terms of project financing, the development of Mont'Kiara stage one and the Duta Grand Hyatt project will be funded by part of the proceeds raised from the rights issue as well as a special issue, which together may bring in RM168.5 million. Still does not look to be sufficient enough to sustain these projects. The saving grace is that the projects are in very desirable and prime locations, and property sentiment for the high end has never been better since 1997.
Olympia's diluted NTA per share is estimated at 80 sen or lower. The gaming division posted revenues of RM103.4 million for the financial year ended June 30, 2005, and RM117.3 million for FY2006. But the profit from the division was only RM4.4 million and RM5.1 million, respectively, for FY2005 and FY2006. The payout ratios in these instances were above 90%, which are much higher than the industry average of about 60%. The broking business is doomed to fail. Hence prospects for Olympia is bleaker.
Mycom is the better bet if you must have a bet, but the run up looks for like a push following the new shares subscription and issuance of free warrants. There are certainly much better investing options around town. Though some of the assets are prime and desirable. The management track record leaves a sour taste, and shouldn't that be the defining point of investing? Lim Kok Thay's "no thanks" should be a big indicator as he would really have wanted to get hold of the prime landbank and hotel.
Monday, June 18, 2007
Implosion Risks Elsewhere
Saturday, June 16, 2007
Friday, June 15, 2007
2 Japan $ 911,140 May 2007
3 Russia $ 406,500 June 2007
4 Taiwan $ 265,700 May 2007
5 South Korea $ 250,740 May 2007
6 India $ 208,373 June 2007
7 Singapore $ 140,900 May 2007
8 Hong Kong, China $ 136,200 May 2007
9 Brazil $ 122,389 May 2007
10 Germany $ 117,998 April 2007
11 France $ 102,703 April 2007
12 Malaysia $ 98,400 May 2007
13 United Kingdom $ 85,910 April 2007
14 Italy $ 79,266 April 2007
15 Algeria $ 77,780 December 2006
16 Mexico $ 77,576 April 2007
17 Thailand $ 70,396 May 2007
18 Turkey $ 69,845 April 2007
19 Australia $ 69,752 May 2007
20 United States $ 66,850 April 2007
Thursday, June 14, 2007
Wednesday, June 13, 2007
How Is Your Credit?
Came across this in the highly reputable (and bloody expensive) Bank of International Settlements publication. The chart on the right is very interesting. It looks at per capita credit card balances. Korea went havoc in 2000-2003 and the jump then was hard to understand but it was like a battle cry among the consumers to spend more aggressively in order to get the Korean economy out from the Asian financial crisis. There was a rallying cry and it showed what people can do if they acted as one.
Economists tend to believe that every individual act for its own good - the Korean experience would have sent economists revising that line of belief. The Korea economy in that 3 years basically spent its way out of a recession, and it was the first country to come out of the Asian financial implosion. Instead of relying on the government to pump up the economy. The Korean public, either knowingly or unknowingly, rescued their own economy. What was even more surprising was they consumerism binge tapered off after the economy recovered, and not vice-versa. Korea has now managed to reduced their credit card outstanding balances significantly now that things are rosy again. This is a phenomenon worth studying over and over again. How to spend your way out of a recession. Of course the binge was not all due to the public deliberateness but also a confluence of factors such as bank's strategy and government's policies in allowing certain leeways to boost the economy. Having said that, the binge also has its consequences. The credit balances went to as high as 15% of Korea's GDP (compared to US' 7% of GDP) and was unsustainable. What followed in 2004-2006 was tighter lending by banks and also more bad debt being written down.
HK is steady and their per capita balances are highest but also its a reflection of their per capita income. Cannot run away from the link. You earn US$5,000 a month you have US$500 in credit card balances. You earn US$15,000 a month you will have US$5,000 in credit card balances. Its like that in life. The countries where growth in consumer finance has been the greatest were at HK, Korea and Taiwan. Following the Asian financial implosion, the loans to deposit gap has narrowed substantially, forcing banks to seek out other growth areas aggressively. Consumer finance was a big target. The growth was exceptional in Taiwan as well and credit card balances did reach a 9% of GDP in 2005, which was a big worry. Banks began to tighten and write down bad debts since then.
Singapore, Thailand and Malaysia are not in any trouble. It showed good restraint and planning from their monetary authorities and central banks. It also points to the level of lending standards being enforced. It also points to the level of asset quality and the risk inherent. Credit card balances is a big indicator on the "real consumerism aggressiveness" of each inherent economy - it indicates the multiplier effect when the country does well, and also the severe contraction when things go awry.
Per capita card balances has to be put side by side to per capita income of each country to make it meaningful. Putting credit balances as a percentage of total household loans would be even more meaningful as it takes into account country specific factors.
Credit Card Balances As A Percentage Of Total Household Loans
1) USA 37% (gulp!)
2) Taiwan 15%
3) South Korea 11% (during the 2002-2003 crazier times, that figure went to a ballistic 45%)
4) Thailand 14%
5) HK 8.2%
6) Japan 6.6%
7) Malaysia 6.1%
8) Singapore 2.1%
From that angle, HK's figure is not that bad. Taiwan's going through some tough times now in consumer finance downturn and tightening, bound to get worse before better there. Thailand's figure looks bad and this would put enormous pressure should the economy there goes into a slow down. Japan's figure is surprisingly high compared to historical trends - the main factor could be the very low deposit rates and the correspondingly not so high credit card interest rates (e.g. deposit rates at 0.5%, banks would be charging only 1.5%-2.0% on credit card balances there).
Singapore's figure is very low. I think that's not due to better cash management but rather the efficient link-ups of your credit to your CPF to your ID to your employment records to your passport to your asset file to your army records to your academic records - you don't want to fuck up anywhere along the chain line.