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Showing posts from June, 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 …
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 cas…
Someone To Watch Over Me
The Bear Sterns experience showed that the market will not know how to react when hedge funds implode. In this case, we know its the CDO market, which had been weak for more than a year, and we know 60 mortgage related companies have closed shop over the past year - its a risky business. When the two funds failed, investors will over-react because the best assumption is to be cautious. Surely there are more similar hedge funds using similar investing strategy in a similar asset class. Could this be the trickle before the downpour?
This will continue to be the trend every time a hedge fund collapses, investors will over-react because they do not have additional information on what hedge funds buy and how leveraged they are. The Bear Stearns and Amaranth incidents will propel all to accept greater oversight and transparency for hedge funds. One of the most important issue is to reveal what are the leverage limits and in what instruments. If it was pure equities, e…
Reweighting On Emerging MarketsThere 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 thethe 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 j…
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 o…
Important Trends For The Future
The highly respected Bank of International Settlements delivered its 77th annual report. If you have the time, its good to try and read through the thick document. The most interesting bit was the 45 pager on Ermerging Market Economies (EME). Here are some of the interesting conclusions:
a) EME grew on average of 6.8% p.a. in 2003-2005. In 2006 the rate was 7.4% and remained strong for 1Q2007. The 2007 figure is expected to beat the 2006 figure as well.
b) Current account surpluses increased in Africa, asia, Latin America, the Middle East and Russia. However, current account deficits grew in india, Turkey, South Africa and remained large in central Europe.
c) Median inflation in 2006 was 3.7%, up from 3.5% in 2005. In Asia, the median inflation was still well below that of other regions in 2006, but was clearly up from near zero rates in 2002.
d) Due to the much higher price of oil, many countries have substantially reduced subsidies to reduce current accoun…
Sapuracrest & A Man Called John Fredriksen
RM1.40 to RM1.70 to RM2.00, I am still bullish on Sapuracrest. Forbes estimates John Fredriksen's fortune at USD 1.9 billion, putting him in 293rd place on the list of 587 persons believed to have more than USD 1 billion in net worth. Fredriksen is a self-made tanker tycoon who grew up in a working class neighbourhood on Oslo's east side. He now controls the largest fleet of oil tankers in the world and also has a variety of other business interests. SeaDrill is the latest adventure of John Fredriksen, who is generally considered the most successful entrepreneur in Norway. Fredriksen is almost a serial entrepreneur, and a very successful one at that. His strategy is in consolidating and leveraging a very diffuse and undermanaged industry. He did the same to Frontline and made money a few times over, before heading up Seadrill.
SeaDrill is a relatively new company, just about two years old, and was IPO'd on the Oslo exchange at …
Singapore's Property (High-End) & Social Fabric Disintegration
80% of Singaporeans live in HDB housing. Property, especially those in the right districts (9,10,11) rose significantly over the last 2 years. In particular, the two IRs were the catalysts for the boom. The solid success in Macau from the new casinos was basically transplanted to Singapore. The feel good factor from Macau spurred many high net worth Asians to gravitate to the new high end projects. Owing to the sustaininable pricing of the new high end, the existing properties in prime areas looked cheap. En bloc sale then took off as the new pricing was used as a benchmark. In 2006 alone some S$8 billion worth of en bloc sale was transacted. In just the first 5 months this year a similar amount was achieved already. En bloc sale usually prices a premium of 30%-50% minimum to actual market prices. Some have gone higher still. These en bloc sales basically minted many new millionaires or near millionaires. Assuming y…
Its A Lot Better Than American Idol
Still on the show Britain's Got Talent, there are other amazing talents which are worth watching:
Damon Scott & Bubbles - Amazing what you can do with your bare hands, and Bubbles is a star in his own right:
http://www.youtube.com/watch?v=pqRd_4wY8hs&mode=related&search=
The KitKat Dolls - No need to go to Bangkok, they have `em in UK too. Brilliant cross dressers and appropriate song too:
http://www.youtube.com/watch?v=0SPgPpTMtew&mode=related&search=
Tony Laf - Original song, raw talent on stage just like James Blunt and John Legend, "I'm Good":
http://www.youtube.com/watch?v=r67tYdGcaeA&mode=related&search=
The show's good cause Simon Cowell is a lot nicer, and the audience does not hoot and holler every 3 seconds, and Amanda's the loveliest looking woman in UK right now.
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.

http://www.youtube.com/watch?v=1k08yxu57NA
http://www.youtube.com/watch?v=YQ-dJHNbFPQhttp://www.youtube.com/watch?v=rDB9zwlXrB8&mode=related&search=Besides Paul, the candidate who will also lift your spirits effortlessly is Connie Talbot (also competed in the same s…
Sugar & Spice For Telekom Malaysia
Next to Tenaga, Telekom Malaysia has also been very stale as well for most of the year. However, there are sufficient signs that TM is primed a good run very soon. The lofty valuations enjoyed by DIGI and Maxis totally bypassed TM. As the first 6 months draws to a close, many equity strategists are putting out reports for the second half of 2007. The consensus is, things are still great for most emerging markets. Many of them still have bucket loads of recommedations on stocks with at least 20% upside. Most favoured markets include Brazil, South Korea, Malaysia and Thailand. Sectors favoured include energy, industrial and telecoms. Markets most are avoiding for the rest of the year were China and Indian markets. TM looks a safe bet below RM11.00. The supposed merger of TM's 49% entity, Spice Communications, with Idea Cellular in India have been dismissed. TM should be in the limelight with Spice Communications' IPO due in a couple of weeks …
The Yuan, Scrips Supply & Funds' Outlets
HK shares had a huge fillip just before they went for the Tuen Ng festival holiday (the most meaningless holiday in the Chinese calendar), guess somebody knew something before the actual announcement. Yesterday, the turnover of HK stocks exceeded HK$120 billion for the first time as the blue chips and H shares set fresh records. The good news for the local shares came as the China Securities Regulatory Commission announced on its Web site that mutual funds and securities houses will be allowed to invest in Hong Kong stocks for the first time starting July 5. Banks had been granted permission on May 11 under the qualified domestic Institutional Investor (QDII) scheme. Among the mainland mutual funds and securities houses, only Hua An Fund Management had received a QDII quota of US$500 million (HK$3.9 billion).

Meanwhile the International Monetary Fund seems to have exerted more pressure on Beijing to revalue the yuan by changing its monito…
Ringgit & The Markets
Having highlighted the solid reserves backing the ringgit, it now looks to be building an even stronger base to try for 3.30 before the year is over. The reasoning behind is fundamentals driven and also on the strategy surrounding the renminbi. To placate the Americans, Beijing has widened the band with room for more upside. The ringgit has been only allowed to track the gains of renminbi and not surpass it, or so it seems by Bank Negara. Though most of the Malaysian public are still unconvinced, the ringgit is probably the second strongest currency in terms of under-valuation in Asia after the renminbi. Zeti is only taking an appropriate strategy to keep in step with the renminbi. Why do i say a wave is coming, its because a wave is coming for the renminbi with higher rates in the works and a wider band for China.
The other reason why I say a wave is building is to follow the benchmark yields on the 10-year government bond. Despite the slight weakness when US …
Best Smokes 2006/2007
I genuinely love cigars. Been smoking them for nearly 20 years. Its not a luxury thing like owning a Porsche. If you really enjoy cigars, you enjoy them in times of solitude and calm, usually by yourself or with similar minded friends. People who brandish cigars all around town are smoking for the wrong reasons. Friends who are pure cigar smokers tend to be healthier, don't ask me to justify. Inhalation is limited and I think its very destressing. The world moves on by slower, you reflect, the aroma envelopes you and your mind, triggering good feelings all around. Cigars should be enjoyed with pure water or an iced tea, anything stronger will compete attention for your taste buds. I know good cigars from bad ones, but a bad cigar is still better than none, I say any day. A tip for girlfriends or male friends wanting to buy cigars for their smoker friend - don't just buy one stick, its just not done that way. I have come across this 'one stick' inci…
Olympia & Mycom

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 sub…
Implosion Risks Elsewhere It used to be that when global markets had a calamity, it had to be something imploding in Latin America. If it wasn't Argentina, then its Colombia, or Mexican peso, or the inflation spiralling out of control in Brazil. That was the tough times in the 90s. Even Russia contributed with a rapidly diminishing rouble in the 90s. Asia contributed its fair share with the 97 liquidity crisis. Currency risks and default risks are now much lower. Just examining the table will show that countries do live and learn. Financial prudence and balance sheet management have been improved significantly, especially at Agentina and Brazil. While Colombia did not change much, its now one of the hottest country among the group of Latin American countries for FDIs and growth prospects. The one bad apple was the nationalising plans in Venezuela. The better report card is also replicated in most Asian economies following the 97 financial implosion. Even Russia has improved by leap…
Stocks In Vogue
Market sentiment has improved somewhat and oil & gas stocks are leading the charge. Surprising coincidence that Ranhill is the top volume stock when there is a big oil & gas conference about town. Top volume game in guessing the worth of the oil find, your guess is as good as mine - not my cup of tea.
Eden - Correct sector, power. Wrong client, not Genting. Should be divesting the poorly performing food business. Moulding itself into a power player. Good prospects and upside.
Sapuracrest - Top pick from oil & gas. More upside likely.
Mycom & Olympia - Avoid like H5N1. Not out of trouble, don't be dragged through the mud.
UEM World - Consolidated looking good to retest the RM4.30 level.
Sime Darby - A big re-rating in the works. Break out likely soon.
Kian Joo In Play
They kept it a good secret. Now its all out in the papers. What's the upside?
52 week High-Low: 1.71-0.98
Last Traded: 1.54
NTA: 1.46
ROA: 3.7%
Cash Flow Per Share: 10.7 sen
Share Capital: 442.2m
Par Value: 25 sen
Free Float: 34.4%
Major Shareholders: KJHSB 34.87%, EPF 13.97%
Debt/Equity: 21%
Business model still good. Absorbed newer canning technology (Microflex). Private equity firms very interested. One brother really wants to sell, the other kinda going along with it. May end up with a new buyer who will work alongside with one of the remaining See shareholder. Owns 54% of Box Pak. Stand alone bidder unlikely to bid past RM1.80. Buyers with synergies and existing big user will see very good returns. Cartons business very good in Vietnam, foothold there already.
I expect a bid of at least RM2.05 for a buyer with synergies. Chance to unlock values in Vietnam and also via Box Pak. As this will not be a G.O. exercise for new buyer, share price may not reach actual transacted p…
Too Shy, Too Modest
Ask any Malaysian on the street about the ringgit and its gains from 3.8 (pegged) to 3.45 to the USD following its floatation - many would think that its good, but at the same time worry silently that maybe foreign investors have been too exuberant. Some may even be thinking that foreign investors are more bullish than local investors for no good reason - but let's keep quiet about it cause FDIs, liquidity driven bull runs cannot be all bad.
We are like kids who have been scared shitless from the 97 implosion which took years to recover. We are so used to the 3.8 peg that we don't know where the true fair value is. We are not certain whether there was sufficient banking reforms since then. Everyone else seem to think we are scoring well, but are we? Most Malaysians suffer currently from the "we are not worthy" mentality.
This is not going to be a Merdeka rah-rah article, and certainly not a Malaysia-Boleh piece of diatribe. Malaysian public support …
Shine A Light On Sapuracrest
The sustained buying in Sapuracrest over the past few weeks can be attributed to two things:
a) a counter-intuitive report from Citigroup calling for a buy on the stock (most of the other research houses have the company at neutral or sell)
b) the rapid collection by a substantial and influential shareholder in Seadrill Limited
As of yesterday, Seadrill owns 93.317m shares in Sapuracrest or a 9.13% stake. If you check the records, Seadrill has been buying aggressively. Seadrill is a Norwegian offshore drilling contractor providing services within drilling and well services. The company has 35 drilling units, of which 15 are under construction. Seadrill's versatile fleet includes harsh-environment semi-submersibles, jack-ups, shallow and deepwater tender rigs and deepwater drillships. In addition, Seadrill provides platform drilling, well intervention and engineering services. Seadrill is operating in 14 countries on four continents. Seadrill is listed on t…
Its A Money Supply Growth Driven Bull (Mainly)
Why is the bull so resilient?
The problem stems from this being a money supply growth driven rally, which basically moves everything up. Developed countries have been encouraging money supply growth to boost their economies for the past 5 years and we are seeing the end result. The liquidity has push prices up for everything, especially commodities.
Then you have the China and India factor as new turbo engines to the global scene. What these two countries provide is the outsourcing phenomena. Almost every big listed company has to to outsource some of their production or operations in order to save costs and improve margins. These gains are recycled back to huge cash flow in these listed companies via profits. The cash balances in corporate coffers are being recycled back as "share buybacks" which reduces the available assets meant for investments.
The China factor again kicked in as a vast group of new consumers in return, availin…
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…