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Showing posts from November, 2007
MEMs Tech vs Moolah
Well, my mate Moolah has done it again, I shall give him a new nickname, Dragon Slayer... but wait, those companies were no dragons at all, maybe Cicak Slayer ... nah, just Slayer will do. Just as effective and scary as Sylar if you ask me. Moolah tore Megan Media to shreds before it decided to implode on its own. As for Mems Tech, well, same old, same old... one person can be better than 3 research analysts at CIMB, OSK and S&P (of all places). Check out his posts (with apologies to Moolah), but first, Moolah noted the wonderful short history of S&P's recommendations for Mems Tech (loved the BUY at 73 sen, then a SELL at 38 sen followed by the STRONG BUY at 85 sen, all within a year - talk about being contrarian). Their earlier instinct was right, should have stuck to the SELL at 38 sen, then be a hero like Moola now already... or just reversing every single recommendation would have yielded the same results.…
Comintel's Information Flow - Somebody Call 999

Share price of Cominetel Corporation Bhd plunged in early trade on Nov 29, falling 29.66% or 43 sen to RM1.02 on extended heavy selling pressure. It opened at RM1.45 unchanged. At 9.03am, it plunged to RM1.02. Within the first hour, there were 5.77 million shares done at prices ranging from RM1.02 to RM1.49. At 10am, it was trading at RM1.02, the lowest since May 10. There were 1.08 million sellers at RM1.02 but no buyers. Yesterday, the share price hit limit down. Falling 65 sen to RM1.45, wiping out six weeks worth of gains. The company was queried by Bursa Malaysia over the sharp fall in the share price.
The Edge reported this back in June 2007:
Telecommunication solutions provider Comintel Corp Bhd is focusing on securing value-added projects for its manufacturing services and communication and system integration divisions to help address its thin margins and loss-making position. "In a way, we are moving away from our traditio…
Best Dim Sum Place

Markets are so boring, no stock to look at, let's talk food. Being Cantonese and all, finding really good dim sum places is really difficult. In fact the better ones can be found, of all places, in Sydney! That's due to the wave of migration from HK in the 90s to Australia. Many good chefs came as part of that wave ahead of 97 then.

When I visit HK, the standard for dim sum is very high indeed. However, my all time favourite dish when eating there was this very simple "see yau wong cheong fun". Its like chue cheong fun here but thicker and its tossed with superior soya, its all in the soya I guess. The simple dish cost HK$30 at the dim sum place in New World Hotel, Kowloon and I always go back there every time I'm in HK.

Back to dim sum in Malaysia. Unfortunately, my favourite place cannot be found in KL, its Ming Court (or Ming Kok in Cantonese when asking for directions driving around in Ipoh). The spread is as in the photo, everything is just v…
Synergy Drive: Some Caveats

The Malaysian markets will be in for a major fillip on Friday owing to the requotation of sorts via Synergy Drive. Conservative estimates see the KLCI jumping 30-35 points based on the requotation, thus we are looking at 1,400-1,420 as the new base judging by today's market performance.

While many foreign houses and international funds played Sime Darby prior to its suspension. Many opted to cash out rather than hold for the extended suspension period to get Synergy Drive's shares. SD is expected to account for 9% of the recalculated KLCI capitalisation. Regional and index funds will have to have SD in their portfolio, no two ways about it.

There is a prediction that some investors will sell other plantation counters to switch to SD. That is unlikely to hold true as SD is not a pure plantation exposure. While SD will be the biggest in terms of plantation earnings, it is not a pure play - and that could be the thing which could trip up SD.

For FY07, plan…
Rio Tinto & ImplicationsI had expected China to join in the battle for Rio Tinto following BHP Billiton's bid a couple of weeks back. Now that Rio Tinto has rejected a merger proposal from its largest rival, BHP Billiton, which valued Rio at about US$142 billion (HK$1.10 trillion), this creates an opening for China. BHP Billiton, Rio Tinto and Brazil's Cia Vale do Rio Doce are the three biggest mining companies in the world. Together they account for 70% of the globe's total iron ore output. The potential merger of BHP and Rio Tinto aroused concerns among China's steelmakers and the central government as China is the world's top steel consumer. China Development Bank has secretly bought about 1% in Rio Tinto during the week that BHP Billiton offered the hostile bid. Despite no confirmation, the move was seen as a move by China to ensure there will be no combined entity dictating iron ore pricing. China's newly set up sovereign wealth fund, China …
Unbelievable Effort!!!

Badminton has a very special place among Malaysians. Considering our smallish population, its amazing that we do relatively well against the other nations. Due to our build, we can only succeed in games that are usually non-contact and those which favours a lower center of gravity and agility. Hence we are pretty awesome in squash, bowling, lawn bowling and badminton. Fergedabout football already! We used to have great female players in badminton when Sylvia and Rosalind were at the top of their game. Its been some 30 years where we have always drawn a blank at tournaments for our female badminton players. Its a thing we never criticise or say much about cause since the Chinese women players came on the scene, its near impossible to dislodge them from the top 5, plus they are all near 6-footers. Hence this puts it into greater perspective what Wong Mew Choo has acheived. Its unbelievable. Hard to fluke it cause she had to beat a few of the highest ranked players t…
CNOOC's Star Rising Amidst The Rubble
Following Petrochina, CNOOC would be my best pick, owing to it being the next big A-share listing by the H-shares. However, the edgy markets for the past 2 weeks may be delaying the A-share plans somewhat. Another thing to bear in mind is that the covered warrant is expiring in February 2008, which would have been ideal a few weeks back, but owing to the postponed A-share listing, may be a bit too short in life span to cover the Shanghai listing. Still, cannot beat CNOOC, especially when the Shanghai index gets closer to the crucial 5,000 level, which I am expecting to be a good base building area for China shares.
Call it coincidence, foresight or good planning, CNOOC's in the news today that it is considering buying interests in Nigerian blocks held by Royal Dutch Shell PLC- the latest indication of China's rising assertiveness in Africa's oil sector. As reported in the WSJ:
Shell is considering selling interests in two Nigerian of…
Its Like The Sopranos Making You An Offer
Beware the friend who keeps patting you in the back, saying "well done, boy" ... cause its more likely he is patting you in order for you to cough up something. BFFs, Temasek and Chinese banks, have elevated their friendship to the next level, a disturbing marriage. Yesterday, the three largest banks in China have separately approached Temasek about buying its 17% stake in Standard Chartered. Officials of Industrial and Commercial Bank of China (ICBC), Bank of China (BOC), and China Construction Bank (CCB) have "sounded out" senior officials at Singapore government's investment agency about buying the stake.
Temasek is the largest single shareholder in London-based StanChart, which makes two- thirds of its profit in Asia. Temasek sources confirmed the approaches but insisted that the agency had rebuffed the advances. StanChart executives are unlikely to welcome a change in its largest shareholder to another lender, as thi…
The Money Train - Will They Or Won't They?

I know its a silly sounding translation from Cantonese, the "direct train" or "straight through train", both referring to the program that was supposed to allow Chinese citizens to invest directly in HK shares. Let's look at the debate, the highs-lows, and the probability in the end.

a) The plan was first announced on August 20th that a pilot program will be started to allow nationals with a Bank of China account in Tianjin to buy HK listed shares. Since that day, the HSI has appreciated some 45% to reach 32,000 but has given back quite a bit over the last two weeks.

b) HSI suffered selling bouts after a Credit Suisse report on Nov 12th said the pilot program had been delayed till 2Q 2008. The report also said that the government may impose a US$30bn cap for the entire program.

c) It is however, more likely that the sell down was due to sentiment being affected by the authorities' clampdown on the illegal money tra…
HK Calling!
The HK and China markets have been the most robust and active over the last 4 weeks. The huge Petrochina and listings have propelled momentum driven investors. Following the euphoria, the Shanghai and Shenzhen markets are going into a downtime. The markets there failed to maintain above the 150 day trendline despite trying a few times. That took some liquidity players away from the markets.
When markets experience a downshift in liquidity, people go looking for reason, and the CPI / inflationary pressures were convenint (and real) excuses. Investors were spooked when the same excuses were repeated day in day out. Those were excuses for the markets there to deflate. To me, the shift down in China markets is more a technical thing rather than a fundamental exorcism. They will need to find their feet before rebuilding, so no hurry to bottom fish in China markets as these momentum driven markets will need to build a bse first before relaunching themselves, it won…
A Disconnect In Equity Markets
Even my aunt has been selling her share holdings!!!Of late there has been a disconnect in global equity markets. Its like all were at a party dancing and talking, and somebody switched off the electricity. Everyone is mumbling among themselves that they are having such a fine and dandy time, maybe they should continue dancing and partying in the dark and without air-conditioning. Some decided to leave for home and rest cause they know it will take some time before electricity is restored.

Important Market Strategy Pointers

a) The only "safe" equity markets seem to be the US and Japan. Both for differing reasons. The US because of the devalued dollar, if the dollar decline over the last 4 weeks did not happen, the Dow Jones index probably will be trading at 11,000 now. The Nikkei is caught in a quandry with a stronger yen, but its probably the ONLY economy not having to deal with inflationary pressures - hence Japan is not in danger, in fact it may…
The World According To Goldman Sachs

The stars are all aligned and the planets all converge to make Goldman Sachs and its alumni the most powerful "club" in the financial world. Merrill Lynch has just announced that it will appoint John Thain (the current head of NYSE Euronext) to be its CEO. Yes, Thain was a former mortgage bond trader at Goldman Sachs before rising to the top as president &COO of the esteemed firm.

Possibly the last piece of the puzzle will be whether Robert Rubin (ex-Goldman Sachs CEO as well) will be appointed to replace Chuck Prince at Citigroup. It looks likely and this "club of insiders" will almost control the global financial world. They already have Henry Paulson (another top alumni from GS, former chairman & CEO of GS) as the Treasury Secretary.

The thing is that is only the surface, Goldman Sachs' alumni is a headhunter's paradise for the very top financial and political jobs in the US and most of Europe. Here are a few exa…
HK's Horse Of The Year (Not)
The Sopranos In HK Racing
Horse racing in HK is certainly one of the best managed. High payout ratios, great liquid pools, the best trainers and jockeys all converged to HK as the race prizemoney is very decent. Fixed races are probably among the lowest in the world. While there is still some hanky-panky (going-not going), HK horse racing easily ranks as the top in my books.
The committee awarded Horse of The Year award a few months back to Vengeance of Rain, trained by D Ferraris. They handed the coveted award to Vengeance Of Rain in honour of his triumph in the world's equal-richest turf race, the Dubai Sheema Classic, and conveniently forgot Viva Pataca had thrashed him mercilessly twice at home afterwards in the Audemars Piguet Queen Elizabeth II Cup, then again in Champions & Chater Cup.
The judges - three from the Jockey Club and three journalists from leading Chinese-language newspapers - clearly and simply got it wrong. The voters mostly ci…
Beware Google-CW

At the closing price of US$660.5 yesterday for Google, the newly listed warrant now trades at more than 40% premium with its CW price at above 25 sen. Even at 20 sen its very expensive, 15 sen is OK. The issuer will be throwing papers at you at anything above 20 sen.
The Final Bits
What we are seeing are the remnants of the blowout by the subprime mess. While the US economy will continue to be weak over the next 2 quarters, the stock markets could be finding its feet now. Darkest before dawn, they say... then its true for E*Trade.
Everyone knows that E*Trade is primarily in online investing, and a successful one at that despite strong competition from TD Ameritrade and Charles Schwab. However, they found that their margin financing business is so good for stock trades that they went and bought a "phone-based bank" that makes and buys mortgage loans, and invests in securities backed by mortgages as well. Since beginning of this year till June the stock held firm just above US$20-US$22 level. The initial subprime surprise in July and August sent the shares down to US$13 and there were days it went close to US$10. Well, that's the good news, cause last night the shares fell another 59%!
There were reports flaming rumours that investors cou…
China & Its Private Equity Strategy
Inflow - Foreign PE firms sealed 129 deals in China last year, with a total investment of US$12.9 billion. In the first quarter of this year, the investment soared to US$7.56 billion, a year-on-year jump of 329%. The Chinese government has been actively trying to "control" foreign PE firms from being overly-aggressive in their buyouts. US buyout firm Carlyle Group's high-profile bid to take 85 percent of China's biggest construction equipment maker Xugong Group Construction Machinery in 2005 was a trouble spot for Beijing. Carlyle has since scaled down its original 85% bid to 45%, but the deal is still pending approval.
China issued Provisions on Acquisition of Domestic Enterprises by Foreign Investors last year in a bid to regulate foreign M&A activities in the country. In August, the Anti-Monopoly Law was enacted and will take effect next August. The new rules require any major foreign M&A deal to be examined and superv…
Remember The Yen Carry Trade?
The yen carry trade caused some anxious moments a few months back when the fear of players unwinding their trades took centrestage. That died down and investors continued to borrow in yen to invest in other higher yielding currencies, stocks or bonds. Just like Britney Spears, oops, I did it again... the sustained but managed weakness in USD has basically unraveled the yen carry trades. The current equity weakness globally is merely a result of yen carry trades unwinding. The stronger the yen, the worse off will be the investors who borrowed in yen to buy Aussie bonds, Singapore REITs, US stocks, Malaysian plantations, HK-H shares, etc...
While we were sleeping, the USD has breached the 110 yen level. The yen's strength is not the only one. The euro has also moved from strength to strength against the greenback hitting record highs after expectations of a further interest rate cut at the next Federal Reserve policy meeting. Further euro support came in…
Shanghai Au Revior? Sayonara USD??

Following the listing of Petrochina-A share, the markets in China just continued to tumble. The People's Bank of China announced Thursday it might use a variety of measures, including bank and treasury bond issues and reserve requirement ratios, to control the country's "severe" liquidity problem.A PBOC report gave no details about the extent of the measures or when or how they would be implemented, but it stressed that absorbing liquidity in banks and strengthening credit control could not fundamentally tackle the constant and rapid accumulation of liquidity and other structural problems. Recent talks about stock market risks by senior economists have also intensified worries about further government measures. China's economic growth is expected to exceed 11 percent for 2007 and growth in the consumer price index (CPI), the main measure for inflation, will be around 4.5 percent year-on-year, though some foreign analysts put …
More Upside For IJM Plantations?

Even at RM3.50, there should be more upside for the stock. Those who followed at RM3.00 will do well to hold till then or near that level. Just to recap the reasons for the rerating:

a) the company did not sell forward the bulk of their current production, unlike many companies

b) Hap Seng Plantations listing on November 16 should see the share trade at RM3.40-3.50, and all things being equal, IJM Plantations should trade at a premium to Hap Seng Plantations (please re-read previous post on both companies)

c) the expansion into Kalimantan is proceeding better than expected

d) a narrowing of discount from over 30% to maybe 20% as IJM Plantations is getting bigger and better managed (better yields comparatively to the average in the industry)

e) expansion plans aggressive and well managed, has acquired 3 parcels in East Kalimantan (11,000ha, 10,200ha and 11,000ha)

f) the managed landbank expansion puts IJM plantations from being a smallish player to mid-size a…
I Know What You Did Last Summer

Being in finance and investments, you have to keep learning new jargon. Six months ago many probably don't even know what CDOs were, many kept hearing it over the last 2 months and had a vague idea of what that is, but probably would find it hard to remember the actual definition in totality - man, where's our c-drive, no retention power, somebody defrag me... or just close all windows in my house and reboot!

Just when you thought it was safe to no longer mention "subprime"... hey all suddenly screamed "I know what you bloody banks did last summer!!!" You got me on HSBC, then Bear Stearns, the UBS joined the fray, jumped across to Northern Rock, now Merrill Lynch and the bigdawg Citigroup.

As I have said recently, the big banks waited for Paulson/Fed to come up with a US$100bn Superfund to help bail them out. That did not arrive, hence the revelation (just as scary as the one in the Good Book). Let's look at why so many inve…
Reasons & Excuses

Business journalists, analysts, business presenters, fund managers, strategists ... all need to have reasons to explain market movements. The reasons had to be somewhat sensible and printable, and coming from the mouths of experts, it sounds more believable.

We sometimes go searching for reasons and excuses when there is really none. We are all brought up to pull out one of maybe twenty or thirty reasons from the basket everytime the market goes up or down excessively. Its like an objective test. The basket could include reasons such as:

a) the Fed is willing/ not willing to loossen

b) the BOJ is staying firm / raising rates

c) the market is overbought

d) the market has discounted the US$90 oil

e) the market is discounting the Turkish situation


Are we really picking the right reasons? We can only pick what is most plausible. Its a hindsight harry situation - you ask the "experts" after the event, not before the event, hence the "experts" will go…