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Showing posts from February, 2008
Krugman On US Housing

Paul Krugman said the housing slump in the US could take up to two years to work through, and that up to 20 million mortgages could be underwater if house prices decline by 30% between now and 2010 – which Krugman believes could well occur.

Housing is illiquid and people are reluctant to sell, factors which will prolong the pain. In contrast, stock collapses tend to be short and violent, points out Krugman. Political considerations could also draw out the process, such as freezing foreclosures, or bailing out homebuyers. It took six years for the South California housing bubble to work itself out in the early 1980s, said Krugman, who believes the national housing bubble of recent years is much worse. He noted that real estate prices in California had given up all their gains by the end of the recession.“The recession in the US could be L-shaped or U-shaped, but it won’t be V-shaped like the Asian financial crisis,” said Krugman, “because the US seems to intent on a…
Citigroup's Not In The Clear YetAnalysts at Goldman Sachs said they expect additional write-downs of about US$1 billion to US$12 billion each for several major United States brokers in the first quarter, withCitigroupforecast to record the highest write-down of about US$12 billion. Citigroup according to many, has not been as aggressive as many of its peers in marking down the value of assets such as residential mortgage-backed securities, commercial mortgage-backed securities and leveraged loans. The analyst who got things right before the sxxx hit the fan, Meredith Whitney, (the Oppenheimer & Company banking analyst), reduced her 2008 earnings estimate for Citigroup by 70 percent on Monday. She also said the bank needs to sell as much a US$100 billion in assets to shore up its balance sheet.In addition to their financial problems, guide, Citigroup’s board still did not appear to learn from past mistakes. In Vikram Pandit, the board has chosen someone just like Chuck Prince i…
Best Concert DVD Ever!

Though my Mandarin is only so-so, I have always loved the old Mandarin songs. Although it was kinda romantic to listen to the scratchy originals, it was better to find good current singers giving these oldies a sound rendition. Paula Tsui Siu Foong dabbled in them a bit. To sing these old songs, one had to have a certain kind of voice, the timbre needs to be just right. Many years ago I discovered Tsai Chin and she was certainly born in the wrong era - but thankfully for us, she is with us now. She has the voice.

I have many of her albums and a few of her concerts. Then I came across her latest offering (remember the cover so you don't buy the wrong edition). It was her concert in HK in 2007. Its a journey of great Mandarin songs through the years, and she threw in a few of her own good songs too. Its a 3 DVDs set. Its certainly the most polished concert performance. The songs selection was right on.Not many singers can perform for 3 hours straight with no pro…
Primus Pleases Itself

The Edge: What is it in EON Capital that makes Primus Pacific Partners pay a hefty RM9.55 a share, a near 60% premium on its trading price, to gain a non-controlling one-fifth of the bank and financial services holding company for a hefty RM1.34 billion?

His other pertinent points:
1) why is it that other shareholders, apart from DRB-Hicom, which sold that stake to Primus, don't get to participate in that largesse?
Permitting some shareholders to benefit and exit from a listed company with a high price without the same benefit to all other shareholders is inherently unfair and smacks of insider dealings, which are unhealthy for the development of an equitable equity market. That's a situation that must not continue.
p/s apologies to Moolah, the article cited was written by P Gunasegaram and not Moolah... should have known that cause you and I rarely disagree ... ; )
Primus agreed to pay DRB-Hicom Bhd RM1.34 billion cash, or…
Hypothetically Speaking

Got this in the mail, had to tweak it a bit, its hypothetical what!!! What if Subject B was to behave like Subject A.

Subject A
Subject B
Pretend to be drunk "I talk rubbish when I drink wine."

"I can even pretend to talk to President Bush." "I get horny when I drink wine."

"Then I pretended to be screwing my personal friend."

Insist that the meeting was pure coincidence "I bumped into former CJ at Changi Airport on my way to New Zealand."

"It was a chance encounter." "I bumped into my 'personal friend' in Batu Pahat, at Hotel Katerina, inside Room 1301."

"Then after I bumped into her, I bumped into her again and again and again lah." Don't admit to being the person in the video clip "It looks like me, sounds like me."

"But I will not say 100% that it's me." "It looks like me, sounds like me, fucks like me."

"But I will not say 100% that it'…
Asia SnapshotThough the table above is a ytd up to only end September 2007, it does shed many insights.* Malaysia’s ringgit only gained 3% against the USD in the said period but has risen more over the last 5 months. Hence the ringgit basically did some catching up in recent months, with more upside in store. Bank Negara has been too cautious in allowing the ringgit to rise over the past two years. That is why despite the gains vis-à-vis the USD, the ringgit has not been gaining much ground against other Asian currencies, especially the bath, including the Sing dollar, the euro, the pound and the Aussie dollar. Have you been traveling recently, the ringgit does not go far unless its HK or the States (USD), anywhere else its the same as it was two years ago. Let's remember that we have saved up tons in foreign reserves. Yes, Bank Negara is deliberately improving our competitiveness via a weak ringgit. Trouble is we get tons of inflation this way. Hence I see a bigger upside for…
Investing Paths

Everyone who starts investing will try to understand the stock markets by talking with others who have been investing. Then we all move on to reading books by the Grahams, Lynchs and Buffetts of the investing world. Probably after losing more money, we will gravitate towards the technicals and charting gurus: the waves, oscillators, fibonaccis, RSI, momentum, etc. So what do we end up with?

Some of us stick to a tried and trusted way of investing, or just something we are comfortable with, or something we can understand. So which groupie do you belong to?

Fundamental Analysis – This group basically looks at the cause-effect in investing variables. This can be broken up into two groups, namely, top-down or bottom-up. The former refers to getting the macro picture and capital flows correct. This will give the investor a proper perspective on country and currency exposure. If you get the country and currency correct, it doesn’t really matter much about picking the right stoc…
Astro Boy Returns!
Really has not been posting about stocks specific. Was looking at one stock's movements over the past 2 weeks - a bit too obvious I thought, so here goes. This was posted back in October 2007. The bounce back to RM4.00 basically confirmed my suspicion - its on, the privatisation.
The once-golden boy, dragged through the mud with their adventure in Indonesia, finally made the top ten volume stocks. This is more than aweek after the announcement that they are pulling out of Indonesia. If it was the Indonesia factor, the stock would have reacted much earlier. Hence there is a better than 50% chance we are seeing another privatisation from the AK's stable. Following up on my prediction of another privatisation possibility for Tanjong Plc - if all comes through almost all of AK's companies will be like him, very private.
Factors For Privatisation a) Easier to do price hikes and whack the Malaysian subscribers as a private entity. b) Pay TV and ARPU moving in t…
Malaysia, A Safe Haven?

Back in 2005 and 2006, when most emerging markets were shooting through the roof, the KLSE underperformed and was widely ridiculed by local and international investors. 2007 saw KLSE doing a bit of catching up. Since the sub prime mess and the debilitating credit implosion, KLSE has managed to weather the stormy waters a lot better than other Asian markets. Since the beginning of the year, KLCI has only shed around 6% while Shanghai and Hang Seng have lost nearly 20%, even the Kospi has lost about 13%. Safe haven?

Why have we held up better? Elections, that's b.s. ... Its the currency, and then its the commodities.

Currency. Even thoough most currencies appreciated against the USD, Malaysia is one of the very few which has a staggering foreign reserves per capita, alongside with Taiwan and Singapore. Bank Negara under Zeti, has been under appreciated by all and they rightly have taken a low profile. Its not easy trying to rid yourself of the "cowboy centr…
Gone Walkabout

Just managed to get myself to some sort of internet access as you might have guessed, I have gone walkabout .... wanted to be there when many people say "sorry". Readers visiting this site, sorry that I have not been posting of late. Am now in Sydney for holidays, and the last few days, drove to Maitland and stayed near Barrington Tops, in one of the lodges. Great, phone signal also don't have. Despite it being summer, its very cool as its in higher altitude and it has been raining on and off. Some of my relatives went fishing as there is a river which passes by the lodge. In the day time, we go visiting vineyards in the region. Didn't really want to do Hunter Valley again. Came across a really good boutique winery in Camyr Allen. They have a beautiful sweet verdelho wine (a kinda sweetish Sauvignon Blanc), got many bottles, only A$16 at the winery, you can add 50%-80% for outside retail prices. Plus the other find was that they also did a liquer from …
Lessons From 'Thomas Edison'
1) HK police must not be over vigilant in nabbing the culprits. Police arresting people must prove they had "done something". The police cannot kowtow to public pressure just because the victims are celebrities.
2) If you arrest anyone, please arrest the source of the photos, not the second or third source. The groups of people forwarding or resending the photos have not done anything illegal per se. Yes, they may have behaved "badly" and have "questionable judgment and lacked empathy", they are idiots but not criminals.3) While we sympathize with the affected celebrities, I totally agree with Lisa Wang who said that "if you don't want people to see, don't take those pictures in the first place". Even when the motive at first is for private use, if you are dumb enough to take these pictures, shit happens. Using the "private use" as an excuse does not win any real sympathy from the public.4) M…
Intelligent Commentary

I have been corresponding with a fellow reader for sometime, and he has kindly consented for me to publish his essay below but not his name: (my comments in blue)


You postulated credit implosion is started with excessive money growth driving assets beyond its fair value. Financial institutions will have to go through the balance sheet cleansing process, therefore monetary policy may not the best tool for this. It also very difficult to use fiscal policy to solve this problem. The root is lack of transparency to mark down what they have on their balance sheets. Like Buffet said, many of them are mark to myth, not even close to mark to model.

Since many of these assets are tie to value of the housing properties, the speed of cleansing will depend on the speed of housing prices fall. This will take sometime to sort out. Recent UBS announcement of massive write down did not send the stock price to hell, I wonder why?
(I think there were early sellers, and on n…
More Exciting Photos Of Edison & Gillian

What funds would not like you to knowARE funds (mutual/unit trust/actively managed funds) the way to go to invest for the long term? There are numerous glossy and enticing advertisements by funds trumpeting excellent returns, but at the same time warning that past performance is no guarantee for future performance. In the US, more than US$10 trillion is held by nearly 10,000 mutual funds. If you take out money market funds and bond funds, about US$5 trillion is in stocks. Is funds investing safe and does it provide superior returns (relative to the relevant benchmark indices)? Majority does not beat benchmark indicesDid your fund portfolio beat the benchmark? Congratulations, for you are in the minority. In the book, Wall Street Versus America by Gary Weiss (formerly with Business Week), he said “if you had shares in an equity mutual fund on January 1, 1984, just as the bull market was taking off, and held on to it until December 31, 2003, the chances are better than 90% that your fun…
Corporate Credit RiskReaders of this blog will be aware that there are not many exciting posts of late. Well, its because I am still bearish and still awaiting for the credit bubble implosion to play itself out. We have the European banks turn, and then the AAA rating for certain insurers in jeopardy, and now the corporate bonds - more specifically the leveraged buyout bonds market.
WSJ - A new problem is rippling through credit markets: Many of the corporate loans used to finance giant buyouts in the past few years are reeling in secondary market trading, making it virtually impossible for banks to unload other commitments they have made. The loans of First Data Corp., which was taken private in September by Kohlberg Kravis Roberts & Co. for about US$28 billion, were sold into the market this past fall at a 4% discount to their par value; they now trade in the market at a steep 11.5% discount to par value. Loans of Freescale Semiconductor Inc., taken private by a consortium of pr…
House Of Cards TumblingI have never been a fan of Macquarie Group from Australia. There is something inherently wrong with the business model. The company acquires lots of infrastructure related assets such as tolls and airports, repackage them and sells to investors for yield and capital appreciation. Trouble is the bulk of the buying is done in house with money pre-raised from investors. These are then packaged into separate funds under the umbrella of Macquarie - assets are shifted, sold for revaluation gains within the funds. At every level and every transaction there are annual fees, transaction fees, advisory fees, placement fees, profit sharing kickers. etc. Its a big fee charging machine. As long as the assets go up in value they can keep doing it, and to magnify returns they usually leverage up most of the funds. The simple strategy was that if you could borrow at 6% but the yield for the asset is 8% per year, they will gear up to enlarge returns. The credit bubble implosion …
Wishing All A Safe, Healthy & Prosperous Chinese New Year ....
Sofia Confidential

Been to a few places in Europe but now for something completely different. New business directions have caused me to arrive in Sofia, Bulgaria. Its among the newer outposts for outsourcing and private equity deals. I was under the impression that it would look something like Prague (which I love) but its nothing like that. The taxi ride to the city center reminded me of East Germany, 5 years before the fall of the Berlin wall! Bulgaria has had a tough history after being under Turkey for so long and then kinda under the shadows of Russia, and only recently liberated in 1989. As the country has been bombed before, its difficult to find nice dated architecture, except for some cathedrals. Coming out of the planned socialistic economy, most of the buildings are drab and bleak.

One thing though, the people seemed nice, at least the cab drivers and sales people do not even try to rip you off. Weather wise, its a killer. Its 8 degrees C in the day and -8 at night, and I sai…
Bursa's Soul Mate There appears to be considerable speculation on Bursa Malaysia Bhd's intention to form an equity tie up with a foreign strategic partner. If that is the case, we assume, it will involve a much bigger stock exchange operator. Second Finance Minister Tan Sri Nor Mohamed Yakcop was reported to have said that foreign companies can purchase a stake in Bursa Malaysia Bhd and that it was in “some tentative discussions” to divest a stake in the company to a foreign party. Well, my humble opinion on the matter is this – “Don't do it.” Ten percent of Bursa is not a small thing. The matter needs to be given some serious thought and consideration. A 10% stake is like small change to a major foreign operator. On the other hand, for Bursa, it could have a major impact and as such, it needs to strategise well before any such stake sale. After that, what happens if the petrodollars-rich Dubai counterparts come along and propose an idea for say, a MENA-Asean exchange? …
Microhoo Or Yahsoft

Microsoft Corp. on Friday offered to buy search engine operator Yahoo! Inc. for US$44.6 billion, in an effort to better compete with online advertising giant Google Inc. Microsoftsaid its "compelling" offer of US$31 a share, half cash and half stock, represents a 62% premium on the closing price of Yahoo US$19.18on Thursday.

In a brief statement, Yahoo said its board of directors "will evaluate this proposal carefully and promptly in the context of Yahoo's strategic plans and pursue the best course of action to maximize long-term value for shareholders."

Yahoo shares jumped 57% to $30 in preopen U.S. trades. Microsoft shares were down 5%, while Google stock dropped 6%. Google poses a clear long-term threat to Microsoft's business, but Microsoft and Yahoo together would make a significant competitor who could fight back.
Google dominates the Internet-search business with a 56.3% market share, according to the latest report by ratings agency…
Terms of Endearment

Important knowledge I have gained throughout my life:

If somebody greets you by calling you "brader", you can bet your sweet ass that he is not your brother and not even a close friend, more of a fly-by-night acquaintance.

You would probably call your very close friend "a total asshole or a total bastard", but someone whom you really despise and just hate their guts: you'd probably refer to them as "a bit of a bastard, or a bit of an asshole".

Somebody who slaps you on your back when greeting you, probably wants you to cough up something.

Seriously, in the end, if you have 5-10 really good close and dependable friends, that's about right.

Somebody whom can greet you by calling out only a phrase of swear words (e.g. TNMCH, KNNCCB, or just a prolonged nonchalant "tiu....") is probably a very very close friend whom you have had a long history.

... and they say don't use swear words in your blog, its unbecoming ... for me, …