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Showing posts from March, 2008
Hajime - A Really Nice Discovery

Is there such a thing as the best Japanese restaurant in KL? You can debate till the cows come home because the essence of good Japanese food is largely determined by the selection of fresh seafood and cuts. Only then can the chef add some zing to its preparation.

Too much fusion detracts from the inherent cleanliness of taste so desired for truly good Japanese food. Fusion is seen in a more negative light here, although Japanese are quite ok with it.

Zipangu is a bit too fusiony for my liking. The Starhill place is more palatable but looks orchestrated. If it was just the sushi bar alone, sit at Sagano inside Renaissance Hotel and talk to the sushi chef. He always have a few incredible items hidden away from the menu (the very fresh & huge deep sea NZ prawns are to die for - pour some hot sake on the head before sucking the whole head dry - heavenly).

Well, I can safely say that I have discovered a Japanese restaurant that is unpretentious, elegant, …
Fed's Actions Inflationary?

I think the Fed has been the suitable punching bag to blame all financial and economic ills on. Much like the role of Tung Chee Hwa for HK during Asian financial implosion. Bernanke will get it left right and center no matter what he does as there will always be somebody who doesn't like what he does to bring up their own points. Hear the experts on CNBC or Bloomberg and you will find all kinds getting in their two minutes of fame.

I will try in this posting to be as fair as possible to Bernanke. Regard me for the next few minutes as Bernanke's best friend. The sub prime and credit implosion, well he wasn't there long enough to create the mess. Much of the mess should be attributed to two main sources: one, Greenspan keeping interest rates too low for far too long in 2001-2003; two, the fucked up ratings agencies, well there are the 3 main ones really - they really have a license to print money, they get to rate all kinds of debts and investor…
Remember Curlin

I would like to take some credit for highlighting Curlin even before he won the Preakness. In actual fact Curlin should have easily won the Triple Crown if not for some bad luck. Still, the horse gained momentum after that and less than a year later was named USA's Horse of The year - if only my stock tips were that good (yes, I know, Evergreen mah...).

Curlin is ready to defend his U.S. Horse of the Year title against the rest of the world in the Dubai World Cup today.

"He's an exceptional horse," Curlin's assistant trainer Scott Blasi said on Friday, the day before Curlin takes on 12 challengers in the US$6 million (€3.8 million) race at Nad Al Sheba racetrack. "It's a big opportunity for us to show the world what a great horse he really is."

Curlin enters the world's richest race having won his last three races — the Jockey Club Gold Cup, the Breeders' Cup Classic and the Jaguar Trophy Stakes at Nad al SHeba. Among those linin…
Famous Lines & Lies

Language is a funny thing. It can be revealing when people don't intend for it to be. Let's look at some opening lines, they betray the speaker almost immediately.

"Trust me ... " - You can bet that whatever the person will say following those two words cannot be trusted.

"I am not a racist but... " - You can be certain that what the speaker say next will be racist.

"I have nothing against gays... " - Similar to the above, and what they say will show they are homophobic.

"I hear what you are saying ... " - The speaker is not hearing what you have said but is dying to say something else.

Sometimes its the intonation and nuances which give them away. For example, a stock tip whispered in hushed tones to you is more likely to be useless.

"No offence .... " - You can bet your bottom dollar that what the speaker says next will offend.

"Correct me if I am wrong..." - Usually means the speaker is damn sure th…
Reassessing Commodities Run
When global share prices were rocked by the Bear Stearns debacle, prices for most commodities corrected as well. Is this the peak for commodity prices? We learnt at school at commodity prices do not move as one with other assets. In recent months that has proven to be very true as commodity prices continued to climb even as major corrections were seen in property, shares and bonds. However, last week saw commodity prices giving a wobble as if it is on very shaky ground.
Let's re-examine that fateful day when commodity prices literally plunged. We had oil breaching a new record of US$111.80 a barrel before collapsing to US$103.23 — the biggest drop during a single day in 17 years. The Goldman Sachs's main commodity index fell by over 4%. At the Chicago Board of Trade, wheat, corn and soyabean futures fell by as much as the exchange's rules permitted. The price of coffee dropped by 11%. Even CPO tumbled like a poor Jenga player.
That singles day itse…
Multiplier Effect & Fed's Agony
SP said...Today THE STAR (21/3/08) posted the global measures to stem credit crisis from 10 August last year til 3 days ago where fed cuts 75 basis point.

Question: Are there any effect of any "help" given by any central bank or goverment institution on US slowdown?

From stock market point of view, the answer is certainly no! Here are some of the main indices of the world performance from 10 August 07 to 21 march 08:

Dow -6.6%
Nasdaq -11.27%
S/P 500 -8.54%
FTSE -9%
CAC -16.79%
DAX -13.9%
KLCI -7.8%
FSSTI -14.33%
HSI -3.14%
NKY -26.25%
TWSE -5.14%
KOSPI -10.54%
S/P ASX -13.62%
SHG COMP -19.5%
SENSEX +0.85%
SET -0.836%

However, the US Dollar index traded on ICE futures drop heavily from 80.59 on 10 August 07 to 72.8 on 20 March 08. Thats more than 9.6% drop on USD against 6 major currency in the world. That's mean if anybody longs all the futures of all indiaces in the world, and also longs the USD…
Absence Of World-Class CompaniesInvesting Scents

The Economist, known for great analysis, is spot on – again. This time, it has bashed SEA companies for failure to come up with great brands or companies with sustainable long-term business plans.The article said:“It is easy to forget, now that China and India are all the rage, that until ten years ago South-East Asia was the world's fastest-developing region, winning the sort of investor attention and breathless column inches that the two new giants now enjoy.The region has, slowly, recovered from the blight of 1997-98. It has recently had several years of strong growth and its government' finances have been greatly improved.Even so, after all this time, the region's five main economies – Indonesia, Malaysia, the Philippines, Singapore and Thailand – are still notable for the near-absence of companies that could truly be called world-class.The region has 570million people and had a head start in economic development over muc…
Market Timing – Fool’s GoldINVESTING SCENTS
There are those who believe you cannot possibly time the market in terms of entry and exit. Fair enough.The random walk theory lies in the fact that you cannot beat the market over the long term. But we also have the proliferation of hedge funds where managers get a lucrative 20% of profits kicker annually on gains. If the random walk theory is correct, then the “hedgies” would be a terrible business to be in.The out performance relative to the benchmark is called the alpha. Hence the name of the popular website Seeking Alpha.Out performance can be gained via market timing strategy and/or superior stock selection strategy, to simplify matters.For this article, I am only looking at market timing.If we could really predict the market's moves, market timing would be great. The problem is that there is evidence to show that market timers do not do well.An annual study by DALBAR, a research firm, showed that the average investor in equity fund…
Different Falls For Different Markets

The above chart shows the year to date returns for the selected markets. The US markets, though hogging the negative headlines, did not perform that badly. That's largely because the correction was a bank-centric, its a banking problem rather than a widespread consumer issue (for now). We may even be able to explain China's sharp correction owing to inflated valuations and tough anti-inflationary measures being instituted. However, the hidden lever has been the USD weakness. If the dollar had not been losing ground so much this year, the US stock prices would have been down a lot more. By weakening the dollar, it an immediate way to acknowledge that yes US economic fundamentals are pretty stuffed. Its like giving yourself a red card for wild infractions of the past.

The resource rich nations did not really fall by that much. Look at Brazil, Australia, South Africa and Canada. This lends some weight to the decoupling theory. Markets are obvio…
Zero Interest Rates

The Standard & Bloomberg: Hong Kong bank customers will be earning virtually no money on their deposits as lenders slashed their rates in wake of the US Federal Reserve's move to cut its key interest rate, bringing their saving rates practically to zero percent.
Two of the city's major lenders, Hongkong and Shanghai Banking Corp, and Hang Seng Bank, will offer an interest rate of 0.01% for deposits of more than HK$5,000. This means that, starting from today, their customers will receive HK$1 interest a year on a deposit of HK$10,000 or HK$100 on HK$1 million. And, at HSBC, depositors whose monthly balances are less than HK$5,000 will not only receive no interest at all, they will be charged a monthly fee of HK$50 to boot. Senior citizens over 65 or recipients of the Comprehensive Social Security Assistance Scheme will be exempted from the charge. Standard Chartered Bank (Hong Kong) and others offer slightly better deposit rates. Standard Chartered will pa…
HK dollar - float or repeg?(as published in The Star 8 March 2008)Naturally when your currency is pegged exclusively to the USD, there will be good and bad problems. I had examined in Part I (in my column last week) and concluded that the Hong Kong dollar would have been better off if the government had floated the currency or re-pegged it from HK$7.8 to HK$10 to the dollar back in 2000.
To peg to the USD might have been a sound idea back in the 70s or even the 80s as the USD had a special position in global trade and was the “reserve currency”. However, the economic paradigm has shifted substantially over the last 5 years and while US still retains economic leadership, their economic dominan ce has diminished substantially. While it can still be said to have the “reserve currency” status, even that appears to have diminished somewhat. The euros, the pound and even the yen have emerged as viable alternatives in global trade. No longer tied to US While HK's trade had been signific…
Wedding & Marriage

What we had yesterday from the US was a wedding, but they are in a long drawn out marriage as well. Weddings are joyous occasions, weddings are an event... marriage is a sentence, no, marriage is a life long thing. Weddings are always made up of hyper optimistic people and well-wishers, maybe they know the couple need all the luck they can get.

Pumping an additional US$200bn and then standing by Bear Stearns/JP Morgan for up to US$30bn, basically staved off a mini confidence crisis. Obviously the Fed has spent a lot on this wedding, maybe too much. Somebody has to pay off that via credit cards. There had been too much drinking during the wedding, now the day after, everyone has to trudge back to work and wait for the weekends again.

The chart above shows that the bulk of the recovery was in stocks which had the highest short positions - hence a short covering rally. Another 200-300 points uptick from here will see shorts starting their positions again.

Another Round?Bear Stearns collapsing following the US$200bn injection by the Fed scared many investors. Below was the conference call held by the company:
12:30 P.M. ET: While the bulk of the investment community is listening to classical music in anticipation of the call’s beginning, here’s an update of where the world stands. Bear Stearns shares are down 36.7% on more than 100 million shares traded, making it easily the most actively traded stock on the Big Board today. The options market shows a ballooning in interest in put options at the US$20 strike price – more than 29,000 contracts have traded, and headed into today there was no open interest at this strike. 12:37 p.m.: Finally, the call is beginning. Elizabeth Ventura of Bear’s corporate communications department is starting the call with the usual boilerplate about forward-looking statements.12:38 p.m.: Sam Molinaro, CFO notes that the firm is moving up its earnings relase to Monday, and also to share some information on the…
Pessimism, Good!WSJ: Standard & Poor's now estimates that subprime write-downs could reach US$285 billion, US$20 billion higher than its estimate just six weeks ago, and is forecasting future pain for financial companies as the credit crisis moves beyond home loans. But the ratings agency also said "the end of write-downs is now in sight for large financial institutions. The positive news is that, in our opinion, the global financial sector appears to have already disclosed the majority of valuation write-downs of subprime asset-backed securities," said S&P credit analyst Scott Bugie, lead author of the report, in a statement.While the hint of an end in sight helped to buoy the sinking stock market yesterday, Mr. Bugie's report was tempered. "We believe that any near-term positive impact of reducing subprime risk in the financial system via increased disclosure and write-downs will be offset by worsening problems in the broader U.S. real-estate market an…
Even Big Boys Cry!WSJ: Carlyle Capital Corp. said late Wednesday it expects its lenders will seize its assets, causing the likely liquidation of the fund, which until recently owned US$21.7 billion in mortgage securities. The fund's likely collapse would be a major black eye for Carlyle Group, the powerful Washington-based private-equity firm whose executives own 15% of the fund. Though it's registered in Guernsey, U.K., and trades in Amsterdam, Carlyle Group runs Carlyle Capital out of its New York offices. Early Thursday in Amsterdam, the shares plunged 70% to US$0.83 each. The stock has lost around 83% since the company first disclosed its funding problems last week.The news comes just one week after Carlyle Group began pleading with some of the world's largest banks to hold off on margin calls and the liquidation of its mortgage assets. Several of the lenders, led by Deutsche Bank and J.P. Morgan Chase & Co. ignored Carlyle's request. Wednesday night, they bega…
Creating A Shopping List
Everyone seems to have their own entry levels, it could be 1150, 1100, 1050 or even 1000. However, its never too early to start creating your own shopping list to be prepared when they actually fall to your desired levels. Naturally, the selection is based on the new political landscape. Here is my list:
The Ones Institutional Buyers Like
Public Bank

The Ones Whacked Down For Being In The Wrong Sector But Actually Having Decent Regional & International Business

The Ones Being Whacked Senseless & Having The Bad News Largely Discounted - For A Quick Trade
Tenaga (below RM6.00)
Commerz (below RM8.50)
Sime Darby (below RM9.00)
SP Setia (below RM3.40)
Gamuda (below RM2.30)
AirAsia (below RM1.10)
UEM World (below RM2.40)

p/s photo: Syafinaz