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Showing posts from October, 2008

US Presidential Elections - The Rest Of The World Have Voted

The US Presidential elections is followed not just by Americans but much to the surprise of most Americans, the rest of the world as well. I had plenty of discussions during my conference in New York on that topic. It was a great bunch of people more than half of the 24 in my group were Americans and the rest from all over the world. When discussions went to Obama and McCain, I posed a fact to them, whether they knew that the rest of the world have actually voted on the US elections already. They were surprised.

To me, I am very confident that the rest of the world has voted Obama in by a massive landslide. The ROW is always in a predicament, we value the US as the sheriff for the democratic world, we even like American culture and their people, but darn it, we absolutely hate their foreign policies. While I may be making generalisations here, the gist of my arguments stand.

The ROW wants Obama, firstly because he is not Republican. We want a discontinuation of the Bush-Bush-Cheney regi…

HK Govenment Did The Smart Thing

Finance Asia: As the global economy twists and turns in a downward spiral, the Hong Kong government announced yesterday that it is appointing a task force to study the matter.Before you groan "we don’t need a task force, we need action", consider that if the government didn’t put together such a group to question how it should handle the global financial meltdown, observers would in hindsight question if the chief executive had done the right thing by his people.

In recent weeks, for example, Hong Kong’s regulators have been swamped by thousands of retail investor complaints that structured products backed by Lehman Brothers, which have since lost most of their value, were being misrepresented. A task force could help sort out what action, if any at all, needs to be taken in such situations – as well as a myriad of other potential problems that could crop up that need to balance out the rights of investors with the rights of financial institutions. And consider Bank of East A…

The Asian Response

10 ASEAN nations planning for a crisis fund to tap from if they face severe liquidity crunch due to global financial crisis; Fund can also be used to purchase bad assets, recapitalize troubled financial institutions and private companies; ASEAN+3, ADB, IMF will contribute to the fund while World Bank has contributed $10bn; also include plans for stand-by liquidity facilities In spite of limited exposure to US bank losses, risks from external funding crunch, higher borrowing costs, bank panics and deposit withdrawals are growing for banks and corporates in Korea, HK and TaiwanAsian central banks had been injecting liquidity into banking system and cutting rates (discount/policy rate) and/or bank reserve requirements to ease liquidity squeeze and spike in short-term rates (swap, overnight, inter-bank rates and spreads) since Sep; Some banned short-selling, guaranteeing deposits, considering fiscal stimulus; following global central bank intervention, these rates have somewhat eased in…

Risk-Reward Ratio Improving

Let's look at valuations. Asia's valuations have reached 1.2x P/BV. That figure is all of Asia minus Japan as Japan is a weird animal on its own. Earlier this year the valuations went as high as 3x P/BV, thus Asia as a whole has corrected severely. The question is whether it can go down some more. Well yes of course it can go down some more, there is always 0.00 to that P/BV figure.

The biggest crises for the past 40 years in Asia had been in 1982 and 1998 and during those times the P/BV went as low as 0.9x. Will we get there? I don't think so. I think we are pretty close to the bottom give or take 10%.

Its interesting to also look at what the Asian investment banks are weighting Asia as a whole with the "new clearance prices". Most are putting just 4 countries in the Overweight category, in order of attractiveness and weightage: Korea, Taiwan, HK and Malaysia. The countries getting the biggest Underweighting are: China, India and Singapore. As for sectors, most an…

Top Yielding Stocks In Malaysia

As shares prices plummet, its hard to get a grasp on actual real yield as its a moving target. Here are the top high yield stocks. Use the information anyway you like as the KLCI hits 801:

a) Evergreen

b) Maybulk

c) Gamuda

d) Alliance Financial Group

e) IJM

f) Telekom Malaysia

g) Muhibbah

h) Public Bank

i) Guinness


k) Ta Ann

l) Pos Malaysia

m) Tanjong

n) B Toto

o) BAT

p) Carlsberg

p/s photos: Shu Qi (Magnum ice cream never looked so good)

Son Of A Gambler

We all know about Kerry Packer. Since James Packer took control of the family corporate empire, he made a huge bet on the future of the empire. Like father like son. However, Packer junior has lost heavily over the last 6 months, and all this for having taken over the Packer empire since Kerry's death in December 2005. This is the score:* The value of Packer's flagship company, Crown Limited, in which the Packer family has a controlling interest, has fallen from A$15 a share since it was listed last year to A$6.66 (the devil's number).* Shares in Packer's billion-dollar gambling play in Macau, Melco Crown Entertainment, have gone into free-fall, dropping just over 85 per cent, from $US22 to $US3.18, since their peak 20 months ago.* In April Packer was offered A$4.80 a share, or $3.3 billion, for the media company CMH, by another media heir, Lachlan Murdoch. Packer declined, wanting a higher price. The shares have since plunged 60 per cent, to A$1.94, closing on Friday …

Blue Christmas For Finance Staff

CLSA Asia-Pacific Markets, the regional brokerage unit of Credit Agricole, asked 500 senior bankers and executives to accept pay cuts of as much as 25 percent next year to avoid getting rid of jobs.

The voluntary salary reduction program that was proposed for one-third of the staff last week would reduce basic pay by 15 percent to 25 percent starting in January. The participating employees would be paid the salary they forgo and may also receive a bonus payment, when profit meets certain targets. The proposed pay cut package is similar to the one offered by CLSA in 2003 when SARS led to faltering economies in Hong Kong and China.

Merrill Lynch & Co. has laid off 10% of staff in its Asia trading division and 10% of its Hong Kong employees, Ming Pao Daily News reported Tuesday, citing unnamed sources. Merrill Lynch has axed its Asia-Pacific structured finance and structured credit teams as part of its cull of 100 jobs in the region. Merrill Lynch has about 6,000 employees in Asia, he…

Singapore Property Outlook

Singapore property market is always very interesting. There is a high degree of speculation and much of excess liquidity would always find their way into properties there.

Thanks to its clear cut policies and very stable currency, Singapore properties attract investors from HK, Brunei, Indonesia and Malaysia as well. Hence, when it is hot, it is very hot. When it is not it can go south very quickly.

Its a very brutal market place. One that is not so dependent on "employment" as a main factor - i.e. if you have jobs, you still can make the installment payments. In Singapore, the dominant factor in properties has to be speculative element. The investors that buy 2 or 3 lots per launch. For them, the jobs factor is not in calculation but rather more important to predict the flow of capital.Prices of private homes have fallen for the first time in four-and-a-half years. This marks the end to the property boom that started since 2004.

Consultants say prices are likely to keep falli…

The Vital Signs Are Good, Even Though Patient Is In ICU

There are signs that the financial regulators and leaders know what is troubling the global capital markets. If they know, then we are on the way to properly restoring calm and sensibility. More importantly, it will ensure a properly functioning capital markets - which is still not evident now as many stocks have dipped below way past what is considered as fair value. Its pointless to point out which stocks are worth buying as there are too many to mention. You would be better off to try and see the road signs that say that the root problems are being addressed. If they are not doing that, then we will be in the doldrums for a while. However, I can see two major signs which say we should be on the right path.Treasury Secretary Henry Paulson’s comments that signaled he wouldn’t let another large bank fail, large institutional traders began doubling down on bets that large banks would skyrocket. At a time when almost everyone is deleveraging, several funds were in essence doubling their…

Happy Diwali

Lehman Brothers, The Rosetta Stone

The 'Rosetta Stone' is an Ancient Egyptianartifact (حجر رشيد in Arabic) which was instrumental in advancing modern understanding of hieroglyphic writing.

Lehman Brothers' demise probably caused the "banking crisis of confidence", which brought about the present state of financial markets. The massive deleveraging by funds of all kinds, the downgrading of emerging markets' debts and currencies, the flight to USD and yen, the numerous injection of liquidity into the system by central banks, the guaranteeing of deposits to prevent bank runs, the notion that nothing has real value anymore... may all be traced to Lehman Brothers' bankruptcy, or rather Paulson's refusal to save the company. Lehman Brothers may be the Rosetta Stone which helps us better understand why things are the way they are now.

Though Lehman was the smallest investment bank when it failed — and regulators decided it was not too big to fail — its demise set off tremors throughout the fi…

My NS Strategy Advice For Valuecap

The Edge Daily wrote a good piece on Valuecap. Here are the main points:a) Valuecap Sdn Bhd, the asset management company owned by Khazanah Nasional Bhd, Permodalan Nasional Bhd and the Pensions Trust Fund Council, will receive an injection of RM5 billion to invest in undervalued companies on the Kuala Lumpur Stock Exchange. The money, which doubles the size of Valuecap’s capital, is on loan from the Employees Provident Fund (EPF). Valuecap, which was set up in 2002 to add liquidity and volume to the market, has met these objectives. b) Is Valuecap’s record of its return on investment matches the EPF’s benchmark. However, currently, Valuecap is believed to have about RM4.9 billion worth of investments in 70 companies. And it has been reported that since its inception to September 2007, Valuecap has paid out a total of RM135 million in dividends. Better public disclosure will help to ascertain whether this passes the standard tests for financial performance. c) A check with the regi…

Roubini On Emerging Markets' Risks

You cannot afford to ignore Nouriel Roubini nowadays, especially since he has been so correct over the past 12 months. Roubini has now latched onto the risks spreading to emerging markets' debts and balance sheet frailty. First thing first, Malaysia is not on the list (phew), but Indonesia, South Korea and India are. How do these risks play out in the mentioned countries? The currency will be under immense pressure, local rates will have to jump sky high to protect value and flight of capital, foreign investment will dry up quickly, short term foreign investments will flee, government and corporate bonds will be downgraded, cost of borrowing will jump, companies on high leverage will suffocate ...
Today we focus on those emerging economies that are falling victim – or are at risk of falling victim – to the ongoing global financial crisis. The escalation of the crisis revealed or exacerbated existing vulnerabilities, such as current account deficits, that were ignored when times wer…

When Dali Came Face To Face With The Real Dali

This was the highlight of my trip to New York. Naturally I went to the Metropolitan Museum of Art as I knew there were two Dalis hanging there. Did I mentioned that I used to sell Dali's lithographs in Paddington, Sydney during my Uni days? Well I did and fell in love with his paintings, but I have never seen a real Dali in my life. His paintings are all over the world and its a bit silly to try and see all of them.

I spent just over an hour inside The Met but was staring at The Crucifixion for over 20 minutes. I wanted to say "Hey, I blogged as Dali, you know!". The painting happens to be one of my favourites as well, hence I was in awe as I did not know which two Dalis were hanging there. The other was a B grade Dali, The Madonna & Child in concentric circles... but I digress. Since I had been acquainted with his works, I was dying to tell someone what a wonderful painting we all were looking at. I was exclaiming to the group next to me, "What a magnificent pi…

See-Sawing To Some Stability

Naturally, we still see a lot of naysayers on the market. There will still be those who will be calling for 700 on KLCI and 7,000 for the Dow Jones. Its very easy to be negative, its the right trend line. The same people shouting for 700 and 7,000 were very quiet when the indices were 1,000 and 12,000 respectively. Where were they then?

Its like Tottenham Hotspurs. Nobody would call for them to be relegated when the season started a few weeks back. Now, the majority are calling for Spurs to be out of the Premier League already, and the league is just a few weeks old. Once a trend has been established, the safe way is to project along the trend lines until it has seen a reversal. These are mainly chartists, they have some value (very little to me) but they will fail to look at the underlying reasons for why they are there, or reasons why they will be going somewhere.

We are facing markets which have lost confidence. We are seeing massive intervention and injection of liquidity, even gua…

Buffett Likes The Mess The US Is In

SMH: Warren Buffett, the world's richest man in the Forbes magazine list, said in a newspaper commentary yesterday that he is buying US stocks even though the American economy is in a "mess". Mr Buffett, 78, who became known as the Oracle of Omaha because of his fortune-building skills, said he has been buying into US companies even as "fear spreads"."The financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy and the leaks are now turning into a gusher," the head of the Berkshire Hathaway Inc conglomerate wrote in The New York Times."In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary."I've been buying American stocks. This is my personal account I'm talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, w…