Thursday, April 30, 2009

China Heart Taiwan


What does it take for a country's stock market to rise 6% in a day? What kind of news can jump start that? Apparently, very little. China Mobile announced that it will buy a 12% stake in Far East Tone Telecommunications. The news raised hopes that there is a tacit approval from Beijing to encourage China firms to do more investments into Taiwan.

Besides being a good move politically, its a very good move economically as well. Just look at how Hong Kong's economy rely on China, its like a modern day umbilical cord. At the same time, it leverages on the advantages of each side to link up. A similar situation looks to be happening between China and Taiwan. Can you imagine the economic might of a Greater China economic grouping that has HK, China and Taiwan. Its pretty formidable. Its might and collective strength more than equates an ASEAN grouping.

Far East Tone is Taiwan's third largest telco. The deal still needs approval from Taiwan regulators, but it should be a done deal. If approved, it would be the first direct investment from China. This comes after another ground breaking development when China agreed to let Taiwan to send observers to the annual meeting of the World Health Assembly, the WHO's ruling body, next month in Geneva. Ties have improved significantly under Taiwan's President Ma Ying Jeou. The two sides have signed a series of agreements easing limits on investments between the two and establish the first regular two way air and shipping traffic.

President Ma Ying-jeou said that the 1952 Treaty of Taipei affirmed the transfer of Taiwan's sovereignty from Japan to the Republic of China. Ma's statement deviated from his previous claim that it was the 1943 Cairo Declaration that gave the ROC its claim to Taiwan. "While the 1952 treaty does not specify the legal successor government [of Taiwan], it was clear between the lines," he said. "Japan would not have signed the accord with the ROC if it did not intend to concede the territories to the ROC."

Ma said the 1952 pact had three meanings: It not only affirmed the "de jure termination of war between Japan and the ROC" after Tokyo's surrender in 1945, but reasserted the "de jure transfer of Taiwan's sovereignty to the ROC" as well as "restoring friendly and normal relations with Japan. Read this any way you like, its not the China Mobile story that pushed Taiex higher, its this statement by Ma.

There are many ways to court a girl. You can threaten, scream, shout and warn ... but those will never be as effective as cajole, serenade, being generous, showing respect and tenderness. China heart Taiwan.


p/s photos: JJ



56 Cents To The Dollar = $1,000 Billion Additional Writedowns



Banks may need to write down another $1,000 billion, and this is already widely hinted in the markets. I would rather not take this as a negative but a positive. Additional capital will not be lost, its to boost the balance sheets. US regulators may force Bank of America, Citigroup and at least a dozen of the nation’s biggest financial institutions to write down as much as $1 trillion in loans, twice what they’ve already recorded, based on past Federal Deposit Insurance Corp. Assets sold under the Legacy Loans Program may be worth an average of 56.3 cents on the dollar, based on the results of FDIC auctions at failed banks over the past 15 months. In view of the potential losses, reports emerge of banks trying to game the system by bidding each other's asset prices up.
  • GoldmanSachs and Mike Mayo report in their analysis that most banks carry unsecuritized loans at 92-98 cents on the dollar on their books. Moreover, most of the assets in the PPIP are loans.
  • Details of past FDIC distressed assets auctions: The FDIC’s average auction value of 56.3 cents on the dollar for residential and commercial loans is based on 312 sales worth $1.1 billion since Jan. 1, 2008, according to the FDIC. The average for 348 commercial loans for which borrowers stopped paying was 32 cents on the dollar. Auction prices ranged from 0.02 cent to 101.2 cents on the dollar, according to the FDIC.
  • Writedowns would total $1 trillion if the program buys $500 billion in loans at 32 cents on the dollar, the average for non- performing commercial loans in the FDIC sales.
  • Banks failing Federal Reserve evaluations of loans this month may be ordered to make sales worth as little as 32 cents on the dollar, according to FDIC data. That would be less than half of the 84 cents on the dollar the Treasury Department suggested was a possible purchase price. Some of the bank- insurance agency’s auctions brought 0.02 cent on the dollar.
  • The FDIC would auction assets after the Office of the Comptroller of the Currency, Office of Thrift Supervision or the Fed signals that a bank is in danger of failing.
  • Treasury spokesman Isaac Baker said in an e-mail that the program is voluntary. "Past auctions cannot reliably predict asset prices in the Public Private Investment Program, as we are creating a new market that has not previously existed to help value these assets, and offering financing to help investors purchase them."
  • The FDIC is considering allowing banks to share in future profits on loans sold to public-private partnerships to encourage healthier lenders to participate. The regulator is seeking comments through April 10 on the program.
  • Banks have almost $4.7 trillion of mortgages and $3 trillion of other loans that aren’t packaged into bonds, according to the Fed. The vast majority are carried at full value because they don’t need to be written down until they default.
  • While regulators don’t intend to publish the details of their stress tests, the results will effectively become known once banks announce how much capital they need to raise. Regulators will then give lenders six months to obtain funds from investors or taxpayers as a last resort.
  • The government’s toxic assets plan will force banks such as Citigroup, Bank of America and Wells Fargo to take large writedowns on their loans, requiring them to raise more capital from taxpayers or investors.
  • Including TARP, the U.S. government and the Fed have spent, lent or guaranteed $12.8 trillion to combat the financial collapse and a recession that began in December 2007. The amount approaches the $14.2 trillion U.S. gross domestic product last year.

p/s photos: Nancy Wu Ding Yan


Wednesday, April 29, 2009

Grooming & Style Tips For Executives


Impressions and how you present yourself are very important for an executive. In a world where first impressions are made in the first 3 to 6 seconds and 70% of that first impression is made with the eyes, the importance of being self assured and looking good has never been so vital. It indicates professionalism and how serious you regard what you do. I see too many executives who will just put on whatever they have with no serious thought on what image they present to their colleagues, superiors and clients. Some might argue that its the performance of the executive that counts. Yes, sure that is true, but business is also about branding and how you represent your company. That is why certain companies will always give a senior executive a certain type of executive car when they reach a certain level - its not really a perk, its there to ensure that this RM20,000 a month executive does not drive to work in a Proton Iswara - there are a host of issues to consider. Of course if you are an entrepreneur and is worth millions, no one will care how you dress, hence you don't need to care.

1) Bespoke / Tailor made vs Off the rack - Always the former. I know many will think they can just grab a shirt of the rack and they fit - really??? They only kinda fit, trust me. How the shirt hangs on your shoulders is critical, just 1 inch off and it will be noticeable. Everybody's arm's length are different, many of us have one which is slightly longer than the other. How the shirt feels around the chest or how the shirt looks when you raise your arms are the defining reasons why you need them to be tailor made. Neck size is critical as well and I always see some struggling to tie their ties as it may be too tight or too loose. One more important aspect is the collar, is it a flared collar or a closed off collar - how a collar shapes in the end determine how much of your tie knot is showing in the end. Many people make the mistake of wearing shirts with a wide V thus making even a good tie look bad. Make your shirts with a narrow V, it makes all ties look much better, trust me. You don't have to invest in dozens of shirts - at the end of the day, just 7-10 good shirts will do. If budget is a problem, promise yourself a very good tailor made shirt every 3 months (RM300-RM500 pp), by the end of one year you would have 4 good shirts, by the second year you will have a good closet. Keep doing that and its not a very expensive way to dress properly for an executive. A final reason for having bespoke shirts is the material quality. It is very bad to see executives wearing shirts with the thinnest fabrics, the ones you can see the guy's nipples, guys cannot get away with that unless you are girls.


2) Sweat stains / odour - Almost self explanatory. Guys who sweats a lot, you should know what to do, get a good spray deodorant. Then at least don't try to wear shirts where their colours will show sweat stains very clearly (e.g. light blue and sweat stains contrast beautifully and clearly). The other thing is when clothes smells of odour because its not properly dry enough or has not been dried in the sun - that defeats everything, you might as well come to work in a Pagoda white singlet cause that has the same effect. Make sure your clothes are properly dry, preferably in the sun, inside and out. Another tip is to put in boxes of dehumidifiers in your closet, they will soak up moisture from your clothes. If one box is not enough, put in two for better effect - oh yeah, never put mothballs in the closet, you don't want your clothes to smell like that.

3) Ties - Learn how to tie ties well. There are basically two ways, half knot or full knot. Depending on the fabric, usually you do not tie the full knot as the thing will look like a bunched up cauliflower, unless its a thinner fabric. A half knot is good enough, and learn to create a dimpled middle in your tie for better effect. Have at least 3 or 4 good solid colour ties. Solid colours mean all black, all grey, all blue, etc... Its increasingly difficult to carry off fancy designs. Solid colour ties makes it clean and sharp to match with striped shirts. Never try to matched striped shirts with ties that are heavily patterned. Stick to solid colours or the classic striped ties. These never go out of style and it gives an air of conservatism and coolness. Fancy multi patterned ties always shouts and basically tries too hard. How long you tie your ties is a dead giveaway to your sense of style and decorum. Ties should always just cover your belt buckle. Never, never wear ties that does not reach your trousers' top.

4) Double-cuffs - Its now more acceptable and trendy to wear double-cuff shirts. Just beware of the cuffs you are using. Double-cuffs used to be for tuxedos wear, but now its a lot more common. Hence many of those cuff links that are very classic, are usually larger and more boring, square or round in solid colours. Executive wear for double cuff links should be slightly smaller. Cuff links are an accessory, use it well.


5) Shoes - Thankfully, guys do not need 20 pairs of shoes. If you think about it seriously, you only need 2 very very good pairs of executive shoes, and they will last for sometime. If you keep buying those RM100-150 pp, they will look bad very quickly and you will have to replace them more often. Guys have the habit of doing everything well but neglecting their shoes. A good pair of black leather executive shoes should cost at least RM600-1,500pp. I can tell you a secret, that girls put a lot of importance in the shoes that guys wear. Slip ons or those with laces, I would always side with laces for executive wear. Never brown, always black, and always take care of your leather shoes with proper polish.


6) Trousers - Always wear pants with a nice conservative belt, hopefully black with a simple buckle. Not brown or light brown belts. Never wear pants without a belt to work, even if the pants fit - its bad style.



p/s photos: Fala Chen



How To Interpret What Your Dealers & Remisers Are Saying

















(Ooops!!! Very sorry, I didn't know the chart did not appear for many of you. Now it makes more sense, lol.)

The ultimate rulebook / guidebook for all investors. This chart below will help you to decipher where the market is at by what your dealer or remisier is saying. It has proven to be highly useful in locating where we are in the market trends and turns. Please use the guide diligently to translate what your dealer and remisiers are saying to you. For example in #5 when your dealer or remisier says "I'll use this correction to increase my position", look at the chart and you will know that it means the market is headed for a very big fall. If you look at #8 when they say that they cannot believe that a stock has fallen so much and has to be the absolute bottom, rest assured the chart is there to help you, it means the stock has at another 50% to fall. In example #15, when you tell your remisier or dealer that you have started to buy shares, and they shout back at you angrily "You what!!!??"... rest assured the market will continue a very strong and prolonged uptrend. Please use the chart below wisely.


1 Ah, the price is going up, let's watch the market
2 The trend is holding, I'll buy at the next consolidation
3 Damn! I missed the consolidation, but if I wait any longer, I won't profit from the trend. LET'S BUY!
4 Good thing I didn't wait
5 I'll use this correction to increase my position
6 Brilliant! At this price, let's double it!
7 Ouch. As soon as it goes back up, I'm selling out!
8 I don't believe it! Its down to 8 1/4! Its hit its absolute bottom!
9 OK, let's wait for it to recover - otherwise this will have to be a really loooong term investment
10 What are the SEC doing about this??!!
11 Enough! I'm selling out! And staying out
12 Good thing I sold
13 It's going to tank again anyway
14 Told you so
15 You what???
16 What the hell???
17 More crazies who are going to get taken to the cleaners!
18 This is it! I knew this was going to happen all along!
19 Drat! I'll buy again. It's cheaper than last time anyhow


(Double click on chart for better view)


p/s photos: Lee Ji Ah

Tuesday, April 28, 2009

MK Land's Pretty Oversold


Judging from my recent postings, readers may think I am into speculative stocks. Not really, but when the timing is right, certain stocks are worth a ride. These stocks, including Talam, are not your buy and hold kind of stocks, but owing to the confluence of certain important factors, they make decent rides. The other stock that I have mentioned last week which I like is MK Land. Following the high profile, high flying reputation in the last few years, MK Land has had to tone itself down to work down some pressing debt issues. MK Land has taken a backseat while working through that over the last 12 months.

The timing to exit some non strategic businesses is welcomed but prices could be depressed, thus its better to take time. Still, its better to exit the hotels, resorts, nursing college and biscuits businesses. The stock has been walloped so bad. If funding was a bit looser, the owner would be dying to privatise the company. The current share price is still below 30sen. The RNAV is RM1.80!!!!!!!! I suspect if the controlling shareholders have no problem with "over-leveraging already", they would have taken the company private. Seriously, 40-50 sen is a no brainer, now that it has sold off some pieces of land, and should be exiting some non-core businesses soon.

If we wait for everything to fall into place, you would be entering MK Land at 50 sen.

---------------------------------------

The principal activities of MKLAND are those of investment holding and the provision of management services. The principal activities of the subsidiaries are property development and property investment, operator of hotel, golf and country club, resort and theme park, provision of educational services and investment holding.
The more notable property project is the Damansara Perdana township project. The project consists of 962 condominium units, 269 units of serviced apartments and 107 units of shops and office suites. The township is strategically located along the Leburaya Damansara Puchong and the Sprint Highway. It is also adjacent to IKEA and Tesco. In addition, MKLAND's flagship project is the RM3 bn Bukit Merah Laketown development in Perak. It consists of a range of resort facilities such as the Marina Village, Waterpark, Eco Park, and the Bukit Merah Lake.
Malaysian Rating Corporation Bhd (MARC) has maintained MK Land Holdings Bhd's BBB+ rated RM60 million outstanding bonds on MARCWatch Negative. The company was first placed on MARCWatch Negative on May 7, 2008 due to liquidity concerns following the deferrment of scheduled payments to build up its sinking fund account.

MK Land has since met the timeline to place RM30 million into the sinking fund account before August 25, 2008 and Tranche 1 bonds has been fully repaid. The company's liquidity position has remained strained despite moderate improvement in profitability measures for the six months ending Dec 31, 2008.

To address its upcoming final redemption of the rated bonds in September 2009 of RM60 million, the company had announced on Jan 20, the disposal of 23 acres of land located in Damansara Perdana in Petaling Jaya, Selangor.

For the first half of financial year ended Dec 31, 2008, the company had recorded a pre-tax profit of RM18.2 million, erasing a pre-tax loss of RM16.8 million previously, due to improved sales of development properties.

However, it registered negative net cash from operations of RM2.3 million Its cash and bank balances and deposits with licenses banks remained at RM29 million relative to short-term borrowing of RM300.2 million which includes the outstanding bonds and RM137.9 million of bank overdrafts.

MK Land's revenue increased 82.3% to RM124.6 million for the six months ended Dec 31, 2008, from RM68.4 million a year earlier. It returned the company to the black with a net profit of RM10.1 million or 0.84 sen a share from a loss of RM18.3 million previously. While the profit was boosted by other operating income of about RM8.9 million, the management pointed out that property sales have improved since last July, which was the start of the company’s current financial year ending June 30, 2009 (FY09), despite the difficult market condition.

“We achieved total sales of RM150 million to date (within seven months since July last year) which is significantly higher than the sales recorded in the corresponding period in FY08,” said Mustapha Kamal. According to him, sales for the quarter ended Sept 30 last year amounted to RM59.3 million. The numbers had remained steady in the quarter ended Dec 31, 2008, with sales of RM60.5 million. Meanwhile, “in-hand sales” since the start of the year amounted to RM30.4 million.

Mustapha Kamal stressed that the RM150 million sales came mainly from projects such as the Armanee condominium and Metropolitan Square, not low-cost housing projects that have low or zero margin. Thus, when these sales translate into revenue, it will contribute decent profits to the group. On another note, Mustapha Kamal said he had no choice but to acquire a 9.2-hectare land in Petaling Jaya from MK Land for RM150 million cash last month. He said that MK Land, which was looking to raise funds, couldn’t find a buyer who would offer a fair price for the land.

According to him, MK Land needed the cash flow to kick-start or resume work on certain projects in order to generate the revenue and to avoid delaying the delivery of certain projects, which will result in the company paying “late ascertained damages”.

“I have to sell my privately owned properties before I could pay the RM150 million to MK Land,” he said. MK Land will use proceeds from the land sale to generate more cash flow in order to help repay a RM60 million bond due in September. The bond is deemed to be the last hurdle for MK Land, the management said, as the group’s remaining RM445 million borrowings are essentially project financing, which will only be redeemed as and when the company sells and develops the projects in stages.

He is confident that MK Land is on the path to recovery. He said the company has several projects in the pipeline, in locations such as Damansara Perdana, Damansara Damai, and Jelapang, Ipoh.These projects have obtained the necessary approvals from the authorities and involve 5,639 units of properties with a combined gross development value (GDV) of RM4.1 billion. Depending on the economic situation, the GDV of these projects could be realised within three to five years.


p/s photos: Park Ji Yoon


Cricket Terminologies For Dating & Sex


Well, to really appreciate this posting, you have to be a fan of cricket like me. Sports mad fans will stand or sit and drink their Tooheys (or VB if you are from the inferior southern city), and cricket being cricket, there will be plenty of time to talk about other stuff. Cricket is full of its own lingo, positions, batting, bowling, catches, fielding... its natural to associate those terms with dating and sex, especially when you are talking with your mates in a pub. Somehow football does not have that many terminologies of phrases where you can equate to dating and sex. We can try:

he missed the bloody penalty - a girl who really likes a guy but he just didn't care

he took a dive in the penalty box - a guy pretending to be someone high and mighty to impress chicks

he was yellow carded - a guy who has been rejected a couple of times by different girls in a bar

he was red carded - a guy trying to pick up chicks in a bar but his girlfriend/wife arrived

he took the ball to the corner flag - playing for time, wasting time, when nothing's ever gonna happen with him and the girl

we did a nice one~two - you and a wing man cooperating to court a chick in a bar successfully

Anyway, you get what I mean, here are some juicy cricket terminologies:

Let one go outside off: Decline an invitation from an unsuitable partner.

Smack one over the bowler's head: Succeed very quickly with a woman.

Pull one over the covers: Masturbation.

Fending 'em off down the leg side: Too many woman to handle.

Fielding at first slip: Running off your mate who has a surplus of feminine attention.

Bowling from both ends: Working two women in the same room.

A barrage of bouncers forcing you to duck for cover: More than one ex-girlfriend in the room while you are trying to tune other women.

Getting your eye in: Practice conversations with women earlier in the night.

Dispatched to the boundary: Have sex.

Whip the bails off: Masturbation or getting a woman's smalls off. "How'd ya go mate? Did ya even get the bails off?

They're flying off the edge: Attempts at conversation or connection with the opposite sex are going awry.

Let it go through to the keeper: Ignore a flirtatious offer from a woman or allow a woman's phone call to go to voicemail.

Batting too high up the order: Aiming too high with women.

Playing county cricket: God's gift to Australian men; English backpackers.

It's all about time in the middle: You need to talk to women often to become successful at it.

Seeing them like watermelons: Having great success with the opposite sex.

Coming out of the hand nicely: Your interactions with women have proved positive so far.

A one-dayer: A one-night stand.

IPL: Exotic action.

Twenty20: Explosive, short-lived sexual encounter, typified by flashy stroke-play.

Running between the wickets let you down: You've drunk a little too much.

Played a very straight bat: You didn't come on to a woman in any shape or form. Usually a mate's ex or sister.

Lot of moisture in the wicket: Many women present at an establishment.

Lot of turn in the wicket: Your interactions with the opposite sex are garnering unpredictable results.

Bowling into the rough: Trying to get a reaction from a woman.

Spent a lot of time at the crease: You've been drinking and/or chatting up for many hours.

Left arm around the wicket: Gay.

French cut: Blokes who act effeminate around women.

12th man: Carries the drinks all night, doesn't get any female company for his troubles. "I've been 12th man the last three weekends in a row."

Appeal against the light: Decline to have sex with a person because of their race/skin colour.

Battling without a helmet: No contraception.

Taking the new ball: Partaking in chemical enhancement after too many beers.

Leg byes: Pulling a root without a great deal of effort.

Enforce the follow-on: Sex after sex. "Mate, we both woke up at 10am and she enforced the follow-on."

Right-arm orthodox: The missionary position.

The yorker: An acute, well-delivered line or action that virtually guarantees sex. "We were getting on pretty good and they I yorked her, so she had to play at the ball."

Seagulling: Sitting in a pub on your own or with a couple of mates and making no contribution whatsoever to the pursuit of the opposite sex.

Duckworth-Lewis: The formula employed to gauge how many drinks you're prepared to buy a woman in order to get her into bed.

Adjust the sight-screen: Drink a few more beers in the hope the girl will somehow grow hotter.

Stranded at the non-striker's end: Your wing man, who was keeping a woman's friend busy, has crashed and burned and both females have brushed you.

Wide ball: Fat.

No ball: Fugly.

Ball tampering: Shaving your privates for a partner.

Night watchman: The father of a young girl with a curfew.

Underarm delivery: Australians acting like dickheads.

Pitch report: When your mate points out the hotties in the place when you arrive.

Stranded on 99: Getting along great in bed, clothes off, about to raise the bat and kiss the emblem and the girl gets cold feet and says no. Doesn't happen often and it was a good knock until then.

Do a Gilly: Walk when you didn't have to, the girl is ready to go home with you but you somehow disappear (tribute to Adam Gilchrist).


p/s photos: Zhou Wei Tong

Monday, April 27, 2009

Talam Coming Out Of PN17


There is an unlikely stock that I like, Talam. It will be coming out of PN17 sometime in May. Paid up has ballooned to nearly 2bn shares of 20 sen each. But debt levels will be coming down to RM300m due to the debt restructuring plan. I estimate that its net asset per share will still be aroun 21 sen. The attraction is its NTA plus land bank. Its rising from the ashes. It might not regain the prominence it once had but below 10 sen is just too cheap. Talam should be trading at 14-16 sen.

Pursuant to the debt Regularisation plan, Talam has accounted for RM145.37m of the income arising from the reversal of interest previously accrued and debt waiver granted by the lenders. In addition, RM381.63m arising from the reduction of share capital and the entire share premium account was credited to the accumulated losses account during the period under review.

Market Cap: RM135.2m

Paid up 20sen shares: 1.931 bn shares

Borrowings: RM750.16m (that should come down to RM300m soon)

Net Profit 12 month ended 31 January 2009: RM60.325m

EPS: 3.1 sen (a large portion from the reversal of interest RM145.37)

Net assets per share: rough calculations should be RM0.21


Talam's executive director, Chua Kim Lan said Talam was targeting to complete its regularisation plan by May this year, for the company to have its Practice Note 17 status removed. Chua said after completing the regularisation plan, the debt level of Talam will be reduced from RM3 billion to RM300 million.

Talam will not be launching any new projects at the moment as it is focusing on completing property sold in Selangor. A majority of the projects in Selangor will be completed this year and the remaining portion in 2010. According to Chua, Talam has a landbank of about 4,000 to 5,000 acres, the majority of which is in Selangor.

Chua also disclosed that Talam had plans to dispose its non-core assets to streamline the company. "We plan to dispose investment properties and land within Selangor with a cash value of between RM200 to RM300 million. Previously, we sold about RM150 million in non-core assets," she said.


p/s photos: Nozomi Sasaki

Next Market Catalyst - Banks Stress-Test Results

The next catalyst for the US markets has to be the government's stress-testing of banks' results. Most analysts and commentators can only guess what the parameters are like. Some banks will be asked to raise additional capital due to the results of the stress-test.


19 banks were asked to submit to the test. If we look at the table for comparison, their Tier-1 capital would be a start. Those around 10% or below would fall under the "danger list", but its not all definitive, its probably one of the many factors that the government looks at. But Wells Fargo, Bank of America, even American Express and PNC Financial would fall under the "to be watched" category.



Of greater importance will be the Tangible Common Equity Ratio which has been harped on by Bernanke and Geithner. I think this measurement will be more critical. I would worry if the ratio is 4% or lower. Bank of America stands at just 3.1%. Citigroup is making me nervous at 1.7%. PNC Financial is there again at 3.3%, and US Bancorp is also there at 3.7%. Wells Fargo, despite registering such wonderful profits is there at 3.3%.



I think those that are below 4% will be barred from returning TARP funds back to the US government. Which is to say the Bank of America and Wells Fargo will still stay under the "jurisdiction of the US government" and will have to toe the line a lot more when it comes to compensation matters.



JP Morgan and Goldman Sachs are in the clear, and Goldman can return the funds should they wish. Returning the funds would allow Goldman to soothe executive nerves on drastic changes to their compensation scheme, and may act as a buffer to retain and attract talent in this difficult environment.



Even if Bank of America and Well Fargo may be asked to raise more capital. It is not a death sentence. It could just mean that these banks will have to try to convert existing preferred shares into common stock. We have to remember that when Citigroup did a similar announcement of the plan, it rocked the share price of Citigroup.
The blessings of the stress-test is that it will make more transparent the health of major US banks. Even though some may be asked to raise more common equity capital, the general view should be more of a relief to investors that these banks are continually being subjected to more screenings and testing of their viability. The end result of the stress-test is probably a boost to confidence and may actually see banking stocks moving up higher in tandem.


[stress tested]


In February, the Obama administration said 19 bank holding companies with more than $100 billion of assets would have to undergo a stress test. The move was designed to calm fears about the solvency of the banking system. The exams, conducted by more than 150 federal regulators, analyzed potential losses from residential mortgages to complex securities products. Banks will have several days to challenge the findings before the government makes results public the week of May 4.


p/s photos: Janice Man Wing Shan (a model turned actress, she will be a wonderful actress in the future judging by her stunning acting chops displayed in Love Story and La Lingerie)

Swine Flu A/H1N1 Takes Centerstage


Can something like an unknown swine flu affect financial market? One need only ask Hong Kong, and the rest of Asia during the SARS outbreak. It nearly crippled the surrounding economies. AirAsia could weather oil prices above $100, but the SARS outbreak nearly drove the company to collapse. So, it is best to keep a close watch on the flu outbreak as it seems to be spreading beyond Mexico. The Obama administration declared a public-health emergency with 20 cases confirmed in the U.S., including eight in New York, and said that there are likely to be more illnesses. China and Russia made plans to quarantine anyone with symptoms of the virus. Asian airports used a device to test arriving passengers for fever.

Russia banned meat imports from Mexico and several U.S. states, although World Health Organization officials said there is no sign the flu spreads by contact with meat. A WHO panel will convene Tuesday to consider whether to raise its global pandemic alert. In Geneva, World Health Organization Director-General Margaret Chan warned that the virus had the potential to cause a pandemic, but cautioned that it was too early to tell whether it would erupt into a global outbreak.


Only one of the 20 U.S. patients has required hospitalization, none had antiviral treatment, and there have been no fatalities. In Mexico, officials have confirmed 20 deaths as due to the new flu and believe 61 more deaths probably were. New cases of the flu, which is taking its heaviest toll in young adults, were seen outside Mexico City, the city that's been hardest hit.

Exactly how the disease is spread remains a mystery, though it is known to be able to move from one human being to another. The virus is made up of genetic material from swine, bird and human viruses. Often, it triggers only mild symptoms.


Stockpiles of Australian developed antiviral drug Relenza are being prepared for use around the world by governments in the global effort to combat the outbreak of swine flu. The US government announced overnight that it would release a quarter of its stockpile of Relenza and the other anti-viral drug Tamiflu after 20 cases of the flu were confirmed there, while other countries are expected to follow if further cases are confirmed. The death toll in Mexico alone now stands at 103, Reuters reported.


Relenza was developed by Melbourne-based company Biota and has been licensed to global pharmaceutical maker GlaxoSmithKline, which produces the inhalant at sites including its plant at Boronia, in Melbourne's east. Shares in Biota, which collects a 7% royalty from sales, shot up 67 cents, or 77%, or 62, to $1.54 this morning.


Authorities around the world are getting ready to tap into their stockpiles of Relenza and the Roche-produced Tamiflu to combat the outbreak of the disease, which emerged from Mexico at the weekend.Tamiflu, known generically as oseltamivir, and Relenza, or zanamivir, are both recommended drugs for seasonal flu and have been shown to work against viral samples of the new disease.


"Anti-viral drugs for seasonal influenza are available in some countries and effectively prevent and treat the illness,'' the World Health Organisation said in a statement over the weekend. The WHO said recent samples of swine flu were resistant to another class of anti-flu drug known as adamantanes, but were "sensitive to'' Tamiflu and Relenza.


Spanish health authorities are investigating seven cases of possible swine flu in people who returned from Mexico in recent days. New Zealand officials said that 10 students "likely" had been infected with the disease after a school trip to Mexico. Canada recorded four cases in Nova Scotia and two in British Columbia, in people with some link to recent travel to Mexico.


Mexican health authorities said the death toll from the new strain of A/H1N1 swine flu remains at 20, and they are continuing to investigate whether more than 1,000 others were infected with the mysterious bug, which attacked in three geographically diverse areas of the country and is taking its heaviest toll in young adults.



p/s photos: Kibby Lau



Saturday, April 25, 2009

Business Reads To Start With


There have been a few readers who have asked me what business books to recommend. I am not going to recommend textbooks, as you can go and do a CFA and read those books on their required list. If you are venturing into the business world, in particular in financial industry, be it research, brokerage, remisier, dealer, fund management or investment banking - these books are a good start. These books are well written, but more than that, its rooted in reality. In the corporate world, you need to appreciate how the different players interact, how to view various players, deciphering the motivations of various players... It should help enormously to have a sense of the kind of loyalty, integrity and egos running around.




Liar's Poker by Michael Lewis

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Panic! by Michael Lewis

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House of Cards by William D. Cohan

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The Real Price of Everything by Michael Lewis

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The Money Culture by Michael Lewis

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The New, New Thing by Michael Lewis

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Capital, The Story of Long Term Excellence by Charles D. Ellis


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Barbarians At The Gate by Bryan Burrough & John Hellyar

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p/s photos: Carmen Soo

Friday, April 24, 2009

Malaysia's 3 Biggest Under-Leveraged Business Factors


Over the years, Malaysia has managed to carve out a respectable economy among the emerging markets. Nevertheless, Malaysia could be so much more, so very much more than where we are now. Let me just cit the THREE major business factors that have been conveniently swept under the carpet, ignored, not discussed, not leveraged on, not expanded on, etc. These 3 factors are hugely important and would have allowed Malaysia to be a few notches higher the overall scheme of things. Are we too shay, politically scared, or rather lacked the political will to maximise our potential. The three factors cannot be glossed over. They represents who we are, you cannot change that, we can only be a better country and better citizens once we come to an acceptance of who we are, where we are in the world.

The 3 Biggest Under-Leveraged Business Factors For Malaysia:

1) Most-Neutral/Moderate Muslim Country - While that has been brought more to the forefront over the last 5 years, especially in the areas of Islamic finance and Islamic banking, we need not be shy about the fact that Malaysia is regarded as being the most neutral/moderate Muslim country. Being in that category allows us natural benefits, many countries want us to be engaged in talks and as the link to the Muslim world. Being pragmatic, we need to be clearer of where we are and don't be shy about our links.

2) Overseas Chinese - Name me the country which has the most overseas Chinese who have become citizens of that country. (Take Taiwan out of the equation, Taiwan doesn't count). Its Malaysia.

3) Overseas Indians - Name me the country which has the most overseas Indians who have become citizens of that country. Its Malaysia.

China and India have been growing in their economic might for the last 10 years. We only have Khazanah opening its Beijing office, LAST YEAR!!!!??? In Malaysia, we have the BIGGEST population among its citizen that have ancestors who have come from China and India - and we still speak the languages there. The natural connection should have allowed Malaysian companies and businesses to leverage on those two factors to greater business ties. Why didn't that happen? Does it seems to be "unpatriotic" to leverage on our backgrounds to do business with China and India? That shouldn't be the case, but we rarely dare to talk about these issues. We need to be clear about our identity, no fellow Malaysians should question our Malaysian-ness. Once we have got past that, where our citizenry and loyalty lies, only then can we leverage on our common strengths and advantages without fear or favour.

Its still not too late.

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Swifz has alerted me to a more correct classification of overseas Chinese and overseas Indian. I stand corrected but I think my points are still valid. Thanks for the correction.

Overseas Chinese

Minority populations
Indonesia 7,776,000
Thailand 7,123,000
Malaysia 6,324,000
United States 3,858,000
Majority populations

Singapore 3,496,710



Overseas Indians

Major ethnic group

Nepal 4,000,000
Malaysia 2,100,000
Myanmar 2,000,000
Saudi Arabia 1,500,000

Minor ethnic group

United States 3,000,000
United Kingdom 1,600,000
South Africa 1,160,000





p/s photos: Eri Otoguro



Sectors & Stocks I Like To Follow As CI Breaches 1,000



This is a follow up to the last posting on the confirmation of the bull run. As in any bull run, it is sometimes quite silly to look for stocks to recommend. The best performing stocks in a bull run are generally the worst type of stocks, no fundamentals, speculative and dodgy management. So, how to get the best returns? I cannot tell you the kind of speculative nonsensical stocks to look for, even though they can make good money, because its baseless and manipulative. Hence for the speculative stocks, you will have to ask your taxi driver or vegetable seller, they have better information on those type of stocks.

Can a simple announcement by Najib turn things so dramatically? We need to be be able to decipher what is blah-blah, and what constitute structural changes. Say that Malaysia is like a farm, the input and output are similar year in year out. Sometimes, through no fault of our own, the yield on the farmland drops sharply, maybe we had an unexpected prolonged dry spell, or the weather patterns shifted unfavourably. You may then do your normal monetary and fiscal stimulus, you can buy some fertiliser or even tweak the tractor's engine to make it stronger, but thats that.

The recent announcement of the removal of the 30% rule is a structural change, not a cosmetic change. To the farmland, that is like getting plenty of tractors to totally remove the topsoil and replace with a much better soil. Its like rethinking on removing some of the plants that yield poorly and have low margins, and replant with ones that give better margins.

We also need to be careful that we do not do too much all at once. There will be those who will clamour for the 30% rule to be taken off FIC as well. One step at a time. While Najib is at it, there is one area that has been neglected for far too long, and too wasteful and results in a huge mis-allocation of resources - properties reserved for bumiputras discounts. I agree that the allotment should stay, but a more sensible rule to be added in that if the properties allotted for such schemes remain unsold for 6 months after the launch, then it is open to be sold as per normal. The rule causes developers to incur unnecessary financing charges, eats into margins, and raises the business model costing. Not being able to sell them after a prolonged period (say more than 1 -2 years) ties up the funds and capital for the developer to manage his business.

Stocks that will run as a group will be the Iskandar project - SP Setia, UEM Land, even the ports and logistics stocks. The second group of stocks should be those in financial services, if Najib can do the 30%, you can expect a similarly effective liberalisation in the financial services. Prefer AMMB, EONCAP.

One sector I particularly like is property, surprise, surprise. Except for the high end condos, the rest of the property market held up very well. However, if you look at property stocks in general, they got whacked by Mike Tyson in a boxing match. Looking at the structural changes, hard assets will do well, i.e. good land banks. I have also said that the world will be in for a strong reflationary period over the next 2-3 years, which again favours hard assets. I like SP Setia, UEM Land, even Talam, Sunway City, even MK Land.


p/s photos: Satomi Ishihara



Confirmation Of A Mini Bull Run For Bursa Stocks


Well, this will be short and sweet. Readers will be familiar that I have said that this will be a 3 steps forward, 2 steps back kind of rally. Then somebody threw something into the barbecue pit yesterday when they announced the removal of the 30% ruling for foreign companies. If I had not been that clear before, it is a substantive impetus for the KLCI. Prior to that, I was looking for a stop-start rally that could bring the KLCI to a year's high of 1,100 - but the high may only be reached towards the end of the year. Now, with the additional impetus, it has elevated Malaysian stocks into a different valuation platform. I can assure you that over the next 3 days, there will be a huge truckload of highly favourable strategy reports on Malaysian economy and Malaysian stocks. Imagine being used to a hose that has people stepping on it all the time, the water trickles in in spurts. The fresh developments is a bit like replacing that with a metal pipe. The flow on effects will be enormous. I am comfortable that the CI will surge past 1,020 within days. I have also revised the high for the CI this year from 1,100 to 1,180. Expect a premium being accorded to Malaysian stocks, compared to other emerging markets in the coming weeks and months. Cheers!


p/s photos: Kelly Lin

Thursday, April 23, 2009

Highly Commendable, Timely and Useful Decision


The longstanding 30% bumiputra equity requirement will be lifted immediately for 27 sub-sectors, including health and social services, tourism, transport, business and computer-related services for foreign companies and investors. While some may still be a bit cynical, this is a very significant move, and will cause many more international funds to consider Malaysia. It is a well known fact that many companies and investment funds have bypassed Malaysia, either as a long term investment destination or even Malaysian equities, just because of the rule.

While the country may not see an immediate benefit, the cumulative goodwill will ensure a more competitive landscape for Malaysia in attracting foreign investments. I can bet you that Singapore should be pretty pissed with this development, so too for Thailand and Indonesia. The ruling unnecessarily put two huge boulders on our feet whenever Malaysia is being considered as a mid-term or long term investment option by foreign companies. Now we can allow our natural advantages, such as cheap flat land, a reasonable and knowledgeable work force, a pretty impressive logistic and infrastructure for movement of goods and services and overall low operating cost (thanks to direct and indirect subsidy).

The government hopes that lifting the requirement will boost investment and make the services sector more competitive. The decision comes amid official warnings that the economy could shrink by as much as 1 per cent this year. Malaysia has been hard hit by the global economic crisis, with exports down 15.9 per cent in February from a year ago. The services sector is the largest, contributing 55 per cent to Malaysia's gross domestic product last year.The move is very crucial in moving our reliance on services to at least 60 percent, and which would then lessen our reliance on electronics exports and commodities.

Within the services sector, financial services is the biggest, followed by tourism, one of the top foreign exchange earners. The government plans to liberalise other sectors in stages, with details for the financial sector to be unveiled next week.


The areas that still will have the 30% rule include sectors that may be politically sensitive and/or have a heavy state presence, such as air travel, utilities and retail. Malaysia is already the third most dependent economy in Asia after HK and Singapore - to compete better, we need a stronger structure to lure a different set of FDI that will add layers and move the country further up the value chain. We also need to diversify faster away from a dependence on commodities and electronics.


That rule has always made it very difficult for some companies that does not agree with the "relevance" and "the need" for such a requirement. Strategically and economically, it might not make much business sense, thus causing a huge downgrade in Malaysia's viability as a long term investment destination when compared to other countries. Its a highly commendable, timely and useful decision.

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Malaysia will scrap ownership limits for overseas companies in dozens of services industries after forecasting a 50 per cent slump in foreign investment this year. The government will immediately drop a rule in 27 sectors, from healthcare to tourism, that requires foreign companies to set aside 30 per cent of their units in Malaysia for ethnic Malay investors, Prime Minister Datu Seri Najib Razak said in a statement today.

Najib said last month that foreign direct investment may halve to RM26 billion (US$7 billion) in 2009 as the global recession delays projects. Malaysia’s government expects the US$181 billion economy to expand 1 per cent this year or shrink the same amount at worst, and many economists expect a larger contraction. Sales at electronics manufacturers have been hammered in the slowdown, and crude and palm oil exports are fetching lower prices.


“The services sector is targeted to be a new growth sector,” Najib said. Other industries freed from equity conditions include computer-related businesses such as repair and maintenance, providers of veterinary services, and transport and ship-rental businesses, he said.


Many foreign investors have said for years that the rules restrict competition and hold back growth. This year, local businessmen including Najib’s brother, Datuk Nazir Razak, who leads Malaysia’s second-biggest bank, CIMB Group, said the program needed reviewing. Today’s announcement should make services more attractive to investors, Najib said. The liberalization is part of Najib’s plan to increase the proportion of gross domestic product derived from the services industry to 60 per cent from 55 per cent in 2008.

Of RM50.1 billion of approved investments in Malaysia’s services industry in 2008, 11 per cent was from foreigners, according to the government.



p/s photos: Angelababy Yang Wing