Wednesday, April 27, 2011

Manchester United Forever

This season has not been easy for Man United, all the points were hard fought. Safe to say, this Man United team is nowhere near the quality and polish of the last team that won the Champions League, which is why its all the more satisfying. To score two goals away, Ferguson would have said well done, but after watching the match, it was a shooting gallery, Man United could have put 5 away. Somehow if we only had Ole Gunnar Solksjear, it would have been a foregone conclusion.

Still, we worry about meeting Barca in the final, which is why many would be hoping that Real Madrid can dump Barca out. However, if it was meant to be, I think meeting Barca in the final would be a good thing as Man United would be the underdog, and thats a good feeling.

Better watch the video before its banned by YouTube, its the highlights from the match.

Tuesday, April 26, 2011

Japan, 1 Month Later In Pictures

A sobering yet respectful moment, the need for purpose and determination to carry on. Buddhist monks, Japan Self-Defense Force personnel, firefighters, and other relief workers observed a moment of silence on "Hiyori Yama," or Weather Hill, in Natori, Miyagi prefecture, on April 11, 2011, exactly one month after the devastating earthquake and tsunami hit northeastern Japan. Local fishermen used to climb the manmade hump and decide whether it was safe to fish. (Koichi Nakamura,Yomiuri Shimbun/Associated Press)

The picture speaks volume, at her age, did any of her family members survived, if they did not, what is she holding onto. Her thoughts must be filled with sadness and longing. An evacuee sat in a partitioned "room" at a gymnasium converted into a shelter in Kamaishi, Iwate prefecture, on April 12, 2011, a month after the March 11 earthquake and tsunami hit the northeastern coast of Japan. (Kazuhiro Nogi/AFP/Getty Images)

A good picture, its for the youth that everyone must carry on, that we should leave the world a better place for the next generation, the picture resonated hope and redemption. Rui Sato, 2, showed off his key chain while playing with a Japan Red Cross member at an evacuation center in Fukushima, northeastern Japan, on April 11, 2011. (Hiro Komae/Associated Press)

A vivid photo that emanates enormous respect for the affected families. A volunteer cleaned a family photo that was washed by the March 11 earthquake and tsunami as baby photos were placed to dry at a volunteer center in Ofunato, Iwate prefecture, April 12, 2011. (Toru Hanai/Reuters)

Shoppers looked for vegetables during a sale of produce from the city of Iwaki in Fukushima prefecture on April 12, 2011. The government is trying to support farmers in Fukushima who are hurting from dropped sales due to rumors of the spread of radiation from the troubled nuclear power plant. (Yasuyoshi Chiba/AFP/Getty Images)

Its a significant thing that there was little or no looting in the midst of the disaster, again, the photo emphasised the dignity of the human spirit - it may be swept up as trash by some, but the belongings are something of enormous value to the affected. A man looked for his personal belongings at a collection center for items found in the rubble of an area devastated by the March 11 earthquake and tsunami, in Natori, northern Japan. (Kim Kyung-Hoon/Reuters)

Events as such have been replicated in many countries, more and more, we are more connected as a planet. Greenpeace activists and other environmentalists lit candles amid hundreds of paper cranes at the Heroes' Monument at suburban Quezon city, Philippines, on April 11 in solidarity to the Japanese disaster victims. The protesters are calling for an end to nuclear power around the world. (Bullit Marquez/Associated Press)

Hope and rememberance among the ruins. A month after the tsunami devastation, 2-year-old Ayaka and family members prayed for her missing grandmother and great-grandmother at a vacant lot where they lived in Ishinomaki, Miyagi prefecture. (Yasuyoshi Chiba/AFP/Getty Images)

Asian Business Blogs

Got this notification through the email. Has to be wary of these things. Yes, its nice to be ranked 50 best business blogs following Asian business, I just hope its not some scheme to divert traffic to their site. Anyway, unless proven otherwise, its a good list of other business blogs, I did check out most of them.

50 Best Blogs for Following Asian Business

[] [Digg] [Facebook] [Mixx] [Reddit] [Twitter] [Email]

Posted on April 25th, 2011

It's impossible to be involved in international business today without paying attention to the economies of Asian nations like China, India and Japan. These countries are major players in technology, manufacturing, research and development and many other facets of business. Whether you're a business student or already working in the field, it never hurts to know a little more about these booming markets. Take a look at these blogs to follow the latest business and economic news that include everything from breaking stories to tips on managing overseas.

Asian Business

These blogs cover a wide range of countries and topics when it comes to business.

  1. AsiaBizBlog: Follow along with the latest news related to business in China and other Asian nations on this blog.
  2. Eye on Asia: This Bloomberg Businessweek blog is a great, authoritative source for commentary on everything Asian business.
  3. Asia Business Media: Mark Cochrane of Business Strategies Group in Hong Kong reports on Asian business to business news here.
  4. Asianbiz: Keep up with sports, technology, business and culture news out of Asia with this blog.
  5. Asia Unbound: The Council on Foreign Relations maintains this great blog, full of the economic and political news you need to know about Asia.
  6. CNN Asia News Stream: CNN correspondent Kristie Lu Stout provides a steady stream of Asian business news on this blog.
  7. Blog of Asia: From business news to how to get around as a visitor in Thailand, you'll find a bevy of great articles here.
  8. BBC Asia Business: Get your Asian business news from an authoritative source, the BBC, through this blog.


Learn more about the business and economic spheres in China through these blogs.

  1. China Business Blog and Podcast: Whether you like to read your news or listen to it, you'll find some great information on doing business in China here.
  2. Asia Business Intelligence: This Chinese business blog focuses on the technology markets, from green energy to mobile phone developers.
  3. China Business Services: Through this consulting firm's blog, you can read some interesting posts about what it's really like doing business in China.
  4. China Law Blog: Curious about Chinese law that might affect your business? This blog is the place to find answers.
  5. China Business Blog: Visit this blog to find news and information about Chinese business.
  6. Larry Salibra: Learning another language can invaluable to a businessperson, something this entrepreneur in the language learning and tech industries knows very well. On his blog, you'll find updates about Chinese language, entrepreneurship and much more.
  7. China Hearsay: You'll find great commentary on Chinese law, business and economics from lawyer Stan Abrams here.
  8. ChinaSolved: Learn more about effective management strategies for working overseas in China through this blog.
  9. China Dialogue: With articles in both Chinese and English, this blog can be a great resource for learning about not only the business world of China but its culture and politics as well.
  10. Managing the Dragon: Check out this blog to read some great articles about being a manager in China as well as commentary on the business world in general.
  11. The China Observer: If it's related to Chinese business, economy and consumerism, you'll find it on this blog, a great resource to anyone working or planning to work in or with the country.
  12. China Economics Blog: Written by an academic economist, this blog is a trusted place to get insights into the Chinese economy and its impact on the world.


These blogs are a great place to learn about Indian economics, technology and business.

  1. India Business Blog: Stay in the loop when it comes to all the latest news in Indian business with a little help from this blog.
  2. You'll get some great access to articles about the Indian economy here.
  3. Squamble: From management strategies to investing in India, you'll get a wide range of business blogs posts here that can help you become more knowledgeable.
  4. Indianomics: Sriram Vadlamani, an IT professional working in India, shares his insights into the tech market in India.
  5. The Big Picture: Professor of Finance and Accounting, TT Ram Mohan, shares his thoughts on everything India here.
  6. Ajay Shah's Blog: Find updates about a wide range of Indian economic and finance issues here.
  7. Capital Mind: Follow the markets, trading and finance world in India through this blog.
  8. One Million by One Million: Follow Sramana Mitra, a leading Indian entrepreneur, through this blog.
  9. The Startup Guy: Find out more about startups in India with a little help from Vijay Anand.
  10. Atanu Dey on India's Development: From politics to business investments, you can learn more about the growing and changing face of India's economy here.
  11. Blogworks: If you're more interested in the role Indian businesspeople are playing on the web, check out this blog to learn more about social media, marketing and public relations.


Japan's economy is one of the biggest in the world. Check out these blogs to learn more about Japanese business and more.

  1. Japan Economy News & Blog: Make sure you always know what's going on in Japanese business by following this great blog.
  2. Japan Inc: From diversity in the workplace to investing in Japanese real estate, this blog covers all the basics of Japanese business.
  3. Japan Trends: Planning on marketing and selling a product in Japan? Keep up with the latest trends here.
  4. Japan Intercultural Consulting: If you're an American businessperson working in Japan, this blog is a must-read to better understand how business works there and examine cultural faux pas you don't want to make.
  5. Japan Economy Blog: Follow the ups and downs of the Japanese economy with commentary from Edward Hugh on this blog.

Other Countries

If you're interested in exploring some other Asian countries' business, these blogs can help, with posts about everywhere from South Korea to Malaysia.

  1. The Korean Law Blog: This blog will help you learn about the legal issues that may affect doing business in South Korea.
  2. Bridging Culture Worldwide Blog: You'll find some great posts on Korean global business through this blog.
  3. Malaysia Finance Blogspot: If you're planning to do some business with Malaysia, learn more about the finance and economics of the country through this blog.
  4. Guide Me Singapore: Here you'll find a wide variety of posts on business in Singapore, including articles on everything from branding to entrepreneurship.
  5. Picture Thailand: Find business, cultural economic and travel news related to Thailand here.
  6. Thai Business: The Business Exchange has a great archive of articles all about Thai business on this site.
  7. PinoyDeal Business: From e-business to regulations to tech news, you'll find some good information on this blog about Philippine business.

International Business

These blogs aren't focused exclusively on Asia, but you're bound to get some coverage in through their posts on international business.

  1. Global Edge: Find all the international business news you need through this blog.
  2. The Global Small Business Blog: Just because you're a small business doesn't mean you can't go global. Read this blog for inspiration, news and advice.
  3. ibt Blogs: This site is home to a great number of international business blogs, perfect for finding news on topics like energy, finance and technology.
  4. International BS Blog: Help build a better business strategy in Asia and beyond with advice found on this blog.
  5. Business 360: CNN's Business 360 is a great source of information for those working in international business.
  6. HBR Blog Network: The Harvard Business Review posts some interesting articles that can help you expand, manage and build your business at home and abroad.
  7. Customs and International Trade Law Blog: Through this blog, you'll learn more about the laws and regulations that will dictate your business overseas.

Monday, April 25, 2011

Was There Really A Global Recovery Since 2008?

There may still plenty of naysayers about the sustainability of the global economic recovery, some might even question if there was even one in the first place. The first portion of the posting highlights the world trade and production volume. The sums have even bettered the peak right up to 2008. The second portion of the posting deals with the performance of global share markets. They have basically kept in line, although India looked terribly overbought. Hang Seng is surging next and could well have more impetus with the debasing of the USD, as more hot money will swing there to anticipate a revaluation, even without that there should be a keen chase for assets of all types there owing to the enlarging liquidity.

Despite the many major negatives, macro and external, to the global economy, much of it has been localised somewhat. The ongoing sovereign debt default issue in E.U., even the unrest in Middle East and some African nations, ... these events did rocked the markets as it should but none of the global equity markets are even ready for a correction.

Even the QE1 and 2 (quantitative easing) seems to have lent more strength to a lower USD which is not a bad thing for US stocks. Usually when you do that, interest rates will go up a lot but the recovery domestically is still muted. However, the US stock indices are not so aligned to the domestic recovery as recent weeks have show that the big boys are registering good profits growth as their tentacles are pretty much extended in emerging markets.

Following on on that, the funds have to go somewhere, owing to the growing "debasement of the USD movement" (aww shucks, you are going to hear a lot more of that new lingo), many have moved out of Treasuries. Usually in such a scenario with massive notes printed by Federal Reserve, they would go for select commodities, well gold has risen an awful lot, but thankfully gold is not a major item in the production chain. However, even though other hard commodities have rise as well, you cannot really justify the extended bullishness, in fact most hard commodities are a little over bought for now.

Oil is a unique animal, but somehow most economies have learnt to live with US$100-110 oil prices. I guess if it hits US$150 for a prolonged period, then we could see a bigger pullback in stock markets.

So, all said, funds are flowing out of Treasuries, where to? You can't all go into gold, not while corporates are registering good profit growth, which is to say, the world may have been blinded by looking too much on the negatives (all the above issues in a negative way). This is an important point, the global media, be it machinery, printed, internet or TV have tended to give a lot more airtime to blowouts, wars, QE2, oil prices, E.U. sovereign debt crisis, natural disasters ... at the expense of a more sobering look that much of the global trade and production have been chugging along nicely since 2008.

When to sell, when the Fortunes, Wall Street Journals andInternational Business Weeks start to turn bullish on stocks. Trust me, they always do that very well.

The CPB Netherlands Bureau for Economic Policy Analysis released its monthly on world trade and world industrial production for the month of February. Here are some of the highlights:

  1. World trade volume increased in February for the seventh consecutive month, bringing global trade to a new all-time record high (see chart). This was also the third month in a row that world trade was above the previous peaks during early 2008 when the U.S. recession and financial crisis started spreading, causing world trade to drop by 20% in 2009.
  2. World trade in February was 10.5% above its year-ago level, and marked the 14th consecutive month of double-digit annual growth starting in December of 2009. Compared to the cyclical high in April 2008, world trade volume has recovered to a level that is now 2% higher than its previous peak. Compared to the cyclical low in May 2009, global trade has increased by 28% through February of this year.
  3. World industrial output was the same in February compared to January, but was above its year-ago level by 7.4%. World output in the first two months of 2011 established a new, all-time record high level, which is 5.2% above the previous cyclical high of 134.4 in March 2008 (see chart above). After falling by 12% during the global recession in 2008-2009, world output has increased by almost 20% during the last two years of a strong global rebound. Global output has increased in almost every month compared to the previous month during the worldwide recovery that started in 2009, with only one month of decline in industrial output in the last two years.

Bottom Line: Based on the ongoing and solid improvements in both international trade and world output, especially the fact that global trade and production are both at all-time historical highs, I think we can now say that the world economy has made a complete recovery from the financial crisis and global slowdown in 2008 and 2009. The remarkable recovery in the global economy over the last few years is a testament to the ability of markets to recover from even a severe financial crisis and the worst economic slowdown in generations. Even though there are still many uncertainties and headwinds moving forward, the strong world economic recovery so far is both remarkable and encouraging as we hopefully have entered a new period of global growth, expansion and prosperity.

The chart below illustrates the comparative performance of World Markets since March 9, 2009. The start date is arbitrary: The S&P 500 and BSE SENSEX hit their lows on March 9th, the Nikkei 225 on March 10th, the DAX on March 6th, the FTSE on March 3rd, the Shanghai Composite on November 4, 2008, and the Hang Seng even earlier on October 27, 2008. However, by aligning on the same day and measuring the percent change, we get a better sense of the relative performance than if we align the lows.

A Longer Look Back

Here is the same chart starting from the turn of 21st century. The relative over-performance of the emerging markets (Shanghai, Mumbai, Hang Seng) is readily apparent. However the pattern has been less apparent over the past few months.

Saturday, April 23, 2011

Press Metal Is A Multi Bagger In The Making

The market is holding now, which gives all an opportunity to take money off the table or revise their bets. I have been following Press Metal since its dramatic run up back in December when it shot up from below RM2.00 to hit a high of RM2.80. Thus, it has given me ample time to assess the company. The timing is just about right as well, with the signing of the PPA and the fund raising exercise proposals last week. I am pretty confident that Press Metal could be the best performing stock this year (of course minus all the brilliant penny stocks below 20 sen la).

Despite the terrible month of March when all hell broke loose, the stock has been collected assiduously by those who have done their homework since then with few sellers. This led me to conclude that its time to get in now, for a trade or better still to hold till more research and institutions discover the stock.

Safe to say, Press Metal 2 years ago was not the animal it is now. We get the biggest gains in a stock when there is a transformational change to their earnings platform, without sacrificing the the strong underlying business model they have built up. To appreciate where Press Metal is going, its good to look at things chronologically.

What is a potential multi bagger? A multi bagger is something you bought and saw returns in the multiples of 100% ... 100% is a one bagger, 200% is a two bagger and so on. These type of stocks do not come around very much. Imagine if you invested in Cypark at RM1.00 or SP Setia-WB at RM0.50, thats what I am talking about.


Background: Press Metal was principally engaged in manufacturing and marketing of aluminium products, whilst the principal activities of the subsidiaries are manufacturing and fabrication of aluminium and stainless steel products, property development, recycling of waste, and investment holding. PMETAL is one of the largest aluminium extruders in Malaysia. The company has been awarded with the MS ISO 9002 certification and the ISO 14001 Environmental Management System Certification. In addition, it has also been awarded the Occupational, Health and Safety Management System (OHSAS 18001) from TUV Anlagentechnik Gmbh of Germany. The company''s operation facilities are located at Jalan Kapar, in Klang. Its facilities have the capacities to produce approximately 25,000m/t of extrusions per annum. Meanwhile, PMETAL''s billet casting division has a production capacity of approximately 70,000m/t per annum. The company distributes approximately 45% of its products to overseas markets, such as Singapore and Australia.

Press Metal has long established its position as a leading light within the ASEAN aluminium industry. In Malaysia, it is the largest aluminium extrusion producer, with a capacity of 50,000 tonnes. P Metal has also been an integrated aluminium producer, having flexed its wings in China by acquiring an upstream manufacturing plant some three years ago, in addition to the commencement of its own Chinese extrusion plant two years earlier. The smelter – located in Fushan (Guangdong province) – has an estimated capacity of 90,000 tonnes – and is used to support its downstream extrusion plant. One of the plant’s key advantages is self-sufficiency in the supply of power through its own 180MW-coal fired power plant located next to the smelter. Because of this, Press Metal is able to secure power at a 15% discount to Chinese grid prices.

2007 - Nascent start into the upstream segment of the aluminium industry supply chain (~ three years). Press Metal took over the reins of an existing China smelter in 2007, and only commenced its own smelter in Sarawak last November 2010.

November 2009 - Having rolled out its maiden production in November 2009 (Phase 1A: 60,000 tonnes), Press Metal has put out an early marker over its rivals. The three other similar but larger proposals - i.e. Salco (Rio Tinto-CMS JV), Smelter Asia (GIIG-CHALCO JV) and 1MDB-SGCC JV – are still at the planning/negotiation stage, with no visible signs of them taking off anytime soon. Capacity at is Mukah smelter is poised to double to 120,000 tonnes with the commissioning of Phase 1B by end-4Q10.

Mid-2010 - The group’s value proposition is further enhanced by the recent emergence of Japan’s Sumitomo as a cornerstone investor in its Mukah plant (20% stake plus option for another 5%) – including Phase 2 of its proposed plant expansion worth around US$600mil. The emergence of Sumitomo is critical as its massive trading and distribution arm will extend Press Metal's presence in export markets. Apart from secured off-take, the deal offers a solid platform for P Metal to leverage on Sumitomo’s extensive network and broaden its market share. Sumitomo – Japan’s third largest trading company – is no stranger to the aluminium business. The group already has investments in aluminium smelters in Australia, Brazil and Indonesia. It also trades primary aluminium in Japan and other Asian markets.

October 2010 - P Metal is on the cusp of a structural transformation into an integrated aluminium giant within ASEAN, following the successful rollout of its smelter in Mukah, Sarawak. Press Metal has a roadmap to be a pure integrated aluminum player. Mukah plant will crucially have unencumbered access to cheap hydro power and the firstmover advantage as the country’s first smelter. Press Metal’s Mukah smelter is one of only two operating within ASEAN – which together with China – has a base consumption of 20 million tonnes (or circa half of global aluminium demand). Press Metal is in a strong position to secure an additional power of 510MW from Sarawak Energy Bhd at attractive rates against the spectre of an insufficient off-take in the state when Bakun comes on stream by end-1H11.

November 2010 - Phase 1B of the Mukah plant was commissioned – doubling its capacity to ~120,000 tonnes.

April 12, 2011 - Press Metal and three other foreign companies have signed separate power purchase agreement (PPA) term sheets with Sarawak Energy Bhd. Apart from Press Metal, the other three companies are Japan’s Tokuyama Corp, Singapore listed OM Materials and Asia Minerals Ltd. Sarawak Energy Chief Executive Officer Torstein Dale Sjotveit was quoted as saying that the four companies would require long-term supply of 1,300MW of power to their plants. Part of the electricity would be supplied via the 2,400MW Bakun Hydroelectricity dam – which is expected to commence production of its first 300MW in three months’ time. The latest development marks another significant step towards the crystallisation of a tariff structure for power off-take for Phase 2 of Press Metal’s US$600mil expansion plans.

April 15, 2011 - Press Metal announced that it has received approval from the Sarawak state planning authority to construct a new 240,000 tonne p.a. smelter in Samalaju Industrial Park, Bintulu. The land is to be developed over a period of five years – and could potentially triple Press Metal’s existing capacity to 360,000 tonnes.

April 18, 2011 - This is highly significant, as soon as they secured the PPA, Press Metal announced the following proposals:
(i) Renounceable rights issue of up to RM324mil nominal value Redeemable Convertible Secured Loan Stocks (RCSLS)
(ii) Up to 147mil free detachable warrants.
The basis for conversion is (1) RM2.20 nominal value RCSLS and (1) one warrant for every three (3) existing P Metal ordinary shares. The conversion price of the RCSLS has been fixed at RM2.20 – with a maturity period of 8 years. The latest proposal appears to be a strategic move by Press Metal to raise capital ahead of the targeted roll-out of Phase 2 of its expansion programme estimated to cost ~US$600mil (RM1.8bil). Alpha Milestone Sdn Bhd – a vehicle owned by the Koon family (major shareholders of P Metal) – has given their irrevocable undertaking to subscribe for the RCSLS/warrants not taken up by other shareholders. This is also highly significant.

Risk Factor #1 - Delays in negotiations for the PPA. Any delays in ongoing negotiations between Press Metal and SEB on the supply of power from Bakun could be a potential drag factor. That factor have been drastically nullified by the signing of PPA last week, a fact which was seemingly lost on investors.

Risk Factor #2 - Balance sheet concerns At face value, Press Metal’s current balance sheet appears to be a little stretched at 169% as at 30 June 2010. This is mainly due to the hefty US$300mil spent on Phase 1 under its Mukah smelter. Its looked like the funding requirements were based on a debt/equity ratio of 60:40. However, its net gearing level to improve to 121% and 97% respectively by FY11F-FY12F – as deleveraging would come along with rising cash flows from its Mukah smelter. The full-commissioning of Phase 1 – where the US$300mil capex has already been spent upfront – is expected to kick in from FY11F onwards.Furthermore, we do not discount the possibility of Sumitomo coming in as a co-investor for Phase 2 of the new smelter worth an estimated US$600mil.

The RCSLS / free warrant proposals last week should put to rest the burden of fund raising for them to start Phase 2. Its an attractive scheme and I think the controlling shareholders would be mopping up shares in the coming days and weeks ahead of the ex-date. Hence I expect a smooth trajectory upwards to RM3.20 up to the ex-date for the share price.


Earnings Visibility - With capex for the entire Phase 1 (US$300mil) already frontloaded, we can expect sequential earnings momentum to gain traction along with rapid expansion in margins. Total capacity should double to 120,000 tonnes in FY11 with the commissioning of Phase 1B by year-end. Earnings are at an inflexion point – with a robust FY10F-12F EPS CAGR of 64%. Core earnings surged six-fold to RM30mil just from a six-month contribution from Phase 1A. Earnings are at an inflexion point – with a robust FY10F-12F EPS CAGR of 64%. In 1HFY0, core earnings surged six-fold to RM30mil just from a six-month contribution from Phase 1A of the Mukah smelter.

Preferential Business Model - A key advantage of the Mukah smelter is its unencumbered access to cheap hydro power under the Sarawak Corridor for Renewable Energy (SCORE) – Sarawak’s economic growth corridor. Supply of power typically accounts for one-third of an aluminium smelter’s cost structure. Press Metal had in January 2009 signed a technical agreement with SEB for the supply of over 600MW of power over a 25-year period. For Phase 1 (180MW), Press Metal has managed to secure power from SEB at fairly attractive rates (~half of the cost of Chinese smelters). While the actual tariffs were not disclosed, earlier press reports indicated that the aluminium smelters were requesting for power rates of 13.6 sen/kHW (~US$4 cents/khW). The additional power would likely come from the Bakun hydroelectric dam.

Regional Player - What many investor might not know is how Press Metal’s rapid progression as an integrated aluminium giant within ASEAN will translate to its visibility for institutional investors. ASEAN together with China – has a base consumption of 20 million tonnes (or ~half of global aluminium demand). In Malaysia alone, aluminium consumption is circa 250,000 tonnes compared with Press Metal’s current capacity of 120,000 tonnes (360,000 tonnes assuming Phase 2 takes off). There is currently a void of aluminium smelters within ASEAN – where Press Metal is one of only two players.

Industry Outlook - Japanese trading giant Marubeni recently projected the global aluminium imbalance (global surplus) to fall by 23% to 1.3 million tonnes in 2011 from an estimated 1.7 million tonnes in 2010. Alcoa – America’s largest aluminium maker – was even more aggressive. It has revised 2010 global surplus estimates to ~1 million tonnes or an 18% decline from its previous estimates in 2Q10.

Valuation - Valuations are exceedingly compelling – at FY10F-12F PEs of only 6x-14x against EPS CAGR of 64%). This represents a deep 40% discount to its larger integrated global commodity and pure aluminium peers. It is also trading at a Price/Book ratio of only 1.1x or a 30% discount against its peers. Press Metal deserves to trade at a scarcity premium - given its deepening progression as an integrated regional aluminium player with an additional capacity kicker coming from its Mukah smelter. More importantly, Press Metal is deeply under-appreciated and under-covered with just ONE research house coverage currently.

What You Didn't Know About Press Metal (look at your iPad or when you shop at IKEA) - Traditionally, the four main user-groups for Press Metal’s aluminium products can be broken down into:
(i) Rolling-mill sheet producers,
(ii) Cable producers;
(iii) Alloy wheel producers; and
(iv) Extrusion manufacturers.
To stay ahead of competition, P Metal has strived to add value to its conventional approach of supplying commodity-based extruded aluminium by offering custommade solutions. This includes the packaging and installation of aluminium products for end-clients. As a result, Press Metal has successfully established itself as one of only two suppliers of aluminium products for IKEA in China. It is also a supplier to the contract manufacturer for Apple’s I Pad (accounting for 20% of P Metal’s volume under a three-year contract).

Planning and Execution Are In The Details - Press Metal’s move upstream is not something new - given its investments in China. You might like to know that Aluminium Corp of China Ltd (CHALCO) – China’s leading aluminium producer - was roped in as the technical partner and turnkey contractor for the Mukah smelter, thereby truncating any start-up risk. The group has since redeployed over 100 staff from its Chinese plant to kickstart its plant in Mukah.

Results - For 2009 the company recorded revenue of RM1.18bn and net profits of RM26.7m, EPS 7.3 sen. As the Mukah operations started to kick in towards the last quarter of 2010, 2010 saw its revenue jumping to RM1.713bn and net profit scaling to RM81.4m, EPS was 18.9 sen. For 2011, revenue is slated to move up to RM2.1bn and net profit should hit RM128m, an EPS of 30 sen. The RM2.1bn figure ONLY takes into account the gradual contributions from Phase 1. Hence we are not needing to look very far out into the horizon to get comfort. Even IF THEY STOP EVERYTHING for Phase 2 now, the stock is very cheap.

Significant Covenants - I like this a lot. If you peruse their Annual Report, you will find that the company has "covenants with their borrowing policy". In connection with the significant term loan facilities of a subsidiary, Press Metal Sarawak Sdn. Bhd., the subsidiary and the Group have agreed on the following significant covenants with the lenders:
i) Project Debt-to-Equity ratio of the subsidiary to be maintained below the ratio of 70:30 at all times; equity is defined to include all subordinated debts and shareholders advances;
ii) Minimum Finance Service Cover Ratio (“FSCR”) of 1.25 times, where FSCR equal to the subsidiary’s net operating cash flows for the year plus opening cash balance divided by total facility payment due for the current year;
iii) no material change in the business plan of the subsidiary and Press Metal Berhad Group; and
iv) the Company shall maintain its shareholdings in the subsidiary more than or equivalent to 80% throughout the tenure of the facility.
I don't know about you, but these covenants speak volume about their committment for the long haul to create great value for the company over the medium to longer term.

So, this is no longer an airy-fairy concept stock. It has successfully rolled out Phase 1 and making good money at it. They now are quietly raising funds for the second phase and that can only enlarge the successful platform they have. They are not the types that have suddenly bought a mine (when they do not know anything about mining logistics and distribution) or they are waiting to sign a big contract from the government or they are waiting for a casino license in East Malaysia. Press Metal is a direct play on the debasement (gradual devaluation) of the US dollar and its associated reflationary pressure on base metal prices. Things are already in place and have been jump started, and profits are flowing.

The two biggest hurdles, balance sheet strains and PPA, have just been swiftly addressed. They are not going into something new, they have already proven that they can deliver Phase 1 well. Multi bagger stocks will go through a period of "sure or not, sure can or not". Many have lofty projections and hearsay ambitions. Press Metal has been relatively quiet, while steadfastly delivering. They are also not your fly by nights who suddenly got something out of the blue and promises so much. Press Metal just went upstream in a gradual big way. Knocking off target KPIs one by one with aplomb and the assuredness of a seasoned business group, how not to ride along. Its not fair to put a target price, as just the Phase 1 alone should see it solidly valued at RM3.40. If they replicate Phase 2, we are looking at RM6.00 in 12-18 months. I would recommend to buy and subscribe to the proposals for full value on the upside.


NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). I may have a position in the counter already. The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

Friday, April 22, 2011

Dilbert@Malaysia, Now A Consultant To PEMANDU

click on image for better clarity

Why Such Strong Reactions To The Email Account Thingee

This is exactly why the government and the advisors ARE NOT ABLE to read the people's desires and wishes properly. Why such a puny project like email accounts for all, can stir up such a vociferous reaction from many quarters, including this tiga-suku? I can come up with cost, transparency, need, "forced down our throats", relevance, expediency, railroaded over, effectiveness, red tape, coercion ... off the top of my head.

My comments below will highlight that despite the huge run up in Tricubes yesterday, if they are allowed to charge 50 sen per email, the stock is still undervalued at RM1.00. But I strongly deter any my readers to even participate in the madness and unfairness of it all. The stock will be clouded with tons of storm clouds.

My site is now linked to the ETP Lite site, let's see whether they take off my link after this article, or do they really welcome sensible debate on important issues.

Let's look at the points and comments in the media, my comments in color:

KUALA LUMPUR, April 21 — The Performance Management and Delivery Unit (Pemandu) has said government agencies will pay Tricubes Bhd to use the company’s 1 Malaysia e-mail database, which it called both a government and private initiative.

“Agencies would have to pay a certain fee to use that, as in any other e-mail database,” business services NKEA communications content and infrastructure director Dr Fadhlullah Suhaimi Abdul Malek said in an interview on radio station BFM today. (OK, no public funds is being used, so somebody has to lend Tricubes, a GN3 company RM50m ... wonderful, I wonder how many GN3 or PN17 companies can even borrow RM10,000 with their financial status as such??!! Anyone??!!)

He said Tricubes’ database of verified e-mail addresses would ensure that correspondence from government agencies got to their intended recipients, adding that this would “quickly move citizens into the digital age”. (Verified email accounts is a superflous name, you telling me that gmail is not secure... pleaaaassseee la).

“What’s important is actually the database,” he said. “That... information gets verified because it is then linked to the National Registration (Department).”

Tricubes was involved in the nationwide deployment of the country’s MyKad identity card system and supplies biometric scanners to 170 organisations.

Fadhlullah Suhaimi said he expected agencies to pay Tricubes about 50 sen per e-mail, cheaper than the RM1.00 printing, stationery, postage and dispatch cost of sending a regular letter.

He said that, as the per unit cost of regular mail might double to RM2.00 if a misaddressed letter was sent back on the taxpayer’s dime, the government stood to save between 50 sen to RM1.00 per e-mail. (Oooh, here's how Tricubes make money, 50 fucking sen per email??!!! Why do you need to compare to postal services cost structure? If it actually cost RM10.00 per letter, does that mean Tricubes can charge RM5.00 per email as that would still save money??? There is no justification for 50 sen per email. I know many company doing SMS, MMS blasts that charges between 10-50 sen only, why 50 sen, you gonna be sending us messages with moving pictures and video clips on how much I owe the tax department? No, its simple messages, cost should be much much lower.

Here is the big wondering, why no talk about how much money Tricubes will make, and what constitutes supernormal profits. Assuming that there are 7m taxpayers, and you forcibly assign our name and IC as the username so that you get 7m email accounts automatically (e.g. Siva_A/

Hence the tax office can send you notices, accounts summary or even summons, and they will make it that once sent by email, its considered delivered, so you got no choice but to check your brand new email account, even though you already have 5 email accounts ... company email, yahoo, gmail, facebook, and now another one.

So, now we forcibly have the mass database, you can imagine just how much money if the tax office, and/or NRD, even the Road Transport, or even more departments ... send you something ... I bloody well hope they never send us festive greetings as well, unless revenue at Tricubes is deemed to be falling short, I guess.

Back to supernormal profits, none is elaborated. Assume you managed to force open 7m accounts and you charge 50 sen an email, conservatively two departments send one mail a month = 2 x 50 sen x 12 x 7m = RM84m a year conservatively. Fuck me silly, thats the easiest way to rob the public.

If its costing just RM50m to implement the system, there should be a proper rate of return, something akin to build, operate and transfer ... then sellback option to the government. Not fair to have the government (our money) paying RM100m a year at the barest minimum year after year.

There should be a term sheet that details: amount invested by Tricubes RM50m; Set them KPIs, they must deliver an unlimited email account like gmail, link up with NRD and get the 7m or 10m accounts set up, before they even get any fees; Once fees start flowing in, Tricubes will only get to keep RM100m of revenue; beyond that all fees are waived forever. Tricubes will get paid a reasonable fee to maintain the system on a yearly basis, say RM5m a year.

Say la something like that, then no one will even second guess the government's intentions or the reciepient's credibility in getting the project. If anyone tells me 100% return is not enough, please justify la, I am sure we can put this up for a tender and see what bids we get.

“The poor taxpayer, without realising, is actually allowing wastage of RM2.00 per post that goes out,” Fadhlullah Suhaimi said. (Yea, Faddy, the poor taxpayer will never know what hit them if the per email cost is 50 sen and runs forever, even Samy Vellu will say "Wah, like that also can aaahhhh, how come my tolls cannot one!!!).

He cautioned, however, that these expected savings were based on Tricubes’ own estimates. He said the actual cost per unit would vary depending on the volume and complexity of the transaction, as well as the number of people who eventually sign up.

Reflecting the earlier confusion on Pemandu’s website, Fadhlullah Suhaimi first said the 1 Malaysia e-mail project was “government initiated and private sector led” before referring to it later as a “private sector initiative”.

Pemandu was forced earlier today to defend changes on its webpage for the 1 Malaysia email project, claiming the switch of the project’s description from a government to a private sector initiative was to correct “a genuine error”.

Fadhlullah Suhaimi nonetheless stressed that no public funds would be used at any point to develop the e-mail service despite the fact that it may fail.

He said the project would be entirely market-driven, with Tricubes bearing the risk entirely if the 1 Malaysia e-mail project does not get off the ground.

“They must make it unique, make it compelling and they must make sure they can run a service that has value for end users,” he said.

“If they fail to deliver they lose their investment... There is no loss to the government or the taxpayer.”

Fadhlullah Suhaimi revealed that Tricubes was chosen as it was the only listed company out of the five that pitched for the project. He explained that listed companies were preferable as the public would be free to scrutinise their finances.

He said Bursa Malaysia had assured Pemandu that the ACE-listed company’s Guidance Note 3 (GN3) status was an “accounting issue”, adding that the entry point project (EPP) evaluation team had determined that Tricubes’ business model was “sustainable”.

Loss-making Tricubes is at risk of being delisted after its weak financial standing triggered Bursa Malaysia Securities’ GN3 in October last year.

Fadhlullah Suhaimi also admitted he was “surprised” by the intense public reaction to the 1 Malaysia e-mail project but said it was good there was such strong interest in an EPP.

“If Tricubes can put it out by July (as planned)... they will have good brand equity,” he joked.

Prime Minister Datuk Seri Najib Razak has said that the project will have a gross national income (GNI) impact of RM39 million up to 2015 and will allow direct and secure communications between Malaysian citizens and the government.

But critics say the government should focus on infrastructure project such as providing clean water or broadband across the country rather than working on a free email service which is already available through Hotmail, Yahoo! and Google Inc.

Tricubes has said it is collaborating with Hotmail service owner Microsoft Corp for the project but no provided no details.

Malaysians already enjoy online services such as MyEG and utilise banking portals to pay for a variety of utilities and services without the usage of email accounts.

Wednesday, April 20, 2011

Why GE Won't Be This Year

All pundits are trying to assess the ramifications of the Sarawak elections. Was it good for BN? Well, it could have been worse for sure. What about the opposition, did they manage to turn the tide? Many focused on DAP's brilliant victories, hence citing that the opposition only got more Chinese but not the rest. In my mind, there was a nagging feeling that it should be better. Finally somebody did a very good analysis of the voting. I am sure the smarter guys at BN strategy team would have done the same - the results are not good for BN. Despite not being able to deny BN the two-thirds majority, the undercurrents on closer analysis swings for the opposition.

Sarawak was supposed to be a fixed deposit for BN. Sarawak was going to be a major test case of whether the opposition are going to be effective and start a wave. Mind you, the last elections saw 51% of the popular vote going to the opposition already.

The article below studied the percentage gains by race by the opposition. That is very telling as to whether opposition has made strong inroads. We know the BN machinery is very formidable and unfair gerrymandering makes it doubly hard for actual seats to be won. More seats were won by opposition, that is point number one. The second point, is more telling: the effective gains by percentage by race to the opposition.

Chinese +13.4%
Iban +14.2%
Bidayuh +17.9%
Malay +18.4%
Orang Ulu +20.5%
Others +24.8%

So, in effect as most Chinese were already voting opposition previously, the gains were smallest. What is significant are the gains or swings by the other races. If Sarawak can see such swings, I think BN can only shudder at what will happen in Sabah and West Malaysia, with them having better access to the internet and other forms of communications. Sometimes, when you can smell smoke, you will act ... when people are just shouting fire, you probably say nah ... Same reasoning that when a state team or Malaysia national team manages to get to the finals of a tournament, suddenly the nonchalant bystanding public will turn to being vociferous fans, why, cause they can smell the smoke, or rather this time, something is burning. Thus, having a GE this year is tantamount to suicide for BN. I expect BN to implement a lot of "strategies" and try a lot of things to try to overcome the "unfavourable perception" by those who voted for opposition.

The myths of S'wak polls results
Tuesday, April 19 @ 07:48:25 CDT

The Chinese swing toward Pakatan is comparatively less than the changes within other communities.
COMMENT The dust has begun to settle on the 10th Sarawak polls with the BN touting its retention of the two-thirds majority as a victory, while Pakatan Rakyat points to the more than doubling of its seats. This was the most competitive state election in Sarawak's history and was hard fought by both sides.

BN, led by Prime Minister Najib Razak essentially camped in the state for 10 days to assure the two-thirds, while the opposition also focused is national machinery in Sarawak, bringing in the top guns from Peninsular Malaysia and thousands of party workers.

A closer look at the results show that the opposition has made impressive ground, despite its failure to break the two-thirds threshold. Sarawak is no longer BN's fixed deposit, and trends in mobilisation and support suggest that it is even more likely not to be so unless Sarawak BN radically changes how it governs.

Myth of Chinese-only swing

The spin on this election reflects a similar tone of 2006, focusing on the gains in urban seats and Chinese voters. The implicit threat in Chief Minister Abdul Taib Mahmud's statement that the Chinese will pay for their lack of loyalty highlights the perception that the losses are the product of continued Chinese support for the opposition.

In terms of sheer number of voters for the opposition, this is correct. In all the Chinese-majority seats - from Padungan to Bukit Assek - the level of support for the opposition increased, both in number of votes and share of the vote.

NONEThis reflected the dynamic - almost electrifying - opposition campaign in the urban areas, especially in Miri where voters experienced the political awakening that their counterparts in Kuching had experienced in 2006, and in Sibu at the 2010 by-election.

No question about it, a growing number of Chinese supported the opposition in Sarawak. The interesting finding from the results, however, is that they are not alone, and in fact the Chinese swing toward the opposition is comparatively less (yes, less) than the changes within other communities.

By comparing the 2011 results with those of 2006, I trace the changes in voter turnout and share of support (percentage of majority among voters who turned out to vote) for the opposition at the seat level and, when appropriate and with available data, the polling stream level.

azlanThe preliminary findings highlight that the movement is greatest in mixed constituencies, and significant movement occurred across the ethnic communities, even the Malays.

Let's begin with the mobilisation of voters across ethnicities. The 2011 polls show an impressive increase in voter turnout, in keeping with the increased competitiveness of the election. The greatest turnout increase was among the Malays, where the PBB machinery was well-honed, as more voters were brought to the polls, followed by increased participation of Chinese and Iban voters.

What this impressive increase in mobilisation across groups reveals is that Sarawakians recognised their power as voters and came out to vote in an unprecedented manner. This highlights the growing appreciation of political power in Sarawak and engagement with politics, which is in keeping with the unprecedented crowds at ceramah across the state, even in the rural areas.

azlanThe table (left) also highlights that the change in voting across the ethnic communities. The greatest movement compared to 2006 was in mixed seats, followed by movement in the Orang Ulu community in places such as Ba'Kelalan (where Baru Bian won his seat) but also places such as Telang Usan.

The share of movement in Orang Ulu-majority seats is large, a 20% swing. These numbers can be a bit deceiving in that the actual numbers of voters in Sarawak are small and 20% can reflect a small number of voters in the small constituencies, yet nevertheless, the swing is significant.

Ibans and Bidayuhs too change loyalities

Why then, given the swing, did the seats not move into opposition hands? The reason is simple - before 2011 opposition support in some of these areas was minuscule. In many constituencies, the opposition needed more than a 40% change to win. Yet there has been a very large swing, which is much larger than the swing in Peninsular Malaysia in 2008.

From my perspective, the most interesting ethnic changes occurred in the Malay/Melanau, Iban and Bidayuh areas. A look at the seat tally suggests that Malays are squarely in the BN camp. The PBB won all 35 of its seats and PAS failed to win a single seat, even in the close contest of Beting Maro.

The Malay/Melanau seats are interesting in a number of ways. First, the pattern towards the opposition varies, with a few of the seats moving even more strongly toward the BN, such as Sadong Jaya, and as such, the pattern is uneven.

Yet the Malay/Melanau ground was more competitive with more straight fights and more contests, such as in Daro and Dalat. PAS, in particular, made inroads. To suggest that the Malay/Melanau community is firmly behind the BN is wrong. Their support is changing as well, in spite of the ethnic campaigning and use of the racial card.

The Iban and Bidayuh majority seats also followed the pattern of opposition gains. In Iban areas, there was less movement in the share of the vote and like the Malay/Melanau seats the pattern was not consistent across seats toward the opposition, with some increased support towards the BN in Engkilili, but overall, the Iban have also changed loyalties.

azlanAs is shown in this table (right), this occurred most starkly in semi-rural areas.

The Bidayuh seats were seen to be those that would have determined whether the opposition broke the two-thirds or not. Pakatan hoped to pick up at least three of these Bidayuh seats, as sentiment on the ground toward the BN had shifted due to the religious issues and persistent exclusion of this group from economic benefits.

Higher education among the Bidayuh had increased awareness and exposure to political issues. The opposition failed to win a single seat, but here too the gains in the share of majority were impressive - an estimated 17.9% swing.

The bottom line is that the view that this election was the product of a bifurcated pattern of support - Chinese with the opposition and other groups with the BN - is wrong. Every group expressed serious concerns with the BN, and this was driven primarily with angst toward the long tenure and perceived excesses of the chief minister.

The urban voters myth

It is thus not surprising that given the changes across the board across ethnic communities, another myth needs to be shattered, namely that the opposition support is only in the urban areas.

Much has been made that the opposition won two very rural seats, Ba'kelalan and Krian. Yet, the most significant gains in terms of seats were in the semi-rural areas - for example, Batu Kawah, Dudong, Piasau (which has a large semi-rural area). The close fight in Senadin is also illustrative.

My preliminary analysis at the seat level shows that the gains in semi-rural seats were more than in the other areas, 19.7% compared to 14.8% in the rural areas and 13.4% in the urban communities.

NONEThe 'safe' seats in the urban periphery are no longer 'safe'. The change in voting pattern reflected not just Chinese support for Pakatan, but Iban and Bidayuh support as well. In fact, what is especially interesting is that the movement in support in rural areas is more than the share in urban areas (although it is important to note that the urban areas have more voters).

More than anything, these findings point illustrate how much the 'fixed deposit' is no longer secure. Semi-rural and rural cracks in BN support are part of the new Sarawak, a more competitive polity that has become increasingly receptive to a stronger two-party system and critical of BN governance, especially in the areas of corruption.

The growing youth revolution

The election of young candidates in the opposition in some cases fresh out to university may come as a surprise to some, but it highlights the final important dynamic in this election, the massive movement among young voters away from the BN.

Chong Snr ceramah in kuchingDrawing from the study of 'saluran' results in seven seats so far, from the Miri, Kuching and Bidayuh areas (semi-rural and urban seats), the findings suggest that a youth revolt has occurred.

In the lower polling streams, where new voters are concentrated, more than 70% of voters opposed the BN. Given the largely young crowds at rallies, especially in Kuching and Miri, this is no surprise.

We see two pattern - higher mobilisation of younger voters, an estimated 16% increase in turnout compared to older voters, and an overwhelming level of support for Pakatan among younger voters in the lower streams, with a change in trend of over 25%. In 2006, there was already stronger support for the opposition among the youth, but this appears to have significantly increased.

azlanWhen one considers the high number of younger voters that did not register, estimated in the 100,000s in Sarawak, and the large number of younger voters working outstation, these results should be quite worrying for the BN indeed. The fact that the election was timed well before Gawai (the harvest festival in June) is also important: had it coincided, the impact of younger voters returning for the holiday would possibly result in greater losses for the BN.

Many a younger voter in my exit interviews highlighted the fact that they convinced their parents (and grandparents) to change support. The youthful composition of voting this election compared to 2006 shows that indeed a revolution among younger voters has occurred in Sarawak.

Rise of a new Sarawak

These results are preliminary and need to further confirmed with the official results at the 'saluran' (polling stream) level. This analysis is drawn from the newspaper publication of results and 'saluran' results that have been made available immediately after the polls, so the numbers should be seen as indicators of trends rather than absolutes.

azlanThese findings collectively show that there is indeed a new Sarawak, that voters across races, across geographic areas and especially the state's future are no longer supporting the BN to the same degree. While the two-thirds may not have been broken, profound political change did come to Sarawak.

It remains to be seen whether the opposition can continue the momentum or the BN will address the root causes of the discontent, but irrespective of this, Sarawak remains critical for the political direction of the country - now more than ever.

Top Country Military Spending

Saw this in Market Watch, thought its interesting enough to repost here. There is no Cold War or agitated tensions, save for the Middle East, but thats internal, I mean are you going to use the military to kill your own countrymen? (China, don't answer that). Safeguarding your sovereignty is one thing. I guess Japan has to maintain some sort of military owing to the China factor. The USA needs to do that as the leader of the democratic world - hence the reserve currency status. Without it, the US may not have as much economic clout as it does now. China, well, sometimes your friend but can turn nasty too with its uncertain and evolving idealogues. India, well, why bother?, same goes for Italy. Russia is Russia (nobody loves me).

10. Italy

2010 spending: $37 billion (estimated)

Change 2001-10: -5.8% (est.)

Share of GDP: 1.8% (est.)

Italy's defence minister, Ignazio La Russa, arrives for parliamentary debate April 5.

Italy spent the 10th greatest amount on the military in 2010. Its 5.8% decline in military spending since 2001 is the greatest decrease among all the countries on this list. One reason may be that the number of volunteer troops is being cut, according to an Italian nonprofit organization, the Istituto Affari Internazionali. Italy’s defense budget is expected to be cut further this year to reduce the country’s debt.

9. India

2010 spending: $41.3 billion

Change 2001-10: 54.3%

Share of GDP: 2.7%

India spent the fifth largest amount on their military among all the Asian countries and the ninth largest in the world. The country underwent the largest absolute decrease in military spending from 2009 to 2010, spending $1 billion less than it had a year before. This decrease will likely not amount to much in the long run because in February India increased its defense spending by 11.6%. This was undertaken largely in response to the growing military strength of China and Pakistan.

8. Germany

2010 spending: $45.2 billion (est.)

Change 2001-10: -2.7% (est.)

Share of GDP: 1.3% (est.)

Although Germany has one of the world’s largest military budgets, its military spending as a percentage of GDP, at about 1.3%, is not especially high compared with other countries. It is the second-smallest percentage, in fact, among the countries on this list. Spending in 2010 decreased 1.3%, after the country’s Defense Ministry recommended Germany close several army bases and cut the number of troops from 250,000 to 180,000.

7. Saudi Arabia

2010 spending: $45.2 billion

Change 2001-10: 63%

Share of GDP: 10.4%

Saudi Arabia’s level of defense spending is all the more impressive when one considers the size of the country’s economy. The $45.2 billion the country spent in 2010 was 10.4% of the country’s GDP. That percentage is more than double that of any other country on this list. Saudi Arabia also underwent the largest increase in military spending from 2009 to 2010, 4%. It had the largest absolute increase in the Middle East, as well, at $1.6 billion.

6. Japan

2010 spending: $54.5 billion

Change 2001-10: -1.7% (est.)

Share of GDP: 1%

U.S. military aid to Japan

Japanese and American officials mark the end of Operation Tomodachi, which means "friend" in Japanese.

Japan has kept its military expenditures at about 1% of GDP since 1967. As a result, the amount spent on defense turns on the strength of the economy. While military spending in the entire East Asia region has increased by more than 55% over the last decade, Japan’s has decreased by 1.7%, according to the Institute for Policy Studies.

5. Russia

2010 spending: $58.7 billion (est.)

Change 2001-10: 82.4%

Share of GDP: 4% (est.)

Although Russian military spending decreased 1.4% from 2009 to 2010, it increased 82.4% over the entire decade. According to the BBC, Russia has plans to spend $650 billion on defense between now and 2020. According to Russian Finance Minister Alexei Kudrin, this money would be used to modernize the country’s armed forces. It currently relies heavily on a nuclear arsenal built during the Cold War.

Honor guard at February 2010 ceremony at the Great Hall of the People in Beijing.

4. France

2010 spending: $59.3 billion

Change 2001-10: 3.3%

Share of GDP: 2.3%

While France’s military spending increased 3.3% over the past decade, it decreased a stunning 8.4% from 2009 to 2010. This decrease, which is by far the largest on our list, is mostly the result of the global economic crisis. The crisis was severe in Europe and hit France especially hard. This has caused the government under Nicolas Sarkozy to make large cuts to rein in the deficit.

3. United Kingdom

2010 spending: $59.6 billion

Change 2001-10: 21.9%

Share of GDP: 2.7%

The U.K., home base of defense contractor BAE Systems, surpassed France in the amount spent on its military in 2010. Despite growth of 21.9% in spending over the decade, military expenditures dropped 0.8% from 2009 to 2010. This amount will most likely decrease more in 2011. In late 2010, Conservative Prime Minister David Cameron announced that the country would be making defense cuts, including cutting 17,000 troops, to help bring down debt. The country will instead focus more on special forces, which includes counterterrorism units.

F/A-18F Super Hornets launch from the aircraft carrier USS Enterprise in the Red Sea on March 17.

2. China

2010 spending: $119 billion (est.)

Change 2001-10: 189%

Share of GDP: 2.1% (est.)

China spent the second greatest amount on the military in 2010, and that amount is growing quickly. From 2001 to 2010, the country’s military expenditures increased 189%. This is more than double the amount spent by any country on this list. Weak economic performance in 2009 kept the 2009-10 increase to only 3.8%. Spending in 2011 will increase by 12.7%, according to the BBC. It should be noted, however, that many analysts believe China’s defense spending is higher than the country reports.

1. United States

2010 spending: $698 billion

Change 2001-10: 81.3%

Share of GDP: 4.8%

The United States — home to such defense-contracting giants as Boeing, Northrop Grumman, Lockheed Martin, Raytheon and General Dynamics — spent just under $700 billion on its military in 2010, more than all the other countries on this list combined. The proportion of GDP that goes to the Pentagon has risen from 3.1% in 2001 to an estimated 4.8% in 2010. This is the highest among countries with reliable military spending data outside of the Middle East. Even with the country’s large budget deficit, military spending seems to be untouchable in the political realm. As the Stockholm International Peace Research Institute’s report says: “President Obama’s FY2012 budget announced a 5-year freeze on non-security-related discretionary expenditure, but military spending, along with other security spending such as intelligence and Homeland Security, is exempt.”

Tuesday, April 19, 2011

Goldman Sachs, The Sulking Boy

Power makes you do silly things. What, you did not include Goldman Sachs in your mega-IPO?? What a travesty! I will teach you all a lesson then. We are Goldman Sachs, we can make or break you, just you watch, don't you know we get a slice of all major deals globally or were you born yesterday. We can even get our government to bailout the very companies who then graciously promptly pay us back with the bailout funds.

Goldman Sachs, which ranks first in managing global share sales this year, is sulking after it didn't get an invitation to Glencore's coming-out party.

The giant Switzerland-based commodities trader is set for a dual listing in Hong Kong and London and may raise as much as US$12.1 billion (HK$94.38 billion). But Goldman is the only one of Wall Street's big investment banks not to be included in the syndicate of nine handling the float. The syndicate is expected to share in a large cake - US$300 million in fees. Goldman was left out because Glencore's board felt there was "no need" to involve it.

So, what did Goldman Sach do ... Goldman said last week that the risks of investing in commodities outweigh potential gains, dropping its recommendation to buy a basket of raw materials including crude oil, copper, cotton and platinum.

"Sell oil, cotton, copper, soybeans and platinum!" urged the commodities oracles at Goldman Sachs, in a surprise note last week.

Well, do you know why Goldman Sachs was left out? I guessed its because Glencore is a huge commodities trading outfit, and Goldman Sachs is also the world's biggest trading unit in everything, including wayward human souls. I am sure they have crossed swords many times in the past, loading big, unloading big positions and is bound to ruffle each other's gilded gold feathers. You fuck me every now and then as a trading competitor, and now you want a share of my US$300m fees in my IPO, go fly your own kite Goldman.