Friday, June 28, 2013

Politics & Business In Myanmar 2013

The phlegmatic government (you can try to get rid of the booger from your fingers but it just sticks around) of Myanmar just announced a shocking awardment of foreign telco licenses to build 4G networks in Myanmar. The winners of the 15 year concession were Telenor from Norway (DIGI fame) and Ooredoo from Qatar.

What was shocking was the favourites did not get a mention. SingTel which was easily the hot favourite did not get it. SingTel was bidding as part of a consortium with Myanmar's biggest bank Kanbawza Bank. SingTel with a large footprint in emerging markets, backed by Temasek, not to mention being buddies in  ASEAN loose coalition of neighbours to boot.

It would appear that there are other concerns in the awardment of the concessions. The messages are loud and clear. One, Myanmar still regards ASEAN as not the most important grouping as the memebrs try to make it out to be. Suffice to say, Myanmar has had lingering political issues that earned the ire of many foreign countries. Be it Aung San Sukyi or the dastardly acts towards the Rohingyas. It appears you cannot EVEN say anything negative or try to interfere in any way, even by political suasian or closed door sessions. A hands off and mouth zipped policies are valued.

The other favourite was a consortium led by Digicel, a Jamaica based telco that first invested in Myanmar in 2009 and employs close to 900 people in the country. The consortium also included Goerge Soros and Seung Pun, a leading businessman in the country. This was supposed to be a shoo-in. But no.

Again, that may have a message to George Soros, an advocate of democracy and supporter of many private efforts via NGOs globally. If you want to do big business in Myanmar, be apolitical.Any country that supports sanctions etc... will be "punished".

Ooredoo was ranked 9th out of 11 bids and was unlikely given the tension with anti-Islam violence with the Rohingyas, as the company was Qatari. Still, Ooredoo is 67% owned by Qatar government and provides telco services in Indonesia, Singapore, Laos and the Philippines. It supposedly has over 60mn customers in Indonesia alone. 

Telenor can better explain its cause as it has Norway government support. Plus the Norway government has been one of the more active European countries in Myanmar, supporting and funding various projects in the country.

So, it could be political ... or it could also be corruption. Who knows? It certainly did not look to be fully on merit alone. Though Telenor could win by merit alone as well. Too many questions, the perils of doing business with government. 

Tuesday, June 25, 2013

Famous Eyeglasses - Artwork by Frederico Mauro
















Fischer On Market Sensibilities

Finally, someone who talks sense about the current turmoil in the markets. The markets should not behave like a petulant child when candies are taken away from them. One, you cannot live on liquidity pumping forever. Two, the withdrawal will only happens when the global economy is recovering sufficiently. So where is the problem?

Billionaire investor Ken Fisher said the U.S. stock market rally that began in 2009 is only in its “middle” stages because most investors still underestimate the strength of the economy.

“We’re right in that transition between skepticism and optimism,” the founder of Fisher Investments, which manages $48 billion, said in an interview at Bloomberg News’s office in Seattle. “The notion that it’s actually the middle of a bull market and there’s a lot ahead -- that’s a really impossible concept for most people to get.”

Stocks tumbled last week, with the Standard & Poor’s 500 Index posting its biggest two-day drop since November 2011, and bonds fell around the world after Federal Reserve Chairman Ben S. Bernanke said the Fed may start reducing asset purchases that have fueled gains in markets. The S&P index has slid 4.9 percent since a record high on May 21.

“I’m always amazed that people don’t marvel at the power of global capitalism and global economies, that they’ve actually done as well as they have,” said Fisher, 62, whose company is based in Woodside, California.

If the Fed reduces the stimulus, known as quantitative easing, the economy will grow faster, he said in the interview hours after Bernanke’s June 19 announcement. That’s because key interest rates will rise, encouraging banks to lend more money to companies for hiring and expansion, the investor said.
“I want QE to end because it’s bullish,” he said.

‘Wildly Optimistic’

Fisher’s predictions proved too bullish six years ago.

“I’m on the wildly optimistic side of things,” he told Bloomberg News at the end of March 2007, as a decline in the U.S. housing market began fueling foreclosures and investment losses that imperiled the financial industry the following year. While the S&P 500 (SPX) went on to rise 10 percent to a then-record high about six months later, it turned and plunged as much as 57 percent through March 2009.

In April 2009, Fisher correctly predicted that the S&P 500 would extend a rally that started in the previous month to between 60 percent and 70 percent by March 2010. In January 2011, he told Bloomberg News he didn’t expect “high equity returns” in 2011. The S&P 500 ended the year virtually unchanged, losing 0.04 point for its smallest annual change since 1947.

Consumer Comfort

Americans’ views on the economy last week were the least pessimistic in five years, the Bloomberg Consumer Comfort Index shows. Its measure of how households view the state of the economy climbed to the highest since January 2008.

Slowing global growth contributed to this week’s stock declines. Manufacturing in China is shrinking at a faster pace this month, according to a survey of purchasing managers released yesterday. Jobless claims in the U.S. surpassed forecasts, climbing by 18,000 to 354,000 in the week ended June 15, according to a Labor Department report last week.

Investors who pushed stocks down this week are overlooking data showing long-term interest rates rising, a positive sign, Fisher said in another interview after U.S. markets closed yesterday.

“It’s Mr. Market doing what it does: It’s trying to see if it can turn you against your better judgment,” he said.

Gold is set for its worst week since April after falling below $1,300 an ounce yesterday to the lowest in more than 2 1/2 years in New York. Bullion has slid 23 percent this year through yesterday as the Fed signaled it will taper the debt-buying that has helped the metal’s bull run.

Inflation Translation

“Most of history it loses money,” Fisher said. “Before the 2011 peak, people were still holding their breath for QE to translate into inflation, which would then push gold up. And when you waited too long and that didn’t happen, it backfired.”

Fisher is best known for writing a column in Forbes magazine for almost 29 years, he also has published 10 books, including “The Little Book of Market Myths: How to Profit by Avoiding the Investing Mistakes Everyone Else Makes” (Wiley, 2013).

Sunday, June 16, 2013

Happy Fathers Day

My friend, Roger Wang, who also happens to be one of the country's finest guitarist ... has composed a lovely song for his daughter. Plus he sings, OMG ... that is so rare. The video sets with the lego pieces, must have been such a labour of love ... Wonderful Roger...

This is the most important song I have ever written. 

It's also my first vocals outing and first music video that I created myself.
The song was inspired by my daughter's obsession with fairy tales and being a princess. It sums up a lot of my feelings about being a father as well as the hopes and lessons I have for her. 
It's often hard for a father to relate to dolls and the way young girls play. Playing Lego together was one of the few activities that we shared. All those hours helped bond us. This video was made with those Lego sets and mini-figures. They became the best way for me to express this song visually.
This song and video come from a very personal place, but it goes out to all fathers and daughters out there, regardless of age.

Thursday, June 06, 2013

Asset Class Returns As At 31 May 2013

This is highly interesting. As a test, if you were looking at the table what could you say or what kind of observations could you make. Not trying to be an asshole or "guru" here, but if you are honest about your knowledge of markets, the ability to synthesize data and tell a story, you should do well in financial markets. If you can't, then you shouldn't be, or are just plodding along. To be in the markets you can study, but you have to have passion for it. Make your own observations before scrolling down.

- The one month data does not tell us much.

- YTD, the equity markets have been well led by the US, in fact emerging markets have been trailing ... suffice to say that most of the Asian markets which have been surging so far this year have been an anomaly, which further depresses the real performance of other emerging markets.

- We know the financial markets have been awashed in liquidity with QEs from various central banks, but where have they been headed. The YTD figures are again revealing, some have exited gold in a big way. Them taking money off gold may be just profit taking or likely to mean they are more comfortable that currencies won't be debased anymore, or that bailouts have finally went past a peak. The reduction of fear or volatility could be another reason.

- So where is the liquidity? They went largely into US stocks, US REITs and even foreign REITs. The REITs interest is but a reflection in a strong bottoming in property price correction and a resurrection of demand, and also a hint that people are more employable even now to take up new mortgages, and/or that a lot more PE/VC/vulture funds are taking advantage and making deals on distressed commercial properties.

- Look at crude oil, one month, YTD or 1 year even, that is a good reflection about the robustness (or lack of) of the global economic recovery. The recovery is benign and in patches still.

- Look at commodities, again the same conclusion as for crude oil, still working of excess inventory in the global system.

- Look at the emerging equity markets from 1 year ago, there has been a dramatic shift away from emerging markets back to US and possibly Japanese stocks. Again the robust performance of other Asian equity markets is very telling as it is viewed as largely unscathed and the equity markets there do attract sufficient interest compared to other emerging markets.

- The most important point one has to conclude is a drastic shift away from bonds of all kind. Bonds have been great on a 3 year basis but more funds are moving out. They move out because they either think there is a bubble there (too safe, and too many people willing to pay too high a price for low yields) and/or equity provides a better return even after accounting for risk.

From the above, I am quite confident that the current sell down in equities will be brief.

Tuesday, June 04, 2013

The Fears Of The End Of Quant Easing

Markets everywhere have been shaken over the last two weeks. First was the correction in the Japanese equity markets. It has lost substantial ground over just the last couple of weeks. Next came the Bernanke's testimony which led all to conclude that QE would be ending soon. 

If an article in Monday's Wall Street Journal is anything to go by, the U.S. Federal Reserve is getting ready to unwind its massive monetary stimulus program. So, is that prospect as alarming for financial markets as feared?

Fed officials have mapped out a strategy to wind down its $85 billion-a-month bond-buying program in careful steps, although the timing of when that will start is still being debated, noted Fed watcher Jon Hilsenrath wrote in the WSJ. 

Any unwinding of the Fed's quantitative easing (QE) program, which has fueled a rally in equity markets and other risk assets, is generally viewed as negative and any indication of this happening has been highly anticipated in the U.S. since late last week. 

"Having spent two New York sessions pricing in a sharp change in Fed stance, it is not obvious that the article was worth the wait," analysts at Westpac said in a note. "The timing of the unwinding of QE remains data-dependent, not a serious prospect until perhaps late U.S. summer at the earliest."

Analysts say that in essence, the Fed appears to be managing market expectations that its quantitative easing program will not last forever. The Fed has said that it would maintain its key interest rate between zero and 0.25 percent until the unemployment rate fell to 6.5 percent. It has also committed to monthly purchases of bonds until labor market conditions improve substantially. 

And it is the recent signs of improvement in the jobs market that has renewed talk about a possible end to the quantitative easing. The latest non-farm payrolls report showed the U.S. economy created 165,000 new jobs last month, much more than expected, helping push the unemployment rate down to 7.5 percent. Data last week meanwhile showed jobless claims at their lowest level in almost 5-1/2 years. 

It looks like the markets are just grabbing at excuses to do a bit of sell down after a spectacular run in most equity markets since the beginning of the years. The timing is still a bit uncertain, but seriously folks, the end game only looks to peter out by December this year. It is very good that markets are readying itself for the end of QE.

The Fed officials are not going to raise interest rates until unemployment comes down to 6.5 percent, and could only come earliest by 1st quarter of next year. What is likely to happen is when unemployment dips below 7%, we may see a scaling back from the $85 billion buyback figure to maybe halve that. 

The knee jerkers would be better off looking at the positives:
That [an easing of QE] would be good for U.S. stocks because it would mean the U.S. economy is doing a lot better.
- That at least markets are already trying to price in the end of QE, instead of a surprising one off massive sell down.

The last part is very important as we can easily reference to the 1994 massive sell down, just because Alan Greenspan never gave any indication as to the imminent rise of interest rates in the US. That experience probably forms the backdrop for Bernanke's communication strategy. He is managing expectations very well. By putting it out there with the 6.5% unemployment target, it allows all to see the looming horizon.

I still think halving the buyback when unemployment dips below 7% would be an excellent strategy to manage expectations further. Everyone knows QE cannot be there forever.

I like the equity markets now more than in the beginning of the year. Japan has corrected substantially even though Abenomics will still be in the works. This will drive Japan to retests its high this year soon enough. I believe the sell down was a good profit taking exercise and actually allowing a lot of stale bulls (i.e. those holding onto Japanese shares for over 20 years) to exit - all that will come back to the market place for sure.

The local Malaysian equity market has held up better than the rest, and confidence breeds confidence. Having said that, Malaysia is only up 4.6% so far this, thanks to the uncertainty over the elections period. Other Asian markets have risen a lot more, and hence had more room for downside: Indonesia 15.2%, the Philippines 16.4% and Thailand 10.6%.

My Life's Aphorisms

Readers of my blog will notice that I haven't been updating my blog lately ... usually I am pretty not that busy ... now I have to go to Singapore every week for a couple of days ... and then there are the many meetings that suddenly crop up and classes that I have to give for Murasaki ... blah blah ... I miss writing my blog, I love it because its like a diary of sorts, I cannot ignore my blog cause its now 6 years of my life. If anyone reads it carefully, they would know me very well cause I never write to create a false persona, if you think I am an asshole, you are probably right. I don't like to be busy, it makes time flies, and I don't get to sit and relax and enjoy. My Monday nights drinks sessions are sacred, those of you who are part of it knows too well. We all have to slow things down and take stock of what we are doing, whether they correlate to fulfillment of your goals in life, so I think its time to re-look my own aphorisms in life, making sure I stay centered amidst the noise.


Don't aim just to be rich, aim to create wealth, create better lives, create better livelihoods for people, create jobs where others can contribute to society and be a useful participant.

Use your wealth to fund your passions and causes, and don't forget to enjoy yourself in the process.

Stand up for injustice, for the downtrodden, for those who cannot help themselves. Aim for equality for all, in all.

Have a zest for good things, finer things in life, its OK to to enjoy.

Surround yourself with positive people. Make sure your life partner is enthusiastic, have energy for life, and empathy for people, friends and family.

Don't wait for fate or destiny to affect your life, its your life, make it happen.

Finding something or someone that/who means more to you than yourself.

Make a conscious effort not to hold onto people who don't love us or people who hate us or people who make us mad or people who take us for granted ... we also care too little for the people who love us unconditionally, the people who adore us, the ones who still stick around in spite of all your shortcomings.

Make an effort to to live healthy for yourself and the people who care for you. Live long but more importantly live well.

Make a conscious effort to better the lives of the people around you, your family and circle of close friends.

Bloom where you are planted, not whine about why you are where you are.