2007-10-02

Tuesday, October 02, 2007

Time to scout for offers before Holiday Season starts

As usual, the fourth quarter is normally the most busy and exciting period of the year. For stocks or options investors opportunities are aplenty since the trend is quite predictable. For retail businesses this period is the most profitable of all since it’s the holiday season such as Halloween, Thanksgiving and Christmas. For kids, this is the time for you to nag, cry or do your stunts to ensure your dad or mum buy whatever in your wish-list.

This is also the period when you’re bombarded with newspaper advertisements on sales with great discounts etc. CouponChief.com is one of the destinations you should start surfing to find out the goodies on the offering. As a start if you plan to replace your old notebook or desktop, probably 30% off a CTO HP Pavilion notebook deal or a $350 off for a Dell Inspiron desktop offer might interest you. I won’t mind if Santa could give me free instead of 10% off on memory cards from BestBuy.

Maybe I should seriously look at some of the comfortable and delicious-looking chairs that could reduce my back-pain while I’m blogging or trading the stocks or options. Office Depot is giving away $30 off for purchases of $150 or more but I still hope the discount could go higher *greedy me*. 

Rate Cut, Financial Expectation & Window Dressing

Level 14,000 could be the biggest boulder that Dow Jones needs to move if investors wish to celebrate a truly bull-run. Wall Street began the fourth quarter with a huge rally on Monday when it crossed over it. But just like how Dow did it in mid-July when it surpassed its closing back then to 14,000.41, the time is too early to predict if this round would be any different.

Nevertheless there were cheers everywhere when the important Dow rose 191.92, or 1.38 percent, to close at 14,087.55. If you had monitored the movement of the index, you would see it was a stable movement the whole day, no more zig-zag of uncertainties. So, what could be the reasons or excuses for such optimism?

• First of all, the latest economic data released by the Institute for Supply Management indicated that the September’s manufacturing sector grew at a slower pace in 6-months at 52.0, below forecasted 52.5. Hence investors are getting more confident there is going to be an October rate cut.
• Secondly, while Citigroup and Switzerland's UBS AG issued third-quarter profit warnings, it nevertheless indicated the current period might see a return to normal earnings levels. Citi Chief Executive Charles Prince said that he expects profit to "return to a more normal earnings environment" during the fourth quarter and this is perhaps the most important indicators from a financial institution considering Citigroup has not release any public information before as to the extent of the damages due to subprime problem. UBS, the largest Swiss bank and Credit Suisse Group similar statements help the situation as well.
• Thirdly, with the expectation that the housing crisis could be a thing of the past, investors are more willing to commit and ready for the“window dressing” which is just two to three months away. Furthermore holiday season could be the catalyst to speed up people’s confidence that the good time is here again. Sales are expected to pick up and if the promotional activities are anything to go by, soon it’ll be business as usual.

And boy, have you seen how Apple Inc.’s(Nasdaq: AAPL, stock) and oil-related stocks soared on Monday’s trading? But none of the above beats the elegant performance of Google Inc. (Nasdaq: GOOG, stock) stock which jumped US$15.28 or 2.7% to US$582.55 per share. Could Google’s stock price breach theUS$600.00 per share before the end of the year?

The rest of the regional stocks markets are expected to perform well taking the cue from Dow’s 14,000 cross-over. Already Malaysia’s Kuala Lumpur Stock Exchange is up 17 points to 1,364.33 in the morning session, not too far away from 1,500 points and definitely very near to the excited 1,400 points.

Other Articles That May Interest You ...

• Apple at 52-week high, Funds flowing into Tech-Stocks?
• Rate Cut’s effect – high Oil Prices and weaker Dollar
• Reasons Why Oil Price might spikes to $90 and beyond

Monday, October 01, 2007

TM spin-off project, Wahid to exit with Jamal’s entry?

It was about three months ago when former Maxis Communications Bhd group CEO, Datuk Jamaludin Ibrahim, announced his decision to call it a day. On the day of the resignation announcement there were plenty of speculations as to which company that managed to win the heart of Jamaludin. Of course Jamal, as he was fondly known, refused to entertain the idea that he was fished to join another telecommunication company.

And when the state controlled Telekom Malaysia Berhad (KLSE: TM, stock-code 4863) announced the bold plan to spin off the cash-cow mobile service provider Celcom (M) Sdn Bhd, speculation on the new top management lineup was in the air again. Although it was reported that current Telekom Malaysia Berhad group CEO Wahid Omar will at most jump ship into TM International, rumor has it that Wahid Omar is set to make a clean exit from Telekom Malaysia Berhad.

It was rumored that Omar Wahid will join Malayan Banking Berhad (KLSE: MAYBANK, stock-code 1155) while former Maxis CEO Jamaludin’s holiday is over and will finally report to work replacing Omar Wahid. However TM clarified today that Wahid Omar remains the group CEO and at the same time denied it has even approached Jamal.

The truth is while Wahid Omar had brought in some minor improvements via restructurings; he nevertheless has not created any significant value that the shareholders can be proud of. But in order to go in full force to attract foreign investor(s) and to unlock the estimated 20% “extra value” within TM Group, Jamal could be a better candidate as far as past report card is concern. In addition, world’s leading mobile telecommunications company, Vodafone Group, which is Celcom’s strategic 3-G alliance partner might be the candidate identified to take a strategic stake in TM International.

The mere plan of the spinoff have already created the excitement when the stock price of TM jumped 9.3 percent to RM10.60 today, the most in seven years on the Kuala Lumpur Stock Exchange (KLSE). Considering the detail scope of the demerger plan will only be known to all in Dec-2007, perhaps the rumor about the departure of Wahid and the entry of Jamal will becomes fact after all. Let’s wait and see.

Other Articles That May Interest You ...

• The Rise of CELCOM Empire, Tales You Should Know
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• Why MAXIS Group CEO Resigned?

Sunday, September 30, 2007

The Rise of CELCOM Empire, Tales You Should Know

By now you and everyone should know that the once listed Celcom will be re-listed again. Who said deadman cannot rise and pig cannot fly in Malaysia? And to think of the possibility that Maxis Communications Berhad could be making its way back to the local stock market one of this day after Ananda decided to takes it private recently is enough to amuse everyone, at least me.

In a not so-distance star away, there was this galaxy whereby the planet was ruled by a powerful government who always got voted into power no matter what. Somehow there was this vision to nurture and create huge companies with international reputations led by some bumiputra businessmen who can make the ruling party UMNO proud and stand tall since successful businessmen often associated with ethnic-Chinese. After all, if the Chinese-ethnic can produce so many successful businessmen, UMNO can mould the same quality Malay-ethnic businessmen as well – how hard could that be?

The Ambitious Plan to Clone Success

And so some candidates were identified and they were to be trained or rather fast-tracked to become amongst the most eliteMalay-ethnic corporate businessmen ever produced. There were actually quite a number of candidates but suffice to say among the successful one were Tajudin Ramli, Halim Saad and Rashid Hussain.All these characters were once multi-billionaires “before” and were trained byMaster Yoda Daim Zainuddin (the former Malaysia Finance Minister). Yes, before the 1997-98 Asia Economy Crisis which brought in the recession and as fast as you can blink your eyes, their fortunes evaporated, though the one who could stand the longest was Rashid Hussain.

While the intention was good (the plan to have more Malay-ethnic successful businessmen), the method of how it was being carried out was flawed. You simply can’t clone a businessman out from some sort of moulder (as if you're making biscuits in the production line) and expect him to be able to withstand the tsunami of the real corporate challenges if you throw in the “fast-track to become a billionaire businessman for dummy” book, can you? Even within the the Chinese-ethnic not everyone has the quality to achieve the desired dream of becoming another Teh Hong Piow, Lim Goh Tong, Li Ka-shing or Robert Kuok.

A thin line between Cronies and Walking Zombies

To cut story short we travel through the worm-hole in the galaxy. Tajudin controlled 47 percent of Naluri and 24.3 percent of TRI (Technology Resources Industries).Naluri controlled Malaysia Airline System (KLSE:MAS, stock-code 3786) and TRI controlled cash-cow Celcom. Before the 1997 Crisis, TRI was the darling stock which managed to fly from a penny stock to almost RM12.00 per share within 2 years. Then the crisis came and everything was wiped out. Earlier on Tajudin was somehow magically able to sell its 29 percent stake in MAS to the Government for RM8.00 a share (for a total RM1.8 billion) although the stock price for MAS was at RM3.68 per share.

Everyone cried “bailout of the century” and“cronies” but Tajudin couldn’t care as he desperately needed the money to reinvest into TRI to rescue his sinking ship. TRI somehow was buried under debts of more than RM4.0 billion and was rushing against time to meet its outstanding US$375 million (the currency rate then was US$1 = RM3.80) euro-bonds repayment with only a couple of months left. With some elements of politic, the Securities Commission somehow rejected Tajudin’s plan to use the proceeds from MAS’s sale to rescue TRI.

The episode showed that managing and growing businesses are more than rubbing shoulders with politicians in hoping for sudden rise in the corporate world and waiting for bailout when disaster strikes. Even the government needs to set priorities of which entities to rescue when the coffer itself was running out of money. Successful people always advise not to wear a hat bigger than your head.

From Hero to Zero

During that period Telekom Malaysia Berhad (KLSE: TM, stock-code 4863) owned TM Touch which was bleeding profusely with losses of over RM100 million for the last four consecutive years despite having about 1 million subscribers. Later Malaysia state bad-debt agency Pengurusan Danaharta Nasional moved in and forced disposal of Tajudin’s 13.2% stake in TRI to Telekom for RM717 million (US$188 million) or RM2.75 a share. Tajudin cried and screamed that the forced-sale was a scheme by the government to enable Telekom to take over TRI cheaply.

Telekom then embarked on a series of purchases on the open market and through direct deals to raise its stake to the 31.25% level, making it the largest shareholder in TRI. Under a restructuring plan, fully-owned subsidiary Celcom (M) Bhd had taken over the listing status of TRI on the main board of the Kuala Lumpur Stock Exchange (KLSE). Pengurusan Danaharta Nasional then moved another step to sell Tajudin's 45 percent stake in Naluri to recover some of the roughly RM1 billion he owed Danaharta. Tajudin’s corporate presence was history. In Aug 2003Celcom Berhad’s shares were de-listed from Malaysia Stock Exchange after Telekom’s stake exceeded 90 percent of the paid-up capital resulting from the general offer.

The Rise of Celcom once again?

StockTube has blogged about how boring the Telekom Malaysia stock was. The growth story wasn’t there and investors simply weren’t impressed compared with the previous listed Maxis and DIGI.com Berhad’s (DIGI: stock-code 6947) exciting growth story. Hence the stock market could be set for another chapter of excitement with the announcement by Telekom Malaysia to split its cellular operation. Soon there will be two entities; Telekom Malaysia (TM) and TM International (TMI). While TM will be left with fixed-line, internet and other miscellaneous business, TMI will be loaded with mobile arm Celcom (M) Berhad.
Current TM group CEO reportedly will jump ship into TMI. However both TM and TMI will have common shareholders – Khazanah Nasional Berhad which will hold strategic 40% stake. The whole exercise should be completed by June 2008 and by then TM shareholders would see some TMI shares within their portfolio as well although the quantum is not known at this moment. According to TM estimates, TM is valued at RM33 billion currently and by breaking up the group, additional 20% value could be unlocked to RM40 billion.

However the actual plan is to expand regionally and thus foreign partner could have been already identified to grow the mobile business (Celcom). Also with Maxis’ exit, the timing couldn’t be better to tap into the floating money eagerly seeking to invest into another mobile business entity.

What could investors see pre-Celcom listing?

Celcom might not be Maxis and both are not the fruit of the same type. With the details of the whole plan still sketchy, TM stock price will definitely soar when the shares reopen for trade. Investors will buy in to capitalize on the fact that they would receive some TMI shares. Although TMI will be listed on June 2008, the question remains if the public will have a fair share allocation as if it’s a normal IPO. With the prospect of foreign investor(s) in the new TMI and existing TM shareholders to be allocated certain percentage in the new entity TMI, everything seems uncertain.

Since TM announced that a detail plan will only be exposed sometime in December 2007, investors might be buying in stages into TM, only when the price is right. Cautious trading could also be seen as it depends very much on the proportion of TMI shares a TM shareholder will get. Don’t forget post-Celcom listing, the value would be shifted to TMI itself instead of TM. So stock values of TM might actually drops post-exercise but the combination of values of TM and TMI shares you hold will command some premium values nevertheless.

That’s the very reason why the government decided toannounce the RM15.2 billion contract to TM to build a high-speed internet network on the same day TM stock was suspended last Friday. It was hope with this contract investors might still see some values within TM and won’t abandon the stock in totality.

Could TM International be as attractive as Maxis?

In a nutshell, TMI is not Maxis and Maxis is not TMI. The values built within Maxis were in the management itself – the value of people. You have to understand that Celcom (019) was long in the market before the birth of Maxis (012) but somehow Celcom lost its shine to Maxis within a short period of time. Put in a competitor and you can see which is the better company by observing how consumers walk towards their preference.

Maxis after-sales customer service simply attracted the bulk of non-Celcom consumers while at the same time swallowed existing-Celcom customers. How inefficiency was Celcom back then? Well, considering that customers only able to receive their billing statements once every 3-months or sometimes even 6-months, it didn’t take a rocket scientist to gauge how problematic was the internal processes within Celcom.

Customer services were horrible and you would be lucky not to be screamed and scolded by Celcom’s staffs when you made enquiries. Things took for the better after Celcom was absorbed by Telekom from TRI but still, the services from Maxis were still better. Seriously whether Celcom could replace Maxis as the next“Replacement Killer” stock depends very much on the management, business direction and operational’s efficiency. 

The most distinct difference between Maxis and Celcom/TMI is the fact that while Maxis’s boss was politically connected to former premier Mahathir, Celcom/TMI is closely related to the ruling party UMNO as a company via Khazanah. Could Wahid manage differently and most importantly better than Tajuddin? But with Khazanah controlling 40%, Wahid’s ballgame would be different from that of Tajuddin’s. Hence it would be interesting to see if business-sense will take the front seat instead of political-sense. 

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• EU envoy Criticize Malaysia's Bias pro-Malay Policies

Saturday, September 29, 2007

3Com to Be Sold for US$2.2 Billion

3Com Corporation, a maker of networking hardware and software, will be sold to affiliates of private equity firm Boston-based Bain Capital Partners LLC for$2.2 billion and taken private. The cash deal will also gives Huawei Technologies, China's largest manufacturer of telecommunications equipment, a minority stake in 3Com. Shareholders will receive $5.30 in cash for each share of 3Com stock, or a premium of about 44 percent over the stock's $3.68 closing price on Thursday.

Those in Information Technology field will know who 3Com is. The company which has more than 6,000 employees in over 40 countries and annual revenue of $1.3 billion was the darling stock during the late 1990s technology boom. Once 3Com’s stock price was above US$100 per share but plunged to dust after the bust.

3Com previously teamed up in a networking product “Joint-Venture” called H3C (short for Huawei 3Com) but 3Com bought out Huawei's 49 percent stake for $882 million in November 2006. It is not known how large of a minority stake that Huawei would have in 3Com after the deal is completed, but said that information would be made public in coming weeks. 

3Com would be required to pay a break-up fee of $66 million if it backs out of the deal, while Bain would pay at least $66 million and up to $110 million if it backs out, depending on the circumstances. In Malaysia Huawei Technologies together with H3C has their presence respectively in Kuala Lumpur.

Friday, September 28, 2007

Online purchases should be given discount

Competition is always the best way not only for companies to offer better service but also to provide the most cost-effective solution for consumers. A classic example will be how everyone can fly with AirAsia, without which consumers will still be paying top dollars to fly. And to continue with his vision to provide better offer along the line Tony Fernandes recently launched the TuneMoney.

The playing ground has changed considering you can purchase home insurance from RM60.00 per year, personal accident insurance from RM45.50 per year or even motorcyclist personal accident insurance from RM10.90 per year. But there’re still ways to further improve the existing offering. For example CIS Cooperative Insurance actually encourages you to purchase home insurance online, and if you do that you’re given 10% discount. This might only applicable to U.K. but CIS actually defines their home insurance coverage within the scope of not only the building itself but also the contents, personal possessions and caravan.

Also, I didn’t know that you can actually get NCD (No Claim Discount) of up to 40% on both buildings and contents coverage. Nevertheless with the wide spread of blogging popularity, I couldn’t find a blog within the website. It would be nice to hear what other people said about the offerings from CIS. But then so are TuneMoney and most of the businesses in Malaysia. 

Make Money Investing Stocks – wait for CELCOM’s IPO

Are you previously one of the proud shareholders of Maxis Communications Berhad stocks who got a shocked by the privatization mooted by tycoon Ananda? If you are, you might either have relocated the money gotten from the disposal to other telco-stocks or maybe non-telco stocks. Maybe you’re still holding the money since you couldn’t find another telco worth buying. What choices do you have?

DIGI.com Berhad (DIGI: stock-code 6947) will be the best choice but considering the stock is already pushed up to current level, it’s not a cheap exposure. Forget about the loss-making Time DotCom Berhad (TIMECOM: stock-code 5031) which has its own problem at the backyard to solve. The only reason that you can justify to yourself going into Time DotCom's stock is betting that this fella will be bought over by another telco.

Telekom Malaysia Berhad (KLSE: TM, stock-code 4863) is too boring a stock to buy into. It might be the blue chip but the fact that it’s a GLC (government-link-company) which monopolizes the fixed-line market and essentially the money-printing machine makes the stock not attractive since it will neither goes up nor down. All is because the management is too complacent with its status as the protected big-guy in the industry.

However if the speculation by Reuters is true, you might want to standby with lots of money to apply for yet another big IPO. This could be the biggest IPO of the year. And you might want to thank Ananda Krishnan after all, since his evil plan enables you to liquidate your money. This news might be old news which had been circulating for years but never materialize. I’m talking about CELCOM’s possible IPO.

Reuters reported that Telekom Malaysia's board agreed on Thursday to house its domestic and offshore mobile assets in one company, TM International, shares in which would be distributed to existing group shareholders and then separately listed. Since Telekom’s shares were suspended from trading on Thursday, the expected announcement from Telekom on Friday could spills the bean, provided what was reported is true.

Telekom owns Celcom which is the country's second-largest mobile operator. It’s time to unlock the jewel in Celcom so that Telekom could raises money and do whatever it wish to do while allow the public an opportunity to invest in a new telco stock. The time is right to bring back more quality stocks after the recent various privatizations.

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Thursday, September 27, 2007

Jury System is still the better system

It appears blogging has taken the business industry in a big wave, so much so that even lawyers have their own blogs. Los Angeles Criminal Attorney Blog California Criminal Defense Lawyers Forum which is authored by lawyer Dmitry Gorin, is a Professor at UCLA and Pepperdine Law School. When I took some time minutes ago to read the blog about the California criminal law and proceeding in Los Angeles, I cannot help but to notice one of the important parts of the judiciary system – the jury system.

If memory serves me right, Malaysia’s Judiciary used to have jury trials before it was abolished in 1995 thereafter. It was supposed to provide another layer of independence and fairer trials as the jurors who made up the team would provide a majority verdict in a particular case. Furthermore it’s more difficult to bribe the whole team of jurors as compare to a single judge, not that there’s no case of corrupted judge before. 

Anyways, in an example of a trial against Spector Hung for murder (as blogged by Dmitry Gorin), it appears the twelve jurors were deadlocked in their decision and was split 10-2 for guilty. You might argue that there’re pros and cons but the California Criminal Law requires unanimity by jurors before someone is found guilty for murder. Nevertheless, ajury system is still the better method in determining the fate of an individual, or else U.S. would have abolish such system ages ago – at least you can be sure that the judge is not bought.

*sponsored*

Silver Bird might be yelling Give-Me-5, High-5

Bakery business is never easy, what more with the Asian culture where breads are never considered the main staple foods. People still opts for rice (nasi lemak anyone?) or noodles for their daily breakfast. Morning breakfast is the only time breads can stand tall with pride as it will seldom appear on the menu for lunch, dinner or even supper. Modern kids prefer cereals such as KoKo Krunch (yummy).

Mention the name Silver Bird and chances are you think either it’s another U.S. latest jet-fighters produced (who do not know BlackBird?) or another old model of car produced by Nissan (Datsun BlueBird, Hokkien people never buy this model for obvious reason). But if you mention High-5 then people instantly will know that it’s the bread sometimes mistaken for Gardenia due to its packaging design. Seriously if you want to enjoy cost-effective bread with taste almost comparable to Gardenia, High-5 would satisfy your need.

Silver Bird’s Crisis

Somehow in Sept 2006, Silver Bird’s Nilai factory created the buzz in the consumer and media news when it was uncovered that particular factory was using non-halal cooking oil and was operating in unhygienic conditions. That crisis had cost the company its reputation, not to mention losses in sales. It posted a net loss of RM18.25 million for the first quarter ended Jan 31, 2007 which among other things inclusive of its operation start-up losses in Singapore as well. 

The year 2006 wasn’t a good year for Silver Bird (KLSE: SILVER, stock-code 7136), that’s for sure considering the business of bakery depends very much on global commodity prices such as fuel (petrol), electricity and flour. Hence theescalated production costs ate into its profit for financial year 2006.

What’s the fundamental of Silver Bird?

From the revenue point of view, the company continues to register healthy growthfrom 2002 to 2006. However for the first half of financial year 2007 (ended May), Silver Bird plunged into a net loss of RM31.2 million despite a 10% rise in turnover to RM269.1 million from RM295.5 million. The second quarter of 2007 alone registered a RM12.9 million in net-loss.

Silver Bird put the losses’ blame on its joint-venture in Singapore and is still in the midst of recovery. Earlier the Group has secured an exclusive supply contract from Singapore-based Dairy Farm International Holdings Ltd to supply bakery products to the retailer in Singapore. That was supposed to turnaround the Singapore’s operation in 2007. The plan was to leverage on Dairy Farm’s wide-network of Cold Storage supermarket chain and 7 Eleven.

It has been reported that Silver Bird planned to up its production capacity to over 400,000 loaves daily by 2009. However analysts said Silver Bird was actually facing an uphill battle in gaining a foothold in Singapore's bread market because market leaders such as Gardenia have a strong grip in the country.
So, while the fundamental was shattered by the crisis and the joint-venture, it’s still too early to write this stock off the book. After all, the net profit growth was in good form from 2002 till 2005. On the prepaid card business, the wafer-thin margin of 1.5% in commission rates has only brought in pre-tax profit of only RM400,000 on a revenue of RM107 million and hence can be ignored.

Technical Analysis is saying otherwise

Wednesday 26th Sept 2007 was the day when Silver Bird stock finally breached its resistance of RM0.58 (with high volume) after the stock plunged from its high in 2005 to the low of pennies. After the closing bell today (27th Sept), the stock appeared to manage to stay above RM0.58 with equally good volume.
Losses aside, the stock could be scouting for its new support now, assuming the RM0.58 is not the new support level yet. The fact that it’s comfortably trading above 200-days moving average could means the bull has just started. Other technical indicators are saying the stock is in the bullish trend. So if you’re a punter, punt it at your own risk. Furthermore high risk high gain right *evil grin*.

Shareholding changes – something’s brewing?

In July Loss-making Silver Bird Group Bhd, whose proposed two-call rights issue was rejected by the Securities Commission (SC) earlier this month, has proposed to place out up to 10% of its share capital to raise up to RM16 million. On Sept 13th, Australia-based CVC Limited has subscribed 20 million shares via private placement.

In Sept 6th, Perkasa Normandy Managers had purchased additional 4 million shares to raise its stake to 9.34 percent from the initial 5.87 percent. What was interesting is the filing which saw multiple acquisitions by Lembaga Tabung Haji within the month of Sept 2007 alone.

In early September, A UK-based venture capital company 3i Group plc, a substantial shareholder in Silver Bird Group Bhd since its listing in 2002, has exited the company after selling all its 21.56 million shares or 13%. The shares were then acquired by Lembaga Tabung Haji and the recent acquisition raised its shareholding to 21.56 million shares. More acquisition was registered by Lembaga Tabung Haji thereafter: 

• On Sept 11th - raised its stake by acquiring another 4.82 million shares to a total of 44.61 million shares or 20.79%.
• On Sept 20th – raised its stake to 22.82% to a total of 53.54 million shares.

After reportedly reduced his stake (rumored to be to Perkasa Normandy Managers), existing major shareholder Dato' Tan Han Kook has started to accumulate. He acquired 20 million shares to raise its stake to 17.06 percent on 24th Sept.

With the excitement shown above, the rumor that Silver Bird might see a new substantial shareholder coming into the board-room is circulating. Some even said the business direction and its model might change for the better.

Punters’ new heaven

CIMB Research might be screaming “Sell” with target price of 20 sen (in June) due to its losses, the fact that the stock price might already hit the bottom created a betting table for the punters on Silver Bird’s mother shares or its warrants. So, let’s eat bread while monitoring the stock’s movement, High-5 bread, will ya?

Wednesday, September 26, 2007

Lawyers Long March to Save the Judiciary – Photos Talk

The morning on Wednesday, 26th Sept 2007 would be another milestone as far as about 1,000 lawyers are concern. Seven buses chartered by Bar Council begun their march for “Justice”, only to be stopped and barredfrom entering Putrajaya, the central government administration of Malaysia. In the history of Malaysia there were three marches by lawyers - lawyers first marched in numbers in 1978, then again in 1999 and now in 2007.

About 1,000 lawyers gathered at the Palace of Justice to march and hand over a memorandum to the Prime Minister's office, calling for a royal commission to investigate a video clip showing a senior lawyer purportedly brokering the appointment of judges with a senior judge. The peaceful march, organised by the Bar Council was also joined by other NGOs and public concerned with the judiciary scandal.

Despite the seriousness of the judiciary scandal hitting Abdullah Badawi’s administration, the news of the crisis was played down by government-controlled media. Thanks to the blogging that flourishing in the blogosphere, surfers are no longer kept in the dark of the true pictures. Realizing this, Jeff Ooi has decided to let the pictures do the taking in anticipation of media blackout. To do our part in pressing for “Save the Judiciary”, StockTube has selected some photos captured by Jeff during the long march.

Foreign Minister Datuk Seri Syed Hamid Albar who today said the current unrest in Myanmar is worrisome and leading to an embarrassment for ASEAN might want to think the same way about the equally embarrassing judiciary scandal that hit his own country. As much as it would be seen as a joke that Asean could not resolve the Myanmar issue, the joke is more amusing at the own yard of his country, Malaysia.

Although a three-man special independent panel headed by a retired top judge has been formed (out of pressure from the public) to investigate and determine the authenticity of a video clip, the opposition said the formation of the panel was unacceptable and a Royal Commission of Inquiry should instead be formed to conduct a full and comprehensive investigation to restore public confidence in the judiciary.

While the photos were taken by Jeff Ooi, the comments are from StockTube. Enjoy the photos and if your appetite cries for more Jeff Ooi has about 53 pictures published in his blog.














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Desperate DRB-Hicom to sell EON Capital to Primus?

Having lost the battle in acquiring Rashid Hussain Berhad’s jewel RHB Bank despite putting the highest offer on the table to Utama Banking Group (KLSE: UBG, stock-code 6831), EON Capital Berhad (KLSE:EONCAP, stock-code 5266) was directionless since then. Many predicted EON Capital could be the target of other banks thereafter. Prior to that there were many rumors of M&A which might see EON Capital being wiped out from the map of Malaysian banking industry.

Early of the year, General Electric Capital, a unit of U.S. conglomerate General Electric Company (NYSE: GE, stock), was reportedly keen on DRB-Hicom's (KLSE: DRBHCOM, stock-code 1619) 20.2 percent stake in EON Capital with mind-boggling offer of RM9.00 per share which will values the stake at RM1.25 billion. The rumor however never materialized.

Later there was rumor that US private equity firm Newbridge Capital was interested in the same EON Capital stake. The repetitive statements from CIMB (Commerce International Merchant Bankers), an investment bank of Bumiputra-Commerce Holdings Berhad (KLSE: COMMERZ, stock-code 1023) pushing the idea of having smaller number of banks had created speculation that the brother of current Malaysia Deputy Prime Minister, Nazir Razak, himself was probably interested in EON Capital.
Everything remains speculation until today when the corporate business might see EON Capital finally find its partner, or maybe not. DRB-Hicom said it won Central Bank approval to start talks with Hong Kong-based Primus Pacific Partners Ltd. on the sale of DRB's stake in EON Capital Bhd. The controlling shareholder of DRB Hicom, Tan Sri Syed Mokhtar Albukhary was reported to desperately want to dispose the 20.2 percent equity in EON Capital for quite some time as he needs cash to reduce DRB Hicom debts which totaled RM1.9 billion.

Interestingly, DRB-Hicom had denied reports back in July 2007 that Primus Pacific Partners Ltd. was interested in its stake in EON Capital. Whether DRB can sell its stake or not this time will depends very much on the offer price from Primus (or other interested parties not visible yet) and the government’s approval for the sale. Primus Pacific's major shareholders which include the Qatar Investment Authority, the Kuwait Investment Authority and Taiwan's fifth-largest financial holding firm, Fubon Financial might need to cough up nothing less than RM9.00 per EON Capital share. Such speculation will definitely create excitement in EON Capital’s stock price when the market opens tomorrow, Thursday.

Other Articles That May Interest You ...

• EPF finalizing steps to let go of RHB to KFH
• EON Capital to Become A Takeover Target Now?
• UBG Aye to EPF despite Higher Offer from EON Capital
• General Electric To Buy Malaysia EON Capital?

Apple at 52-week high, Funds flowing into Tech-Stocks?

Whoa! Did you see how Apple Inc.’s (Nasdaq: AAPL, stock) breachedthe strong resistance of $150.00 per share on Tuesday’s trading? I was about to lock-in the profit when I saw how it tried for more than 3 hours alone trying to push pass that level. Honestly I rarely saw such a stubborn stock constipating for 3 hours just to get out of that thin line. But the stubborn me decided to stay on and watch and by the lunch hour, I knew I was in luck againand will make the killing this time.

Really, there’s no news on Apple that would see the bull charged against the $150 level. The only news and justification from investors is that since the housing crisis (home posted steepest drop in 16 years for God sake) basically affecting other sector such as financial or banking and oil prices are still in the threatening level, most funds are trying out the less risky technology stocks.
Hence the investors pumped in to send Apple Inc. to another record of $153.18 after the closing bell, up $4.90 or 3.3 percent. The feeling of seeing the stock you invested hitting the 52-week high is simply thrilling, don’t you think so? During the after-trading hours Apple Inc. goes up another $0.42 to $153.60, so hopefully my profit will be higher after the opening bells on Wednesday.

Besides Apple Inc. it was reported that Research in Motion Ltd. also hit a 52-week high – rose to $96.82 after the closing bell. Nevertheless oil-related stocks took a plunge after NYMEX crude oil was traded below $80, losing $1.42 a barrel to $79.53 a barrel. Oh well, maybe it’s just the correction after the recent bull. But the fact that the oil prices didn’t react to the opposition group in Nigeria that announced it will resume attacks on oil installations does not spell good for investors who long on oil stocks. Anyways, let’s wait for Wednesday’s oil inventories report.

Tuesday, September 25, 2007

MAYBULK, the Shipping Stock You Can’t Ignore

When people talk about tycoons, you can’t float too far away without taking a hard look at shipping industry. Pre-technology age, building an empire (always associated with shipping) was a hard work which not only required huge resources but also tons of precious time. Shipping tycoons such as Y.K. Pao, Robert Kuok, Li Ka-shing, the late “Godfather” Henry Fok Ying-tung and even former Hong Kong Chief Executive Tung Chee-hwa built or inherited their wealth from shipping business, one way or another.

And so, when former premier Mahathir tried to create his own shipping tycoon in the form of none other than his son, Mirzan Mahathir, it raised everyone’s eyebrows. Public quietly accept while oppositions cried the model of nepotism or favoritism. The economy was booming and the stock price of Mirzan’s new petKonsortium Perkapalan Bhd (KPB), now known as Konsortium Logistik Berhad (KLSE: KONSORT, stock-code 6157), skyrocketed to market capitalization exceeding RM2.5 billion.

The jolly good time didn’t last, the 1997 Asia Economy Crisis hits and the glory of KPB was reduced to a pile of dust and debts estimated at RM1.8 billion. KPB was on the brink of bankruptcy and Petronas (the state oil giant) was roped in topurchase (bailout) KPB’s shipping assets at a mind-boggling US$220 million. Such scenario goes to show that the business needs real shipping acumen in order to stay afloat else you’ll sink faster than the Titanic.

Knowing Shipping Terminology

Lately you heard of how shipping stocks are doing well due to some bombastic language such as Baltic Dry Index, Baltic Clean Tanker Index and Baltic Dirty Tanker Index. Just like energy-related stocks rely on the daily global oil price and telecommunication relies on ARPU (average revenue per user) as its measurement of business, shipping industry has its own terminology as well.

The Baltic Clean Tanker Indexmeasures the cost of carrying refined oil products while the Baltic Dirty Tanker Index is the yardstick for crude oil. Both indexes however have nose-dived. However Baltic Dry Index (BDI) is another totally different animal – today’s (24th Sept 2007) BDI is trading at9,082.00. BDI’s number changes everyday and depends on London-basedBaltic Exchange. Basically the exchange is the common area where all the brokers around the world will spell out the booking cost for various cargoes of raw materials on various routes. Together with speed and type of ship plus the estimated time-frame of a voyage, it produces the BDI.

Bulk container carriers specifically carry unfinished goods such as building materials, cement, grain, coal, iron ore and so on. BDI is probably the most reliable and honest indicator of the economy simply because people don’t book freighters unless they need to move cargo around the globe. But the argument is always that the bullishness in BDI is merely due to China’s huge appetite for raw materials.

MAYBULK Fundamentals

Malaysian Bulk Carriers Berhad (KLSE: MAYBULK, stock-code 5077) is probably one of the shipping stocks preferred by most investors. While players such as Halim Mazmin Berhad (KLSE: HALIM, stock-code 7102) andMalaysian Merchant Marine Berhad (KLSE: MMM, stock-code 7040) found the hard way that the business is not as rosy as it looks after registered losses, MAYBULK is enjoying consistent and excellent business.
MAYBULK’s main focus is in the bulker and tanker segment. Together with 70% of its vessels actively participating in spot charter market, the strategy works like a charm. Although spot charter market gives higher returns, the charter periods are shorter hence creating the idle-time for vessels. However with the correct formula of mix and match to maximize the utilization, MAYBULK’s profit continues to grow. Based on info from its website, the company has 12 Bulk Carriers, 4 tankers and 1 new ship to be delivered in Oct 2007.

To a certain degree having tycoon Robert Kuok as its boss has its advantage. His very-close relationship with China government helps in the business of transporting goods such as coal and iron core which is expected to be up by 9.4% in 2007. For the first half ended June 30, 2007, the company recorded a higher pre-tax profit of RM288.571 million compared with RM143.341 million in the preceding period of last year. Its revenue was also higher at RM253.555 million from RM215.727 million previously while registered net profit of RM129.47 million, an 84.7% increase compared with RM70.11 million in 2Q06.

MAYBULK has been recording good and sustainable profit and has been paying good dividend. In fact it had paid double-digit in terms of cents per share since 2004, with 2006 registered the highest dividend yield or 30 cents per share. Revenue has been on uptrend since and market analysts are estimating another record dividend for the year 2007.

Technical Reading from Chart

Since MAYBULK breached the resistance level of RM3.60 on 9th July 2007, it has never look back. Thereafter the stock actually has been trading within the wave-range of RM3.60 – RM4.40 and the middle value of RM4.00 has been established as the support/resistance level.
Hence, for stock traders, you can actually buy in stages at both RM4.00 level and if this level is breached, buy in another stage at RM3.60 level. The support of RM3.60 should be strong looking at how the stock rebound after 17th Aug 2007 with very high volume. Unless something really bad happen, there’s no justification for the stock to trade below RM3.60 level. Nevertheless with current record level of BDI, it is a dream if you wish to scope at this level.

What analysts said about MAYBULK?

AmResearch said dry-bulk rates were expected to rise further for two more years and it likes Maybulk for its sound manage and has a “Buy” call on the stock with target price of RM5.15 per share. OSK has forecast MAYBULK raking in as much as RM526.3mil in net profits on the back of RM517.2mil in revenue for the financial year ended December 2007. OSK has a fair value of RM4.88 based on MAYBULK’s 11 times price-earnings ratio.

When to jump into the vessel?

To stay afloat, you should trade based on the indicators from the technical chart – to maximize profit. Nevertheless the fundamental is strong and if you wish to long now believing the stock will jumps above RM4.40 comes the next earning announcement, nobody can stop you really. Alternatively you might want to studySwee Joo Berhad or Hubline Berhad as the shipping stocks (I’ll leave that as another discussion at another time). As part of the best practice in stocks investing, diversification is the name of the game and you should seriously consider a transportation stock in you portfolio. What better stock than MAYBULK which has the support of Robert Kuok?

Monday, September 24, 2007

PetroChina is Charging, not even Buffett can stop it

Of all the interest in foreign-stock Call Warrants in Malaysia, none of them has attracted the followers as PetroChina Company Limited(PETROCH-C1, stock-code 0500C1 and PETROCH-C3, stock-code 0500C3) since the oil price hit above $82 a barrel. In fact the volume for these two stocks counters which attracted punters intensified on 19th Sept after Ben Bernanke cut the rate by 50 basis points. You need to read why oil prices soared due to Uncle Ben's action. 

Both PETROCH-C1 and C3’s exercise share price is HKD10.40 with exercise ratio of 5:1 (5 warrants per share), expiry-date is on 29-Feb-2008 (158 days to go). However while PETROCH-C1 was issued by OSK, PETROCH-C3 was issued by CIMB and based on market volume PETROCH-C1 is more actively traded. Stock market talks has it that the difference in volume and even the price is due to the fact that PETROCH-C1 is tightly held by public while PETROCH-C3 shares are mostly within the grip of issuer CIMB itself. 

Of course logically shares within public possession will see more volatility, higher volume transacted and easier chased up than if it’s held by institution (in this case CIMB itself). Due to the fact that the issuer, which is also known as market-maker, held most of the shares, the spread between bid and ask sometimes can be huge (you need to closely monitor this) especially when the volume transacted on a particularly day is low. This concept applies in option trading whereby the market makers are trying to make profit out of you because the liquidity of the day is low.

Warren Buffett selling PetroChina Shares

Warren Buffett's Berkshire Hathaway's (NYSE: BRK.A, stock) has been selling its shares in PetroChina for the last 3-months with rumors ranging from public pressures to Warren to protest PetroChina’s support for the Sudanese regime to the investors reasoning that Buffett actually taking profit off the table.

Despite the three sales, Berkshire still owns nearly 9% of China's largest oil company, making it the second-largest shareholder behind the government-backedChina National Petroleum, which owns 88%.

• July 12th - sold 16.9 million PetroChina shares at an average price of HK$12.441 – stake reduced to 10.96 percent
• Aug 29th - sold 92.66 million PetroChina shares at an average price of HK$11.473 – stake reduced from to 9.72 percent.
• Sept 20th - sold 28 million PetroChina shares

Being an aggressive animal PetroChina plans (pending regulatory approval) to offer as many as 4 billion Class A shares on the Shanghai exchange. The company has indicated it will use the proceeds to boost output and build a pipeline, a justification that was mooted out of national mandate to ensure energy security for the ever-growing China. Money has never been a problem to PetroChina and if it really needs more, the government of China can always extend cheap loans anytime.

It’s time to buy PetroChina stocks?

As can be witnessed, PetroChina stock prices were not affected by numerouos sell-off by Warren. It appears the share might only show weakness if the global oil prices drop to below $80 a barrel. By the rate the company is expanding to feed the hunger of China’s economy, current stock price might be the attractive level to enter since it has breached the resistance of RM0.26 for PETROCH-C1.

Nevertheless the risk is always there and its danger lies in the “volatility” of daily oil price. Do not touch the shares if you can stomach any potential losses in stocks investing.

Other Articles That May Interest You ...

• Rate Cut’s effect – high Oil Prices and weaker Dollar
• China’s Syndrome – ICBC Stock Exposure
• Know The Difference - Warrants & Call-Warrants

Sunday, September 23, 2007

Volkswagen BOSS to visit Malaysia to conclude deal

The news was actually out (kinda like leaked) that Germany's Volkswagen (FRA: VOW) already agreed to take a stake in Malaysian loss-making car-maker Proton Holdings Bhd (KLSE: PROTON, stock-code 5304) but with some conditions attached. Knowing that Malaysia’s GLCs (government-linked-companies) are mostly tricky when comes to question of management control, Volkswagen earlier suggested that it would take 20 precent stake initially with the right to raise it to 50 percent majority stake in 5-years period.

Secondly – Volkswagen wants Malaysian government to clean up all the debts(or shits) accumulated by Proton. It makes business sense as Volkswagen is suppose to start its plan of putting everything on track to push the Proton out of red once the green light is given. That’s the plan and Volkswagen has no intention of studying and wasting time trying to clear the debts due to the previous weak management of Proton.

Hence the third and most important condition is to have all (or majority) of existing management team pulled out from the board of Proton. As suggested by Volkswagen, it will have only 20 percent stake initially so the board might still consists of majority Proton’s team. With 59% stake (including a 43 percent stake held by its investment arm, Khazanah Nasional), the government will have more representatives on boards of Proton, at least in theory, and this could create problems when Volkswagen management would like to push for some important decision. 

However when the above news was out, Malaysian Prime Minister Abdullah Badawi only confirmed talks were ongoing but said there was no formal request from Volkswagen for a stake in Proton. But then it could merely due to protocol or procedure that it would not be nice for Badawi to announce something which has already been reported and known to public, the same way the first Malaysian astronaut was identified and reported by foreign news before Badawi has the honour to announce it to the country.

Nevertheless, a report from Singapore which picked up the Edge business news said thatVolkswagen boss Martin Winterkorn will visit Malaysia in the next few weeks to conclude a deal between the German auto giant and state-owned carmaker Proton. The visit by the Volkswagen chief executive officer this time should settle a lot of questions and uncertainties that have prolong the negotiations.

While Proton desperately needs foreign technical expertise to halt its ever continuing decline in market share, Volkswagen hopes to have a base to strengthen its presence in the Southeast Asian region. It’s a matter of who is more desperate to get out from its trouble and hence give in to the conditions set by the other party.

Proton’s stock prices should get excited by the news of the coming visit by the Volkswagen’s boss and everyone would be listening and watching the final conclusion from Badawi. Considering Abdullah Badawi’s administration is currently hit by multiple crisis and scandals such as the RM4.6 billion ringgit PKFZ scandal and the latest Judiciary Scandal, not to mention tough economic decision in raising gas price, Badawi could put the meeting with Volkswagen boss as the last priority for the time being,

Other Articles That May Interest You ...

• Volkswagen sets to Control PROTON, in 5-years?
• Malaysia’s Biggest Scandal – Business as Usual

Slow turtle WATERS Stock finally turns into profit

Last Friday was the option expiration for the month of Sept 2007. One of the trades that made my blood boils over the last two months is Waters Corporation (NYSE: WAT, stock) which I talked about here. Waters is not really my favorite, having disappointed me before. Nevertheless I was sure this stock would continue to beat its estimated earnings on 24th July based on its track record. There was no reason why the strong resistance (it was a very very strong one indeed) of $64 cannot be broken, I thought.

After Waters delivered its earnings of which it beat by 2 cents of $0.60 per share againsts the market estimate of $0.58, it didn’t gap-up as expected. Worst still, it stubbornly floating within the price range of $58 - $64 – refused to break the $64 level. Luck turns for the better on 14th Sept when it finally breached the $64 level and never look back since then registering record 12-months high again and again. If not for the Friday Option expiration on 21th Sept, I would have leave it run as far as possible.
Though my option had lost the time-value, it was compensated with the $4 dollars gain within 6-days of trading since it breached the $64 level. The fact that I boughtWAT Sept 60 Call Option means my position has intrinsic value of well over $8.00 a share. And this is the same reason why on the last expiration day, my position still commands 70% profit. If only I’ve time-value, my profit will surely surpass 100%. Anyways profit is still profit and I should be grateful, right? There’s always another trade next time.
Waters is one giant turtle and as I said earlier, you need to have tons of patience waiting for it to hatch the money. Compare to other fast moving stocks such as Google Inc. and Apple Inc. not many investors like to invest in this stock.

Saturday, September 22, 2007

Dell’s printers could drive up its stocks

Why most of the successful entrepreneurs who made it to the billionaire list are dropout? Could it be that these individuals have something not common to other people? Michael Dell might be a dropout but his simple yet successful business model of selling desktop computers to customers directly is a proven method not only in making profit but in making great fortune. He’s the 8th richest Americans in the latest Forbes 400.

His shares are up 38% since 12 months ago. One trick in making money investing Dell Inc.’s shares is the fact that the stock normally soar at the end of the year, mainly due to holiday season where sales are brisk. Dell’s forte has been in desktop computer and later notebooks before venture into storage by OEM with partners. They tried PDA but without much success. 

However its’ success in desktop could be replicated with printers ranging from laser printers, printer scanner copier, color printers to inkjet printers. This could give its competitor especially Hewlett-Packard a run for their money. Where others failed miserably, Dell has the high percentage of success with its strong branding and loyal customers. Furthermore customers have been trying the reliability of Dell’s desktop and notebook before. So packaging the printers under a roof should not be a problem as everyone needs to print.

*sponsored*

Friday, September 21, 2007

Malaysia Judiciary Scandal? Don’t bet on it

To outsiders except for the British, corruption might not be as scary as the deadly H5N1 bird flu. Furthermore H5N1 kills but not corruption; physically the corrupted hands do not kill, do they? British government knew how corruption could bring disaster to a country, as was seen to their small colony which was under Britain’s rule till 1997 – Hong Kong. Hence the establishment of Hong Kong ICAC (Independent Commission Against Corruption) by Governor Murray MacLehose on Feb-1974 with the main objective of cleaning up corruption in the Hong Kong Government especially the Royal Hong Kong Police Force.

Malaysia’s laws have great similiarities to the British’s laws as majority of it were imported from the British, not surprising since the then Malaya was under British colonization. One of the greatest things in the Constitution is the “Separation of Powers” whereby the three pillars of parliamentary democracy namely the Legislative, Executive and Judicial are to be operates independent of each other.

Under such separation of powers the legislative branch makes the laws, the executive implements the laws while the judiciary interprets the laws and decides legal controversies. The Legislature which is the Parliament consists of Dewan Negara (Senate) and Dewan Rakyat (House of Representatives) and its main task is to draft the laws. The Judiciary is the Supreme Court while the Executive is the Prime Minister.

Dewan Rakyat’s members are elected by the people and this is also the entry point where everything will get screw-up if the people did not elect their representative wisely. All proposed laws must pass through the Dewan Rakyat before escalated to the upper house of Dewan Negara. The Senate (Dewan Negara) which is supposed to act as the check on Dewan Rakyat has becomes rubber-stamp over the time due to various modifications. The fact that the Prime Minister belongs (overlap) to both Executive and Legislative pillars creates cloudy relationship to two of the three pillars, what more with people usually returns more than two-third majority to the government.

Powers-Overlapping

Hence the Prime Minister whose party controls the Legistative would make laws and at the same time implements it as if a small kid would say he wants to watch pornography and head straight to watch it, without any obstable. It wasn’t so bad because you still have the Judicial pillar to at least protect your interest and rights. But after former premier Mahathir crossed the bridge and land on the soil of Judicial back in 1988, all hell breaks loose. With the position of the highest court judge at the mercy of Prime Minister, you shouldn’t be surprise at the new title “Dictator” bestowed on him.

After two decades since the last Constitution Crisis, it appears Malaysia is going to have another one, at least Raja Petra believes it's already happening. With senior and qualified judges put on cold storage when comes to promotion, the unqualified or juniors were given preference. Goblok blogger or not, the signature petition initiated by Raja Petra sure attracts 10,000 signatures and International Herald Tribune calling on Malaysia's king to help resolve problems such as corruption. 

The Latest Scandal – Judiciary Fixing

And the latest scandal which is blowing hard on the current government has everyone who cares to read alternative news from blogs such as JeffOoi, MalaysiaKini and Malaysia-Today in disbelieve. The scandal which involves Judiciary at the highest level was first exposed by former Deputy Prime Minister Anwar Ibrahim and picked up by MalaysiaKini and JeffOoi's blog. The Malaysian Bar Council equally surprised and jumped in mad. While the media which are all controlled by the government had playdown or even blackout the exposed scandal, most of the blogs are flooded with the latest revealation.

While the government controlled media are careful to use “prominent” businessman, lawyer, politician and judge, the blogs have exposed all the names involved in the“Judicial Fixing” video clip. According toMalaysiaKini, the individuals named in the video clip includes VK Lingam, current Chief Justice Ahmad Fairuz, former Chief Justice Dzaiddin Abdullah, tycoon Vincent Tan, current tourism minister Tengku Adnan, former DAP member Wee Choo Keong and others.

In the video clip, the lawyer was talking on the telephone to someone who seemed to be a senior judge about how he (the lawyer) had helped get this judge appointed to one of the top judiciary posts. According to the telephone conversation, the appointment was done through a prominent businessman and a politician. The lawyer was also heard saying that he was working through the two persons to get the judge elevated even further and get him a “Tan Sri” title.

Judiciary Scandal – business as usual

The video clip with crystal clear audio has been uploaded into YouTube. Unable to hide anymore, Deputy Prime Minister today wants the authenticity of the video clip to be established. But considering Anwar has produced only 8-minutes of the original video clip to safeguard the whistle-blower, it could be used as thereason (or excuse) by the government to declare that the video-clip as not original and thus cannot be used as evidence. Unless Anwar can submit the original clip, to which will put the head of the whistle-blower’s identity to the gallows, this might be another “case-close” in the making. In addition, who are you or even the opposition to argue with the government if the ruling government insists that the video clip authentication cannot be verified? The transcript of the clip is here.

As usual, the calls for Royal Commission of Inquiry to be setup, asking the Chief Justice to be suspended and so on were heard. However such calls are basically useless and waste of time as with previous scandals that spawned such inquiries, it’ll be business as usual in no time. Furthermore the government basically controls all the three pillars of powers, mind you. Of course the timing of the video clips being exposed definitely raise people’s eyebrows.

Whether the video-clip produced is to portray Anwar’s innocence while at the same time to splash more dirt water onto Mahathir or simply to embarrass the current administration remains to be seen. For all you know prime minister Badawi might just reuse the famous yet effective “I don’t know … I’m not aware … it (the video clip) didn’t happen during my time” phrase to pass the ball out of his court. While this may be the second Judiciary Crisis, it’s definitely the first Judiciary Scandal. Furthermore how serious could this scandal be compare to the RM4.6 billion ringgit Port Klang Free Zone scandal? If the US$1.3 billion PKFZ scandal can be twisted with the soft-loan trick, this Judiciary Scandal can be twisted the same way, only with much ease.

Desperate times require desperate measures

Prior to the current state where the Supreme Court is the highest court, appeals on criminal and constitutional (abolished in 1978) and civil (abolished in 1985) matters can still be taken to the Queen-in-Council, advised by the Judicial Committee of the Privy Council in London. Of course the country cannot revert back to Privy Council as that would be "unpatriotic".

What the nation need is to return the glory of independence of check and balance. Simple measures such as restructure the Anti-Corruption-Agency to one similar to Hong Kong’s ICAC with the Commissioner of the body report directly to Parliament and the King might do the trick. The same goes to the appointment of judges, especially the Chief Justice.

Should Stock Investors Care?

What the heck does the Judiciary scandal has anything to do with stocks investing? Well, if the appointment of top judges can be brokered, as long as the money play along, what do you think of the investment protection the minority shareholders have if the tycoon of your portfolio (shares) decides to play you out? Remember Transmile Group Berhad (KLSE: TRANMIL, stock-code 7000), Megan Media Holdings Bhd (KLSE: MEGAN, stock-code 7101) or even unlisted Maika Holdings Berhad? You don’t think some heads will be sent rolling, do you?

The bottom line – vote wisely; but considering even Rocky’s Bru never register in his entire life, the current government will definitely score another big win in the coming general election. Maybe not 90% votes win but probably 85%.

Other Articles That May Interest You ... 

• No fees but shareholders fuming Ling Chicken Out
• Poor’s Hope in MAIKA – the Last Robbery
• Malaysia’s Biggest Scandal – Business as Usual
• A case of Little Crime overshadows Big Crime

Do you have US$1.3 Billion? Then you’re in the list

It appears the stake has increased if you plan to squeeze yourself into the glamorous Forbes 400 Richest Americans. Just like playing poker at the gambling table, the stake has been raised to $1.3 Billion if you wish to see your name within the list. The new threshold meant 82 of America's billionaires didn't make it this round. Altogether the top 400 billionaires have wealth worth a staggering US$1.54 Trillion (go and punch that number and see how many trailing zeroes please).

The top four wealtiest was unchanged. However joining the top 10 are the founders of Google Inc., Sergey Brin and Larry Page who shared the fifth place. Surging oil price has indeed help the oil baron brothers Charles and David Koch sharing the 9th spot, jumped from 19th spot last year. The most spectacular achievement was by casino tycoon Kirk Kerkorian who doubled his wealth in one year to US$18 Billion from US$9 Billion a year ago, pushing him to 7th position from 26th in 2006.

William H. Gates III

• Rank: 1 (2006 Rank: 1)
• Net Worth: US$59 Billion (2006: US$53 Billion)
• Fortune Source: Software
• Empire: Microsoft Corp. (Nasdaq: MSFT, stock)
• Age: 51

Warren Buffett

• Rank: 2 (2006 Rank: 2)
• Net Worth: US$52 Billion (2006: US$46 Billion)
• Fortune Source: Stocks Investments
• Empire: Berkshire Hathaway's (NYSE: BRK.A, stock)
• Age: 77

Sheldon Adelson

• Rank: 3 (2006 Rank: 3)
• Net Worth: US$28 Billion (2006: US$20.5 Billion)
• Fortune Source: Casinos
• Empire: Las Vegas Sands (USA), Sands Macau Casino (Macau), Venetian Macau (Macau), Marina Sands Bay(Singapore)
• Age: 74

Lawrence Ellison

• Rank: 4 (2006 Rank: 4)
• Net Worth: US$26 Billion (2006: US$19.5 Billion)
• Fortune Source: Software
• Empire: Oracle Corporation
• Age: 63

Sergey Brin

• Rank: 5 (2006 Rank: 12)
• Net Worth: US$18.5 Billion (2006: US$14.1 Billion)
• Fortune Source: Internet Search Engine
• Empire: Google Inc. (Nasdaq: GOOG, stock)
• Age: 34

Larry Page

• Rank: 5 (2006 Rank: 13)
• Net Worth: US$18.5 Billion (2006: US$14.0 Billion)
• Fortune Source: Internet Search Engine
• Empire: Google Inc. (Nasdaq: GOOG, stock)
• Age: 34

Kirk Kerkorian

• Rank: 7 (2006 Rank: 26)
• Net Worth: US$18 Billion (2006: US$9.0 Billion)
• Fortune Source: Casinos, Investments
• Empire: MGM Mirage, Mandalay Bay Resorts
• Age: 90

Michael Dell

• Rank: 8 (2006 Rank: 9)
• Net Worth: US$17.2 Billion (2006: US$15.5 Billion)
• Fortune Source: Desktop Computers, Laptops, Storage
• Empire: Dell Inc (Nasdaq: DELL, stock)
• Age: 42

Charles Koch

• Rank: 9 (2006 Rank: 19)
• Net Worth: US$17 Billion (inherited) (2006: US$12.0 Billion)
• Fortune Source: Oil & Commodities (chemicals, pipelines, ranching, refining operations)
• Empire: Georgia-Pacific, Koch Industries, Koch Family Foundations
• Age: 71

David Koch

• Rank: 9 (2006 Rank: 19)
• Net Worth: US$17 Billion (inherited) (2006: US$12.0 Billion)
• Fortune Source: Oil & Commodities (chemicals, pipelines, ranching, refining operations)
• Empire: Georgia-Pacific, Koch Industries, Koch Family Foundations
• Age: 67

Thursday, September 20, 2007

Vincent Tan banking on new name to strikes Fortune

When the Chinese talk about feng shui, they have a holistic view and approach to it and one of the most famous saying is “first is Destiny,second is Luck, third is Feng Shui, fourth is Virtue and fifth isKnowledge”. That’s the importance in ascending order to the Chinese. But at the same time, a very important component within an individual (to the Chinese) is the name. Chinese people always attach great importance to the choice of names,so much so that in ancient time, Chinese believed that name contained the invisible fate and the visible and meaning characters.

Even in the current modern day, when parents or elders named a new born baby, they will normally consult the “wise-man” (fortune-teller) who will take several factors into full consideration: the astrological principles, the birthdate, the array of five elements (metal, wood, water, fire, and earth), the form, pronunciation, the numner of strokes and meaning of name. Ever wonder how Chairman Mao Tse-tung (毛澤東) rised and became the leader of the People’s Republic of China from its establishment in 1949 until his death in 1976? It was all in his name, as most fortune-tellers will tell you.

Ok, we’re not going to talk about fengshui or fortune-telling, though I’m very much interested in learning this area of meta-physic if there’s a true master who happens to be the reader of StockTube. Hey, one has to learn as much as possible across the board and not hiding oneself under the “coconut shell” in the name of complacent.

Talk about changing name, unlisted pay-TV operator MITVCorporation Sdn Bhd yesterday announced that it is now known as U Telecom Media Holdings Sdn Bhd. It futher claimed that the name change was to better reflect the group’s plans in offering multiple technology-driven services, applications and content. Its subsidiary, U Mobile Sdn Bhd (formerly known as MiTV Networks Sdn Bhd) is the newest mobile service provider using the 018 prefix.

U Mobile’s jewel is definitely the 3G license it won from the government of which is still sitting collecting dust without any productive roll-out from it yet. The fact that the company has signed interconnection agreements with Telekom Malaysia Berhad (KLSE:TM, stock-code 4863), Time DotCom Berhad (KLSE: TIMECOM, stock-code 5031), Celcom (M) Bhd, Maxis Communications Bhd and DIGI.com Berhad (KLSE:DIGI, stock-code 6947) only proves that besides the 3G paper license, it has nothing as far as infrastructure is concern in rolling out 3G services.

So, what about the pay-TV business that Vincent Tan and his lieutenants have been screaming about? If memory serves StockTube right, the MiTV’s ambitious plan to give Ananda Krishnan’s Astro All Asia Network Plc (KLSE: ASTRO, stock-code 5076) a run for the money stretches as far back as in 2001 (or earlier). Of course numerous promises were made and announced but it seems the fate (or feng shui) has determine that pay-TV is not the cup of tea that Vincent Tan should embarks on.

With the announcement on the name changes, does that mean Vincent is pulling his last leg out from the pay-TV business to concentrate in the lucrative telecommunication sector? Having started the DIGI.com only to sell it off to Norway's Telenor ASA (OSL: TEL) for a huge profit, Vincent is indeed not a new kid on the block. But would it be a little too late to start all over again with the telco market already reaching its saturation stage?

It actually depends on whether he can attract a good management team who not only knows how to plan, execute and market the products but also how to create innovative services and offerings along the line. Furthermore it was after the Telenor’s team on board that DIGI.com managed to gain respect from other mobile service providers namely Maxis and Celcom and the stocks soar to the current level.

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• The tale of pay TV business, ASTRO and NBC
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Mortgage with mform services

Ever since the housing crisis hit U.S. people who did not know the meaning of sub-prime and mortgage earlier now know the meaning of both words. From the soil of U.S. the plague spread over into U.K. The problem was so real that Federal Reserve Chairman Ben Bernanke had to announce the rate cut by 50 basis points. Behind the crisis, firms who smelt the opportunity began offering their services in helping affected people in comparing mortgages in the U.K. and U.S.

Existing customers who did not have good credit ratings were affected badly and most of them were looking for remortgages online. Remortgaging or refinancing is the simple process of changing your existing mortgage lender (the banks) to another who can offer a better deal. Typically you’re required to complete the mortgage application form after which the lender will evaluate your eligibility and probably do a valuation on your property.

First time buyer mortgages would finds the process of finding the right mortgage lender quite challenging. mform's first time buyer mortgage guide gives you all the information required to learn about buying a house ranging from choosing a property, choosing a mortgage and other mortgage features to consider. mform also provides multiple calculators in its website for the purpose of stamp duty, rate change, monthly payment and even affordability’s calculation.

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The tale of pay TV business, ASTRO and NBC

Don’t you hate it that despite paying for the programs on monthly basis, you’re still getting bombarded with advertisements? To make matter worse Astro All Asia Network Plc (KLSE: ASTRO, stock-code 5076) which monopolize the pay-TV sector is forcing more advertisements to its subscribers. You might not realize it but if you care to measure the time-frame of advertisements in between a show / drama over the popular channel, you will noticed the ridiculous long period of commercials. Some veteran subscribers claimed it wasn’t that bad 3 or 4 years ago.

With Ananda Krishnan’s investment in Indonesia’s Astro-venture screwed-up big time after it registered a net loss of RM54.18 million for the second quarter ended July 31 2007, things can only get worse. Astro reportedly has invested about RM230 million since it bought 20 per cent of PT Direct Vision (PTDV) in July 2006. With only slightly more than 120,000 subscribers, PTDV (a joint venture between Astro and PT Broadband Multimedia's subsidiary PT Ayunda Prima Mitra) is rushing against time to find a better working solution before the loss getting deeper into the investor’s pocket.

While some analysts still screaming a “Buy” on Astro stocks, I would give it a pass, at this moment. It could be that Astro has engaged Harry Potter’s help in casting a spell on its suppose-to-be competitor, unlisted pay-TV operator MITV Corp, as nobody heards from the Vincent Tan’s ambitious plan to rival Ananda’s Astro ever since. Except for the 3G license won by MITV, the company seems to be resting inside the grave-hole and can never rise. 

Meanwhile let’s travel thousands of miles away into the land of America. NBC Universal Inc. said yesterday that it would soon permit consumers to download many of NBC’s most popular programs free to personal computers and other devices for one week immediately after their broadcasts. The audience in U.S. is getting sophisticated and viewers are finding new methods to avoid watching the commercials such as using TiVo Inc.’s(Nasdaq: TIVO, stock) machines.
Under the new NBC service, called NBC Direct, consumers will be able to download, for no fee, NBC programs like “Heroes,” “The Office” and “The Tonight Show With Jay Leno” on the night that they are broadcast and keep them for seven days. However the files, which would be downloaded overnight to home computers, would contain commercials that viewers would not be able to skip through. And the file would not be transferable to a disk or to another computer.

The smartest part with the service is that the files would be unwatchable after a seven-day period, kinda like Mission Impossible, minus the explosion and smoke. The requiremen is for you to have a PC or notebook with Microsoft Windows operating system. For Mac computers and iPods fanatics, you just have to wait for the next release.

You might have to wait another decade before Astro actually adopts such a methodology, not that it has to share the pie with any real competitor out there now. By the way, the service by NBC will starts in November, so watch out for it.

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Wednesday, September 19, 2007

StockTube’s another article picked up by CNN Business

After StockTube’s article on “Reasons Why Oil Price might spikes to $90 and beyond” was picked up by Wall Street Journal, I was alerted via email by one of the readers that another of StockTube’s article was highlighted by another heavyweight financial portal, CNN.com. I couldn’t believe it but after checked it out, it shows how the top news providers actually paid attention to blogs around the world. It simply shows that blogging is here to stay and actually assists in presenting the independent voices of bloggers to readers. So, who says bloggers are Goblok (Indonesian slang for “stupid”) and have no value?


Anyways, this post is not to boast but merely to remind the politicians, who are illiterate about the technology of internet and the valuable of opinion and information in the world of blogosphere, that in order not to make a goblok of oneself, one has to have an open-mind and embrace the presence of blogging.

Although the latest article by CNN world business that highlighted StockTube’s article was released today, the article sphered under its blog section was posted about 7 days ago by StockTube. Of course I might be dreaming to think of the possibility that CNN might one day publish articles written by StockTube, but I’ll still keep my fingers cross. Furthermore news providers (not Malaysia, mind you) have recognized the increasing influence of bloggers in publishing the latest hot topics or happenings not only with accuracy but with speed comparable with them, if not better.

For the time being, StockTube is happy to know its articles are recognized and covered within CNN’s own blogosphere. Of course appreciation should be extended to regular and loyal StockTube’s readers, that’s you, and for that thank you for your continuous support.

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Rate Cut’s effect – high Oil Prices and weaker Dollar

You won people - you got your interest rate cut after months of chanting, so much so that U.S. Federal Reserve Chairman Ben Bernanke admitted defeat and cut the funds rate by a whopping 50 basis points. But really, can the current new rate of 4.75 percent (from previous 5.25%) help the ailing housing sector? Was it the right move? Nobody can or dare to answer that question. The safe answer would be – time will tells. While no one knows if this is the medicine needed, the rate cut has already presented some immediate effects.

Joyful stocks investors aside, Ben Bernanke is crossing his fingers hoping for the inflation risk to remains stagnant, if not go away. Oil prices rose immediately with light sweet crude for October delivery added 82 cents to $82.33 a barrel in Asian electronic trading on the New York Mercantile Exchange by midmorning in Singapore. Did anybody just say some days ago that $80 a barrel is a temporary level and won’t last? By cutting the rate, the growth in economy will accelerate and hence the demand for already tight crude supplies will increase, at least in theory.

Of course the consolation prize will be the statement from analysts that oil prices are still well below inflation-adjusted highs of $96 to $101 a barrel achieved in the early 1980s. Holy cow! Are you saying the oil prices are going up to the mind-boggling US$100 a barrel? While this indeed will bring cheers to stocks investorswho bought into oil-related counters (ahem), it might create social problems to countries which are net importer of this black-gold, not to mention the catastrophic to countries that do not have a good governance in their spending habit.

If you’ve bought into oil or energy stocks or options, today’s (Wednesday)inventories data to be released by the U.S. Energy Department's Energy Information Administration (EIA) will be the key measurement that will determine if you would make good profit. Analysts surveyed by Dow Jones Newswires expect the EIA to show that crude inventories dropped an average of 1.5 million barrels in the week ended Sept. 14, while gasoline supplies fell by 1.3 million barrels. If so, you’ll see oil stocks to soar.

On the other hand, the dollar tumbled to a new all-time low against the euro and other regional currencies including Malaysian ringgit. As the gap narrow, funds might flows out from the U.S. looking for better place to park. Malaysia ringgit already registered its biggest gain since 18th June, traded at 3.4580 to a dollar after the rate cut. This sure brought the much needed relief to the Malaysian government who was worried sick of the falling stocks prices. It hopes foreign investors will restart buying local shares, at the same time allows the government to sing the song of praise right before the next general election.

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Bernanke admitted defeat and Released the Pressure

If you do not know yet, the announcement is already all over the financial news portal. Federal Reserve Chairman Ben Bernanke and his central bank colleagues admitted defeat and lowered the interest rate to 4.75 percent, a half point cut from 5.25%, pressured by the political and economy built up over the months.

Wall Street responded happily sending stocks up over 335 points - its biggest one-day point jump in nearly five years. The first cut in over four years means borrowers who can obtain credit should see rates drop on a variety of loans such as credit cards and housing mortgages. Already Wells Fargo, Bank of America and other commercial banks dropped their prime lending rate charged to millions of borrowers by a corresponding amount to 7.75 percent after the announcement.

“"Today's action is intended to help forestall some adverse effects on the economy that might otherwise arise from disruptions in financial markets and to promote moderate growth over time … some inflation risks remain" the Fed said in a statement released after its closed-door meeting.

While some other analysts predict the Fed will lower rates again probably by a more modest one-quarter percentage point at its next meeting in October and December, economist Richard Yamarone of Argus Research is of the opinion this is the only help needed and the Feds will not act anymore. But the Fed left the door open to its next rate move, saying it will "act as needed to foster price stability and sustainable economic growth."

Some people said Bernanke is dead worry that people and businesses will cut back on their spending and investment, throwing the economy into a tailspin, thus the rate cut to ensure it doesn’t happen. As expected the dollar tumbled to a new all-time low against the euro after the rate cut simply because lower rates make the currency less attractive while crude oil futures spiked into record high of $81.51 a barrel, up 94 cents.

Needless to say, Asian stocks jumped on Wednesday morning trading in the wake of Wall Street's overnight surge. Japan's benchmark Nikkei 225 stock index soared 531.49 points, or 3.36 percent, to 16,333.29 points on the Tokyo Stock Exchange while Hong Kong’s Hang Seng Index jumped 791.34 points. Malaysia’s KLCI jumped over 19 points in early morning trading with high volume after days of low transaction due to the uncertainties. Now the ball is in Malaysia Central Bank'scourt whether to follow the step in cutting the interest rate which can ease the suffering of homeowners.

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Old couple getting Thoof about preference

Just how on earth do you pronounce “Thoof” and most important of all what does this word means? If you check the word against thesaurus, it’s a dead-end. If you split the word to “The” and “Hoof” it’s a dead-end as well. In a nut shell, no one really knows the meaning behind Thoof brand except the website actually provides personalized news to you and me. Thoof claims it is using"personalization algorithm" in presenting the info or news to its readers. Meaning users access news based on his / her likes and preferences on the very first visit. Talk about democracy.

Still it doesn’t answer how the founders got the unique name of “Thoof” in the first place. If it’s up to the imagination, you might find the answer in the badge itself. The double-O resembles a pair of glass, a very old fashion one. One fine day while surfing the internet searching for info on Artificial Intelligence stuff, the Thoof founder overheard his neighbor quarrelling. It got so serious that he can swear the whole street heard about it. He went over to see what was going on, only to find out that an old couple was arguing what color they should paint their house’s wall with. 

Instantly the founder realized that even after years of marriage, a couple still have their own preference in such a simple thing. What about youngsters surfing the net searching for info, news or even gossips? And talk about gossips, every celebrity has their own fans. The founder decided to launch his own site with the flexibility of allowing readers to customize their preference, and named it Thoof – short for “TheHut Of Old Fanatic”.

Tuesday, September 18, 2007

Gas Price to increase but IPPs remains unaffected

As expected, oil prices climbed to a fresh high with the light sweet crude for October delivery rose as high as $81.18 a barrel in Asian electronic trading on the New York Mercantile Exchange, before retreating slightly to $81.04, midmorning in Singapore. Basically the stocks markets across the globe have been quiet with most of the indexes in the red awaiting the result of the Fed meeting today.

I’ve actually left out one of the reasons why oil price will remain bullish from my recent article “Reasons Why Oil Price might spikes to $90 and beyond”. That factor is the coming winter season which at this point is still uncertain in terms of its severity. Really it’s an annual event as the winter season comes without a miss every year. What is the difference is whether the blizzards will create havocs this time around, not that the U.S. inventories are anything that can comfort the people of U.S., going by the recent announce figure.

To be precise it’s the heating oil futures that investors should watch out but generally when the winter season is super-cool, almost all energy-related commodities will go up. While U.S. has to face the uncertainty of higher fuel price and heating gas due to the winter season and natural disaster such as hurricanes, something quite difference is haunting the people of a nation thousands of miles away.

Instead of natural disaster, Malaysia is a country blessed with numerous natural resources and the most precious of all at this particular moment is oil. The country doesn’t have winter season so the only thing required besides petrol for cars is gas for cooking and generating electricity. It was reported that Petronas, the oil and gas company wholly owned by the government, is whinning about the huge subsidies it’s paying for the gas and is asking for a raise.

Government claimed Petronas paid out subsidies close to RM50bil in the last 10 years for gas and the time has come for it to raise the rate considering the global oil prices hitting above US$80 per barrel. As a wholly owned government business entity, the government Minister is helping in echoing the needs to raise the price of gas when the Cabinet committee meets next Monday. So a raise is imminent.

But the question remains if Petronas can actually continue subsidizing the gas. While Petronas sold subsidised gas at RM6.40 per mmBtu (Million British Thermal Units) when the unsubsidised gas cost about RM40 per mmBtu, the fact that Petronas’ accounting figures’ continuous secrecy has given impression that the massive profits have been abused. If it’s clean, why not disclose it to the public since the natural resources belongs to every individual citizen, goes the argument.

The critics have complained for decades that elected politicians have siphoned the profits to finance un-sustainable ventures or to bail out politically connected companies with funds that could have been better used for national development. The infamous bail-out with Petronas profits happened in 1998 when Petronas, through its shipping carrier Malaysian International Shipping Corp Berhad (KLSE: MISC, stock-code 3816), inexplicably acquired a debt-laden (debts estimated at RM1.8 billion) shipping company, Konsortium Perkapalan Bhd (KPB) which owned by former premier Mahathir’s son, Mirzan Mahathir.

The government was criticized for sponsoring cronies in terms of heavily subsidized processed gas to companies such as Tenaga Nasional Berhad and a handful of IPPs (independent power producers). Petronas once said over RM25 billion of subsides were extended to IPPs such as Genting Sanyen Power, YTL Power, Malakoff Bhd and Tanjong Plc/Powertek Bhd, thus created instant tycoons associated with politicians. So why the people should suffers with price hike when these cronies are enjoying their massive profits from the subsidies?

Despite Petronas being the special entity created by Parliament via the Petroleum Development Act (144) 1974, it has a strange clause which amongst other stated that the Corporation shall be subject to the control and direction of the Prime Minister who may, from time to time, issue such direction as he may deem fit. Hence even Parliament has no power over Petronas. In another words Petronas belongs to the Prime Minister of Malaysia. And to see people cracking their heads wondering why former premier Mahathir appointed himself as the “Advisor” to Petronas after passed the baton to Badawi – it’s a gold mine, mind you.

Anyways, the hike in gas price will definitely bring in another round of price hike in other consumer products or finished goods and the chain-reaction will push up the inflation. Can the government take the heat of grumbling voters with the general election so near? Maybe the benefits of having the extra billions of dollars released from the subsidies outweight the unhappy people on-the-street.Furthermore the government can always gives another carrot to the people a week before election is announced.

On the side note, don’t you dream of the day when the Petronas finally list its’ shares in the local stock market? But considering Petronas does not need to raise money, it might just remains as the personal corporate of the Prime Minister.

Other Articles That May Interest You ...

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The Mortgage’s plague spread into Britain from U.S.

It was a rare sight though it happened before but those were during the recession period. Sometimes you watched it during some television dramas but in actual fact it’s a rare occasion. What I’m talking about is the panicky depositors showed up in drove to withdraw their savings from financial institution. Well, believe it or not it happened in one of the most developed country in the world – Britain.

For the second straight trading day, the shares of lender Northern Rock Plc (LON:NRK) plunged by more than 30% to 302 pence in late trading on London's FTSE 100 index, forcing the stock to be suspended briefly in the early Monday morning trading. Last Friday, its shares closed down 31.46% after the Bank of England (BoE) agreed to rescue Northern Rock, the fifth-largest mortgage lender, which fallen victim to the global credit squeeze.

BBC (British Broadcasting Corp.) reported that 1.4 million customers had withdrawn nearly 2 billion pounds (US$4 billion) over the counter or online from Northern Rock accounts on last Friday and Saturday, though CEO Adam Applegarth refused to acknowledge it. The Wall Street crash in the 1920s came haunting the depositors especially the old ones, so much so that people were frightened and reluctant to put their money into banks, instead they prefer to keep it under their mattresses once again – joked a depositor.

While Chancellor of the Exchequer Alistair Darling sought to assure depositors that their money was safe, former US Federal Reserve chairman Alan Greenspan add fuel to the fire and warned in an interview on Monday that British consumers were in for more pain as he predicted "difficulties" ahead in the country's housing market.

According to the Sunday Telegraph, one rescue plan involved carving up Northern Rock's mortgage book, totalling 100 billion pounds, and distributing it amongst other lenders. Even if Northern Rock can survives this round of onslaught by its depositors, the images of customers queuing up in the high street has done irreparable damage to the brand. With such fragile markets, everyone is watching Bernanke’s next move.

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Monday, September 17, 2007

Reasons why U.S. rate cut is a Bad Idea

By far you’ve heard and read why everyone was and is still chanting for the Fed to cut its key rate from the current 5.25% to 5% or even 4.75%, if Bernanke is serious in wanting to make the investors “happy”. The investors are threatening (sort of) to boycott the stock markets by not participating (buy shares or Call options) at all, as can be seen with the low volume. They might increase their pace in selling though – sell shares or Call options (or buy Put options), reasoning that the stocks could not see any reason to be bullish but every reason to be bearish.

The Fed funds rate of 5.25% has been stagnant since June 2006 and Bernanke has been ignoring these market urges (to cut rate) because the other data shows the recession is not to be seen, at least to the Feds chaimain. Due to the overwhelming chanting for the rate-cut, almost every financial analyst predicted the cut is a sure thing to happen on Tuesday 18th Sept 2007. As such Monday is expected to be a very very quiet trading day with almost “ALL” the fund managers staying sideline sipping their coffee or coke waiting for the result. A news portal even calls this week the “mother of all weeks” – a reference to the Tuesday’s FOMC meeting.

So, are there people who actually do not wish to see a rate-cut? You bet and I guess the concept of yin and yang applies to basically everything in this universe.Amongst the reasons why these people do not want Bernanke to cut the rate are:

• It would bail-out the stupids – yes, I know it’s a harsh-word but that’s exactly the word some analysts used. This group of people thinks that since it was the stupid lending companies which lent it to the people with little or no credit histories they have no one to be blamed except them-selves when the credit crunch began in 2007. Warren Buffett actually has the same opinion, though he was short of using the “stupid” word during an interview on “Warren Buffett on Housing Crisis and Presidency”.
• The U.S. economy is not weak – while housing is weak, it’s not across the board as can be seen in states such as California or Florida whereby the real-estate sector is still bullish. Consumer spending is still strong with McDonald’s Corporation reported the August’s sales were up more than 8%. And you simply have to read the multiple new orders for Boeing Company’s (NYSE: BA, stock) planes and its stocks performance.
• China and India’s economy is too strong – the global economies especially China is still very strong, so much so that the China had just recently raised its interest rate to cool off its economy. As such the strong demand for commodities (coal, oil etc) and finished goods could cushion the relatively weak U.S. economy. It could create potential new issue (funds out-flow) if U.S. cuts its interest rate when the Chinese is busy finding slots to increase its rate.
• It would increase U.S. inflation problem – already the U.S. dollars had fallen to record low against the euro. A lower interest rate might cause dollars to depreciate further and the purchasing power of U.S. to decline. Higher price of goods will hinder consumer spending due to the potential inflation hikes.

It’s a tough decision for Ben Bernanke to make as he needs to weight from both flip of a coin whether he decides to maintain, cut or even raise the interest rate. They don’t call the Fed Chairman’s position a hot seat for no apparent reason.

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Sunday, September 16, 2007

The Week Ahead – awaiting FOMC for direction

Next week will be an interesting week, especially with the FOMC meetingon Tuesday, 18th Sept 2007. Given the damage done and the meltdown in subprime lending, the expectation is extremely high from investors for Fed to cut interest rate.to help support the U.S. economic growth, which has indirect effect on the global stock markets with the exception of China. But there’re concerns that Bernanke might disappoints everyone again.

The more volatile household survey used for the unemployment statistics showed a 316K plunge in employment. Nonfarm payrolls fell from 138,041,000 in July to 138,037,000 in August - the decline of 4,000 is well within the margin of error. The average payroll gain in the past three months is just 44,000, with financial and construction sector announcing layoffs. The weak payrolls however are not happening across the the broader economy to other sectors. 

Another critical fact that cannot be ignored is that the consumer spending trends remain steady. Consumer spending is almost two-thirds of the GDP calculation and there is no obvious sign that it is declining. In a recession, consumer spending would have weakening. Furthermore, the argument that consumer spending has to fall given the decline in payrolls simply does not add up.

So while the economy is sluggish, it’s still far away from the “recession”.Bernanke just might lower the feds rate at 18th September’s meeting and will just stop and move in “slow-motion” thereafter onwards.

Saturday, September 15, 2007

BBC HardTalk too Hard & Hot for Malaysian Syed Albar

Iwas driving when I received a SMS from a number unknown to me; the content was quite lengthy so I just left it as it is. Upon reaching my destination I reached for my mobile to have a serious look and there it was a message to watch tonight’s “show” at 10:30pm (Malaysia time) on Astro Channel 93 which happen to be BBC World. It was suppose to be an interview with Malaysian Foreign Minister Syed Hamid Albar on topics about Indian and non-Malay ethnic’s rights.

So I waited for the clock to strikes 10:30pm, getting ready for the Friday’s “entertainment” with some cans of Coke, peanuts and some snacks (was watching Bloomberg live on the internet to get the pulse of the stock markets on Wall Street). The time passed but no Minister to be seen. So I thought someone must be playing a joke on me. But wait, maybe I should just do a Google Search (who says internet is useless?) on the keywords “bbc interview syed albar” and bingo I got the link of Sarah Montague talks to Dato Seri Syed Hamid Albar ...

What I missed initially was compensated with the link within the same page to watch the BBC HardTalk interview. It appears while the Astro (or Malaysian government?) tried to put a stop to the interview from repeat again (I guess the SMS was trying to say the 10:30pm show tonight is the repeat of yesterdays’) on Channel 93, BBC had put it up on their web. Cool, I clicked the pause-button of Bloomberg live and clicked on the newly found link with the speaker’s volume to the max.

What can I conclude from the whole interview is the fact that Syed Albar was trying his very best to beat around the bush, so much so that Sarah was bothamazed and frustrated with the minister’s attitude in trying to cocoon himself in the “denial mode”. I can sense that when the minister was grilled so much that he was trapped and pushed to the end of the wall; he used the same tactic of how the common ministers will do in Malaysia – tell the outsiders to mind their own business.

I bet Syed Albar is still kicking himself for agreeing to the interview, not that he didn’t want to in the first place considering the publicity he can get from his appearance on the international TV. He might thought he could beat around the bush, the same way he did to the local media, when tough questions were asked. Furthermore how hard could it be to handle Sarah Montague considering he’s the foreign minister with the eloquent tongue? But he was surely grilled to a piece of“well-done” steak, no doubt about it. Please do yourself a favor by getting a can of beer, coke or a soda together with fries or snacks before you click here towatch the BBC HardTalk interview. 

Update: Some readers couldn't view the above link as it runs on RealPlayer. Fortunately it has been uploaded into YouTube, you can click on below video to view it.

Friday, September 14, 2007

Oil price hike – Badawi’s greatest Economic Challenge

Human nature has it that once something is given it’s hard to take it back later. So, when the Malaysian government tried to win the hearts of millions of voters by way of subsidies little did the leader realize one day the same tactic will backfires. It was argued that the subsidies were necessary to help the poor especially in the agriculture sector during the initial developing stage. But somehow the subsidy mentality glued and refused to leave the mind of these same people who voted the current government.

To further artificially control the cost of living, fuel subsidy was introduced. It was alright back then when you have more money in the coffer than to spend on nation’s mega-projects, not that the country has zero debts like Singapore. But because of the bullishness in global economy especially in electronic and manufacturing, the spill-over went into stocks investing and property development. Everyone made good money, unemployment was low and the nation thrived.

Maybe the former premier Mahathir was lucky to be on the throne during the booming economy. Maybe he was smart after all and has business acumen on how to manage the country’s economy. Maybe he had with him a group of good advisors who gave good quality consultation and advices which made him looks like he was an all rounder great leader, corruption asides. Maybe he knew how to handle the people well and the psychology of slowly taking away something without provoking them. And so the fuel was increased gradually of 1 cent, 2 cents and so on but rarely tens of cents per liter. Inflation was kept on bay as hard as possible. The people didn’t felt much of the pain and you have to give respect to the former premier, who’s still walking and eating well despite his 81-years of age.

When the baton was passed down to current Prime Minister Abdullah Badawi, ready or not, he appeared to be ill-equiped with the basic Economy-101. Of course he scored the highest point in gaining more than 90% of the voters’ vote in 2004 election, but that was because he promised the corruption would be the last thing to happen in his administration. Despite the bullish and bearish (1997 recession) economy during Mahathir’s administration, people got tired with the mismanagement and wide spread of corruption and Abdullah Badawi was seen as the savior riding the white horse.

The rest is history – not only Badawi was seen as not keeping his word to wipe out the corruption, being a religious man he was, the premier also seen as theweakest leader ever produced. It could be said that the number of demonstrations staged against him out-numbered his predecessor Mahathir during his short 4-years in power as compare to Mahathir’s 22-years. Minus the huge demonstration against Mahathir during his sacking of his former deputy Anwar, the comparison is more obvious.

After Badawi’s infamous highest ever fuel price rises (30 cents per liter) in Feb-2006, political and civil groups organised demonstrations in the streets of the capital Kuala Lumpur to condemn the decision since Malaysia is a net exporter of oil, much to Badawi’s dismay. Abdullah Badawi, who is expected to call elections early next year, saw the inflation spiked spirally thereafter and his popularity drops to the current level of 70%. It was amusing to have leaders who told people to change their lifestyle and become “Smart Consumers” instead. But this is not his biggest challenge.

His biggest challenge could be on how he plans to deal with something which is beyond his control – the rise in fuel prices. As if the oil price is toying around with the prime minister, Badawi today said the Government will honour its promise to the people not to hike fuel prices despite world oil prices soaring to a record high of US$80 per barrel. That’s right, oil prices finished above $80 a barrel for the first time Thursday and gasoline prices rose as refiners reported production problems after Hurricane Humberto hit Texas.

Light, sweet crude for October delivery finished at a record $80.09, up 18 cents on the New York Mercantile Exchange. Hurricane (downgraded to tropical storm) Humberto added to the supply concerns by cutting power to several refineries in the Port Arthur, Texas, with another tropical system a.k.a. Tropical Depression Eight said to be gaining strength in the Atlantic. Tropical Depression Eight could develop into a hurricane and create havoc to the oil and gas infrastructure in Gulf of Mexico.

So, what could be the good news and bad news waiting at the doorstep of the people? The good news – the fuel price remains, for now till the election is over. Even if the magical moment of fuel price suddenly drop to below $60 a barrel overnight, the government will most likely not going to decrease the price as can be seen during some months back when the global oil prices were traded below $60 – citing the government was actually still subsidizing it.

The bad news – the government has no choice but to raise the fuel price, probably after the current fasting month and the Malay’s Hari Raya festival. Nevertheless, having learnt his lesson, Badawi might just have to live (or pretend) with it until his party successfully secured another majority win, even if the oil prices rises to $90 a barrel next month.

Other Articles That May Interest You ...

• StockTube's Article picked up by Wall Street Journal
• Reasons Why Oil Price might spikes to $90 and beyond
• Malaysia’s Biggest Scandal – Business as Usual
• More Signs General Election is Nearing
• Badawi is Still Dreaming – No Wonder Nation is Stagnant
• Does Malaysia PM Owns RM30 Million Yacht?

Thursday, September 13, 2007

StockTube's Article picked up by Wall Street Journal

The Labor Department reported claims for unemployment benefits rose by 4,000 last week to 319,000, the sixth increase in seven weeks, but less than the 325,000 claims analysts expected. As of writing, the Dow rose 155 points (12:22pm EST) to 13,446 while the Standard & Poor's 500 index rose 14.48, or 0.98 percent, to 1,486.04, and the Nasdaq composite index rose 13.08, or 0.50 percent, to 2,605.15.

The NYMEX crude oil seems to have back off from the high of $80 a barrel, now at $79.70 down $0.21, although there as a time when it hit a high of $80.12 earlier. And talk about oil prices, StockTube was alerted that the earlier posting today on"Reasons Why Oil Price might spikes to $90 and beyond" was picked up by Wall Street Journal under its article Attention, Crude-Oil Arbitrageurs earlier.

StockTube's article was highlighted under "Related Articles and Blogs" section, a screenshot was attached as on the left.

Anyway, there's nothing much to shout about, unless Wall Street Journal published the whole of StockTube's article (keep on dreaming StockTube). On the serious note, if the Dow could maintain the 3-figure positive gain well into the closing bell, tomorrow's regional stock markets including Malaysia should be open higher when the opening bell starts on Friday, 14th Sept 2007.

Meanwhile Bloomberg TV is talking about the big bet on oil price going into $100 per barrel. Such is the optimism on the energy price now. You can actually watch the "Live Bloomberg TV" on the internet, the link is located on the left-side of the navigation of this blog - go and find it if you're interested. Glueing yourself to the financial tv give you the advantage of knowing the latest happening in the stocks market. It would be extra fun if such a channel could be provided live for Malaysia's stocks market, but then the resources required for the production might be too much to handle.

Reasons Why Oil Price might spikes to $90 and beyond

Former Malaysia premier Mahathir once urged the Islamic countries to control their own destiny and at the same time show the true color of Muslim’s power to the western countries, particularly United States. The silver bullet was of course the huge reserve of oil which coincidently happens to be stored under the bed of Islamic countries. But using oil as the weapon in trade war (and political pressure) against U.S. is easier said than done.

Previously, any actions by OPEC (Organization of the Petroleum Exporting Countries) will affect the global oil-price in one way or another. And the reason why U.S. established friendship with Saudi Arabia, the country with the largest oil reserve in the world, decades ago is no coincidence. U.S. needs a presence in the land of unknown, the Middle East, to at least monitor and chip in some influences on the policy of oil output back then.

Saudi Arabia, being the de-facto leader or “big brother” amongst the OPEC countries could easily influence the oil price by way of increasing or decreasing daily oil production, and still can at today’s standard but the level of difficulty had increased. Everyone thought the oil production would remains before the Sept. 11 OPEC meeting in Vienna but increase it did.

Everyone was surprised, what more it was only six months ago when calls were heard urging OPEC to increase production but was ignored – OPEC was satisfied with the $60 per barrel level. And now after the Sept 11 meeting OPEC decided toincrease production of 500,000 barrels a day beginning 1st Nov 2007 to cool things off.

However the oil price continues to go up instead of coming down. On Sept. 12, U.S. light crude for October delivery briefly pushed above $80 a barrel ($80.18), before closing at a record high of $79.91 a barrel, up $1.68. There’re some factors which contributed to the bullishness of energy and the scary part is it might just cointinues to spike.

Oil Price to Soar - Contributing Factors

[ 1 ] Wednesday's weekly report from the U.S. Energy Department's Energy Information Administration said crude oil supplies fell 7.1 million barrels in the week ended Sept. 7, more than twice the average 2.7 million-barrel decline analysts surveyed by Dow Jones Newswires had expected.

[ 2 ] Speculative buying by big investment funds has created “backwardation” in the trading of oil futures, which means near-term futures prices are higher than at the back end several years away. For example the NYMEX front-month contract for October delivery is at about $79 per barrel, while prices for oil five years out are around $70 per barrel.

Such strategy has created a tight demand and speculators can make money by buying oil at the front end and then rolling over into cheaper oil as contracts expire (investors who buy now will end up with more oil contracts later).

[ 3 ] The OPEC Basket, which is composed of heavier, lower-quality crude oils, hit an all-time peak of $73.23 per barrel on July 19. Opec Basket usually trades at a substantial discount to the Western marker crudes.

[ 4 ] Low Supply but High Demand - Global crude oil production is over 1 million barrels per day lower than last year, while global demand is over 1 million barrels per day higher. It is estimated the demand is in the range of 1.5 million barrels per day in 2007 and 2008. According to Paris-based International Energy Agency (IEA) global oil demand is forecast to expand by 2.2% per year on average, led by Asia and the Middle East. Chinese oil demand will reach almost 10 million barrels a day in 2012, and China will only produce 3.9 million barrels domestically.

[ 5 ] Political uncertainties by oil producing countries – Venezuela, whose President’s aggresive move to wrest control of key oil projects from global companies has created some sor tof mess. Since President Hugo Chávez came to power in 1999, he fired 75% of the managers at state oil company Petróleos de Venezuela (PDVSA) after a strike in 2003, leaving PDVSA handicapped. Venezuela’s output has declined by about 25%, to 2.4 million barrels per day since. It was reported that life was so difficult that Exxon Mobil Corp.and ConocoPhillips walked off from Venezuela.

President Vladimir Putin’s energy policies have also contributed to the slowing growth in Russian output. Not only it forced BP and Royal Dutch Shell Plc into selling its stake in Kovykta and Sakhalin respectively, it’s now forcing ExxonMobil to do the same. The International Energy Agency says Russia's production may top out at about 10.5 million bbl. daily - well below the expected peak output of 12 million bbl. per day.

[ 6 ] Hurricane season - which begins June 1 and ends November 30, has a 75% chance of being above normal in activity. NOAA scientists predict 13 to 17 named storms, with seven to 10 becoming hurricanes, of which three to five could become major hurricanes of Category 3 strength or higher. Hurricane Humberto was upgraded to a minimal hurricane early Thursday morning, and made landfall over rural Jefferson County, Texas. The storm continues to spread heavy rain and increasing winds along the upper Texas coast.

[ 7 ] Potential military attack on Iran – while President Bush might be loss in ideas, certain powerful positions in Washington are seriously considering and justifying a military attack on Iran, the second largest OPEC producer. Whether there’re enough justifications to launch an attack is beyond the debate. For the sake of political and business profit potential, something could be cooked up to justify it.

According to an analyst from Goldman Sachs, a bear market for oil is now $40 per barrel, not $10 as in the old days, while a bull market is $90. And since the bear marker already started from the end of last summer until the current shift in the price curve, it is expected the oil price is heading into the bull territory. 

Oil-Stocks to Monitor

Some of the oil-related stocks to be focused include:

• EOG Resources, Inc. (NYSE: EOG, stock) - explores, develops, produces and markets natural gas and crude oil primarily in major producing basins in the United States of America (United States), Canada, offshore Trinidad, the United Kingdom North Sea and other international areas.
• Transocean Inc. (NYSE: RIG, stock) - primary business is to contract these drilling rigs, related equipment and work crews primarily on a day-rate basis to drill oil and gas wells - specializes in sectors of the offshore drilling business with a focus on deepwater and harsh environment drilling services.
• Schlumberger (NYSE: SLB, stock) - an oilfield services company, supplying technology, project management and information solutions.
• GlobalSantaFe Corporation (NYSE: GSF, stock) - an offshore oil and gas drilling contractor, owning or operating a fleet of 61 marine drilling rigs, charges on a daily rate basis.
• EnCana Corporation (NYSE: ECA, stock) - is a holder of natural gas and oil resource lands onshore North America.
• Halliburton Company (NYSE: HAL, stock) - an oilfield services company and a provider variety of services, products, maintenance, engineering and construction to energy, industrial and governmental customers.
• Valero Energy Corporation (NYSE : VLO, quote) - owns and operates 18 refineries located in the United States, Canada and Aruba that produce refined products, such as reformulated gasoline (RFG), gasoline meeting the specifications of the California Air Resources Board (CARB), CARB diesel fuel, low-sulfur diesel fuel and oxygenates (liquid hydrocarbon compounds containing oxygen).

On the local front, some of the companies to benefit either directly or indirectly from the bullishness of oil price include:

• Kencana Petroleum Bhd (KLSE: KENCANA, stock-code 5122),
• Scomi Engineering Berhad (KLSE: SCOMIEN, stock-code 7366),
• Wah Seong Corp Berhad (KLSE: WASEONG, stock-code 5142),
• Muhibbah Engineering Berhad (KLSE: MUHIBAH, stock-code 5703),
• Pantech Group Holdings Berhad (KLSE: PANTECH, stock-code 5125)

# TIP: If you decided to do option trading, remember to buy option with time-value of at least six months expiration.

Possible Tsunami after 8.4 magnitude earthquake

CNN reported that at least three people are dead in Sumatra as a result of an 8.4-magnitude earthquake that shook buildings across Indonesia and sparked widespread panic earlier today. A small tsunami was detectedin Padang, on Sumatra - several hundred miles northeast of the epicenter, measured about 60 cm (2 feet high), much smaller than the devastating tsunami that struck in 2004 - according to the Pacific Tsunami Warning Center.

Indonesia's meteorological center said the small tsunami was not a concern and canceled its tsunami alert several hours after the quake struck, but it issued a new alert after a strong aftershock occurred at 9:40 p.m. (1440 GMT). The U.S. Geological Survey estimated the aftershock at 6.0.

The quake in the Indian Ocean shook buildings in Jakarta nearly 640 kilometers (400 miles) away from the epicenter off the coast of Sumatra and sent frightened people into the streets. Many buildings along Sumatra's western coast collapsed as the heavily Muslim country prepared for Islam's holy month of Ramadan, set to start in the coming days.

Wednesday's quake was about 10 times smaller than the 9.0-magnitude temblor that caused the giant tsunami off the northern tip of Indonesia in 2004 that killed more than 200,000 people in seven countries rimming the Indian Ocean. The quake was strong enough, however, to be felt in Malaysia and Thailand. High-rise buildings were evacuated in Singapore, 1,100 km northeast of the epicenter.

Meanwhile, the Malaysian Meteorological Department has advised people in the northern states of Perlis, Kedah, Perak and Penang to move away from beaches as a safety precaution against a possible tsunami .

Wednesday, September 12, 2007

Volkswagen sets to Control PROTON, in 5-years?

The old unsolved problems pop-up again, and this time Germany's Volkswagen (FRA: VOW) was reportedly wants to take 20% stake initially in Malaysian loss-making car-maker Proton Holdings Bhd(KLSE: PROTON, stock-code 5304). Volkswagen also wants to be able to raise its share to majority stake of 50% within five years, which makes business sense otherwise why bother spending money, effort and brains in reviving the Proton.

Reuters and local news reported that the proposal mooted by Volkswagen is for the Malaysian government to gradually pull out while taking on any losses during the starting phase of the partnership. Although it’s not clear the definition of “pull out”in this context, the government is required to settle all the losses before Volkswagen will pull in its’ resources in full-blown to assists its ailing partner.

The government might be required to “pull out” from its’ majority stake which currently stands at 59%, including a 43 percent stake held by its investment arm, Khazanah Nasional. It could also mean that the Malaysian government is required to "pull out" its management team from Proton in order for Volkswagen to have a clean and free hand in turnaround the company. For all you know the agreement might involves selling the controlling stake gradually to Volkswagen leaving the government with minor say ultimately.

But the question remains if the ruling government especially the backbenchers of UMNO, the biggest party component in the current ruling government, will keep quiet and not boycotts the partnership (or acquisition by VW?) considering Abdullah Badawi administration is rumored to call for a general election anytime soon. It depends very much on the timing and the full details of the partnership are not expected to be announced before the general election.

It could give Abdullah Badawi his biggest headache if the above proposal is true and materialized before the election as he could angers mostly Malay-ethnic who are the main employees of Proton, not to mention the reaction from former premier Mahathir who is well awake after his successful heart by-pass surgery last week.

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• New PROTON Model with Old Design Launched
• PROTON Saga Ending - VW as New Boss with 51%
• 5 Reasons Why You Shouldn't Investing Proton Stocks

Stock Markets – the game of Feeling, Perception and Hope

Traders had been hoping the Fed chairman, Bernanke, would give some indications during his speech to the Bundesbank, the German central bank, yesterday about the Fed’s next move. Not only Bernanke avoided the topic of interest rate, he instead talked about something else – the need for countries gloabbly to cooperate toward economic stability.

Yet, the Dow rose 180.54 points, or 1.38 percent, to 13,308.39. The Standard & Poor’s 500-stock index rose 19.79 points, or 1.36 percent, to 1,471.49, while the Nasdaq composite index rose 38.36 points, or 1.50 percent, to 2,597.47. The Russell 2000 index of smaller companies was up 12.46 points, or 1.62 percent, at 782.27.

Analysts pointed out that even though Bernanke didn’t say anything about interest rates, the Wall Street has a“feeling” that the interest rate cut is mandatory and the investors’ “confidence”in the cut has grown. This is yet again another classic example of how “perception” plays the major role in determining the short-term market direction. During the period of uncertainties, all the technical analysis and fundamental data are put into cold-storage.

Bonds fell as investors withdrew money to buy stocks, pushing the 10-year Treasury note’s yield up to 4.37 percent from 4.32. Generally the men on-the-street expects that the central bank would lower the overnight federal funds rate at least one-quarter of a percentage point, to 5 percent, at its meeting next week.

Ben Bernanke caution that the flood of cheap capital from abroad was likely to taper off in the decades ahead, possibly leading to higher interest rates, as countries like China save less and consume more. This leads some economists to believe that the flood of foreign money, some of it from investors seeking higher yields in the United States, contributed to the speculative bubble in housing prices and the explosive growth in high-risk mortgages that helped finance it.

Nevertheless the stocks markets globally still hope for the magic word from Feds and will definitely be relieve if Bernanke finally decides to cut the interest rate but if it doesn’t, another round of selloff will surely kicked in - only this time themagnitude will be enormous. 

Other Articles That May Interest You ...

• Bernanke Prepared to Act, Hint to Cut Rate?
• Chinese Banks adding fuel to U.S. Subprime Crisis
• The Man who can Change the Market's Tone - Bernanke

EPF withdrawal to Reduce Housing Loan Clarified

One of the grey areas has been clarified by the authorities regarding the mechanism on the EPF monthly withdrawal for reducing housing loans initiative proposed during last Friday’s 2008 Malaysia Budget. Today it was clarified that the said withdrawal will be credited directly into the contributor's personal bank account and not to the lending bank. Second Finance Minister Nor Mohamed Yakcop said the money could be used to either help offset the housing loan installment or for the contributor to afford a bigger or more expensive house. 

Supposing you’re earning RM3000 per month, then:

• Employee’s EPF deduction of 11% = RM330
• Employer’s EPF deduction of 12% = RM360
• Total deduction from above = RM690
• Account 2 (30% of total deduction) = RM207

The total contributed into account-2 (RM207 in above example) will be made available at your disposal since that same amount will be credited into your“personal bank account”. It was further clarified that contributors needed to go to the EPF to apply for the monthly withdrawal only once, and it would directly credit the money to their personal account every month.

The only condition is for the contributor to provide proof of his / her housing loan, fair enough. Compare to the previous option where contributors were allowed to withdraw money from EPF to buy computers (some creative contributors bought fake computer slips instead), this time the abuse is minimal. However it is hope that the EPF officers will be briefed in order for the processing procedure to be a smooth as possible.

However there’re concerns that contributors who are eligible to do so might use the money for something else. It’s human nature that when they see extra money in their banking account, their hands got itchy and use it to buy anything but paying the intended housing loan. Hence there’re people who think it’s best to credit the money into the door of financial institution instead.

Eventually it boils down to the discipline of the contributors (but how many has it?). Since it’s their own money, they should be wise enough to decide whether to do the right thing or to screw up the thing. Personally I think this is a great move simply because it’ll reduce the total cost of owning your sweet home, without which the amount you paid at the end of the 20-year (for example) loan period will be much much more than what you earned from the pathetic annual dividends declared by EPF should you chose to instead keep it with EPF.

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• Malaysia 2008 Budget Rumbling
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Tuesday, September 11, 2007

9/11 – Two Towers Crashed; 9/08 – Two Civilians Shot

Relatives of Sept. 11 victims bowed their heads in silence on Tuesday to mark the moments exactly six years earlier when hijacked planes crashed into the World Trade Center, the Pentagon and a Pennsylvania field. A memorial honoring Flight 93's 40 passengers and crew began at 9:45 a.m., shortly before the time the airliner nosedived into the empty field.

Construction equipment now fills the vast city block where the World Trade Center once stood, and work is under way for four new towers, forcing the ceremony to be moved away from the twin towers' footprints for the first time. For the first time, the name of a victim who survived that dreadful day but died five months later of lung disease blamed on the dust she inhaled was added to the official roll. 

The month of September is surely a month that brings in sad memories. While the people of U.S. are marking the anniversary of the terrorist attacks this morning with sadness, another group of people located thousands of miles away are still trembling from the after-shock of the riot that occurred at the homestate of Malaysia reigning Agong, Terengganu.

September 8th was the day when the riot occurred that saw the police shot and seriously injured two opposition supporters, aged 21 and 38. While the oppositions said they’ve been immuned with the water cannon and tear-gas that greeted them on numerous occasions, they are shocked as this was the first time “live bullets”were sprayed on them.

Earlier the Terengganu police chief claimed only one shot was fired, a statement which was doubted and questioned as two persons were shot, but then revert that two bullets were fired. However in a latest twist, the police chief contradicting himself when he admitted four shots were actually being sprayed – reportedMalaysiakini.

Meanwhile an urgent motion was rejected by the Dewan Rakyat speaker Ramli Ngah Talib today who said while the matter (the bloody incident) was of public interest, it was not an urgent matter that needed to be debated and discussed in the House. Gosh Mr Speaker! You meant two civilians were shot by a police yet it’s not urgent enough? Maybe the speaker Ramli thought two innocent lives are not comparable to thousands of lives that perished in the Sept. 11 incident, hence there’s no urgency.

So can you see the similiarity? On 911 (Sept. 11) you witnessed hijacked planes crashed into “two” towers while on 908 (Sept. 8) you saw policeman pumped bullets into “two” innocent civilians. While certain people of the United States claimed that the 9/11 incident was engineered by President George Bush, can the same be said about the 9/08 incident? At least the opposition believes the riot was orchestrated and provoked by the government.

Guess September is not a really prosperous month after all!!

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• Red Blood Everywhere – Stock Market and Social Clash

Stock-brokerage fees debate – a Win-Win solution

Some retail investors are unhappy over the higher costs in investing in stocks after the minimum brokerage charges are increased by about 233% to RM40 per transaction from the current RM12 effective 1st Jan 2008. Local news provider theStar also reported that the increase would have a significant impact on small traders who would be discouraged from trading as frequently as before.

Another retail player in his e-mail concurred, saying that based on a brokerage rate of 0.7% per transaction, investors would have to buy shares worth more than RM5,715 each time to avoid being hit with higher broking charges compared with RM1,715 currently. The charges would make trading in penny stocks unattractive, especially if investors wanted to buy in small quantities - reported bizStar.

For an investor buying 1,000 shares of 50 sen each totalling RM500, the RM40 brokerage fee would translate into a transaction cost of 8%. As such, the price of the stock would have to gain at least 10% for the investor to make a meaningful return on investment. An industry observer said investors might lose interest in low-priced shares given their high break-even level.
For further illustration, the break-even price for 1,000 shares of RM1 each based on the new brokerage fee would be above RM1.04 per share compared with RM1.012 at the current minimum charge of RM12. This is excluding the stamp duty and clearing fee.

However, Remisiers Association president Sam Ng said the increase in broking fees would also help curb speculative trading, hence, providing price stability. “We want to encourage investors to hold for a longer period to see an appreciation instead of trading for the short term, which creates volatility. Volatility does not help instil investor confidence,” he said.

Well, correct me if I’m wrong but I thought speculative trading is what remisiers (or punters) are looking for as it increases volume, volatility and hence the commissions. Assuming there’s limited speculative and only value investing (you can’t totally eliminate speculation in stock markets), even the increase of commission by 233% might just make the whole thing back to square one, with lower volumes “neutralize” the previous RM12 per transaction fees (but high volumes).

The Key Ingredient and Suggestions

On the other hand, if indeed the percentage of retailers buying in small quantities is negligible and most of them actually bought in large number of shares, then no doubt the new RM40 per transaction fees will increase the revenue to both broker house as well as the remisiers. Regardless of how you debate on this issue, the main ingredient here is the volume. Without volume, the remisiers will suffer the same way before the so-called mini bull-run started, during those days when the daily volume hardly breached 500 million shares.

Maybe Bursa Malaysia could implementdual system of brokerage fees, one for traders or investors who wish to perform their own trading leveraging on STP (straight-through-processing) via internet trading (without going through remisier but instead dealing with the broker house directly) while another option for investors who require remisiers to“assists in executing” their trades. For the former, implement a competitive flat rate whereas for the latter the brokers can continue to charge the RM40 or whatever higher fees per transaction. This will kill two birds with a stone – create volume as well as to ensure remisiers could “survive” (for those who can hardly now).

What do you think of the plan above – remisiers, traders, stock-brokers and Bursa Malaysia? I can see remisiers will object as the plan creates an “option” to retailers, who might bypassing them. Nevertheless looking at the long-term and the prospect of high volume resulting from continuing speculative trading, the plan suggested by StockTube might just work, no? Anyway constructive feedbacks are mostly welcome.

To add more spices, simplify the process of opening new account which can be done via internet so that anyone from anywhere can trade the Malaysian’s stocks. Too complicated, troublesome and have no idea where to start. Go and consult InteractiveBrokers, OptionsXpress, E*Trade and so on. If Bursa Malaysia can open up this new channel of business, then Malaysia can shout “Malaysia Boleh” because currently Singapore “Tak Boleh (cannot)” do it … yet.

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Who’s the New Buyer for 12% stake in DIGI.com?

It appears the Norway’s Telenor ASA (OSL: TEL) will have no choice but to follow a Government directive to cut its stake in mobile phone operatorDIGI.com Berhad (DIGI : stock-code 6947) by the end of the year. Energy, Water and Communications Minister Lim Keng Yaik said that the company would not be given another deadline.

Telenor which was given a year extension earlier must now cut its holdings to 49 per cent from 61 per cent currently by end of 2007. CEO Jon Fredrik Baksaas said last month he was in talks with Malaysian authorities to find a solution, possibly by extending the exemption, which is due to run out at the end of this year.

Considering the floating shares of 750 million in the stock market, a 12 percent stake would cost a whopping RM1.746 billion based on the current DIGI.com share price of RM19.40 a piece. Who on earth would have such a financial strength to purchase the shares?

It was reported that CIMB (Commerce International Merchant Bankers), an investment bank of Bumiputra-Commerce Holdings Berhad (KLSE: COMMERZ, stock-code 1023) would be the banker to arrange for the selloff. A mere 1 percent of commission from the selloff will bring in RM17.46 cool profit to CIMB. Are you still wondering how CIMB’s staff could enjoy bonus from 12-months onwards? Go and join CIMB if you’re looking for the best yearly bonus a company can ever give you.

Just how much is RM1.746 billion? As a starter, Telenor can acquire 100% of Time Engineering (KLSE: TIME, stock-code 4456) which will cost only RM534.92 million based on current share price of RM0.69 per share, leaving Telenor with more than RM1 billion extra for further shopping. Time Engineering holds 40.68 percent stake in Time DotCom, the loss-making but was awarded a 3G license earlier.

Alternatively Telenor can go on a buying spree and gain access to the 3G license by acquiring the controlling 51% stake of Time DotCom Berhad (TIMECOM : stock-code 5031) for a cash of RM1.42 billion (based on RM1.10 per share), still have extra money to be wired back to Norway. Of course the above are just for fictitious illustrations purpose as foreigners are not allowed to hold more than 50% stake in Malaysia. Telenor will most likely repatriate the money back home after paying the tax.

Or maybe there’s an arrangement made between Telenor and the government to retain the money by allowing Telenor to do some sort of “diversification”?RM1.746 billion is a lot of money when comes to currency exchange losses, but then compare to PKFZ’s scandal of RM4.6 billion, maybe its just chicken feed.

Who has the deep pocket to acquire the 12 percent stake? Many, if you’re talking about foreign buyers. Not many, if you’re looking for local purchasers. You can count on PNB (Permodalan Nasional Berhad), EPF (Employees Provident Fund) or Khazanah to buy the stake. Probably some Middle-Eastern investors already had been identified as the buyers.

Other Articles That May Interest You …

• What if Telenor refuse to sell-down DIGI.com?
• Malaysia’s Biggest Scandal – Business as Usual
• China Mobile the Actual Rescuer for TIME?
• DIGI - If You Can't Beat Them, Suck the Coffer Dry

Monday, September 10, 2007

Warren Buffett on Housing Crisis and Presidency

Just what does the legendary investor Warren Buffett thinks of the current real estate or housing crisis in U.S.? Is it for real? Are consumer still spending? As far as politic is concern, Warren doesn't support either Clinton or Obama but the chairman of the most expensive listed company, Berkshire Hathaway, sure has something to say about Obama.

Other Articles That May Interest You ...

• Warren Buffett the upcoming RailRoads Tycoon?
• It's Hunting Season for Warren Buffett
• Warren Buffett's New Taste in Railroad Stocks
• Warren Buffett Is Hiring - Young CIO
• Berkshire Buffett Is UnStoppable
• Warren Buffett Part 1
• Warren Buffett Part 2

Red Blood Everywhere – Stock Market and Social Clash

As expected, Malaysia Stock Market nose-dives in early trading on Monday taking the cue from last Friday’s Dow Jones almost 250 points losses.Couple with uninteresting budget revealed last Friday by Prime Minister Abdullah Badawi, investors couldn’t find any reason to buy in big ways. Mostly are waiting on side-line waiting to see if either U.S. market will behaves or the government will announce additional goodies.

This week is expected to be a debate week for Malaysian corporate figures as well as politicians to further market how responsible the budget was and don’t be surprise to hear more flowerishlanguages frontpaging the government-controlled media. As data showing the first monthlydrop in payrolls in four years stoked fears on Wall Street that the economy was headed intorecession, the Malaysia government is finding it hard to please the stocks investors that the country is not affected by crisis in U.S. 

While the government officials were busy preparing for the next topic of budget-tale for publishing in the central of capital, clash was reportedly occurred hundreds of miles away at oil-rich northeastern state of Terengganu on Saturday night. The news of the clash was blackout from government-controlled media (until today, Monday) even though it was widely published on blogs and opposition websites.Malaysiakini was one of the blogs which reported how police used live bullets on crowds.

The riot was sparked when police ordered the crowd of 500 people gathering at Jalan Sultan Mahmud, close to Batu Burok, to disperse peacefully at 10pm. Seven people were injured, two with gunshot wounds, when opposition supporters clashed with police – reported theStar. It was claimed that despite five verbal warnings, the crowd became aggressive and verbally abused the Federal Reserve Unit personnel and later hurling stones, homemade bombs and Molotov cocktails at police. 

Police retaliated with tear gas and water cannons and in the melee, shots were fired injuring two opposition supporters, aged 21 and 38. The two have been hospitalised. One is in serious condition with a neck injury at the Kubang Kerian Hospital in Kelantan. State news agency Bernama said that 23 people had been detained and that seven, including four policemen, were injured.

However rumor has it that a policeman or FRU officer who infiltrated into the crowds as plainclothes officer was discovered and attacked with stones by a group of people before the officer whipped his gun – and all hell breaks loose. Nevertheless this is the first case of Malaysian police fired “live rounds” to quell a riot, in a country that require police approval or permit to stage rallies but often rejected despite numerous application by opposition parties. Strangely the ruling party will never get rejected by the police whenever it needs to hold rallies.

"It was police who attacked the civilians … It was a peaceful rally … Police set up all the road blocks around the area with water cannons … Then suddenly in the middle of the night they started using water cannons on people" said Kamarudin Jaffar, a leader of Islamist party Parti Islam SeMalaysia (PAS), saying the rally had been staged by PAS, other parties and non-government bodies to call for free and fair elections.

The riot which gained international coverage including Reuters is another sign of rising social tensions in Malaysia as the nation moves into election mode. Opposition parties in Malaysia might be split along racial lines but are united in complaining that the electoral system is rigged against them with years of claims of phantom voters – deadman found to be voting.

Other Articles That May Interest You ...

• Malaysia 2008 Budget Rumbling

Sunday, September 09, 2007

Malaysia 2008 Budget Rumbling

As usual, after Malaysia Prime Minister Abdullah finished his 2008’s Budget speech last Friday (after heavy coughs in between), you can bet your last penny all the cabinet members will praise how great the budget was. All the ministers never fail to amuze me and perhaps everyone on the street, as they (ministers) seem to sing the same old praise song repeatitively on annual basis. So, was the budget this time really benefits the people who voted the current government? Let’s see:

Corporate Businesses

Corporate tax reduced to 25% in 2009 – obviously this reduction is good for local businessman as they’ll pay less tax, though not necessary will translate to better productivity by passing the same quantum of benefits to its employees. If the intention is to maintain or wrest foreign investors into the country, this might not work too well, considering neighbouring countries such as Singapore has a lower tax bracket. 

Besides lower tax and other incentives, foreign investors are putting other factors such as red-tapes, efficiency, transparency, good-governance, fair-policiesand to a certain degree crime rates into consideration as well. I still don’t see why foreign investors will be super-interested in local REIT sector with the racial policyof minimum 30% Bumiputra ownership requirement.

Housing 

50% stamp duty exemption for house purchase not more than RM250,000 per unit – a good move though I can bet most people (buyers & developers) will ask why not abolish it 100%. Besides, house buyers still need to fork out huge amount of dollars for legal fees, not to mention the bulk of the cost in owning the house will actually goes into serving bank interest of which the rate is not low either. 

Of course, you might argue that the kind-hearted government now allows you to make monthly withdrawals from the balance in Account 2 to reduce housing loans. Does this new measure serve any purpose since the existing policy allows EPF contributors to withdraw “all money” (or balance of the loan whichever lower) from Account 2 once a year to reduce housing loans? The quantum of monthly withdrawal allowed is not known (though I still wonder till today why it wasn’t presented) but unless you can withdraw maximum amount required to pay “monthly installment”, it won’t help much, would it?

Lower Education

As for tax exemption for primary and secondary Chinese and Tamil schools, these schools should not be taxed at all in the first place. Not only the government didn’t chip in a single cent while these schools were busy begging for donations from public and depends heavily on charitable bodies (mostly Chinese and Indian businessmen and associations) in order to run the schools, the government also “steals the IP (intellectual property)” from these schools – to borrow a statement from former premier Mahathir who recently claimed that developed countries should pay for stealing so-called talents and thus IP from developing countries which spent huge amount of money and time in providing the education for its own citizens.

Text Book Loan Scheme will be provided to all students - irrespective of their families’ income. And annual fee for primary and secondary schools will be abolished. But shouldn’t the government provide “free” education if it’s serious about developing human capital? Furthermore reducing RM4.50 annual fee for primary school and RM9.00 annual fees for secondary school is nothing to shout about.

Note that with the new goodies, the lower education is not free yet, it’s just“almost free” – you still have other miscellaneous fees which might eats up into the poor’s pocket. Remember the case of how a student who was so poor that his mother has to cut the pencil into two so that it can be shared with other brother and sister, only to be teased by the teacher that the student ate the pencil because he was hungry resulting in the student commited suicide?

Higher Education

Tax relief of up to RM5,000 on education fees to all post graduate studies might be one of the most attractive goodies for working people who desire to climb the corporate ladder which might require you to have a Master degree nowadays. Again, with the average course fees ranging from RM20,000 to RM40,000, depending on which university that offer it, the 5K might looks like chicken feed. 

PSD sponsored students in loca universities to be doubled from current 5,000 to 10,000 annually should be lauded. But instead of pushing for quantity, the government should admit there’s serious problem with the quality of the graduates generated from the mill nowadays with thousands of them not being able to find employment. Either they’re “not employable” or the government did a lousy job in administering the country that“unemployement” hits record high – please pick your choice.

The cheers could be heard both locally and thousands of miles away when the premier announced the increament of COLA (cost of living allowance) between 23% to 84% and almost 100% for students in local and overseas universities respectively. How many non-Bumiputras actually benefits from such move? Not that they’re eager to come back to serve the country after their studies. Heard of how these students studied for years but yet to graduate, even got married and have kids mind you, simply because they purposely fail their papers in order for them to “continue their studies” (forever), while staying at the comforts of the rented home enjoying the allowance for years?

Youth and Sports

Everyone was surprised with the individual tax relief of up to RM300 a year be given on the purchases of sports and exercise equipment. Great step in encouraging healthy citizens. I would be still interested to know the scope of equipments that I can buy to claim the relief, does golf set or slimming sets count? 

Aren’t it pathetic to allocate almost RM1 Billion to implement so called sports programmes, including RM677 million for training of 110,000 youths under theNational Service Training Programme only to have multiple deaths reporteddue to unknown and suspicious reasons? You might start asking yourself whether you’re actually sending your son or daughter to die in the camp, not to mention themultiple corruptions or misuse of the funds. The business of providing equipments under such program is simply too lucrative.

And talk about Youth and Sports Ministry, you should read today’s news on how the consultants for the Youth and Sports Ministry had reached an estimated price tag of RM399.67million for the equipment for the IKBN (National Youth Skills Institutes) project which later ballooned to RM767.98 million after two appeals by the ministry for additional allocations. And guess where the extra money ballooned went to. Consider this:

• Technical books (market price = RM417 per set) was billed for RM10,700 per set
• A set of 3 plastic vases (market price = RM5.20) was billed for RM42.80
• A 2-ton car-jack (market price = RM50) was billed for RM5,741
• A set of average screw-drivers (market price = RM40) was billed forRM224.94
• A 3.1 megapixel digital camera was billed for RM8,254

Internet Trading

Minimum broking charges per transaction will be fixed at RM40 from RM12 previously and clearing fees be reduced to 0.03% from existing 0.04% with a maximum fee of RM1,000 were proposed. I won’t mind paying if the broker’s remisiers or dealers can add value by providing me with quality advice. But to pay minimum RM40 per transaction for the no-brainer advice such as “buy this stock because it’s going to fly soon but don’t ask me why” is simply outrages.

As comparison, I’m paying USD1 dollar (RM3.50) per contract trading U.S. options via internet trading, though some other broker houses charge slightly more than that. That’s the cheapest brokerage fees I can get with super-fast speed in trades execution. To add salt into wound, I can sometimes get cheaper rate (less than USD1 per contract) during promotion period. So, Malaysia’s internet stock trading still has a long way to go dude.

Where the credit is due it should be awarded. So StockTube think the stock investors would appreciate that the government has stopped robbing investors of the dividends paid by companies. The removal of dividend tax will give better investment returns to shareholders. Hence, high dividend-yield stocks will stands to gain with new interest from investors.

Conclusion – I believe citizens are still hoping that the huge allocation for Education Ministry (RM30 billion), Public Transportation (RM12 billion), Public Safety (RM6 billion) and others will not go to waste (or corruption or misuse) as most of the money came from hard-earned taxpayers’ money (42.5%).

# Note: StockTube has started yet another poll on what you think of the Malaysia 2008 Budget revealed last Friday. Have fun voting (located on right side navigation bar of this blog, just scroll down)

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• Budget 2008 Live Update from StockTube
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Friday, September 07, 2007

Budget 2008 Live Update from StockTube

StockTube is determined to update as fast as possible the summary of the main ingredients of Budget 2008 as it broadcasted here. This entry will be updated continuously. So here you goes:

• Corporate tax reduced to 25% in 2009 (26% for 2008 remains)
• Single-tier tax system - profits are only taxed at the company’s level and dividends received are exempted from tax.
• All professionals and consultants required to pay service tax.
• Foreign ownership on fund management companies and REITs will be allowed up to 70%, with minimum Bumiputera ownership requirement at 30%.
• For the purchase of house of not more than RM250,000 per unit - a 50% stamp duty exemption on documents of transfer.
• Text Book Loan Scheme will be provided to all students - irrespective of their families’ income. Annual fee for primary and secondary schools will be abolished.
• Primary and secondary Chinese and Tamil schools - income tax exemption (yeah right, as if these schools are making tons of money now). How about private education or colleges of which most of the non-Bumiputras acquire their training and education?
• Tax relief of up to RM5,000 on education fees to all post graduate studies.
• Effective 1st Jan 2008, EPF contributors are allowed to make monthly withdrawals from the balance in Account 2 - for the financing of one house (the quantum is not known though).
• RM677 million is provided for training 110,000 youths under the National Service Training Programme - no wonder the authorities do not care despite numerous death occured to the youths. The program is simply too lucrative.
• Individual tax relief of up to RM300 a year be given on the purchases of sports and exercise equipment - does this includes slimming equipments *grin*?
• Internet trading and cash upfront transactions will be fully negotiable. Clearing fees be reduced to 0.03% from existing 0.04% with a maximum fee of RM1,000. Minimum broking charges per transaction will be fixed at RM40 from RM12 previously (effective 1st Jan 2008)
• The worst part - NO PERSONAL INCOME TAX CUT? Well, I'm sure you guys who are tax-payers out there are not going to like this. Does this means the government doesn't needs your votes?

Conclusion - Except for the monthly EPF deduction of which the quantum is still in grey area, this budget would be more bias towards trying to attract businesses especially Islamic financial services and insurance. No doubt it's a short, simple, unexciting and no-brainer budget (don't you pity Badawi who had been coughing non-stop during the presentation) without much meats to the people on the street.

And based on the wish-lists collected from StockTube's readers via poll, most of your wishes won't come true. You will still have to pay top dollars for private medical cares (unless you want to rush and queue with others at government hospitals), spend tens of thousands of dollars for basic education in private colleges simply because the government quota system says you're not eligible (but you can be assured of university seat overseas) and no increase in relief for your kids or wife(s). Maybe the government's pocket is too tight this time.

# NOTE: Government will be spending RM176.9 billion for fiscal year 2008

# Update: Deputy prime minister Najib hinted that not "ALL" must be announced during the budget. At the same time during the questionaire session with journalist broadcasted at 8pm news, Najib also hinted the civil servants might get their bonus when the time is "right". If you smell rats, that's because the bonus might be the carrot to be given a week or two before the general election date is announced. So watch out for the bonus announcement as it gives indication to the date of the coming election.

Other Articles That May Interest You ...

• Budget-2008 – Poll Result and what you might Get
• Pre-Budget 2008 – What’s your wish? Take a Vote
• Budget 2007 with New Tax on Everything - GST
• More Signs General Election is Nearing

Budget-2008 – Poll Result and what you might Get

In less than 4 hours, Malaysia Prime Minister Abdullah Badawi will present his budget for the year 2008. Expected to be Election-Budget, the budget is expected to contain lots of goodies or sweeteners to appease voters - especially to the civil servants who constitute the bulk of the voters.

StockTube had on Tuesday, 4th Sept 2007, opened the Pre-Budget Poll inviting all the readers to participate and contribute their wish-list (Pre-Budget 2008 – What’s your wish? Take a Vote). Below is the summary of what the readers would like to have based on the 6 choices randomly selected by StockTube. Interestingly nobody present their wish other than the one prepared, even though there’s an option for “Other” of which readers can type in their wishes.
So, what can we conclude from this little simple poll? Quite a number, if you were to analyze it out of the box.

• Firstly, based on the number of votes against the actual readers, it is assumed only 20% of the readers actually care to vote. Either the readers are ignorant about how the budget could affect their life or they simply don’t care to vote brings us to another question. Does this co-relate to the actual pattern of voters in the coming general election? Could this translate to the fact that only 20% knows what or who they’re voting for during the general election with the remaining 80% are fence-sitting voters?
• Secondly there’s no doubt the majority of the voters would like to see theirpersonal income tax be reduced – kinda no-brainer considering that nobody likes to pay more tax to the government.
• The second place has 3 winners namely reduce costs on medical expenses, higher relief for wife and children and reduce corporate tax. This result also means voters are aware or already bitten by the escalating costs of health-care and at the same time hope to have more take-home-money from the immediate family-members’ relief.
• Surprisingly EPF withdrawal for housing loan was the least thing the voters hope for. Talk about financial freedom, besides cutting debts on credit-cards, do you know that housing loan is the one actually eating your fortune slowly but surely? Ever heard of paying twice the amount of money for one house? It simply means your house’s interest rate is so venomous that at the end of the payment, you’ve actually paid 2 times the house value when you initially bought it. So you bought the house or condo for RM150,000 and at the end of payment period, you discovered you had paid RM300,000 to own the property. It’s pointless putting the money in the EPF as they pay pathetic annual dividend and since most housing loan is based on daily interest rate, the sooner you settle the loan the better.

Meanwhile, speculations on the street of what could be coming out from the mouth of permier Badawi are the following:

1. In a further boost for house buyers, he is likely to announce further reductions for stamp duties. Allowing more withdrawals from EPF accounts for home purchases could be on the card. For existing house owners, talks is in the air that the government will introduce a mechanism allowing EPF contributors to make monthly deductions, the same way as how Singaporeans are doing now. Funny that the government didn’t see this as a good way to improve house-ownership after decades Singapore implemented it. But then maybe the money is better on EPF’s (or government?) pocket than on contributor’s pocket.
2. Unlikely sin taxes would be imposed again since the government had recently raised excise duties - Smokers and drinkers to benefits.
3. Goods and services tax (GST) to be put on hold temporarily due to the timing of the coming election. GST would burden consumers which would be unfriendly with the general election.
4. On corporate tax, it is almost certain that Abdullah would announce another 1% cut, from 27% to 26% in tandem with what he proposed earlier.
5. Policies to improve households' disposable income such as reduction in personal income tax, probably from existing 28% to 27% in 2008 and further reduction to 26% in 2009, inline with corporate tax. Rumor said there could be a cut in employees' contribution to the Employees Provident Fund (EPF) of up to 2%, which will release RM2 billion in disposable incomes per year.
6. Government might consider providing higher personal tax relief as well as relief for spouses and childrens. Currently parents are allowed a deduction of RM800 per child, which is pathetically low considering the high cost of education.
7. To fight escalating crimes, government was reportedly might adopt London-style camera surveillance system where thousands of cameras are installed to deter criminals. But again, transparency in calling for tenders and efficient execution and implementation are still the grey area.
8. Possible announcement of another round of good bonus for civil servants.

Meanwhile the Customs Department will operate two budget hotlines to enable the public to make enquiries on taxes. Both hotlines at 03-8882 2407 and 03-8882 2412 will be open from 3pm to 10pm today and from 8am to 5pm on Saturday. Enquiries can also be made through facsimile at 03-8889 5884 or via e-mail tobajet2008@customs.gov.my.

According to Aseambankers, REITs, construction companies, property developers and consumer companies are likely to be the key beneficiaries of Budget 2008 - helped by the relaxation of rules, incentives for home buyers and higher household disposable income. Its top pick for REITs are Axis REIT, Quill Capita Trust and Atrium REIT. Top picks for construction firms and property developers include WCT Engineering, Sunway City and Sunrise, and for consumer companies, KFC, AEON, Amway and QL Resources.

Other Articles That May Interest You ...

• Pre-Budget 2008 – What’s your wish? Take a Vote
• Budget 2007 with New Tax on Everything - GST
• More Signs General Election is Nearing

Thursday, September 06, 2007

No fees but shareholders fuming Ling Chicken Out

As expected the Transmile Group Berhad’s (KLSE: TRANMIL, stock-code 7000) shareholders’ meeting (AGM) yesterday, Wednesday 5th Sept, was conducted in a relatively calm and smooth environment as compared to the recent MIC’s Maika’s meeting. At least you don’t see bleeding shareholders coming out from the meeting room.

However it would be strange if the shareholders who attended Transmile AGM put on smiling faces with full of praises for the management. How do you expect the shareholders to behave after their hard-earned money was literally wiped out due solely to the mismanagement? I would consider the action of “angry” minority shareholders who voted against paying directors of Transmile Group Bhd for their services last year as a mild one, not that those irresponsible directors care a bit about their fees.

The decision by Transmile in engaging six policemen and several security personnel for the AGM might be overdone. Hey, we shareholders want efficient, responsible and above all transparent management. Not some idiots who spent tens of years getting their tertiary education only to start cooking and boiling the accounting figures hoping to fool everyone. 

And definitely not having a chairman who claimed he was “invited” into the chairmanship position because of his previous wide experiences and contacts as the transport minister, boasted about how he help getting some landing rights and only decided to quit after putting the house in order. Trying to make himself as a hero who saved the day? 

Well, it sure doesn’t takes a rocket scientist to understand that the former chairman chicken out as he knew he would be red-faced out of embarrassment simply because the shareholders will continue to bombard him with questions he couldn’t answer. Leaving the problems solely on the shoulders of the new management is the worst thing a former leader (or was he one?) can do, not to mention he has not shown a bit of regretful over the whole accounting scandal.

“BusinessTimes reported one shareholder who said "We can't ask much (about what happened) can we, the chairman has run away, not bothering to even meet us, these (the board of directors) are new people … I wanted to ask if this is the work of a reputable man, to leave without speaking to us shareholders"

Meanwhile, Minority Shareholder Watchdog Group chief executive officer Abdul Wahab Jaafar Sidek said Ling Liong Sik should have stayed for the AGM and answered questions from shareholders and then perhaps steps down if he wanted to. "It would have been rougher for him, perhaps, but it would have been the right thing to do considering all that has happened," he said.

Ling might managed to hide under his former boss’s, former premier Mahathir, shadow when he screwed up big times while he was a politician but when comes to real corporate world where every single cent is accounted for, he only has the“exit door” to go, what more with the no-nonsense businessman such as Robert Kuok.

Other Articles That May Interest You ...

• Learn from Mistakes - better days ahead for Transmile
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• TRANSMILE in Loss since 2005, Lower 2004 Profit

MarketProbability - new tool for Technical Analyst

New stock players tend to jump into the river full of crocodiles, without knowing what was waiting them at the other side of it. With the tips floating around and the envy in seeing friends making money, it was little wonder why only 5% of traders or investors are making money. Along the way of learning the rough sea and paying tons of money in tuition fees, new players started to know what technical and fundamental analysis is.

Technical analysis specialization alone will take you months or even years to master based on the number of technical indicators available out there. The biggest problem with technical indicators is – it is useless on its own, most of the time. So you can see several indicators were being used as a mixture to actually qualify the direction of the market trend.

There’s yet another way to make money investing stocks. MarketProbability has its own methodology which is quite different from conventional technical analysis. It uses historical price action of which it apply a set of technical indicators on it and by measuring their relative predictive contributions, MarketProbability claimed it will then form an unbiased composite estimate of profit potential over the desired trade period.

Whether the methods work or otherwise, you’ve to read their historical test result.MarketProbability offers 30-day trial period though, so if you’re already a self-claimed expert in technical analysis and would like to jump into another higher level, you might want to learn more about MarketProbability. 

*sponsored*

Apple Slashes iPhone Price – Steve wants quantity

Boy - was I lucky or what? I’m referring to my decision yesterday to lock-in profit on Apple Inc.’s (Nasdaq: AAPL, stock) trade. I’ve put in my thought why I close the position on AAPL Oct 130 Call in my entry at “Taking Money off the Table before Apple Special Event”.

And so Apple plunged more than 5 percent after the whole so-called “Special Event” which started at 1:00 E.T. ended, closing at $136.76, down a whopping $7.40 (in extended trading, it lost another $1.01). The reason - Apple Inc. slashed the price of the top iPhone by $200 to bolster holiday sales, surprising almost all investors as the steep price cut was done in less than three months after the iPhone's launch.

While this angered loyal customers who paid top dollar for the cool iPhone since it launched, investors were seen punching their keyboards in lightning speed selling Apple’s shares with anticipation of lower profit from the iPhone’s sales. The 8-gigabyte iPhone will now cost $399 - one-third cheaper than when it went on sale in June 29. The 4-gigabyte iPhone, which sold for $499, however will be phased out.

The good news - anyone who purchased an iPhone within the past 14 days can get a refund under Apple's return policy – only if the item is unopened. The policy also allows for a refund of the price difference if a product was purchased within 14 days of a price cut and the owner has the original receipt.

Analysts pointed out that Apple is starting to learn the business of selling cell phone. Considering the world's best-selling cell phone, Motorola Razr, was debuted at $499 initially but can now be bought for less than $100, the cell phone sector is a totally different ball-game to Apple Inc. Maybe quantity is what Steve Jobs trying to achieve when he was quick to add that the company is on its way to selling 1 million iPhones in the United States by the end of September.

Meanwhile, the company also revamped its iPod media player lineup, introducing a model called iPod Touch that incorporates the iPhone's touch-screen and adds the ability to wirelessly download songs directly. It introduced a new version of the best-selling iPod, the Nano, which plays video – reported AP.

The iPod Touch is less than a third of an inch thick, thinner than the iPhone, and with the Safari Web browser will offer quick access to Google, Yahoo and YouTube. Announcing a partnership with Starbucks (Nasdaq: SBUX, stock), the coffee chain will let iPod Touch and iPhone users have automatic free Wi-Fi access to search for or buy digital tunes featured in U.S Starbucks stores that offer wireless Internet access.

For those traders who have been watching the Apple’s stock behavior after yesterday’s Special Event and had opened new position on Option Put, you have all the reasons to smile now *evil grin*.

Other Articles That May Interest You ...

• Taking Money off the Table before Apple Special Event
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Taking Money off the Table before Apple Special Event

If you’re still holding your Apple Inc.’s (Nasdaq: AAPL, stock) shares or option contracts as of writing time (1:30 pm E.T), I hope the market will be kind with you for the subsequent hours. As I’ve blogged about 4 hours ago, I had prepared myself to take money off the table today, no matter what (you can read it here Ready to take profit on Apple’s Special Event today), before the“Special Event” starts. I’m not sure, somehow I don’t have a good feeling about what Apple has to say. Furthermore, Apple was trading near the all-time highsince yesterday's jump.

I opened the position because the U.S. President Reassures Stock Investors on 8th August, silly me huh? Well, actually it was because Apple’s stock price reached the support level of $125. But as with the nature, it wasn’t the right timing as the stock price plunged further to unbelievable low of $112 at one point, breaching all the support, be it $125 ot $122.
However there was a reason why I bought the contract with Oct expiration – because Apple’s earning announcement is scheduled on Oct and as with historical behavior, the optimism with the stock will gradually increase towards the date.
29th Aug was the date I added more contracts to my trade – mostly because the market was flushed with opinions that Bernanke will act, a hint that interest rate might be cut. Due to that reason Dow Jones gained by almost 250 points -Bernanke Prepared to Act, Hint to Cut Rate?. Chart-wise, Apple Inc, showed strength by gapping up compared to the closing price the day before (28th Aug) and the decision to add more contracts was decided after 45-minutes of trading started based on the price-volume.