Thursday, December 06, 2007
Breakfast in KL and lunch in Singapore
The Channel Tunnel was perhaps the most ambitious, controversial and complex project ever taken by mankind as far as rail transportation is concern. The challenge was in linking two nations separated by sea – beneath English Channel. The Channel Tunnel which is also known as Eurotunnel is the second-longest rail tunnel in the world, with the Seikan Tunnel in Japan being longer, but the undersea section of the Channel Tunnel, at 37.9 km (23.55 miles), is the longest undersea tunnel in the world.
It was reported that the tunnel cost nearly 6 times more than expected to build and debts were around £6.2billion and after several false starts it was finally completed in 1994, linking London with Paris and Brussels. A journey through the tunnel lasts about 20 minutes with the Eurostar trains travel at 160 km/h even although their maximum speed was 300 km/h. The same technology in tunnelling the undersea was used by Malaysian’s SMART project.
But Malaysia is not going to undertake such an ambitious project itself, not that it has the capability to do so. Rather, the nation might be building one of the fastest and luxurious trains linking the capital Kuala Lumpur and Singapore. YTL Corporation Berhad’s (KLSE: YTL, stock-code 4677) which has submitted the proposal for a bullet train between KL-Singapore to the government is confident of securing the project, group managing director Tan Sri Francis Yeoh Sock Ping said today.
Taking the cue from the London-Paris Eurostar which had increased the land and properties’ value in the cities, Francis Yeoh is betting (or justifying) that the same proposal could create the same impact. He further mentioned that the 700 percent difference in property value between Singapore and Kuala Lumpur could be reduced to 260 percent of which will translate to RM5 billion in property values.
Property appreciation aside, it would be wonderful to think of the prospect of able to travel by bullet train from KL to Singapore within a short time-span. Shopping at Singapore anyone?
Stumble it!
The Stock Market wants 50 basis points cut
Wall Street rally Wednesday with Dow Jones jumped almost 200 points after new data showed the overall economy is holding up but isn't too strong to prevent the Federal Reserve from cutting interest rates. ADP Employer Services said 189,000 jobs were added during the month - an increase that bodes well for consumer spending. The report raised hopes for a strong November jobs report from the Labor Department on Friday.
Some investors are even bold enough in betting the Fed will go beyond the generally anticipated quarter percentage point cut and lower rates by a half point. The market is currently pricing in a rate cut next week. Supporting the case for a cut is that central banks globally seem to be open to the idea, a trend that would give the Fed even more room to move - reported AP.
Meanwhile the Bush administration has hammered out an agreement to freeze interest rates for certain subprime mortgages for five years to combat a soaring tide of foreclosures. The plan would apply to borrowers with loans made at the start of 2005 through July 30 of this year with rates that are scheduled to rise between Jan. 1, 2008, and July 31, 2010. It is aimed at homeowners who are making payments on time at lower introductory mortgage rates but cannot afford a higher adjusted rate.
The administration plan is designed to deal with the crisis by letting subprime borrowers who are living in their homes and are current on their payments to avoid a costly reset for five years. The hope is that by that time the housing downturn will have stabilized. Under the typical subprime loan those offered to borrowers with spotty credit histories - the rates for the first two years were at levels around 7 percent to 8 percent. But after two years, those rates were scheduled to reset to levels around 9 percent to 11 percent. Let's hope all ends well.
Wednesday, December 05, 2007
A creative jail sentence for Insider Traders
You’ve heard how insider traders were punished in U.S. but this news israther amusing. A former financial analyst at Morgan Stanley (NYSE:MS, stock) and her husband were each sentenced yesterday to a year and half in prison for insider trading. The husband, Ruben Chen was a former hedge analyst at ING. Ruben and his wife, Jennifer Wang, would have to serve the combination three years in prison but it appears the Judge Colleen McMahon of United States District Court in Manhattan has other idea.
Judge Colleen decided that the husband and wife should serve their sentences one after the other so their infant son would have one parent with him for the three years. Jennifer’s plea not to serve the jail sentence justifying she needs to be with her son was rejected as the judge said she would not let Ruben “take the fall for both.”
“Ms. Wang, you are not less culpable. You are more culpable. You are the thief …You have done this to your son” Judge McMahon said. Federal prosecutors accused them of trading based on nonpublic information material that Jennifer obtained from Morgan Stanley, gaining more than $600,000.
However the judge sentenced them so that Jennifer would report to prison after Ruben was released and their son had turned 2. A nice and flexible proposition isn’t it?
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Tuesday, December 04, 2007
Tong Herr Stock, hidden Gems within bolts & nuts?
One of StockTube’s readers was curious as to why low-PE stock such as Tong Herr Resources Berhad was bleeding profusely, stock price wise. Is Tong Herr a fundamental stock? Based on its past financial statements Tong Herr is definitely a sound company with sustainable profits, not to mention great EPS (earnings per share) and DPS (dividend per share). The company is the largest manufacturer and exporter of stainless steel fasteners and almost 95 percent of its products are exported overseas.
The Penang-based Tong Herr operates via its subsidiaries - Tong Heer Fasteners Co. Sdn. Bhd. (100% owned) and Tong Heer Fasteners (Thailand) Co., Ltd. (50.01% owned) are engaged in the manufacture and sale of stainless steel fasteners, including nuts, bolts, screws and all other threaded items. As with any company in the manufacturing field the cost of raw materials and the selling prices determines the profit or loss of the business - hence the setting up of the plant in Thailand.
The fall of Tong Herr
Tong Herr Resources Bhd’s (KLSE: stock-code 5010) net profit for the third quarter ended Sept 30, 2007 fell 26.5% to RM15.23 million from RM20.71 million in 2006. Although the company announced its revenue surged 57.7% to RM139.11 million from RM88.22 million in 3QFY06, the stock was punished the moment it said theearnings per share (eps) fell to 11.95 sen from 16.26 sen in 2006.
Tong Herr also declared a lower dividend of 10 sen in 3QFY07 compared with 16 sen in 2006. Although the global demand for stainless steel fasteners is estimated to grow by eight per cent a year over the next few years, some factors are hindering Tong Herr from pleasing the investors:
- lower demand of its product
- higher cost of raw materials purchased
- lower selling price of goods during the quarter
Investors do not like weaker expectation in terms of earning and will not hesitate to sell upon the sight of such weaknesses, the same way U.S. stocks are being assessed.
FTA the answer to better earnings
Tong Herr has definitely taken the wise step in shifting part of its manufacturing into Thailand (in May) due to import duty issue. All the manufacturing companies have (or plan to) no other choice but to find alternative countries that have preferential tariffs with the U.S. This is one of the reasons why Malaysian government is favoring FTA with U.S. albeit other issues such as NEP which is preventing a speedier execution.
Consider this – Tong Herr has to pay import duty of 8.6% in the U.S. for stainless steel screws and bolts exported from Malaysia since the country lacks the FTA with U.S. However there’s no duty for exports from Thailand to U.S. for the same products.
Should you consider Tong Herr in your portfolio?
The stock has been on the plunge since the bonus issue of 2 for 1 on 16th Oct 2007. Interestingly there were insider sellings by the Tsai shareholders. If you’re trading U.S. stocks or option such selling could weaken the investors’ sentiments and the same reason applied here. The target price lowered by some investment banks or research institution did not help either.
Nevertheless the low P/E ratio is definitely the main bullet that you should consider for this stock. Assuming the full financial year 2007 will bring in the same earnings per share as of 2006 (62.18 sen) which should be achievable since the first half of 2007 already saw it registered 51.38 sen, the stock could be a steal at a P/E of 5.3 multiple only based on today’s closing price of RM3.30 a share.Is Tong Herr stock price expensive? If you take its competitors Chin Well Holdings Berhad and Techfast Holding Berhad (KLSE: TECFAST, stock-code 0084) which are trading at multiple of 21 and 10 respectively into consideration, Tong Herr could be one of the hidden gems available. However the timing of entry is of paramount important and you should buy in stages with lots of patience.
The World of MergeCraft games in the making
Computer gamers out there should know who’s Blizzard Entertainment. No? Then games such as “World of Warcraft” and “Diablo” might ring the bell. Of all the games I’d played my favorite was easily Diablo II - thereafter you saw some other games built within the same story-line or concept as Diablo. It appears the corporate M&A has hit the gaming sector with the latest announcement that Vivendi SA is set to acquire a controlling stake in Activision Inc. and combine the company with Vivendi Games in a deal that would create arival to Electronic Arts Inc. as the world's largest video game publisher.
French conglomerate Vivendi would pay $27.50 a share and make cash infusion of $1.7 billion to acquire a 52 percent stake in Activision Inc. (Nasdaq: ATVI,stock), valuing the combined company at $18.9 billion. Vivendi will then fold its game operations into those of Activision in the new company. Vivendi's Irvine, California-based Blizzard Entertainment is behind the top multiplayer online role-playing game franchise, "World of Warcraft." which the company says more than 9.3 million subscribers worldwide. Activision Blizzard will continue to operate as a public company traded on the Nasdaq Stock Market under the ticker ATVI.
Activision’s forte is on making games for consoles, like the Sony’s (NYSE: SNE,stock) PlayStation 3 and the Microsoft Corp.’s (Nasdaq: MSFT, stock) Xbox 360. Its game franchises include “Call of Duty” war game series and “Guitar Hero”(Guitar Hero III sold 1.3 million copies in just seven days after released). Vivendi’s strength is in online games (like World of Warcraft and Diablo), which its Blizzard Entertainment unit has built into a worldwide phenomenon with more than nine million players worldwide.
Sales at Activision rose to $1.5 billion in 2007, a 74 percent jump from 2003. In the same period, Electronic Arts’ revenue rose 25 percent, to $3.1 billion. Vivendi and Activision estimated their combined revenue for 2007 at $3.8 billion.
Robert A. Kotick, the chief executive of Activision will retain his position atop the combined company while Bruce Hack, chief executive of Vivendi Games, will become vice chairman and chief corporate officer.
Sunday, December 02, 2007
Billionaire Li’s latest $60M bet on Facebook
To Hong Kong billionaire Li Ka-shing 60 million dollars are just loose change. Considering his fortune was estimated to be worth 23 billions and the ninth richest person in the world by Forbes, 60 million dollars toy would not looks excessive. The tycoon could probably talk days and nights when come to topic of property investing but unlike Warren Buffett who walked away from technology stocks during dot com boom, billionaire Li’s latest bet could turns out to become the future jackpot.
Following Microsoft Corp.’s (Nasdaq: MSFT, stock) step in recognizing the potential in social networking websites in Facebook, it appears Li has somehow saw the potential in pouring 60 million dollars with a right to acquire another 60 million dollars stake in the US-based company which has about 5 million members around the world and is registering 250,000 new users daily. Microsoft had bought 240 million dollars stake in a deal that instantly valuing Facebook at 15 billion dollars back in Oct 2007.
However Li’s investment was shielded from his Hutchison Whampoa Ltd (HKG:0013) and Cheung Kong’s (HKG: 0001) empire. Instead he made his entry via his Chinese mobile internet company Tom.com. If Facebook could hit it big the same way Google Inc. (Nasdaq: GOOG, stock) did it when listed on the Nasdaq stock exchange, Tom.com could bring cheers to the richest man in Asia - Li Ka-shing. The ultimate reason could lies in it’s partnership in China that could prove valuable for access to China.
Facebook, according to sources, is still planning on raising more investment dollars, although some once-hot prospects, such as Providence Equity Partners, have dropped out due to the onerous terms Facebook has demanded from investors. Providence was put off by the lack of downside protection and also the fact that a major investment in Facebook would not get them a seat on the board of the start-up. Neither Microsoft nor Li will get a Facebook board seat though.
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Where to search for Web Hosting Choices
Your personal web hosting normally comes into mind whenever you’ve decided to host your own domain name. Most bloggers would not jump into real blogosphere by having their own domain name plus the hosting server as they won’t know if blogging is what they’re looking for. Hence free blogging via free platform such as blogspot and wordpress would be their test-bed, until they could see some successes.
Assuming somehow you wish to host your own domain. Which hosting companies would you choose? There’re tons of web hosting companies out there on the net. WebHostingChoice is a web hosting directory that contains a list of such web hosting companies that provides information such as disk space, bandwidth, monthly hosting cost and the setup fee. You can also choose specific features preferred such as Unix, PHP, MySQL, Phython, type of support and others.
Besides provide useful information on web hosting choice, please remember to read the part about the web hosting scam. For people who wish to customize their specific requirement, the advanced web hosting search allows you to pick the plan details and features to fit your bill. This advanced search which is brought to youby Web Hosting Choice is a handy tool for people who’s looking for hosting their domain.
Suddenly PM Badawi and Samy are super awake
Someone who tried to please Malaysian PM Abdullah Badawi said recently that the PM was perhaps the nicest and bestest premier as he has not used the draconian Internal Security Act (ISA) and the people should appreciate it. Not many months later the PM threaten to use the ISA in the wake of the rally organized by Hindraf which gained fame when it filed the $4 trillion lawsuit against the British Government in London.
Already on the brink of receiving the award for being the “Father of Rallies” in the history of Malaysia since Independence, Badawi who was labeled as sleepy-head due to the claims that he almost goes into auto-sleeping-mode during most of the official meetings is actually at the center of crisis. Maybe the word crisis is a bit exaggerated because the current ruling government could never be replaced with the bias delineation exercise that almost give the ruling parties 4 seats vs oppositions’ 1 seat for the same number of voters. But at least the PM is awake – temporarily.
Abdullah Badawi said yesterday that he was aware of complaints about “what is happening to the economy”. He tried to crack a joke that he actually has “big ears” but maybe you should take that with a pinch of salt as whatever entered his left ear could be leaving the other end of the ear as fast as you can blink your eyes. Does this simply mean the local businessmen are unhappy with the way he administer the country’s economy?
Strangely while the government officials immediately jump into denial syndrome again saying it was not true that the Malaysian Indian has been marginalized, the same government via MIC (Malaysian Indian Congress) will setup a hotline to “entertain” all problems faced by the Indian community. Wow! Since when a “hotline” is a magic bullet that can solve a community’s poverty, not to mention oppression and suppression, problem? Maybe the country could earn foreign currencies by exporting such know-how to African countries.
To add to the stupidity, Samy Vellu (president of MIC) proudly said that the PM had also asked MIC to set up a special committee to analyse and address socio-economic problems faced by the Indian community. Wait a minute; didn’t the government deny there was any problem with the Malaysian Indian earlier? So why set up a special committee if it was true that Hindraf’s claims were false in the first place? Having fun watching and reading the government shooting their own foots huh?
While the Malaysian Indian make up 8 per cent of the population, their share of the economy is just 1.5 per cent today and little changed from the 1 per cent in the 1970s, thanks to the MIC under the leadership of Samy Vellu. No wonder MIC as a party was not longer relevant since ages ago as can be seen when the ruling party UMNO didn’t give the Indian community the respect when it scheduled its’ AGM right in the middle of Deepavali’s festival recently.
The Hindraf ‘s rally has even courted the attention of India when Tamil Nadu Chief Minister M. Karunanidhi had written to Indian Prime Minister Manmohan Singh urging him to take immediate and appropriate action to end the “sufferings and bad treatment” of Tamils in Malaysia. Spotting the opportunity to become hero, Minister in the Prime Minister’s Department Nazri Aziz immediately issued a stern warning to Karunanidhi to stay out of the controversy and said he won’t apologize for calling those who participated in the Hindraf rally on Sunday “penyangak” (thugs).Assuming India shouldn’t even whisper the issue in the name of “no interference in other countries” then maybe Malaysia should back off from championing Palestine’s problem after all.
When one are being oppressed, suppressed and systematically marginalized to the extent that another friendly country couldn’t help but to speak up it only goes to show the criticality of it. Stop building a thicker layer of denial wall but face the music like a leader. Admit the failure and take the courage to solve it once and for all. You can issue all the ISA that you can put your signature on but the people will not just keep quiet. If the people are happy with the treatment no way they would demonstrate the way they did (won’t it better to spend the time shopping at MegaMall?). To put the blame on the leaders of Hindraf that demonstrators were being spinned into believing that they’ll get money from the lawsuit is simply insulting the intelligence of the tens of thousand of people.
It won’t do any good if the PM Badawi keep on trumpeting that he has big ears and listening but never take any concreate action(s) to work around the issue. You can only push people to certain degree and when they hit the wall of no return, they’ll“let you know”. The worst thing is you’ve a PM who has no idea what to do in such scenario except to give some marketing talks hoping the issue will disappears when he wakes up the next morning.
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Friday, November 30, 2007
Stocks Investing - don’t run naked with the crowds
StockTube had said previously that investors shouldn’t run naked but take their own sweet time to put on their clothes so that nobody could call you cuckoo. Speculators or gamblers on the other side ran helter skelter and unfortunately investors whose emotion were put to test decided to join in the crowd, most of them ultimately. For decades, the same emotion runs wild and didn’t change; perhaps it will never change as long as human is trading the stock markets.
Yeah, easier said than done – who would know what will happen next? A bird in hand is worth two in the bush and so instead of normal selling it became panic selling when the Dow Jones decided to take the bungee-jump recently. The reason for selling was quite silly though – because of the old sub-prime old problem but if this known reason was used to even infect technology-stocks, then something must be terribly wrong. Investors couldn’t invest rationally but emotional instead and that’s something you should be able to read.
It could be a systematic plan by big boys to force Ben Bernanke to tilt towards submission – that’s to cut interest rate when it meets on 11th Dec 2007, its’ last session of the year. Just to refresh what StockTube had said previously. It’s unlikely that U.S. economy will suddenly slam into recession although the odds have grown. You got to remember that Federal Reserve has tons of bullets to shoot the recession down. Uncle Ben could takes his own sweet time playing bubble bath and still can make the call to cut another 25 basis points for a whopping 10 more times; and still the rate would be at 2.25.
The big boy’s plan works and Federal Reserve Chairman Ben Bernanke on Thursday hinted that another interest rate cut may be needed to bolster the economy. Fed policymakers will need to be "exceptionally alert and flexible," Bernanke said. Analysts said the Fed's next move on interest rates depends on the outcome of next week's employment report. If the report shows a weaker employment climate, that could seal a rate cut, economists said.
So, if you had taken some positions when the Dow hits just below the 13,000 points you might be smiling now. If you had believed in the business model of Google Inc. and thought it would be silly for the stock to plunge below $600 a share, you could be smiling as well. And if you had believed Apple Inc. would not simply collapse because of the over-trumpeted sub-prime issue, you’re part of the smiling crowds. But most importantly if you believed your stocks’ fundamental were simply awesome and decided to hold on instead of running naked, give yourself a pat on the back.
# TIP: Don’t always run naked with the crowds investing stocks or trading option. Think rationally of your own portfolio. The crowds are not always right and you’re not always wrong.
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Thursday, November 29, 2007
Delayed Toll Hike – bait for voters before election
One of the most spectacular things you can find amongst the politicians in Malaysia is the way they talk faster (output) than what their brain machines could process (input). Most of the government controlled-media reported news that the Cabinet has agreed not to raise the toll charges at four main highways, including the North-South Expressway (PLUS), Prolintas for the Ampang-Hulu Klang Elevated Highway, Skim Penyuraian Trafik KL Barat (Sprint) and the Penang Bridge next year.
As a result, the government (or rather tax payers) will be paying RM242 million in compensation to the above four concessionaires. However, the toll charges for six other highways/expressways would be raised in accordance with the concession agreements; which include Seremban-Port Dickson, North-South Expressway Central Link, Kulim-Butterworth, Malaysia-Singapore Second Link, North Klang Valley, Johor Causeway and Bukit Kayu Hitam.
Analysts were quick to conclude (it wasn’t so hard to guess, was it?) that the“delayed” hike in toll charges was aimed at pleasing voters ahead of early elections especially after the PM Abdullah Badawi had tasted the medicine of inflation since his last unpopular 30 cents per liter petrol hike in Feb-2006. As usual the Works Minister who has been making fun and fool of the voters for the last 30 years was happily denied the link between the delayed toll hikes with the coming general election.
In fact during the local television broadcast the Works Minister, Samy Vellu, said the government was so concerned about the welfare of the people that only those expressways that have “very little traffic” were allowed to increase their tolls. Not bothered by the Sunday’s Hindraf Rally, Samy even cracked a joke that it doesn’t matter if the toll rates were to be increased to RM100 or 10 sen as the traffics are simply negligible. So, can the people conclude that these six highways/expressways are white elephants built without a proper feasibility study done?
Many ignorant voters who voted blindly for the current administration might have no clue as to why the agreements were so biased towards the concessionaires that it was as good as presenting a blank check/cheque. Could you imagine concessionaires were allowed to increase the toll rates indefinitely – at least that’s what happens to PLUS expressway. But you can’t blame the politicians since you allowed them to milk you for the next 40 years. So continue taking the bait and let the government have a good laugh again. At least Reuters was smarter and knew that this is one of the election goodies.
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Wednesday, November 28, 2007
Second attempt to delist E&O Property by the parent
One of my property stocks, Eastern and Oriental, has requested suspension on the shares trade of both the parent and its subsidiaries.Eastern & Oriental Berhad (KLSE: E&O, stock-code 3417) has signaled a major corporate transaction involving itself (parent) and its property arm,E & O Property Development Berhad (KLSE: E&OPROP, stock-code 3468).
It was reported that an announcement will be released later in the day on a a major corporate exercise, igniting speculation that Eastern & Oriental could be launching a buy-out bid for the property unit, which has a market value of around US$482 million. The last stock prices traded for Eastern & Oriental was RM2.40 while E & O Property was at RM2.45 a share.
Reuters reported that a spokeswoman for the parent company said it’s a “big corporate” announcement, without giving more details. Could the parent company, Eastern & Oriental trying to wrest and take the profitable property arm private again after failed to do so previously? For those who’re not aware of thepower of minority shareholders, let’s do a flashback.
On 5th May 2005 Eastern & Oriental served a notice of conditional voluntary offer to while E & O Property's board of directors when the KLCI was hovering at 900 points. The reason for the privatization - E & O Property’s shares traded was not reflective of its true value. But minority shareholders believed the management didn’t work hard enough to bring in values to the property arm. Furthermore the offer price of 65 sen a share was well below attractive level. Of course the picture of holding unlisted shares scared the shit out of many shareholders and lots of them accepted the offer.
In a twist to give the majority shareholders a taste of their own medicine, a group of 134 shareholders with 19.90 million shares voted against 20 other shareholders with 741.86 million shares for the Company’s delisting at E & O Property’s EGM on 12th Oct 2005. It was a victory for the minority shareholders, until today.
StockTube waited for the news (before publishing this article) and here’s the announcement. In a second attempt to delist E & O Property, Eastern & Oriental offered on Tuesday (27th Nov 2007) to buy out the remaining 37 percent it does not already own in E & O Property for up to RM610 million. Existing shareholders of E & O Property can either:
- swap 1,000 shares for 1,100 new Eastern & Oriental shares OR
- exchange 1,000 E&O Property shares for 715 new Eastern and Oriental shares plus RM875 cash.
For the first option, shareholders will ended up owning Eastern & Oriental shares worth RM2,640 based on closing price of $2.40 a share. The second option will give shareholders total values amounting to RM2,591. However assuming the stock prices of E&O Property goes up upon relisting from suspension, the offer might not be that attractive. Eastern & Oriental owned 63.8 percent of E&O Property Development as of July 2007 and it appears this round the parent company has a higher chance of delisting the property arm.
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Tuesday, November 27, 2007
Compare prices for best deal this Christmas
Electronic Games such as Nintendo Wii, Xbox or Playstation are the favorites and hot-selling items during the year-end holiday Christmas. These are just a small portion of other holiday gifts which could sell-off before you can blink your eyes. Thanks to internet grabbing a piece of the items online proved to be a valuable alternative way. Best still you can do a price comparison to get the bargain you ever dreamt of.
Now, getting lower price has even reach a new level. You can tell SaveBuckets that the prices offered are not low enough and suggest your budget. Whenever the product(s) is available at your suggested price, they’ll email to alert you. However if the price has not fallen to your budget price after two weeks, you’ll be notified of the current lowest price. Hence the site actually does not sell products but act as a price comparison site to assists online shoppers.
Monday, November 26, 2007
Two Major Rallies within 1 month – great score for PM
Boy! You should see the face of the Malaysian Prime Minister Abdullah Badawi when he was giving his opinion about Sunday’s rally by thousands of minority Indians. After Hindraf (Hindu Rights Action Force) filed a $4 trillion lawsuit against the British Government in London, August 2007, it raised eyebrows because of the huge amount of money involved. Let’s face it, $4 trillion is a lot of money – not even the world’s richest man has that amount of money, yet. The amount was arrived when Hindraf was demanding $2 million in compensation for each Indian in Malaysia.
Besides the money Hindraf was also demanding a grant of British citizenship as an"opportunity to escape any future discrimination, marginalization, oppression and suppression by the Government of Malaysia" – reported KyodoNews. Hindraf claimed that the British government h
ad abandoned the Indians when independence was granted to Malaysia in 1957 and forced them to be subjected to Malay-Muslim rule. Of course you can bet your last shirt you’re wearing the Hindraf will never be able to get anything out of what it demanded. The actual objective was to attract world’s attention to the lawsuit.
The Indian, like the Chinese, have begun challenging the continued implementation of an affirmative action policy that grants special privileges to Malays, including a greater admission quota to public universities and special access to government contracts. Over the 50 years since independence the three major races have been living in harmony – until now. There’re many reasons speculated as to why the Indian suddenly got “excited” and joined the rally.
Some said it was the underlying issues represent longstanding grievances among Malaysian Indians who possess neither the political clout of the majority Malays nor the economic strength of the Chinese who are the second largest ethnic group in Malaysia. There has also been deep anger generated among the Indians by the recent demolitions of dozens of Hindu temples. The Indians, who were mostly Tamils, are also unhappy over the dilapidated state of Tamil vernacular schools in the country.
Prime Minister Abdullah Badawi could proudly announce to the world that he’s the only PM so far to score the greatest victory in the general election, but it was achieved mainly due to the promise to curb corruption, of which he has disappointed many voters. On the other hand Badawi could also claims success to be the only PM who experienced two major rallies – the 10th Nov 2007 Bersih rally and the 25th Nov 2007 Hindraf rally.
Deputy Prime Minister Najib Abdul Razak on Saturday accused Hindraf of trying to incite racial hatred although the real intention was to press for a better treatment by the government. Badawi could easily be the weakest PM in the history as far as economy administration is concerned. People who are oppressed, suppressed and depressed are the people who will take to the street as can be seen in other parts of the world – regardless of how developed the nation is. MalaysiaKinireported about 30,000 protesters demonstrated under the shadows of Kuala Lumpur’s iconic Twin Towers after their efforts to petition the British High Commission was thwarted by the police with tear gas and chemical-laced water cannon.
MIC president Samy Vellu said people should use existing forums to voice their problems and not resort to street protests. The MIC party which is supposed to create values and help the poor Indian has fail miserably. Samy Vellu who has been the MIC president since 1979 is clearly the loser who has done nothing much and should stop beating around the bush by saying that issues such as education, the economy and social issues had been resolved through direct consultation with the Federal, state and local governments behind closed doors as they involved sensitive matters.
If Samy Vellu couldn’t deliver given the 30-years in power, one cannot expect any more miracles from him, not that he has done any before. Of course if one intends to trace the root of the problem, one cannot run too far away from the former premier Mahathir’s policy of “Divide and Rule”. The NEP (New Economic Policy) has proven to be successful only in enriching cronies in power instead of broad-base wealth distribution amongst the Malay-ethnic. It’ll be interesting to see how Badawi will score for the coming general election.
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Saturday, November 24, 2007
After MAGNUM’s privatization will BJTOTO follows?
The recent privatization announcement involving yet another sector, number forecast operator (NFO), has created some excitements since the stock market took the plunge taking the cue from U.S. continuous sub-prime worries. Magnum Corp Berhad, the oldest NFO in Malaysia is set to be taken private by its largest shareholder Multi-Purpose Holdings Berhad (KLSE: MPHB, stock-code 3859) which holds about 55.54 percent in Magnum.
Under the proposed deal, MPHB together with private equity firm CVC Asia Pacific Ltd will form a special purpose vehicle (SPV) to take Magnum private at RM3.45 per share or RM4.9 
billion for the whole exercise. At RM3.45 Magnum was valued at a P/E ratio of 21.5 times and book value of 4.2 times based on its balance sheet as of Sept 30. MPHB and CVC will hold 51% and 49% equity interest respectively in the SPV; the SPV will pay out some RM4.9bil - RM2.7bil to MPHB and the remaining RM2.2bil to other shareholders.
While there’re three main 4D players or NFOs in the Malaysian market, Berjaya Sports Toto Berhad (KLSE: BJTOTO, stock-code 1562) has the most lotto games and outlets in the country while the other two players, Magnum Corp Bhd and Tanjong plc.only offer 4D games. Magnum which started operation in 1969 has followers since then and it was said that gamblers who bet their luck with Magnum has higher chances of striking, though it’s not proven. But old timers are mostly Magnum’s loyalist.
With Magnum set to be delisted from Kuala Lumpur Stock Exchange, logically the attention from investors would be diverted to BJTOTO. It would be interesting to see if Vincent Tan plans to adopt similar approach in taking his cash-cow private.
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Friday, November 23, 2007
Asia’s downsizing waves from CA, finally
Mention CA (Computer Associates) and the next thing that comes to your mind is the co-founder Charles Wang. He was born in Shanghai, China, and moved to New York when he was eight years old. At the age of 31, Charles Wang started Computer Associates. But those were not what made him famous. What he was well-known for is the way he built the empire of CA. Those in the IT (information technology) field would know that the method Wang (as he’s often addressed) used was quite simple yet fast in building an empire – via takeovers.
Known as a heartless and ferocious person who applied draconian practices, Wang had over 50 (fifty) takeovers under his belt during his time as CEO of Computer Associates. He was notorious for forcing the employees of an acquired company to sign new employment contracts on-the-spot at a company meeting without prior warning – he/she who refused or wished to review the contracts were immediately fired. If you think Donald Trump was cruel during the Apprentice series, wait till you meet this monster.
One of the biggest problems with Wang is he could never get good and loyal employees, at least in certain countries inclusive of Malaysia. If your company somehow had purchased their CA-Unicenter product (can’t remember the version though) you would understand what I meant. While the product could be over-complex, the engineers sent on site for implementation could not deploy it satisfactory either. To make matter worse, the staff turnover was so high that basically you could see new faces (engineers) sent to your office trying to figure out where the previous engineers had left once every two weeks.
In the sub-area of data protection, CA’s ARCserve Backup software competes directly with Veritas Backup software (now known as Symantec after it bought over Veritas). Although CA’s backup software is very much cheaper than the BMW-priced Veritas, CA somehow couldn’t kick Veritas out from the market. Today, Computer Associates has decided to downsize its operations in Asia, including Malaysia, but has spared Singapore for the time being as one of its regional centres.
Indonesian office has been closed while offices in the Philippines and Malaysia would be downsized. Rumors said CA, Inc. (NYSE: CA) offices in Taiwan, Thailand, Hong Kong and China would be the next target of downsizing. Meanwhile with more than 60 employees in Malaysia on the chopping board, you can’t blame the rumor that CA will eventually close down its office in the country. CA’s abruptly measure could be due to its changing business model from direct to partner-centric. The name mentioned to continue representing CA is Patimas Computers Berhad (KLSE: PATIMAS, stock-code 7042).
It’s time for American companies to accept the fact that you can’t simply replicate the direct-to-customer business model in U.S. to Asia’s countries. They need the local partners in order to bring in the sales. So many MNCs had tried and failed. Unless your products are retail-based and require minimum support such as Dell Inc.’s (Nasdaq: DELL, stock) model in selling PCs via internet, you can’t expect businesses to rely solely on the MNC’s support as 24x7 uptime would squeeze the MNC’s bandwidth.
Thursday, November 22, 2007
Stock Market has become extra emotional
Holiday mood is gaining momentum and judging by how the investors sold their equities, Thanksgiving will be another excuse for stock market to head south. In time of uncertainties coupled with long holiday it’s just too hard to convince investors to long. The 13,000 Dow’s mark is still a crucial point to note and as long as it couldn’t stabilize, you just can’t long, at least temporarily.
The stock market has been thrashing about recently as investors attempt to gauge how companies will fare amid a further slowdown in the U.S. housing market, a deterioration of credit and record oil prices that crested above $99 a barrel ahead of Wednesday's session. Stocks have fallen in eight of the 11 last sessions including Wednesday’s 200 points slide.
The Conference Board suggested an economic slowdown could accelerate in the coming months amid rising costs and further weakness in the housing market. On the other hand the Reuters / University of Michigan consumer sentiment survey showed its lowest reading in two years - an unwelcome development for retailers entering what is for many the most important period of the year. The Commerce Department said jobless claims fell by 11,000 last week, a positive sign for U.S. employment.
There’s only one word to describe the current stock market – it is so emotional.
Tuesday, November 20, 2007
VW-Proton talks ended, sensitive issue during Election
Just when everyone thought struggling Malaysian carmaker would ink the deal with foreign partner Volkswagen, the bleeding Proton Holdings Bhd (KLSE: PROTON, stock-code 5304) suddenly call off the negotiation.Although this was the second time in two years that VW-Proton talks over cooperation have ended without a deal, VW said it still planned to build up a production base in Southeast Asia.
According to Reuters, Malaysia announced on Tuesday that it would no longer look for a foreign partner for the ailing Proton for now and added that state investment firm Khazanah Nasional had stopped its talks with both Volkswagen and U.S. rival General Motors Corp. (NYSE: GM, stock).
Reuters further reported that the loss-making Proton, set up in 1983 by then Prime Minister Mahathir Mohamad, was for a long time state-protected due to policies aimed at giving extra business and employment opportunities to the country's majority ethnic Malays. At one point, it sold more than half of all new cars in Malaysia. But since barriers to competition started coming down, it has lost market share to international rivals and even to domestic carmaker Perodua.
In a statement VW said "Volkswagen will now independently examine other possibilities to enter the ASEAN market and further strengthen its sales operations in the region including Malaysia." Actually besides Malaysia, the nearest location that Germany's Volkswagen (FRA: VOW) could try its luck isThailand.
Malaysian Second Finance Minister Mohamed Yakcop said rising domestic sales and exports should help tide Proton over its current difficulties. An industry source said the government's sudden change of heart could be due to factors such as a fear of ceding management control of Proton to Volkswagen and intense lobbying by Proton rivals who fear VW could flood the market with VW cars.
StockTube thinks both parties should stop beating aroung the bush and reveals the real reason, not that the secret is too big to be known by people who can smell it. And what could the exact reason for the deal to be stopped abruptly? It’s the coming general election silly you. As stated above all foreign carmakers knew who’ll get affected the most should the Proton falls into the control of Volkswagen. The matter is too sensitive to be announced now. Just imagine how the oppositions would sing the song with heads rolling down the chopping board with a foreign company dictates the future of national car-maker, never mind how effective the foreigner has been in the past.
So, just wait for the general election to past and you’ll get the official announcement before you can even blink your eyes. But isn’t VW wasting too much time playing to the tune of Malaysian government? Probably they could just setup their own plant in Thailand and start the production lines.
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Bear is leading but Bull is trying very hard indeed
When one of the top 10 stocks that moves the index of Dow Jones was being downgraded or kept being flushed into toilet with not-so-good news, you can expect the overall stock markets to be volatile. Coupled with bearish sentiments, you just can’t beat the bear no matter how slow it moves around. This is not the time to play Call Options especially the stocks which are due to announce its earnings. Yous stocks might announce flying color results but it won’t last.
Instead if you’re damn sure a particular stock’s earning is doomed your chances of making money playing Put Option could have multiply by now. Chances are great that the stocks which you do not have much confidence in the first place could potentially make you tons of money since it’s swimming along the course. Goldman Sachs downgrade Citigroup Inc. by betting the bank would have to write down $15 billion due to its exposure to risky debt over the next two quarters.
Stocks have fallen in six of the last eight sessions and it appears the trend will continue. At one point, Dow plunges to minus 200 points, well below the psychological 13,000 points. Hence it’s important to watch this level as bull and bear are at the opposite sites waving at you. No matter what, the Asian stocks will definitely say hello to the bear when stocks markets open its trading on Tuesday tomorrow. At time such as this, sometimes you just got to stay neutral and wait for a clearer signal, or try to scalp some Put positions if your favorite stocks demonstrate such opportunities.
Sunday, November 18, 2007
The King’s Consent Untold Story – watch 24 series
One week after the largest rallies since 1998 all the print-media reported that Malaysian King (Yang di-Pertuan Agong Tuanku Mizan Zainal Abidin) has expressed displeasure over claims that he and the Palace approved and supported Saturday’s illegal rally in the city. Tuanku Mizan also stressed that he and Istana Negara (Palace) had at no time approved or given any support – directly or indirectly – to any quarters which organised or were involved in the illegal assembly or any other activities that contravened the law.
Due to protocol, the statement was issued by Datuk Pengelola Bijaya Diraja of Istana Negara (Royal Household) Datuk Wan Mohd Safiain Wan Hasan on behalf of Agong and not directly from the King himself. Since all the print-media are government-controlled, the front-paged news indeed gave a slap to the participants who gathered and rallied all the way braving the rains to the Palace to handle the memorandum to the King. It was claimed that The Agong did not say no to 100,000 citizens who wish to seek for an audience with His Majesty – the King wanted to know how many people will be representing the 100,000 rakyat and the names of the representatives.
According to the highly popular political blogger Raja Petra Kamarudin in his article, word was passed down the line that the 19th Brigade of the Royal Malay Regiment or Regimen Askar Melayu Di-Raja (RAMD) was on stand-bye, to move in if there are any fatal casualties. The article claims that fourteen armoured cars(kereta perisai) had earlier arrived from Sungai Petani and were parked at the Sungai Buloh military camp, ready to roll at a minute’s notice. It would take them ten or fifteen minutes to arrive at the scene of any violence against the rakyat.
So if the article was correct, does that mean the King being the Commander-in-Chief actually save the day with the police who received earlier endorsement from PM actually backed-off? But why the statement from the Palace (seven days later) denied the King actually gave the consent to the rallies? According to Malaysia-today the answer could be more interesting than you thought. It seems Wan Mohd Safiain is not the official spokesman of the King – the rightful person should be the Keeper of the Royal Seal. Malaysia-today’s theory was that it was actually a plan to send the Prime Minister and the King into conflict.
Malaysia-today even went to the extent of exposing that Malaysia’s intelligence agency miraculously reported the participants from the previous rally amounted to138,000 people. The number was exaggerated in hoping the Prime Minister will panic and start making silly decisions which could accelerate his own downfall. Deputy Prime Minister Najib already said the government hopes to avoid using ISA, although such action will be the most unpopular but could only issued by the Prime Minister who holds the powerful portfolio as Minister of Internal Security.
As usual Malaysian politic never fails to amuse me. The plots and story-lines are far much better than watching the highly explosive Emmy and Golden Globe award-winning American television series 24, except that you can’t find hero Jack Bauer in Malaysia. So far I believe the best season would be 24 Season 5 – how do you bring down the evil President of the United States?The story (24 Season 5) might makes sense in the country that practices transparency and separation of powers, well maybe not 100% but at least there’re clear and written procedures on how to force the President to step down. Also in U.S. it’s rather difficult to have 90% of the House of Representatives (lower house) and Senate (upper house) members corrupted to the stage of rubber-stamping all the President’s wishes. If Malaysian Politic’s plots could be incorporated into the series it would definitely wins more awards. Malaysia needs Jack Bauer.
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Saturday, November 17, 2007
Take remaining profit from GOOG on expiration Friday
Today is the Friday expiration and options for the month of November will expire after the trading bell. My plan to breach my earlier 486 percent profit record evaporated into this air. Hence I’ve no other choice but totake whatever remaining profit left. And guess what, just after I’ve locked the profit, the trend reversed. Yeah, I know I’ve lost thousands of profit because of my plan but seriously I believed Google Inc. could touch the $800 level and I still believe it can. Maybe the Nasdaq Composite needs some rest or rather the technology stocks need to take a coffee break, so much so the moment it spotted an excuse to do so, it dropped like a rock.
Any regret? Well, the potential profit was good but if I didn’t challenge myself I wouldn’t know if I could make it. Trading is all about pushing yourself to the limit, at least that’s what I believe. This round is also a good exercise to test my emotion. Of course along the way, I made some tiny profits scalping Google with Put Option. So in a way there were consolation prizes. But it's part of the journey.
I’ve said Google took 20 trading days to reach $700 from $600 and it took even a faster lane to drop from $700 ($725) to $600 ($625) – a whopping 8 trading days. Let’s see if Google can repeat its sprint to go up back to $700 again. Or will it try the $500 level instead?
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Friday, November 16, 2007
Paper trade virtually before you trade real money
The closest you can go to gauge whether you’re ready to take the plunge into the pool of real stocks investing or trading is through virtual trading. Call it virtual trade, paper trading, virtual compete or whatever you want but the basic reason is still the same – to prepare yourself what the stocks investing is all about. However one thing that paper trading cannot equip you is the fact that the actual emotion of “fear and greed” are not there. You’re trading virtual money (the same way you’re playing monopoly) and hence the decision to buy or sell stocks might differ from the real stocks trading.
Nevertheless it’s still a good tool especially if this is the first time you’re trying to trade the largest stocks exchange in the global equity markets – the Wall Street.HowTheMarketWorks – the subject of this paid request – is one of the websites that provide the free Virtual Stock Exchange platform for newbies. It only requires your first-name, email and password to sign-up. You can setup up to 3 portfolios to trade virtually. Starting with $10,000 as your initial investment fund, you can increase your wealth (virtually) to $500,000. To make it easier and fun to learn, the website provide the basic ingredients required such as stock quotes, stock charts, symbol lookup, popular stocks (long and short-sell) and even “Throw Stock Darts”.
Yes, for gamblers or people who got nothing else to do you can actually choose throw the darts option and the system will randomly generate the stock for you to trade. Of course in real world or even in virtual trade, you shouldn’t do this. Now what you can trade? You can basically trade stocks and indexes, penny stocks, pink sheet stocks, mutual funds, ETFs and short-selling. However you can’t trade options and I think this is one of the areas the website owner should improve. Another limitation is the stocks quote are delayed by 15-20 minutes, which understandably is quite common to free providers such as HowTheMarketWorks as real-time streaming quote cost real money.
Having said so, the website provides the basic functionalities which can benefits lots of first-timers who would like to get their hands dirty in trading U.S. stocks but are not willing to put their hard-earned money into the trading floor yet. Not much complaint from me since it’s simple, easy, fun and free.
Take money off the table after 1-day of GOOG’s trade
Iwasn’t sure if I did the right thing yesterday when I opened a position with the intention to scalp Google Inc. The stock was floating within the range of $660 and $654 for more than 3 hours. Once it breached below $651, I knew the stock was heading south for the rest of the day and so I was relieved. Theinstability of Dow and Nasdaq as if they were constipating helped in my decision after the technical rebound on Tuesday, 13th Nov.
Today, I closed the position, GOOG Dec 660 Put Option after I sensed it was trying to breach the $648 level although at the time of writing it appears to be too weak a creature to push above that. It’s been on zig-zag trend almost the whole trading day – not a good sign to scalp again. Anyway tomorrow is expiration Friday and the volatility is going to be more fun.
The stock markets are still in the uncertain stage, going up into positive territory and minutes later going down into the red. This is the stage where your emotion, fear and greed, is better put to test. Get the hang of it and the next round the wave of tsunami comes splashing, you would survive.
Thursday, November 15, 2007
Bored with railroads, Warren found his new toy
Months after playing with his trains, world’s second riches man Warren Buffett somehow got bored with the toys. The Oracle of Omaha continues to sell Norfolk Southern Corp. (NYSE: NSC, stock), Union Pacific Corp. (NYSE: UNP, stock). His empire Berkshire Hathaway announced it has only 4.5 million shares of Union Pacific as of Sept. 30, down from the 7.4 million shares held on June 30. Berkshire also trimmed its shares in Norfolk Southern to 1.9 million shares as of Sept. 30 from the 3.8 million it owned as of June 30.
However one of his railroad toys, Burlington Northern Santa Fe Corporation (NYSE:BNI, stock) remains his favorite with his stake at 60.8 million shares, controlling 17.2 percent of the nation's second-largest railroad. Warren has found a new interest though, his new toy in used-car retailers. According to regulatory filing, Berkshire Hathaway (NYSE: BRK.A, stock) has bought nearly 14 million shares (6.4 percent stake) of Carmax Inc. (NYSE: KMX, stock), the nation's largest specialty used-car retailer.
Carmax Inc. is a retailer of used cars that purchases, reconditions and sells used vehicles. Approximately 85% of the used vehicles CarMax retails are 1 to 6 years old with fewer than 60,000 miles. During the fiscal year ended February 28, 2007 (fiscal 2007) it retailed 337,021 used vehicles and operated 77 used car superstores in 36 metropolitan markets. In addition, the Company sold 208,959 wholesale vehicles in fiscal 2007, through its onsite auctions.
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Telenor reduced stake to 49% in compliance
After announced it would give away RM700 million (in exchange for 10-year period of right for 3G license) to loss-making Time DotCom so that Time can nurse its wound, DIGI.com’s parent company, Norway's Telenor ASA (OSL: TEL) said it has made a gain of 2.6 bln nkr on the sale of a 10.2 percent stake in Malaysia's DiGi.com, which was carried out in order to comply with the maximum 49 pct equity ownership requirement of the Malaysian government applied to foreign investors.
Telenor sold 76.5 million shares in Malaysian operator DiGi in a book building exercise, representing the remaining shares to meet the 49 percent threshold, atRM 21.5 per share to Malaysian investors for a total of RM 1.61 billion – 8.9 percent discount over DIGI’s pre-suspension price of RM23.60 a share. Together with the the issuance of 27.5 million new ordinary DiGi shares for Time's 3G spectrum, Telenor will have a 49 percent ownership in DiGi.
The identity of the “Malaysian investors” are not known as of writing but unofficially it could be Khazanah Nasional Berhad as only Khazanah would have such a deep pocket for the purchase. Khazanah also owns 64.6% stake in Time DotCom. Now assuming Khazanah was the buyer and it plans to inject the newly acquired stake into Time DotCom, it simply means Time DotCom could emerge as a strategic shareholder in DIGI. During Wednesday business news on local TV, Time DotCom’s boss already hinted that they wish to subscribe more than 3.5 percent.
If Telenor could sell the 10.2 percent stake (76.5 million shares) at the same price as per-suspension stock price, it could pocketed the cool RM200 million but guess you “need” to give discount for such a large block of shares.
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Wednesday, November 14, 2007
Bail-Out with a piece of paper worth RM700 million
Malaysia never fails to amuse me when comes to corporate bail out. Not so long ago you have PKFZ scandal but the magic word “soft-loan”solved the controversy. And now, you’ve the white-knight DIGI.com saves the day by bailing out Time DotCom in disguise of an “alliance”. So now you know the “real reason” why Time DotCom Berhad (TIMECOM: stock-code 5031) was awarded the 3G license by the government despite bleeding profusely. You don’t really think Time DotCom has the capability to roll-out anything under the 3G, do you? If you still think so, please go back and research what happened to Time DotCom’s initial public offering (IPO) years ago.
It’s obvious that the auhorities knew the only way to bail-out Time and its major shareholders was to give it an Ace, not ordinary Ace but the Ace of Spades (which is 3G license). The authorities also knew in order to force the bailer to take the bait the sucker’s application for further extension for stake sell-down in compliance with the rules had to be rejected. Furthermore authorities knew the bailer will not throw in the towel and sell-off its 61 percent and start packing heading back to Norway – there’s still money to be made.
Bail-out becomes creative with “Alliance”
The sucker or bailer on the same time knew the autorities are pushing it against the wall. So what it needs to do is ensure it won’t be eaten up alive, at least put up some fights. Pushing the stock price to as high as possible would be the immediate weapon. With its sound management and quarter-on-quarter profits plus great dividend declaration, the task wasn’t that difficult. The bailer also knew sooner or later they’ve to take the Ace of Spades by the throat, at a hefty price (of RM700 million). Tell DIGI that it can wave the whopping $700 million and the unlisted pay-TV operator MITV Corp would have snap the offer even before Telenor can say “Any 3G license for sale?”
On the gentle note, DIGI.com Berhad (DIGI : stock-code 6947) is now offering$700 million for a piece of paper. A paper that says you’re now the proud owner of 3G license. But wait, that’s not the amazing part. The mind-boggling part is despite giving away $700 million to Time to have the rights to roll out 3G applications and services, DIGI can only use the 1965Mhz-1980Mhz, 2155Mhz-2170Mhz and 2010-2015Mhz or the IMT2000 3G spectrum until 2018. That’s 10-years lease for RM700 million or in simple arithmetic, RM70 million per yearof usage.
Time DotCom the clear winner
Beyond that DIGI might needs to apply for renewal, the same way you renew your road-tax. Short of daylight robbery, this is indeed one of the creative and ingenious ways to make money out of one’s own incapability to do so. The summary of benefits that Time DotCom will enjoy:
- DiGi issuing (giving away free) 27.5 million shares, equivalent
to 3.5% stake in the company, valued at RM654milor RM23.80 a share, to Time DotCom. - DIGI would issue a guarantee to the Malaysian Communications and Multimedia Commission in place of Time DotCom unit TT dotCom’sguarantee of RM50mil.
- DIGI to share telecommunications towers with Time DotCom for the purpose of Time DotCom’s broadband service in the 2.5G spectrum band or WiMAX.
- DIGI will utilize (or lease?) Time DotCom’s idling fibre-option network at a contract value of between RM10 million to $15 million per annum
- DIGI will provides training to key Time DotCom personnels (so that the idiots can become smarter and able to understand the world of telephony services)
- Invitation to Time DotCom to take part in the placement of DiGi shares to comply with the equity stake sell-down; although it’s highly unlikey that Time DotCom as a company has the financial strength to do so.
Does DIGI have a choice?
Now, most of the analysts said it’s a win-win “partnership” justifying that the 3G is required if DIGI.com needs to achieve higher ARPU (average revenue per user). But DIGI’s Chief Executive Morten Lundal once said the company still has other options or alternatives besides 3G to further grow the company. Without 3G, DIGI might crawls but it will still be able to deliver the values to the shareholders, better still if it has the 3G license.
Nevertheless this still has not solves the deadline problem where DIGI is required to sell down from the current 61 percent (59 percent after the dilution) to 49 percent stake. Khazanah Nasional Berhad which has a 64.6% stake in Time DotCom is perhaps the only entity that has the financial resources to acquire the remaining shares from DIGI. It would be interesting to see if Khazanah is willing to pay in cash or push more bones into DIGI’s throat.
Maybe by giving the $700 million free coupon, it could prolong the life of DIGI.com and Telenor as a whole. Yes, DIGI.com sets to gain from the license but still to pay $700 million for the 10-year license is over-kill don’t you think? Morten Lundal most likely has done some cost-benefit justifications and could conclude that this is his only choice.
More cheap sales from DIGI’s placement?
To comply with rules and regulations, Telenor will sell its DiGi shares under a placement exercise to investors, in which Time DotCom is invited to bid. While Time DotCom obviously doesn’t have money to do so, its largest shareholder Khazanah has the capability. Not sure how transparent the auction will be butplease do not get too excited or flabbergasted if a lower bidder wins the deal at the end of the day. There’re still more developments to be announced from both parties, so stay tune.
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Limit Order Triggered Scalp position on PCLN
This is not the first time but just get prepare for it because I’m going to curse myself again. Yeah, everyone did it because the stock market has the tendency to make a fool out of you when you least expect it. So please don’t try this at home because it’s not something healthy to do. Now here we go –If only I knew PCLN would goes up by a whopping $8.00 a share Tuesday, I would limit my selling price at higher level.
Sounds familiar huh? Well, get used to it as every traders will never be able to control their fear and greed. When you realized that you’ve sold at a lower price you scream. When you realized that you’ve bought at a higher price you scream again. Yes, I realized that I’ve sold my position in Priceline.com Incorporated(Nasdaq: PCLN, stock) which I scalped Tuesday a little bit too low. My only complaint was that I paid too much attention to Google Inc. simply because the trading pattern didn’t look good. I was afraid Google’s instability might pull down the Nasdaq Composite and the rest of its members.
Also partly because Priceline was tricking my eyes into believing $105 level was a strong resistance. So I set the limit price and walked away. Now I realized my position was triggered and closed but the same PCLN Dec 105 Call Option was last traded above $10.00. How can I not scream for making less profit that I should *there I go again*. Enough of the ranting, profit is still a profit and I should behave *smack myself*. The consolation prize was that I still have small position (here) when I believed Dow and Nasdaq was ready for technical rebound. Unfortunately my dear Tiffany didn’t make it, for now.
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Tuesday, November 13, 2007
Google is giving away US10 million to developers
All right, the technical rebound is finally here but it’s still too early to see if it can last but at least the 13,000 mark (DJIA) is putting some fights with the bear instead of letting it ripping off the skin of it. This week is the expiration week and as usual the volatility is building again. I like to wait till Friday to see if Google Inc. can erupts again. It appears Apple Inc. is taking the lead by jumping a whopping 7 percent as of 10:15 trading hour. Google meanwhile is crawling the same way like its founder, Sergey Brin.
Yeah, Sergey Brin could be so bored with his billions of U.S. dollar notes now that he doesn’t seem to have the fire or passion to work anymore. He even looks very sleepy when he announced that Google is giving away a whopping US$10 million to the developers who can come out with the best and coolest application for his new toy – the Android. I bet he just woke up.
US$10 million might be a lot to developers out there but it’s just loose change to Sergey Brin. Dropped US$10 million? Forget it, might as well get some sleep, says Brin.
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Broom Award for the Information Minister please
Do you know which news hit the “Most Viewed” of the day from theStar? It’s the “Broom Award” presented by Selangor Khir Toyo to two government agencies for failing to collect assessment above the 50% mark required for 2006. It might sound insulting but in fact it could probably be the most creative (or insulting) method in getting those fat-arse moving away from the comfort chair to become more productive.
The broom might only costs RM3.80 a piece but the values associated with it was high, so much so that certain agencies magically hit 97% in terms of revenue collection just to prevent from the embarrassment of getting it. Maybe the Malaysian government could take this newly found 
effective method to a new level in achieving higher productivity and efficiency. Now, who should get the broom award amongst the Ministers? I would suggest the Information MinisterZainuddin Maidin a.k.a. ZAM for his latest “contribution”to the nation.
If you think Foreign Minister Syed Albar was pathetic enough for the award, wait till you hear the quality shown by ZAM during the phone interview with Al-Jazeera on the day when Malaysia’s Biggest Rallies since 1998 – KL under siege. Apart from the denial syndrome, ZAM went a level ahead of everyone by single-handedly brought Al-Jazeera to “shame” and"speechless" when he lectured the Doha, Qatar-based television network about the real meaning of democracy.
Not only that, he probably surprised every Tom, Dick and Abdullah Badawi when he shown to the world how the highest level of English should be spoken. ZAM was a former journalist himself so he can’t be wrong, can he? Furthermore as the top man sitting on the important Information Ministryship, he is the most (and bestest) informed person of the nation and whenever he speaks, the country and even Al-Jazeera should listens.
Of course the Information Minister was right that whenever the country held the election without fail, that tantamount to fair and clean election, never mind that voters as old as 100+ years and as young as 8 years can cast their vote. Tell me which country in the world can be more democratic than this. Also the gathering was illegal because the organizer doesn’t have the police permit. In the true, virgin, first-version and highest level of democracy, any gathering of 5 or more persons is as good as illegal.
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Next on Middle East’s shopping list - MAHSING
After invading the territory of Putrajaya Perdana (KLSE: PPEDANA, stock-code 5117) and Loh & Loh Corp Berhad (KLSE: LOH&LOH, stock-code 7706), it appears the appetite from Middle Eastern is getting bigger and it was reported that a consortium from the oil-rich states is eyeing a strategic stake in property developer Mah Sing Group Berhad.
The shopping spree by Abu Dhabi and Kuwait investors is part of their quest to build the Middle East-Southeast Asia property value chain. Only this time their strategy might change in the sense of buying only strategic but not controllingstake as Mah Sing Group Berhad’s (KLSE: MAHSING, stock-code 8583) current boss, Datuk Seri Leong Hoy Kam, is unlikely to let go of his empire of which he owns the 40 per cent stake.
The Middle Easten investors might have learnt (their lessons) from their earlier acquisitions into Putrajaya Perdana and Loh & Loh that buying major stakes to take control and triggering mandatory general offer (MGO) might not be the best approach. They still need someone who is well-versed with the business and the operation to drive the newly acquired company. It’s better not to rock the boat and maintain the status quo of the ability of the management in generating strong cash balances, low gearing, great earnings and continue to deliver values to shareholders.
Mah Sing which is trading at 9 times and 7 times multiple of its 2008 and 2009’s financial earnings is reported to be trading at 40 percent discount to its revised net asset value of RM2.86 as estimated by Macquarie Research. The company which has declared 40 percent of its net profit will be given back to shareholders in terms of dividends for financial year 2007 has also attracted other investment bankers.
Besides a “Buy” call, all the investment banks have almost the same target price - Deutsche Bank (target price of RM3.02), CIMB (target price of RM3.00), Aseambankers (target price of RM3.00) and SJ Securities (target price of RM3.15).
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Monday, November 12, 2007
DIGI to Bail-Out Time DotCom via Share-Swap?
Both Telenor’s DIGI.com Berhad (DIGI : stock-code 6947) and loss-making Time DotCom Berhad (TIMECOM : stock-code 5031) were suspended from trading today, Monday, and rumors quickly spread again thatDIGI.com is buying into Time DotCom on a share-swap. The last trading price of DIGI.com was RM23.60 a share while Time DotCom’s stock price was RM0.87 per share before the suspension.
Based on the last stock prices, 1 share of DIGI.com would fetch about 27 shares of Time DotCom. 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. With floating shares of 750 million in the stock market, a 12 percent stake from the selldown to swap shares with Time DotCom would worth RM2.124 billion.
Time DotCom on the other hand has 2,530,775,000 floating shares worth a total RM2.201 billion. Hypothetically, let’s say Khazanah Nasional Bhd is willing to dig into its own deep pocket for RM2.124 billion for the 12 percent stake and inject it into Time DotCom. Assuming Khazanah is forcing its own direct 30% in Time DotCom to DIGI.com with a 50% premium of the last trading price. That would means DIGi.com needs to cough up RM991 million. Khazanah still owns 45% in Time Engineering which in turns own 40% in Time DotCom (not the latest figure).
Put the whole deal in a share-swap and Khazanah needs to pay up RM1.133 billion to ensure Time DotCom owns 12 percent in DIGI.com. This will translate into a situation whereby Time DotCom could enjoy the fruits of profit from DIGI.com, not to mention the ability to pay its' debts, while DIGI.com could leverage on Time DotCom’s 3G license. To further bargain for a better price, DIGI.com could be force to pay higher premium using the 3G as the excuse.
Assuming again that somehow DIGI.com is required to pay 100% premium for Time DotCom, a 30% stake in the latter will cost RM1.32 billion and Khazanah needs to pay only RM804 million.
Other Articles That May Interest You ...
- Who’s the New Buyer for 12% stake in DIGI.com?
- What if Telenor refuse to sell-down DIGI.com?
- DIGI - If You Can't Beat Them, Suck the Coffer Dry
# Update (Tuesday 13th Nov 2007 15:02pm): Reuters reported that DiGi has agreed to form strategic and equity tie-ups with broadband telecommunications firm Time dotCom Bhd, allowing DiGi access to Time’s prized 3G spectrum. Time DotCom said it also received an offer from DiGi’s parent, Telenor, to buy a stake in DiGi via a share placement to help DiGi comply with Malaysian equity rules. Both companies have announced the alliance in statements to Bursa Malaysia today.
Bursa should get more mature, take the Quantum Leap
Nobody knows when the current temporary bearish sentiment will last. What we know is the U.S. sub-prime or housing bubble has burst and now is the time for financial companies to report the extent of the damages caused by it. Gauging from the initial reports, it seems the damage is quite serious but does not warrant the 1929 Great Depression. It’s already announced that the sub-prime problem might needs up to 2-years to recover. Fortunately China and India markets are still running at full speed and able toabsorb some damages – from America to South-East Asia’s countries.
And please remember that Federal Reserves Chairman still has the aces of the interest rate of which he can cut anytime if the situation requires him to. In fact he has too much room to move around that investors are whining with the intention to force Ben Bernanke to use it. Hence logically investors should not worry and instead should let Ben’s team do their work. It’s not like the economy is on the brink of collapse with the interest rate remaining at 0.5%.
If you ever noticed the Kuala Lumpur Composite 
Index (KLCI) these couple of days, it’s taking the cue from U.S. stocks market most seriously. The fact that the KLCI has reached the 1,400 means the general election’s feel-good factor has been taken into consideration. The 1,400 mark is no simple quest, though I’m still puzzle why there’re still tons of penny stocks scattered around this time. Just grab this “1,400” figure and use a time-travel machine to zoom back to 1993-94 and you can see the wonders it can do to investors or traders back in the future.
It’s true that if you’re speculating or trading with penny stocks, you don’t really need to worry about having sleepless nights because your shares will not drop any much further down the drain even with today’s plunge (KLCI was down 20.71 as of writing). Trading volume drops significantly with less than a billion shares traded, which is normal considering few people will try to catch a falling knife. It’s a boring trading day and the Bursa Malaysia should accept the fact that most of the volume traded prior was from the penny stocks.
Needless to say, stocks above RM3.00 to $4.00 affected the most everytime KLCI drops. On the interesting note, the foreign Call-Warrants are being pulled down together simply because their main shares on the foreign soils took the beating more severely.
So what can the Bursa Malaysia do to create the excitement? Unless you’ve alternative bourse or equity markets to trade, go and take some sleeps now *yawn*. Bursa should seriously consider taking the quantum leap in introducing short-selling with easier and attractive mechanism. Put away excuses that short-selling might worsen a bear market and the local investors are not mature enough and so on. You need to start from somewhere. It will create more dynamic and efficient market with better supply and demand from the investors. Bursa and brokerage houses survive on commission and volume is of paramount importance. A one-way market is never interesting and can never mature.
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Sunday, November 11, 2007
Payday Loan is getting easier and even free
Remember those days when the parents would be extra proud that their daughters found their other half working under the bank’s payroll? It was the moment to cherish simply because the job was said to be one of the safest of all. It was like striking a gold-mine and you can be sure your daughter will not die of starvation. Such was the power of job security. Today if you think you can find job security anywhere, you must have living under the coconut shell for a very long time.
People tend to stuck in financial difficulties more often than ever. While Asian’s been saving, American’s been spending. And it’s a wonderful to know despite continuous spending to the current deficit level, U.S. is still the biggest economy power-house that everyone needs to rely on. However, unless you command great pay and have good credit rating, chances are you belong to the majority middle to low level income citizens who might face cash shortage, every now and then.
It’s normal to face short-term cash problem and who do you approach urgently for help? Maybe your immediate family members or friends but not everyone can start the conversation of money borrowing with ease. There’s another way though which is cash advance loans. No, this is not something like those underground loan-sharks that can loan you hundreds of thousands of dollars but will not hesitate to harass you in 1001 ways to get back double or probably triple what you borrowed in the first place.
Just because you need money by tomorrow but somehow your payday isn’t available until next week does not mean you shouldn’t have the flexibility or option to get small loans amounting to $100, $200 or $300 fast and easy. Although the competition is tough, some providers such as National Payday is providing free payday loan or cash advance as long as you pay the full balance due on your due date. It’s fair to conclude that unless you’re really desperate and are sure you can pay back the loan amount within the time-frame, you should reconsider taking such loan unless you’re willing to pay 25% loan fee on the balance after the due date.
Dow and Nasdaq ready for technical rebound?
Almost every single human being on the trading floor at Wall Street ran helter skelter searching for shelter from the stocks plunge. This time (last Friday) it was Wachovia Corp. and Qualcomm Inc. with their loan losses and weak quarter respectively that continued the previous day’s panic selling started by Cisco System Inc. The selling accelerated in the final minutes of Friday and subsequently Dow Jones sank 223.55 points to 13,042.74 while the Nasdaq Composite dropped by 68.06 points to 2,627.94.
As usual, it doesn’t matter if the stock (in this case Qualcomm) beats Wall Street’s estimate earnings. It’s all about guidance. And when Qualcomm guides financial year-2008 EPS (earnings per share) below consensus - $2.03-2.09 vs. $2.19 consensus, it was punished. Great! If only these investors could maintain the momentum with the current continuous selling program, I believe some of us should start laughing all the way to the bank. Making money would be much easier with such trend by buying Put Option and for investors who’re holding stocks / shares you can sell option contracts which is out of money, wait for the option to expire worthless with Friday expiration around the corner.
But could the 13,000 become a strong support level? From the chart it appears that way and the fact that it’s touching the 50-MA means the DJIA needs to wake up and flex its muscle. As for Nasdaq Composite, technical rebound should happen since 2,600 
level is the cushion for the technology stocks. The next support level is within the 2,500 range. Hence the DJIA has little space while Nasdaq has about 127 points for further drop. Below these levels and you might wanna kiss your bull goodbye, medium-term. Nevertheless Uncle Ben might spring some surprises by continue to cut the interest rate in order to soothe the crying babies on the trading floors.
By the way, I had opened new positions on both Tiffany and Co. and Priceline.com Inc. which I short (Put Option) and long (Call Option) respectively last Friday. When market open for Monday trading regional stocks markets such as Hong Kong, Japan and Asia can expect another round of selloff. Going by the current trend 1,400 could perhaps be the most interesting level to watch out for Malaysia stock exchange.
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Saturday, November 10, 2007
Malaysia’s Biggest Rallies since 1998 – KL under siege
There’s a strong reason why Malaysian PM Abdullah Badawi didn’t looks relax when he should be when closing the 58th UMNO General Assembly on Friday. Obviously he was disturbed with what was going to happen on the very next day, Saturday 10th Nov 2007. A mass gathering organized by a non-governmental organisation called The Coalition for Clean and Fair Election (BERSIH) which consists of a group of 60 non-governmental organisations supported by five Opposition parties was scheduled to happen on that day. The rally is to call for free and fair elections.
According to the New York-based Human Rights Watch, Malaysia's parliamentary elections have been characterized by vote buying, the use of public resources by the ruling parties, and gerrymandering. The Election Commission has been accused of bias. – reported Kyodo News. Bersih is demanding the use of indelible ink to prevent voters from casting more than one vote, the removal of alleged phantom voters from electoral rolls, and access to state-controlled media by all political parties. New York-based Human Rights Watch slammed the government's stance on the mass rally, which Prime Minister Abdullah Badawi had vowed to suppress, and police had threatened to arrest protesters.
I was traveling down to KL for my breakfast but decided to call off the plan. It appears the police are dead serious about filtering every single creature going into the city, not a single mosquito is supposed to past them. The capital of Malaysia, Kuala Lumpur is under siege, not by terrorists but by thousands of police and anti-riot police together with tons of FRU trucks readied with water cannon. Basically you can’t enter Kuala Lumpur at all. People from Gombak trying to access the city via Bulatan Pahang are screened even at road blocks setup before the junction into Titiwangsa Lake. If you try to access from Jalan Ampang you’re stucked at Jalan Jelatek as well. Same with routes from Sg Besi, Sg Buloh, Old Klang Road, Bangsar, Brickfields and the rest of the roads leading into the Dataran Merdeka (Independence Square), the supposed venue for the gathering.
While the Malaysian government put the number of demonstrators at less than 10,000 BERSIH claimed over 40,000 people involved while CNN/AFP put the numbers at between 30,000 and 40,000. Opposition group leader and former deputy Prime Minister Anwar Ibrahim put the number much higher, claiming more than 100,000 people had gathered in the streets. Witnesses said police fired tear gas and jets of "chemically-laced water" at hundreds of demonstrators who sought refuge in the city's Jamek mosque and in commercial buildings. MalaysiaKiniwhich provide live reports on the rally experienced servers overload – you can take a look at the map here.The delegation, led by opposition leader Anwar Ibrahim, successfully handed the memorandum to the King's secretary at the gate of the Istana Negara at 4 pm, accompanied by PAS' Hadi Awang and Nasharuddin Mat Isa and DAP's Lim Kit Siang and Lim Guan Eng. The organisers then asked the crowd to disperse. Foreign media carries out the rallies’s coverage in a big wave and thanks to internet, the local Government-contolled media that normally black-out such rallies failed to close the people’s access to such information.
So, can you blame the poor PM Badawi to be in such panic in the first place? The PM has said no gathering is a peaceful gathering even before it takes place. Does this mean the PM somehow knew in advance the gathering will not be a peaceful one? The gathering turned out to be the biggest anti-government protest in nearly a decade with the organizer, BERSIH, claimed over 40,000 people took part, although it wasn’t able to be held at the pre-planned Independence Square as the police had taken over the area.
I still can’t understand why the government and police can’t just allow the“peaceful” gathering to take place. The fact that BERSIH chose Saturday, just two days after the Deepavali festival to hold the gathering showed it tried to minimize the impact to the motorists as much as possible. Of course the argument that the gathering was illegal since it did not receive police permit is simply insulting people’s intelligence as it was known that besides the government itself, no other parties are allowed any permits to gather.
For God sake just let those people voice their rights and if anyone becomes violent, arrest him/her. People will not simply sacrifice their sweet weekend time to demonstrate if the whole election process is clean. And to even think of the basic fundamental rights enshrined under Constitution - freedom of speech my foot!
# Note: more photos from Malaysia-Today
# Note: Coverage by AlJazeera that made one of the Malaysian Ministers furious?
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Friday, November 09, 2007
Technology Stocks’ Tumble Exaggerated
So, the whole world thinks the technology stocks are next in line to get the spanking from the subprime crisis. That’s just silly. If you didn’t know, Nasdaq was punished on Thursday because Cisco System Inc. (Nasdaq:CSCO, stock) indicated his company has been having trouble selling products to its 25 largest customers particularly financial institution. Without identifying them, Cisco whined that the reluctant buyers include eight banks.
Logically when a company is hit by financial difficulties, one will tend to temporarily evaluate and might stop the purchasing of luxury items and this does not only confined to I.T. hardware(s) or software(s). It could affect other expenditures such as office upgrades or renovations, salary raises, retrenchments, staffs’ benefits and even stationaries. But has the banking sector reaches such a depression stage? There’s no more bailout in a very big-scale, is there? Cisco might thought it would be a good idea to sound the alarm early as not to disappoint the ever-hungry wolves’s (investors) high expectation. Little did it realize it actually had caused the panic and blood-shed all over the trading floor.
It wiped out $12 billion out of Google Inc.’s market value and $9 billion from Apple Inc. Other great soldiers who lost the battle: IBM Corp., down $4.97 (4.5 percent) to $106.11; eBay Inc., down $1.29 ( 3.8 percent) to $32.40; Oracle Corp., down $1.75 (7.9 percent) to $20.35; Baidu.com Inc., down $37.13, (9.4 percent) to $357.87.
The fact is the banking companies still need to buy the necessary technology equipments or programs in order to compete or to enhance their existing operation problems. They might just stretch the project into multiple phases but to scrap in totality might be too exaggerated. History has shown that the fastest and efficient way to bring up the bottomline is to chop the staffs’ strength. So for the technology stocks to plunge (to continue?) as if it’s the technology bubble instead of housing bubble that was actually burst is tantamount to present good opportunity to investors to scoop at a very attractive stock prices.
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Scalping GOOGLE for fast money, thanks to option
Unless you’re Angkasawan (not astrounaut mind you), you should respect the Newtons’ Law of Gravity which says whatever goes up must come down. The physic law or formula applies mostly to engineering - remember those days when your physic teacher always relates your classmates who excel in physic as potential engineers but not doctor? I might wanna give my physic teacher a lecture if I have the opportunity to meet him.
My physic teacher could have forgotten or didn’t have a clue that Newton’s Law of Gravity can be used profitably in trading options or stocks. I’m referring toGoogle Inc. (Nasdaq: GOOG, stock) of course. Today is the day the physic law takes its effect on Google’s stock. So what’s the problem with Google that it plunges more than 5 percent or $37 a share as of writing? Traders blame it on Cisco System Inc. which drops more than 7 percent and pull the rest of the Nasdaq’s stocks into negative territory.
Using this as an excuse, everyone seems to be selling technology stocks – Apple Inc., Akamai Technologies Inc., IBM, Baidu.com Inc. etc. If you can’t beat them, join them. And so I bought GOOG Nov 700 Put Option with the intention of scalping the stock. It was quite easy with such high volatility and if you refer to the chart, the range of $10 was the perfect area to scalp. I closed the position an hour later pocketing a cool 30 percent profit. My guess was the stock could go lower because it was struggling to hold on above $700 a share. But then, I wouldn’t want to stay all day long. It’s better to take the money off the table and run. I always remind myself that “Bull and Bear make money, Pig gets slaughtered”.There’s always another trade next time.
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Thursday, November 08, 2007
Pamper yourself with high-speed wireless broadband
Days ago, I’ve blogged about how you can trade U.S. stocks or options basically anywhere you are located within the globe as long as you’ve internet access. The world of investing has somehow becomes smaller geographically. Gone are the days when small investors need to drive all the way to the brokerage firms to monitor their stocks. Of course you can subscribe to the real-time stock prices but it would costs you an arm and a leg back then.
Now, if you have internet access you can basically trade from home and trade most of the major equity markets from major stocks exchanges. Current internet access does not confined to wired-access anymore but wireless has become the de facto. In fact wireless equipments have become so affordable that if you’re trading from U.K. you are pampered with wireless broadband which bundled with the wireless BT Home Hub and BT Hub Phone and unlimited download, not to mention the download speed of up to 8Mb.
Add in 24x7 customer support, 5GB of free online storage, built-in firewall and the ability to leverage your existing touchtone home phone to make inclusive UK evening and weekend calls – it’s a great offer. For a more cost-effective option, you can choose another package specifically for wifi broadband with optional BT Hub Phone.
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Dow Jones already taken 3 Bunjee Jumps in 1 month
Again the U.S. Dow Jones plunged 360 points Wednesday *yawn*. Is that the best it can do? I’m still waiting for 4-digits drop as I’ve not seen that before but 3-digits drop is quite normal nowadays, no? And aren’t you sick and tired with this subprime crisis being put as target on the shooting board? You read the news that investors worried about spreading fallout from the credit crisis at banks and about a dollar that just keeps getting weaker. Or the oil prices keep on going up the sky and blah blah blah. Yeah, crude oil hit $98 – big deal.
When the interest rate was cut, the after effects are just that – weaker dollar, higher oil prices 
and most likely higher inflation. So the investors should expect such impact. Life still needs to continue. Citibank Inc. and Merrill Lynch & Co has spilled the beans and now Morgan Stanley said its fourth-quarter profit will be reduced by $2.5 billion in write-downs related to the ongoing credit crisis. The nation’s second largest investment bank said it could lose up to $6 billion if all subprime mortgage-related investments were to go bad.
So what if financial institutions have already suffered an estimated $55 billion of losses following a sharp increase in U.S. mortgage defaults this year? When the bubble burst, investors should have displose or started to short the financial stocks. It doesn’t make sense to long on financial related stocks unless you’re day trader trying to scalp to make minor profits out of it.
Instead of crying Armageddon, why not think it this way. Weaker dollar has already pushed a portion of funds elsewhere such as Asia, assuming Ben Bernanke will not cut the rate again in December. The remaining portion of funds that are squeezed out from financial stocks need to re-park into other sectors such as technology, healthcare etc. So it’s not like thousands of stocks within Wall Street will see a depression out of a sudden. There’re still stocks that are resistant-proof to the housing crisis. Just think of it and you’ll know where to park your money.
And talk about 300 points plunge, if you care to pull out the chart and take a look at the Dow Jones performance for 1-month period you’ll notice there were at leastthree times the DJIA took the 300 points bunjee jump. So get used to it.
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GUESS - the apparel retail stock you can’t ignore
Stocks tumble again on the Wall Street and this time we’ve another culprit that we can point our finger at. Blame it on General Motors Corp. (NYSE:GM, stock) - the company reported a loss of $39 billion, or $68.85 per share, more than the loss of $147 million, or 26 cents per share GM reported in the third quarter of 2006. The loss was its worst since the first quarter of 1992, when GM lost $21 billion.
The reason for the enormous loss: GM is taking $38.6 billion non-cash charge in the third quarter against its deferred tax assets in the U.S., Canada and Germany. In line with U.S. accounting rule, GM is writing down the assets because the three locations have seen a "three-year historical loss".
Anyway even when Wall Street is in red, there’re still some stocks that you can bargain-hunt. Guess?, Inc. (NYSE:GES, stock) might not be attractive in the face of warmer than normal temperatures this fall to the extent that stock investors turned their cold shoulder toward apparel retailer. Shares of GES hit a 52-week high of 57.20 on October 17 but since then have plummeted 28% with reports of insider selling.
On 6th Nov, GES raised its fiscal year earnings per share forecast from a range of $1.79 to $1.84 to a range of $1.85 to $1.90 (compare to Thomson Financial of $1.87). GES added that third quarter comparable store sales in its North American Retail segment increased double-digits and accelerated in October.
The company has been around a long time, and it's been through some bad, bad years. And the management somehow will know how to fix the problem whenever it arises. The company has been beating earnings for the past several quarters and it’s expected to do the same when it is set to release its third-quarter financial result on 4th Dec 2007. Trading at P/E of 22 times estimated 2008 earnings GES is expected to meet huge resistance at $52 a share.
However its strength in its brand simply means you can’t ignore this stock when the share price shows weaknesses. Consider the GES Mar 2008 45 Call Optionwhich will have 135 days to your advantage before expiry.
Wednesday, November 07, 2007
Oil Crisis - Palm Oil and Crude Oil at record high
Malaysian crude palm oil futures broke past the key RM3,000 resistance level to strike a new high today, after crude jumped to a record peak and soyoil soared to a near 33-year high. Prices also gained as financial players covered their short positions ahead of an Indonesian industry conference tomorrow, when influential analyst Dorab Mistry is due to give forecasts on palm prices and exports, traders said.
The benchmark January contract rose as much as RM42, or 1.4 per cent, to a high of RM3,002, the seventh record high in little more than three weeks. At 0330 GMT, the contract was up RM27 at 2,987. “For the first time ever, we are trading with RM3,000 for a metric tonne. Never has there been so much volatility in this market,” said a dealer with a foreign trading house.
Meanwhile, oil prices jumped to a trading record above $98 a barrelWednesday amid expectations of declining U.S. supplies and following news of an attack on a Yemeni oil pipeline. Light, sweet crude for December delivery rose as high as $98.03 a barrel in Asian electronic trading on the New York Mercantile Exchange. Traders remain worried about whether supplies will be adequate to meet demand for heating fuel in the approaching Northern Hemisphere winter.
Oil inventories likely fell due to a suspension of output at Mexico's state oil company Petroleos Mexicanos, a major crude exporter to the United States, which temporarily shut its ports last week due to severe weather. Analysts also expect the EIA to report Wednesday that gasoline inventories rose by 200,000 barrels during the week ended Nov. 2, while supplies of distillates, which include heating oil and diesel fuel, fell by 500,000 barrels.
Hence you can see stock prices of palm oil producers jumps today. If the weather continues to bring in flash floods and destroy the plantations in large scale, expect the palm oil futures to skyrocket highger together with the crude oil prices. Now not only Malaysian government has to hike the price of fuel but also the cooking oil.Other Articles That May Interest You ...
Minimize stress and have fun with Quiz Rocket
Are you bored to death because somehow the stocks that you hold do not seem to move while the others are having fun? If you’re stress most of the time from the stocks investing activity, it’s time to have fun. Different people have different way to relax and have fun but if you like something to challenge your brain cells, then why not take some fun tests. Quiz Rocket providesfun online personality quizzes just for you.
You can try out the dumb test, crazy test, love quiz, idiot quiz or just to test how sexy you are. For example, one of the idiot questions might be “How many idiots does it take to screw in a light bulb?” What’s your choice of answer given the following:
- One. Idiots are very smart
- That’s a trick question. There’s no such thing as a light bulb
- Four idiots. One to hold the light bulb, and four to rotate the ladder
- Five idiots. One to hold the light bulb, and four to rotate the ladder
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Tuesday, November 06, 2007
Move aside iPhone here come the Android
The way Google move along its roadmap (I assumed they have one) is simply fantastic. The company is one of the rare species that do not give earnings guidance and this could be the reason for its success. Probably Google itself couldn’t measure how far the company will jump in every coming quarter and the subsequent thereafter. Earlier decision in YouTube and DoubleClick’s acquisition might be seen as a way to monopolize the online advertising, however the killer-move did not arrive until the recent official announcement.
The long rumor of Google going into the cell phones territory is confirmed. For decades mobile phone industry are being segregated among the major players without a common platform. With the announcement of the creation of the Open Handset Alliance that will pull a group of 34 companies together to create a free package to run a cell-phone, Google Inc. (Nasdaq: GOOG, stock) might have hit the next jackpot after it’s flagship Google Search Engine. The free package is essentially a complete set of software required to run a cell phone - Linux-based operating system, a Web browser, applications including maps, e-mail, video-sharing and viewing tools.
The alliance includes chipmakers Intel Corporation (Nasdaq: INTC,stock) and QUALCOMM Inc. (Nasdaq: QCOM, stock), handset maker Motorola (NYSE: MOT,stock), wireless carriers T-Mobile and Sprint Nextel and e-commerce provider eBay Inc. (Nasdaq: EBAY,stock). The new phone will be known as Android and is seen as having the potential to give Microsoft Corp and Nokia Corporation (NYSE:NOK, stock) a run for their money. Perhaps the success factor is the proposition to introduce a toolkit that will let independent programmers build mobile software and services for Android-based cell phones.
And the good news for developers is that they don’t pay a penny for licensing. Instead the developers will be able to sell their applications through a Google-created online marketplace without sharing revenues with the search giant. Google will make money on the advertisement served through the phone's browser. On the other hand, existing wireless handset makers and carriers will be allowed to use the software platform free of charge. In fact handset makers are hoping to cut the 10% off their costs which they currently pay to use Symbian or Microsoft as part of the licensing fees. So its win-win propositions for everyone.
Just how does Google think of the success factors of this project? Andy Rubin, head of the Android project at Google, hopes that within five years, "hundreds of millions" of Android-based phones will be sold per year. This might be a dream but make it cheap and simple enough and consumers might just love it. But with hundreds of millions of cell phone users, the ready market is too huge to be ignored and if things go well, Google’s fortune could just double or triple. So, are we seeing Google stock price above $1,000 a share?
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Web Design and SEO come hand-in-hand
Google is now the de facto when comes to search engine. I used to love Yahoo and found it to be one of the greatest piece of tool ever invented in the internet world. But that was before the birth of Google. I can’t give you 10 reasons how and why I switched to Google search engine over the period but I know the main reason was the performance. Google could give you the result so fast that you thought the database was residing inside your own notebook. Yahoo was somehow too ambitious and as a result cluttered its own search engine which in turns slowed down the result.
However, Google search engine is still far from perfect. If you try to search to “make money investing stocks” or “make money trading option”, the search engine somehow will present book offers from Amazon as the top choice even though that’s not what I want. There might be intelligence built into the search engine’s algorithm but still it can’t really produce what you want. Sometimes you might get bombarded with unrelated websites due to the heavy SEO done. Hence just like what chicago internet marketing consultants said - no matter how great, beautiful and creative the design of your website, if you do not do some Search Engine Optimization, chances are your site or blog might not be found despite 9 billion searches being performed every month.
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My biggest Profit in Option Trading – 486 Percent
Question: Name me a stock that defies the gravity and appears to have everlasting rocket fuel blasting into the space. Answer: Google Inc. of course. Not only the stock doesn’t give the stock market a damn even though the Dow was in red for sometime now, it also continues to attract analysts.
In the latest update, Oppenheimer raises their target on Google Inc. (Nasdaq:GOOG, stock) to $850 from $700 saying they believe that mobile advertising opportunities for Google are bigger and traction can be higher than any other advertising opportunities Google has tried to capture so far beyond its core search marketing business.
Google is widely expected to enter the mobile phone market very soon with its own Google phone and operating system for the phones. Looking at how deep is the cell phone’s penetration now, it’s no-brainer to guess the revenue prospect from such a strategy. Analyst Sandeep Aggarwal said advertising revenue from the phones could generate up to $4.8 billion annually in three years and $10 billion per year within five years.
When the market is in red and directionless with the concerns about soured debt mounted after Citigroup Inc. (NYSE: C, stock) warned it plans to book $8 billion to $11 billion in additional losses, investors and speculators are finding alternatives to make money. If you remembered my previous article, it appears investors are finding comfort in technology stocks. The positive news on the upgrade pushes Google’s stock north without the needs to dial the Star-Gate (you watched Star-Gate, don’t you?).
Soon my GOOG Nov 570 Call Option will expire worthless. Hence, I decided to take money off the table today, not that I was willing to (I’ve fallen in love with Google – big mistake) considering how beautiful the stock is. So I slapped myself to remind me of the real objective, which is to make money. I’ve promised to tell you my profit margin and here it is, my biggest profit in terms of margin and percentage – 486.9 percent. Whoa! Am I dreaming or what *slapped myself again*? Nope, I can feel the pain.
However I only disposed two of my contracts leaving the remaining to catch any more upside and also to see if I can break my own record before the Friday expiration. As an option trader, you should know that my position does not have much time-value but only intrinsic-value (it’s very deep in-the-money). The position was opened on 24th Sept 2007 based on price-volume-action. Really, I do not know how to plot the support and resistance level since then as the stock just keep pushing upwards, so much so that the stock skyrocketed from $600 to $700 a share within a record 20-trading-days.
So far I’ve not seen such an explosive movement and I bet the Oppenheimer analyst was as clueless as me how the internet giant could behaved in such a way. The stock could have prompted the analyst and possibly other analysts tokeep on raising their target on Google. Can the stock continue to go into the$800 territory? I’m not going to wait to find out but I’m sure it will not disappoint the Google’s fanatics. And I’m sure you didn’t know besides the remaining Nov 570 Call, I still have Dec 630 Call *evil grin* – also entered based on price-volune-action. But for this Dec 630 Call Options I’m not sure it can break the existing record because there’s no earning factor before it expires. Now you know the power of leverage with option trading.
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Monday, November 05, 2007
One Trillion Dollars company from PetroChina
The global financial market has a new champ – PetroChina, which became the world’s largest company by market capitalization worth nearly one trillion dollars – double the value of ExxonMobil. PetroChina’s stock prices were trading at 48.62 yuan from IPO price of 16.7 yuan today, Monday 5th Nov 2007, an increase of over 190 percent. Its market capitalization shot past the 1.1 trillion dollar mark in early trade before profit-taking trimmed the company to slightly less than 1 billion mark.
Already listed in Hong Kong and New York stock exchange, the Asia’s top oil and gas producer made it’s entry to the Shanghai stock exchange after the largest IPO (initial public offering) ever in China. The IPO raised nearly nine billion dollars from the sale of four billion shares. The Chinese bourse surged 130 percent in 2006and is already up by 110 percent this year with many companies trading at the risky and ridiculous 60 times earning.
PetroChina is still controlled by the state after the listing, holding 86 percent stake through parent China National Petroleum Corporation. In the latest salvo to the over-heating stock market, China’s Premier Wen JiaBao has warned that his government will do what’s necessary to prevent bubbles and fluctuation.
On the other hand, Hong Kong’s Hang Seng Index tumbled 3 percent or 915.56 points at 29,552.78 mainly due to comments from Wen JiaBao during the weekend to delay the mainland citizens from investing Hong Kong stocks directly.Wen said Beijing should pass a law to regulate outward fund flows from the mainland to minimize the shock to domestic stock markets, and examine how they might negatively impact the Hong Kong bourse. It appears the China’s Premier is aware of the bubble and sorry about it’s impact.
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Sunday, November 04, 2007
Which Brokerage and How to open a trading account?
Some of you asked how on earth a non-U.S. citizen can open an accountwith the intention to invest U.S. stocks or to trade its options. The facilities to do so were there for years and the process was simple. It just that after the tragic Sept-11 incident the U.S. government has put on multiple processes in between to prevent money laundering or something similar from happening again. If you do not already know, just before Osama bin Ladin launched his attack on America, he was believed to have bought tons of “Put Options” on U.S. optionable stocks. As a result he made great fortune when the stocks plunged.
While there’re many brokerage houses offering you the facilities to trade the U.S. equity markets, they’re equally different in terms of their offerings. These brokerage houses also act as the market makers who while trying to make money from you, they also compete among themselves for that piece of commissions. If you do not know that competition breeds benefits and lower cost of doing business, chances are you’re living under the coconut shell.
If you’re not a citizen of USA, then you’re an alien (no jokes). And as long as you’ve internet access, basically you can trade not only stocks or options but also forex, futures and bonds from over 70 global markets using a single account from such brokerage firms. That’s why countries such as Malaysia and Singapore have miles of catchup to do when you talk about financial globalization. Among the providers include TD Ameritrade, Scottrade, E*Trade, OptionsXpress, InteractiveBrokers and so on.
One of the reasons that I’m holding from writing an article about brokers is due to the fact that every traders or investors have their own preference – one’s meat could be another’s poison. Of course the other reason was the request from a reader who has not trade U.S. equity markets before slipped off my mind (and for that I apologize). Long story short, my preferred providers areInteractiveBrokers and OptionsXpress. Let’s talk about InteractiveBrokers.
Why InteractiveBrokers?
- InteractiveBrokers’ strength is probably in its speed in execution. It makes sense because InteractiveBrokers (IB) was initially designed for professionals – not for newbies who’re still learning the ladder. And professionals’ main requirement is the performance in buying and selling on top speed. So, features such as nice looking chart wasn’t integrated into IB. However over times due to requests and competitiveness, IB deployed multiple features and functionalities to satisfy the customers.
- InteractiveBrokers also offers one of the lowest commission rates, if not the lowest in the industry. Starting from US$0.70 per contract for options trading, it’s hard to find similar offer elsewhere. When you’re talking about scalping stocks or day-trading, commission is what matters and differenciate between a profitable and a losing trade.
InteractiveBrokers provide you the best pricing based on “Smart Best-Execution Routing”which means essentially it searches for the best stock or options prices available from all the market makers out there – so that you don’t overpay.- InteractiveBrokers provides you both trading platform – web-based or client-based (Java) trading and hence the fast execution during buy/sell activities.
- There’re more benefits but I’m not going to elaborate more as it would take pages. But there’s one thing that I don’t really like – I can’t have my preferred login name because IB will add some characters to the end of your login automatically as part of the security feature. So I can’t tell IB I want “StockTube” as my login name.
To apply via InteractiveBrokers, click on Individual Application form. Due to the multiple steps in applying for an account, I’m not going to show each of them here. There’re mainly 4 major processes of which each of them will have more mini-steps:
- Account Configuration
- Applicant Information
- Agreement and Disclosures
- Funding and Acknowledgements
I know it’s a tedious in opening the account but it’s better than fly yourself to the U.S. and subject yourself to body searches at the immigration. As for the funding, you can “TT or Wire” the money (do the USD-Ringgit conversion please) to IB together with several pieces of information that you will get after going throught the steps in online application. That’s why the Funding is the last step within the procedures.
Some of the brokerage houses try to attract you with minimum US$500 as the requirement to start an account but seriously it’s not sufficient. And if you plan to trade Google Inc.’s option, don’t even think about such amount. As forOptionsXpress, all I can say is this broker house provides probably one of thebest features and tools in the industry. Depending on number of contracts you trade per month, your commission starts from US$12.95 a contract. Now do you understand why I mentioned earlier that InteractiveBrokers provides the lowest commission? Nevertheless if you prefer rich functionalites and nice-looking charts, then OptionsXpress is your choice. But I’ve to warn you that your trades might not get filled at the desired price because it’s web-based and any slow internet bandwidth will only worsen the situation. I particularly love their support which is in the form of "Live-Chat" - it's superb.
So which one should you choose - InteractiveBrokers or OptionsXpress? It depends on what you need and mandatory requirements. If financial allows, why not open an account with both?
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Preferential loan rates from Payday Fans for military
Money is the root of all evil. Money is perhaps the most useful product ever invented yet centuries later not many know how to use it wisely. But who cares about good money management? As long as money keeps appearing the moment we need it, people couldn’t care less. However money is evil enough that people are willing to rob, cheat, kill, kidnap and hundreds other creative activities just to get hold of it. Tell that to a Chinese that money is not everything and chances are you would be screamed at – without money you can’t do a single thing.
Before the invention of plastic card called credit card, people have to borrow when things get difficult. The borrowing is either hard cash or in the form of a check. There’re two types of people when come to borrowing money. First type is the people who will not borrow no matter what and this group of people interestingly has prudent money management and do save for the rainy day. The second type of people will not think twice about borrowing money the moment they can get their hand on you, including the loan sharks. This second group of people tends to spend lavishly as if there’s no tomorrow and they won’t blink twice in acceptingguaranteed payday loan offered since their credit rating are generally bad.
Majority of people in Western countries are more fortunate as the money borrowing concept has taken another level of complexity. They don’t believe in saving for rainy day. They might save a little but not for their children’s education as the kids are expected to survive on their own once they reach the maturity age. This reason could be one of the reasons why the U.S. is the largest economic powerhouse for many decades even until today – because Americans spend. In fact Americans are spending every single dollar other countries such as Japan, Korea, China and even Malaysia are saving.
Besides credit card cash advance loans, payday cash advance or payday loan is gaining popularity. While not everyone qualify to become the proud credit card holder, the same cannot be said about payday loan. It’s quite normal for people nowadays to take care of their immediate short-term needs while waiting for their next weekly pay check. Your credit check will not be performed and generally you’ll receive the money fast, normally within 1 day if it’s approved. Payday Fans from http://www.paydayfans.com/?p=13 is one of the companies that provides payday loan to military with lower preferential rates simply because of the role played by them protecting the nation.
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Malaysia Govn desperate for early Election this year?
The wind of general election is blowing. And it’s blowing real fast and strong, so much so that I overheard not once, twice but thrice conversations about it from the next table when I was having a glass of “Teh Tarik kurang manis” (pulled tea minus condensed milk) with my buddies within this week alone. In a rare occasion, the UMNO assembly which will see 2,500 delegates attending the event is set to clash with Indian community main festival, Deepavali. UMNO assembly is from 5th to 9th Nov 2007 while Deepavali falls on 8th Nove 2007.
Umno secretary-general had said that the party's AGM would not take a break on Deepavali. Interestingly, MIC (one of the founding members of the ruling coalition representing Indian community) president Samy Vellu said the Indian community will not feel slighted by Umno's decision to continue its general assembly on Deepavali. In actual fact, Samy Vellu can’t do anything even if UMNO doesn’t give a damn if MIC likes it or not. Heck, the truth is, even if the whole nation's Indian community feel offended, what can the minority Indian do?
UMNO president, Abdullah Badawi, himself is having a crisis and it appears he had just awakened from his long sleep when his plan to have previous Chief Justice Ahmad Fairuz’s extension was blatantly rejected. He might be wondering why he was advised otherwise. He thought that he can do whatever he wants, including extending the tenure of the Chief Justice; at least that’s what the de facto Law Minister Nazri told him not long ago. But I guess when he’s alone with the King (minus the boot polishers) sitting on the round table together with others in the Conference of Rulers last Thursday, the former lord president of the Supreme Court, Sultan Azlan Shah, who chaired the conference might have lectured the PM the basic 101 of Judiaciary Independence.
Recently PPP (People’s Progressive Party), another member of the ruling coalition was left reeling when UMNO’s third most powerful man, vice president Ali Rustam, told PPP to fly kite and leave the coalition (BN, Barisan Nasional) if the party was unhappy. PPP president, Kayveas who was equally stunned by the speech by Ali Rustam was reportedly didn’t say anything even after Ali Rustam delivered the rude and insulting speech, not that he can say or do anything being bullied by his “big brother” in the coalition. What Kayveas could do was to report it to UMNO President Abdullah Badawi as if a small kid lost his ice-cream to his big bully brother. Majority of PPP members are Indian but Badawi couldn’t care less. He has bigger headache to take care of. He’s worrying about the coming general election.
Influence political blog had spills the bean that current administration has three auspicious dates to choose from for the coming general election: 25th Nov 2007,15th Dec 2007 or 15th Mar 2008. Looking at how the UMNO rushing things at the expense of offending the feeling of the Indian community by having the AGM knowing well Deepavali festival clashes with it gave hint the general election could be held within this year itself after all.
Most importantly the government needs to hike prices of several important commodities such as fuel, gas, electricity, toll and other miscellaneous. It can only implement the unpopular policies after the election. With the existing Chief Justice seat temporary held by Court of Appeal president Abdul Hamid, Badawi needs to rush to the finish line before Abdul Hamid himself retires early next year. Badawi can’t afford a confrontation with the King now. He needs the King’s consent to dissolve the Parliament for the coming election and what’s important within his agenda now is to probably get the UMNO AGM done. The rumor is his son-in-law, Khairi, might be given the easy ride to take over from Hishamuddin as the new UMNO Youth Chief. Hishamuddin is said to be eyeing one of the three vice presidential slots.
All the good news is in order, at least that’s the best Badawi could do now with his limited knowledge and expertise. The stock market is at all time high, amazingly higher than the 1993/94 Super Bull Run. The PM is proud that he has sent the first Malaysian to space, never mind it was part of the Russian arm deal that cost the nation $30 million for the space tourism expedition. The two Angkasawan (Malaysian version of astronaut since both NASA Space Station Crew’s Profiles and even the Russia Federal Space Agency said Muszaphar was only “Flight Participant”) will be presence during the UMNO AGM and likely be on the nation roadshow to instill another “feel good” factor and to publish Badawi’s achievement in an apparent attempt to fish votes. Small fry was put on stage on charges of corruption – just like previous pre-election.
The time couldn’t be better to call for a snap election. But let’s not stop there. Let’s add more spices. Citing unnamed sources, theEdge’s Saturday business news (picked up by Reuters) reported that The Walt Disney Company (NYSE: DIS,stock) is looking to build a theme park on a 500-acre (202-hectare) site in southern Malaysia, referring to the Bardar Nusajaya in the Iskandar development zone. The proposed Disneyland theme park and resort is slated to be bigger than Hong Kong Disneyland and about the size of Tokyo Disney Resort. I would rather take this piece of news with a pinch of salt. This is not something new. In fact the rumor of Mickey and his gang coming to Malaysia already started in May 2006 with news that Badawi flew to Japan apparently asking Oriental Land Co. Ltd. for support. However a day after the reported rumor, Disney denied and said it has no plans to build a theme park in Malaysia.
Whether theEdge is trying to create sensation for UEM World Berhad (KLSE:UEMWRLD, stock-code 1775) stock or to help create “feel good” factor on behalf of the government is everybody’s guess. But one thing is for sure. The UMNO Youth Chief is adamant about displaying his weapon again during the AGM. Fortunately this time there will not be any live telecast of the meeting or else the true face of the party could be resurface again (for those who had missed the first episode)
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Friday, November 02, 2007
Now Malaysian can trade Google stocks literally
Wow! For investors who are keen to trade the U.S. stocks or options but not sure how to do it, fret not. There’s good news for you thanks to the aggressive issuer OSK Investment Bank. OSK Investment Bank has been fighting heads on with CIMB in the call warrants market lately. Both are willing to lose tooth and nails into the profitable foreign call-warrants and the battle is not going to stop anytime soon.
OSK Investment Bank will list the first Call Warrant (CW) on an American stock, Google Inc, for which the exercise price is denominated in US dollars. The CWs will be listed as Google-C1 on Nov 14. Hold on the excitement. Gosh! Isnt’ AEON Credit prospectus will be launched in mid-November as well? How could you do the killing then? I’ll leave it to you as far as your money management is concerned. You might want to sell down some of your portfolio the moment KLCI goes up to 1,400 points again (example) or if you’re holding some stocks that are not moving for centuries but profitable enough, why not take the money off the table and move on?
AEON Credit being related to AEON hypermarket (previously known as Jaya Jusco) should attract lots of subscribers. If you think AEON is a great stock with great sales record plus tons of loyal customers, then the question of whether you should try your hands on AEON Credit is a no brainer one. AEON’s fundamental is absolutely fantastic and you need to go and visit their supermarkets to get the feel of how good the business is.
Anyway, I’m sure you don’t need much introduction about Google Inc. (Nasdaq:GOOG, stock) because StockTube has been crazily talking about the same stock for quite some time now. OK listen, before you plan to jump into options trading in the U.S. markets (I know, I know, I’ve been a bad influence by blogging how much money can be made from options trading), I think this Google call warrant will be the best platform for you to try it out. It’s good to see if you’re ready for the high volatility coaster-ride. And if you can’t take it at home (Malaysia), don’t ever try it at U.S.
Both Google call warrant and options will be similar in the sense that both expire within a time-frame. So if you’ve been trading local call warrants and think you can take more excitement consider this. If you think the existing call warrants are volatile, Google’s call warrant could be 100-times more volatile, depending on the call warrant conversion and structure to be issued by OSK.
However there’re some differences. The newly Google call warrant will have conversion based on U.S. dollar and the dollar is weakening now. So that could be the risk but on the bright side the stocks’ volatility in the U.S. will not mirrored on local bourse. Also the call warrant will be at the discount since OSK placed the exercise price at $680 a share (Google’s closing stock price is $703.21 as of Thursday trading). Needless to say you can't perform other strategy such as spread on call warrant.
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Investors depending too much on Feds to Breastfeed
Japan's benchmark stock index, Nikkei 225, plunged more than 300 points and Hong Kong blue chip Hang Seng Index was down 710.62 points in early trading. Malaysian KLCI dropped below its crucial and glory level of 1,400 marks by 15 points to the 1,394 level. Blame it on Wall Street which pulled theDow Jones down by over 360 points. All because the investors are not happy with two things – no more interest rate cuts and slowing economy.
Maybe I should add the third thing which is the escalating oil prices which zoomed to $96 a barrel before profit taking kicked in. One day you saw 3-digits of Dow up (after Feds cut 25 basis points) and the next day it was a total 360 degrees reversal. The report from the Commerce Department indicated consumers scaled back their spending in September might be the reason that scared the investors. But don’t you think it’s over exaggerated?
Come on, you can’t expect the Feds to cut the rate continuously, can you? Poor Uncle Ben needs to balance between the economy growths with inflation as well. It’s all about balance. If the task is as easy as declaring the Feds will keep on cutting 25 basis points another 10 times to bring the final rate to 2.00 percent, then the Federal Reserve Chairman will not be a hot-seat anymore. Even though Bernanke might have thought of the above (25 basis points cut over 10 times), you don’t think he’ll reveals it, do you?
But it appears investors are depending too much on the interest rate alone. They behave more like a baby expecting Ben Bernanke to breast-feed them non-stop. Stop feeding them and they’ll cry as if there’s no tomorrow. The fact is you might not want to see the after-effect of over interest-cuts. High inflation, crude oil above $100 a barrel, U.S. dollar worth half of Euro and so on could be the effects. And the most scary part could be slowing in import from U.S. from other parts of the world because the dollar losses its shine. If that happens you can be sure of global economy crisis as almost all the countries, from China to Malaysia depends on how much U.S. can buy (or absorb) from them.
China might be booming but it’s not self-sustainable yet. She still needs to export gigantic amount of finished goods to U.S. while import raw materials for its’ manufacturing, construction etc. The difference of export and import is what you called surplus which contributes to the China’s wealth now. Try to pull the fuse of export and you can see China depress. She might not collapse but will slow down tremendously. Of course the country has billions of dollars in reserve but guess what – the value would have devalued by then. And to think of the existing China’s stock markets are overheating with potential to burst anytime soon (did someone said after 2008 Olympic?).
Hence, I think the sell-off provides opportunity to buy in stages. Furthermore the Dow has not move very far from the 14,000 points since the combination of 75 basis points cut. Also you got to get used to the 3-digits swing from the Wall Street. But then I’m ranting partly because lower dollar decreases my take home money after the currency conversion, not that a stronger ringgit will benefits me in any way.
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