Wednesday, 29 February 2012

Dow Closes Above 13,000; First Time Since 2008





The index, which tracks 30 of the biggest companies on Wall Street, last surpassed the milestone mark in a closing on May 19, 2008, when it ended trading at 13,028.16.

February has been a good month for the Dow Jones industrial average as it trades at levels not seen since the 2008-9 financial crisis. And after several narrow misses, it mustered enough momentum to pull itself firmly across the 13,000 threshold on Tuesday and stay there through the close.
As it did twice last week and on Monday, the Dow poked through the 13,000 level in intraday trading on Tuesday but then dropped back down toward the end of the day before a final surge that pushed it up to about 13,005.
It was a day marked by a handful of economic reports that were generally positive. The Conference Board’s measure of consumer confidence registered a 12-month high of 70.8 this month, a reflection presumably of continued improvement in labor market conditions, economists from Capital Economics said in a research note. Home prices, however, have fallen, with the 20-city Standard & Poor’s/Case-Shiller index declining 4 percent in December year-over-year. Durable goods orders fell 4 percent in January, but aircraft orders accounted for much of the drag.
The Dow is up nearly 3 percent for the month. Analysts said that the gains reflected the culmination of a generally upward trend in stocks since the beginning of the year. But they were also quick to point out that it said more about improving sentiment in the financial markets and the performance of individual companies than about a rebound in the economy since the recession ended in mid-2009.
“Thirteen thousand is not so very important technically as it is emotionally, simply because it is not 12,000,” Dan McMahon, the head of equity trading at Raymond James & Associates, said earlier Tuesday. “It is on the way to 14,000. It is kind of a landmark on the way.”
“The market has rallied significantly since the October lows and everything seems to be trending in the right direction,” Mr. McMahon added. “We are waiting for the next catalyst.”
Mr. McMahon said a better barometer for the market in general was the Standard & Poor’s 500-stock index, which measures the broader market, and has already hit its own precrisis levels. It closed Friday at its highest level since June 2008. Other broader measures of the market, such as the Russell 50, which includes the largest capitalization stocks, have already recovered as well.
“The stock market has been going up pretty consistently since October,” Dan Greenhaus, the chief global strategist at BTIG.
The Dow hit a 52-week low of 10,655.30 on Oct. 3. All 30 companies have risen since then, but about a third are responsible for most of the gains in the index, based on how they are weighted. The top contributor was Caterpillar, a stock that reflects the ups and downs in the economy, particularly in construction. It has accounted for more than 343 points in the index rise since the October trough. IBM and Exxon, helped by a rise in oil prices, each also accounted for more than 100 points, as did McDonald’s.
“It takes just a couple names to get it going in one direction or the other,” said Owen Fitzpatrick, head of U.S. equity strategy for DWS. Mr. Fitzpatrick said, in general, some of the issues that propelled the sell-off of last summer have eased, such as the concerns that the United States would follow Europe into a recession.
Future catalysts include strong gross domestic product data, or other signs the economy is stable, Mr. McMahon said.
Mr. Greenhaus said the closing threshold for the Dow “technically means nothing” when seen in the context of the wider, uneven economic recovery.
“People who hung in there have now seen their investment return to pre-crisis levels,” he said in a recent interview. But he added: “People are still going to say ‘I still don’t have a job.’”
Since the financial crisis companies have achieved good results with cost-cutting and hoarding cash. Some, like McDonald’s, have reoriented their approach to the tighter economy.
McDonald’s, one of the Top 10 contributors to the Dow’s strong rise since October, is now up more than 60 percent since before the financial crisis. Sara Senatore, a senior research analyst at Sanford C. Bernstein & Co., Inc. said many fast-food and casual restaurants have done well during the economic downturn, but McDonald’s also has a global footprint with growth in other economies that has helped it to do well. In addition, it has done an “excellent job” innovating and re-imaging, with new beverages and Wi-Fi in some outlets that allowed it to persist when the economy improved.
“You could make the case people traded down during the recession and haven’t traded back out, or up, as much as you might have thought,” she said
.

Investing: how small UK companies can boost your wealth

Paul Marriage, manager of the Cazenove UK Smaller Companies Fund, tells Robert Miller why investors should ignore the 'noise' of macro economic news and look at smaller and profitable companies in the UK.





http://www.telegraph.co.uk/finance/financevideo/yourmoneytheirhands/9100964/Investing-how-small-UK-companies-can-boost-your-wealth.html

Britain becomes a nation of debt slaves as regulation and inflation deter saving

Britain becomes a nation of debt slaves as regulation and inflation deter saving

British piggy  bank
Britain's households are drowning in debt
Now that interest on debts absorbs nearly a quarter of British households’ net income, according to the Consumer Credit Counselling Service (CCCS), many families are discovering how cruel a taskmaster compound interest can be.
If you think conventional savings products – like pensions and managed funds – provide poor value, then just wait till you see how bad the ‘returns’ on borrowing are. While instant gratification has come to be regarded almost as a ‘yuman right’ in the credit-fuelled consumer societies of the developed world, the costs of that delusion will mount over the decades ahead. Worse still, the Government is actively encouraging young people to take on massive debts before they have any means of repaying them.
Even at today’s low rates of interest, debt that is allowed to accumulate on debt will often roll up faster than the debtor’s ability to repay it. For example, anyone who borrows £10,000 at a typical mortgage rate of 3.5 per cent will repay a total of very nearly £15,000 over the standard 25-year term.
Not many students today have heard of the ‘Rule of 72’ but more are likely to take an interest in future. This is the easy way of calculating how long it will take a debt to double; you just divide the annual rate of interest into 72 to arrive at the number of years. Albert Einstein is reported to have described compound interest as “the most powerful force in the universe” – and students in future could be forgiven feeling that questions about the accuracy of this quote are academic.
Sadly, savers have been so badly treated in Britain for so long that it is not hard to see why many have decided prudence is not worth the bother. Millions of people who set aside something for a rainy day in bank and building society deposits have seen the real value of their savings – their purchasing power – steadily shrunk by the Government’s undeclared policy of running negative real interest rates.
The average easy access savings account has lost nearly £2,500 of its real value or purchasing power during the last decade, according to calculations last year by Yorskhire Building Society. Inflation is the insidious enemy of savers because it stealthily reduces what their money will buy. But with the Government’s favoured yardstick, the Consumer Prices Index (CPI) and the Retail Prices Index (RPI) running in low single figures, many may underestimate the cumulative threat.
Simon Broadley of Yorkshire Building Society said: “With the average savings account standing at £11,648 this can have a significant effect on a person’s savings – especially over the long-term, given the current market.
No wonder Britain has turned from being a nation of savers to a nation of borowers. Regulatory requirements mean it takes hours to start a pension savings plan but just minutes to take out a credit card. After more than a quarter of a century of extensive and expensive regulation of financial services, the net effect has been to replace poor value retail savings products with even worse value retail credit.

What is the real cost of 0.5pc Bank Rate?


What is the real cost of 0.5pc Bank Rate?
Three years on, savers are paying a heavy price to subsidise cheap borrowing.

MAN HOLDING A HANDFUL OF BANKNOTES
Lending to small businesses fell by 5.1pc in August, against an overall decline in corporate credit of 3.4pc Photo: Rex Features
Savers have lost more than £5,000 since the Bank of England reduced interest rates to a historic low of 0.5pc three years ago – but borrowers have cashed in.
While few savers will be celebrating the anniversary of this decision next week, mortgage borrowers will be toasting a windfall of almost £40,000, which is what the average householder has saved in interest charges over this period.
The unprecedented cut in interest rates was designed to protect an enfeebled economy from outright collapse, but the effect on families up and down the country has been enormous. Research for The Telegraph shows the extent to which families have gained or lost out. Pensioners are among those who have suffered the most; many depend on the income they receive from savings, so they have seen their standard of living fall – a decline made worse by high levels of inflation. Conversely, it is younger people, who typically have larger mortgages and other debts, that have benefited from lower borrowing costs.
Here we look in detail at how the Bank of England's extreme measures have affected our fortunes.

Savers

The Bank started seriously cutting interest rates in response to the growing credit crisis in December 2007. In the three years before this, the rate paid to savers with instant access accounts averaged 3.15pc, according to Defaqto, the data analyst. But over the past three years the average rate has been just 0.94pc.
As a result a saver with £20,000 in one of these accounts would have seen the interest they receive reduced by 70pc. In pounds and pence this means the interest has fallen from £1,950 to just £570 before tax – so they now get £1,380 less. For a basic-rate taxpayer, this means his income cut from £1,560 to £456, a fall of £1,104.
It's a similar story for cash Isas. The average rate on an instant access Isa in normal times was 4.85pc, Defaqto said, compared with only 1.52pc over the past three years. Assuming that savers had amassed £50,000 from successive years' Isa allowances, their income would have fallen from £7,635 to £2,315 – a fall of £5,320.
However, those who have shopped around and moved their savings regularly could have avoided much of this income loss. Over the past three years the average "best-buy" instant access account has paid 3.06pc, Defaqto found. As a result, anyone who switched from an average account to a best buy when the Bank cut rates to 0.5pc – switching again where necessary – would have seen their income fall by just £108 from £1,950 to £1,892 a year.
The average rate on a best-buy instant access Isa has been 3.12pc since March 2009. So a saver who took £50,000 out of an average product at that point and ensured it was always in a best-buy Isa thereafter would have seen their income fall by £2,805 from £7,635 to £4,830.
If you have left your savings in an account paying next to nothing, it's not too late to take action – in fact, economists don't expect Bank Rate to rise until late next year at the earliest. The best rate on the market for instant access accounts is currently 3.1pc on Santander's eSaver Issue 4, Defaqto said. Better rates are available if you tie up your money – such as 3.55pc for one year (from Aldermore), 3.85pc for two years (Vanquis Bank) and 4.2pc for four years (from BM Savings). Rates on equivalent Isas are often slightly lower.
David Black of Defaqto said: "There's a wide variation in the interest rates available even for the same sort of account – the rates paid by easy access accounts range from as little as 0.01pc up to 3.1pc. This shows how important it is to shop around for the best deal. If you've had an account for a while, the chances are you can get a better deal elsewhere."

Borrowers

Where savers have lost, mortgage borrowers gained. In the three years to December 2007 the average lifetime tracker mortgage charged Bank Rate plus 0.7pc, according to SPF Private Clients, the mortgage broker, so the rate that you actually paid at that time was 6.2pc. But since Bank Rate fell to 0.5pc the interest rate paid has been just 1.2pc.
As a result, monthly repayments on the average £250,000 lifetime tracker mortgage have fallen from £1,292 in the "normal" years to £250 now (on an interest-only basis). Total payments over three years have fallen from £46,512 to £9,000, saving the average borrower £37,512.
Two-year fixed-rate deals were also popular before the credit crisis. Someone who took out one of these loans two years before Bank Rate fell to 0.5pc would typically have paid an interest rate of 5.18pc, SPF said, taking a loan from Nationwide as an example. Monthly repayments at that rate would have been £1,079 (again interest-only).
After the introductory period on these mortgages has expired, the rate typically reverts to the lender's standard variable rate (SVR). A borrower who took out Nationwide's two-year fix in March 2007 might have expected to pay 7.5pc when the two years were up, as that was the SVR at the time. Instead, the SVR after Bank Rate fell to 0.5pc in March 2009 was just 2.5pc. This borrower's monthly payments would have fallen from £1,563 to £521, saving them £37,512 over the past three years.
But many home owners chose instead to maintain their payments when interest rates fell. This has the effect of paying off an extra slice of capital every month, cutting the overall interest bill and allowing the mortgage to be paid off in full sooner.
The average tracker mortgage customer with a £250,000 loan would have saved £1,978 in interest over the past three years if they had maintained payments at the level of December 2007, while their mortgage term would have been cut by almost 10 years.
Many people have both savings and a mortgage, of course. As we have seen, their savings will often have paid very little interest over the past three years. A better use for the money can be to reduce the mortgage balance.
If a home owner with a £250,000 mortgage on a typical lifetime tracker charging 3.56pc had used their savings to make a £20,000 lump payment on their home loan in March 2009, they would have saved £2,886 in interest so far and would be in line to shave two years and nine months off their mortgage term, according to HSBC. The figure for a £50,000 payment is £6,262.
Mark Harris of SPF said: "While interest rates are at record lows, not all borrowers are taking advantage. If you are on your lender's SVR and it's 3pc or more, you might want to consider remortgaging. There are some very cheap fixed rates at less than 4pc for five years, or two-year trackers starting at less than 2pc for those with enough equity in their property."
Peter Dockar, the head of mortgages at HSBC, said: "By paying down their mortgage now, borrowers are able to reduce the impact of higher monthly repayments if interest rates rise. It will also build up equity in their properties, giving them access to better deals if they need to remortgage in future."

'I've bought more shares in Lloyds and RBS'

'I've bought more shares in Lloyds and RBS'
Leading UK fund manager Richard Buxton on why he favours financials.

Richard Buxton, fund manager at Schroders
Richard Buxton, fund manager at Schroders 
This June, Richard Buxton will have been managing the £2.5bn Schroder UK Alpha Plus fund for 10 years.
Launched to combat "sideways" markets, Mr Buxton's fund has met its mandate handsomely. If you had invested three years ago you would have doubled your money. We get his views below.

You said you 'couldn't wait' for 2011 to be over. What is your current market outlook?

If the market is particularly stressed, as it was in the second half of last year, any cyclical or long-term holding tends to go down.
The turnover on our fund is extremely low – we are looking at least a three to five-year view for all our holdings – and as a result we had a bad year. Clearly the moves by the European Central Bank in December have been a bit of a game-changer. We were concerned that a major European bank, or two, could end up in severe difficulties. It is no surprise given how depressed sentiment was at the tail end of last year that the removal of that risk has led to happier markets.
We have not repositioned the fund after a bad 2011, but we did add to the badly performing positions – Lloyds and Royal Bank of Scotland, for example. This year, the mood music has changed – we have had a better start. We knew there would eventually be stimulus, I just couldn't believe how long it took the ECB to do what they needed to do.

How long will this positivity continue?

We think it will be better this year, but it's still a mixed picture. There is recovery and dividend growth but we're not out of the woods yet; there are still issues to face and much scope for policy error. After the financial crisis we are in an environment where there are shorter economic cycles. We are going to have to live with shorter mini-cycles, but I think that is all part of the post-crisis recovery. It may well last another three to seven years.

Which sectors will thrive in this environment?

Sectors where valuations are weakest, because there is the greatest uncertainty and maximum fear. Ten years ago, big tobacco companies were risky. But they've had a fabulous decade of re-rating, going from pariahs to being well-loved. Today, few people invest in banks because of uncertainty around them, so they are trading at half book value. But on a five to 10-year view, they may actually do very well.

How do you respond to the accusation that all UK equity funds are the same?

Rest assured, my fund looks very different from others. It is a concentrated portfolio that is not built in relation to the index: I don't hold big companies just because they are big.
We set it up almost 10 years ago with the view that the index was going nowhere, so you did not want to invest in index trackers or actively managed closely correlated funds.
There are fewer winners in this environment, but if you can identify them you can do well.

What has changed since you started in the City 26 years ago?

I joined in the middle of a 20-year bull market. Back then, making money was a lot easier. It is harder now. I can see huge value but I can equally see reasons why it will take a while for that value to be realised. You can still find fabulous companies capable of achieving year-on-year growth or value companies that have been poorly managed and new management has gone in. But you have to be patient.

What has been your best investment decision?

I only invest in my own fund, so I don't have separate personal stock holdings. I have been very proud of [technology stock] Autonomy. It was hugely controversial, with many non-believers, but we continued to ride the volatility and were vindicated last year with the £7.1bn takeover by Hewlett Packard.

And your worst?

As a house, Schroders is very balance sheet-focused so we haven't generally suffered because of a stock having too much leverage.
For that reason we are big shareholders in Home Retail, which owns Argos and Homebase, and which has had a dreadful performance. But we know it is a survivor. It is not going the way of HMV and Woolworths. So we're sticking with it.


http://www.telegraph.co.uk/finance/personalfinance/investing/9110405/Ive-bought-more-shares-in-Lloyds-and-RBS.html

Tuesday, 28 February 2012

Hong Leong Bank (At a Glance)



Announcement
Date
Financial
Yr. End
QtrPeriod EndRevenue
RM '000
Profit/Lost
RM'000
EPSAmended
27-Feb-1230-Jun-12231-Dec-111,003,356381,37124.22-
29-Nov-1130-Jun-12130-Sep-11916,730407,11027.98-
26-Aug-1130-Jun-11430-Jun-11820,792296,60020.42-
10-May-1130-Jun-11331-Mar-11577,914289,69619.95-


Announcement
Date
Financial
Yr. End
QtrPeriod EndRevenue
RM '000
Profit/Lost
RM'000
EPSAmended
27-Feb-1130-Jun-11231-Dec-10603,964291.43220.07-
29-Nov-1030-Jun-11130-Sep-10539.787257.20017.72-
26-Aug-1030-Jun-10430-Jun-10520,252302,94220.90-
10-May-1030-Jun-10331-Mar-10508.046227.95515.73-


ttm-EPS  92.57 sen
LFY ending 30.6.2011:  Dividend 24 sen  DPO  0.31

Price  RM 11.82
ttm-PE  12.8x  Thumbs Up
DY 2.03%

Net assets per share
31.12.2011   6.05
31.12.2010   5.13

Dividend 1H
1H 2011  11.00 sen  Thumbs Up
1H 2010    9.00 sen

PAT 1H
1H 2011  788.481m  (50.08 sen /share)  Thumbs Up
1H 2010  548.632m  (37.78 sen /share)



Stock Performance Chart for Hong Leong Bank Berhad

Business Description:
Hong Leong Bank Berhad operates in the Bank holding companies sector. Hong Leong Bank Berhad (HLB) is a Malaysia-based company. The Company is engaged in commercial banking business and in the provision of related services. The Company provides services in personal financial services, business banking and trade finance, treasury, branch and transaction banking, wealth management, investment banking, private banking and Islamic financial services. The Company's business segments include Group Consumer Banking, Group Business Banking, Global Markets, Investment Banking, Overseas Associate and Overseas Joint Controlled Entity. Group Consumer Banking focuses on servicing individual customers and small businesses. Group Business Banking focuses mainly on corporate customers. Global Markets refers to the Group's treasury and capital market operations. On 6 May 2011, the Company acquired EON Capital Berhad, and EON Bank Berhad and its subsidiaries, including EONCAP Islamic Bank Bhd and MIMB Investment Bank Bhd and its subsidiaries became part of the Company.



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

Past Financial Year Historical data
Financial Year Ended 30/06/2011

Total Assets
30.6.2011  87,650.089m
30.6.2010  77,777.858m

Total Equity
30.6.2011  6,567.126m
30.6.2010  5,903.363m

Revenue
30.6.2011  2,542.457m
30.6.2010  2,085.079m

PAT
30.6.2011  1,134.928m
30.6.2010  1,009.132m


Net assets per share
30.6.2011  5.1300
30.6.2010  4.4900

EPS

30.6.2011  78.12 sen
30.6.2010  69.61 sen




Dividends per share
30.6.2011  24.00 sen
30.6.2012  24.00 sen


FY Ending 30.6.2011

Net Profit Margin  44.6%
Asset Turnover  0.029x
Financial Leverage  13.35x

ROA  1.2934%  Thumbs Up
ROE   17.27%   Thumbs Up
DPO   0.31






Cocoaland (At a Glance)









Announcement
Date
Financial
Yr. End
QtrPeriod EndRevenue
RM '000
Profit/Lost
RM'000
EPSAmended
27-Feb-1231-Dec-11431-Dec-1151,4018,7175.08-
22-Nov-1131-Dec-11330-Sep-1139,9212,8851.68-
25-Aug-1131-Dec-11230-Jun-1143,6744,2312.47-
23-May-1131-Dec-11131-Mar-1138,9983,3591.96-

Announcement
Date
Financial
Yr. End
QtrPeriod EndRevenue
RM '000
Profit/Lost
RM'000
EPSAmended
27-Feb-1131-Dec-10431-Dec-1038,4454,2861.90-
22-Nov-1031-Dec-10330-Sep-1037,2904370.34-
25-Aug-1031-Dec-10230-Jun-1031,3171,0140.79-
23-May-1031-Dec-10131-Mar-1035,2074,0823.40-



ttm-EPS
2011  11.19 sen
2012    7.39 sen
YoY change +51.4%

Dividend
2011   5.50 sen
2010   4.40 sen
YoY change +25%

Net assets per share
2011  RM  1.100
2010  RM  1.030
YoY change +7.8%

Total Revenue 173.994m
PAT  19.192m
Total Assets  219.050m
Total Equity  188.670m

Cash & Equivalents  42.986m
LT Borrowings   0
ST Borrowings  0

CA  118.006m
CL  30.307m

Inventories  25.336m
Trade receivables  40.904m
Trade Payables 22.768m

OPBWCC  27.438m
Net CFO  9.349m
Capex (PPE)  (30.739m)

Ordinary Shares of RM 0.50 each
2011  171.600m
2010  132.891m


Valuations

Price  RM 2.39 per share
Market capitalisation  410.1m

ttm-PE  21.4x
DPO  0.49
DY  2.3%


Net Profit Margin  11%
Asset Turnover  0.794x
Financial Leverage  1.16x

ROA 8.7%
ROCE  8.3%
ROE  10.1%



Review of Performance 
In the financial period under review, the Group posted a 22% year-on-year revenue growth from RM142.3 million to RM174.0 million; this was mainly due to increased selling price and trading volume of our Fruit Gummy and Beverage production lines.  However, during the year, the Malaysian Ringgit has also been steadily strengthening against the US dollar. Consequently the impact of increased selling price on revenue growth was partially negated by the stronger Malaysian Ringgit.

The Group achieved profit before taxation of RM21.7 million, an increase of RM13.4 million or 161% from the previous corresponding period. This improvement in profit was attributable to the increase of sales revenue and production efficiency, especially from the Beverage section, which the Group incurred substantial startup cost during last financial year, higher fixed deposit interest received coupled with lower operating cost during the current period.





Stock Performance Chart for Cocoaland Holdings Bhd


Business Description:
Cocoaland Holdings Bhd operates in the Candy & other confectionery products sector. Cocoaland Holdings Berhad (Cocoaland) is an investment holding company. 

The Company operates in the business of manufacturing and trading of processed and preserved foods and other related foodstuffs. The Company's products include candy, canister, cookies, drinks, gummy, hamper, juice, pudding and jelly, snack and wafer. 

Cocoaland's subsidiaries include 
  • Cocoaland Industry Sdn Bhd, which is engaged in manufacturing and trading of processed and preserved foods and fruits of all kinds; 
  • L.B. Food Sdn Bhd, which is engaged in the wholesale and retail of processed and preserved foods; 
  • B Plus Q Sdn Bhd, a manufacturer of fruit juice and foodstuffs; 
  • Greenhome Marketing Sdn. Bhd., which is engaged in the marketing, trading and distributing of all kinds of beverages and foodstuff; 
  • Lot 100 Food Co. Ltd., which is engaged in the wholesaling, import and export of gummy products and other product, and 
  • M.I.T.E. Food Enterprise Sdn Bhd, which is engaged in trading and distribution of foodstuffs.