20 Tools For Building Up Your Portfolio

20 Tools For Building Up Your Portfolio

The concept of a portfolio and the birth of individual investing have opened up possibilities for everyone. The only real difference between you and Warren Buffett is a few well-chosen stocks - the billion-dollar fortune is the result. Stocks, while important, aren’t all there is to investing. Keeping your portfolio divided between the different investment vehicles reduces your overall risk while still generating returns. Here are 20 investment tools you can use to increase your portfolio’s diversity. Read: 20 Investments You Should Know

Inflation does matter in China and the world

Inflation does matter in China and the world
By Huang Shuo (chinadaily.com.cn)
Updated: 2010-11-15 16:58

The growth rate of China's consumer price index (CPI) was 4.4 percent year-on-year in October, a 25-month high. The rate is up 0.8 percentage points from September. This is an alarming statistic for a country that for the past three decades has had steady economic growth. Inflation risks do matter for China.

In particular, the new factor of a rise in prices, main promoter for CPI growth, took up 3 percentage points of the 4.4 percent surge. Prices of agricultural products and food have been playing major roles in contributing to the CPI hike. Food prices surged by 10.1 percent compared with the same period of last year as a result of the price hike in international agricultural products, and the recent flood in South China’s Hainan province affected vegetable prices and oil prices, adding to the product costs, said Sheng Laiyun, spokesman for the National Bureau of Statistics (NBS).

In addition, daily essentials such as eggs and vegetables are leading the price increases in China's consumer market, followed by meat, oil and white sugar.

As the industry generally expected that about 4 percent would be the proper answer for CPI, the final data released by the NBS on Nov 11, 2010, was 0.4 percentage points higher than estimated, which astonished the public and drew lots of attention from domestic and foreign experts.

Consumer prices associated with social stability are the top concern of the public in China. The increase of CPI indicates that the surge in commodities prices is ongoing in the consumption market, closely linked with the daily lives of ordinary people. China’s income per capita still lags behind the United States, the European Union, and even some other emerging economies. How to increase income and stabilize or lower the prices in the market, especially for daily essentials, should be attached great importance by the government.

Livelihood is like the basis for constructing a building, which lays the firm foundation for a harmonious society. Whether people can lead a good life decides the quality of governance by central and local authorities. High consumer prices pose an unstable economic factor to improving the living standard of people.

More regulations are expected for the soaring Chinese CPI. As to that situation, the People’s Bank of China, the central bank of China, has noticed and adopted a measure increasing the required reserve ratio by 50 basis points and coming into effect on Nov 16, 2010, in order to ease the pressure from the second round of quantitative easing policy (QE2) by the Federal Reserve of the US and increasing liquidity caused commodity prices to rise in China. But is it enough to merely depend on national economic regulatory authorities?

Every economy released loose monetary policies to conquer the challenges brought by the international financial crisis in 2008 and get out of the recession. But side effects are inevitable. Rising inflation is one of the consequences. As a result, countries with expansion policies on issuing more currencies should work together and reach agreements to confront the emerging side effect -- inflation.

The author can be reached at larryhuangshuo@gmail.com.

http://www.chinadaily.com.cn/business/2010-11/15/content_11552427.htm

China rate rises no panacea to curb inflation: PBOC adviser

China rate rises no panacea to curb inflation: PBOC adviser
(Agencies)
Updated: 2010-11-18 11:06

China should not solely rely on interest rate rises to curb inflation, an academic adviser to the People's Bank of China said in remarks published on Thursday.

Zhou Qiren, who is also a professor at Peking University, said the government must take steps to tackle supply-side strains that have been a key factor pushing consumer prices.

Loose monetary policy in 2009 has created excessive liquidity and helped fuel prices of various products, he said.

"Much liquidity and fewer goods are the reasons behind inflation. Raising interest rates cannot change such a situation," he was quoted by the China Securities Journal as saying.

Zhou warned that liquidity had been channeled from the real estate market to other sectors of the economy, after Beijing took harsh measures to prevent a property bubble.

China's CPI hit a 25-month high of 4.4 percent in October, fuelling expectations of further tightening measures.

The PBOC has ramped up its efforts to tighten monetary conditions in the past month, increasing bank reserve requirements and surprising markets on Oct 19 by announcing the first rate rise in nearly three years.

http://www.chinadaily.com.cn/business/2010-11/18/content_11570306.htm

Related readings
: Gold drops on China interest rate hike rumor, stronger dollar
 Stocks down on mainland rate worries
 Rising food costs boost China's inflation rate to 25-month high
 Oct consumer confidence falls due to inflation, rate hike

Rise of the middle class

Rise of the middle class
By Tang Jun (China Daily)
Updated: 2010-11-18 15:12

Society will be more stable when one third of the Chinese population has material means to become social backbone

Many scholars and individuals are showing concern about what kind of social structure will bring the best stability.

According to sociological theories, a modern society can be divided into four ranks: the wealthy, the middle class, labor and the disadvantaged. The middle class creates the ladder between the well-to-do and the poverty-stricken, thus easing the antagonism between them, by granting those at the bottom the hope of rising to a higher level.

Generally speaking, in a modern society, the middle class contains 60 to 70 percent of the population, leaving about 15 to 20 percent at either end of the ladder. Such a large middle class ensures stability for a society.

How do we define the middle class? There are three standards: material wealth, job status and self-identity.

Concerning material wealth, a middle income, sufficient to maintain a comfortable but not luxurious lifestyle, is the first pursuit of the middle class. In the present social situations, a typical middle-class family tends to own a car and a house, together with certain financial products.

The xiaokang (literally moderate prosperity) standard introduced by the government is essentially the Chinese version of the middle class. Sufficient wealth accumulation is the first prerequisite to be xiaokang.

Job status is another essential. In this society, a salary is still the most important income source for most individuals; therefore a stable job is the pursuit.

With the rise of knowledge capital, intellectuals and technicians are taking more pride in gaining a position through their knowledge or technical skills.

Self-identity is also indispensable. Being middle class means having access to a decent and relatively comfortable life and having the will to strive forward. This is beneficial to both the people and society.

During the past 30 years, a middle class has come into being in China. According to Professor Lu Xueyi of the Chinese Academy of Social Sciences, 23 percent of the population belong to the middle class; five years ago it was 18 percent. He estimates that the number will increase by 1 percent every year. If that growth rate can be maintained the middle class could reach 40 percent of the population by 2020.

However, that will not be achieved without problems. Ever since reform and opening-up in late 1970s, our changes in social structure have lagged 15 years behind economic development; that's the origin of many of our social problems.

The middle class, with a strong sense of social responsibility, should be the backbone of society. The awareness of being a responsible citizen offers strong support for society. However, the middle class in China is still immature in this respect and society needs them to meet their social obligations.

Of course, the rise of the middle class in any society is in dire need of rational support from the government. On their road to industrialization and modernization, many developed countries offered support or subsidy to blue-collar workers, helping them to own and accumulate capital. After World War II, many countries also used the policy "houses for residents", which proved very successful.

Owning a house has long been considered a prerequisite of entering the middle class, and when more and more people find it hard to reach this standard, it is impossible for them to remain silent.

The present tendency of economic growth is unfriendly to many people, especially to the supporting pillar of industry - migrant workers, whose number has reached 200 million. We hope the "inclusive growth" in the 12th Five-Year Plan (2011-2015) will solve these problems.

Three decades ago, Deng Xiaoping said: "Let one part of the people get rich first." Today might we make a similar statement for the 12th Five-Year Plan period - let one third of the Chinese people become middle class first.

The author is a researcher and secretary general of the Social Policy Research Center of the China Academy of Social Sciences.

http://www.chinadaily.com.cn/business/2010-11/18/content_11571957.htm


Related readings
 Sam's Club eyes fatter wallets of burgeoning middle-class shoppers
 Second-hand fashion revives virtues in China's middle class
 Enigma of the middle class

Coastal Contracts Bhd

Date announced 19/11/2010
Quarter 30/09/2010 Qtr 3 FYE 31/12/2010

STOCK COASTAL C0DE  5071

Price $ 2.32 Curr. PE (ttm-Eps) 4.22 Curr. DY 1.29%
LFY Div 3.00 DPO ratio 7%
ROE 36.4% PBT Margin 27.9% PAT Margin 27.9%

Rec. qRev 192091 q-q % chg 39% y-y% chq 37%
Rec qPbt 53601 q-q % chg 10% y-y% chq 11%
Rec. qEps 14.80 q-q % chg 11% y-y% chq 11%
ttm-Eps 55.04 q-q % chg 3% y-y% chq 40%

Using VERY CONSERVATIVE ESTIMATES:
EPS GR 2% Avg.H PE 5.00 Avg. L PE 4.00
Forecast High Pr 3.04 Forecast Low Pr 1.90 Recent Severe Low Pr 1.90
Current price is at Middle 1/3 of valuation zone.

RISK: Upside 63% Downside 37%
One Year Appreciation Potential 6% Avg. yield 2%
Avg. Total Annual Potential Return (over next 5 years) 8%

CPE/SPE 0.94 P/NTA 1.53 NTA 1.51 SPE 4.50 Rational Pr 2.48



Decision:
Already Owned: Buy Hold Sell Filed Review (future acq): Filed Discard: Filed
Guide: Valuation zones Lower 1/3 Buy Mid. 1/3 Maybe Upper 1/3 Sell

Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr

----

Prospects

Given that offshore shipbuilding activity is slowly perking up, Coastal Group has modest optimism of clinching new contracts to add to its vessel sales order book. The Group also expects steady income stream from its ship chartering division through continued utilisation of the Group’s fleet in coastal transportation and in various oil and gas support services. It is anticipated that future participation in the offshore structure fabrication business will be earnings-accretive and reduce the Group’s dependency on shipbuilding orders. The Group’s strong financial footing paired with low level of borrowings will further shield it from major financial distress.

With more deepwater oilfield developments off the western coast of Sabah coming on stream, Coastal Group is looking to enter a new phase of growth by diversifying into offshore structure fabrication to gain industry knowledge of the oil and gas engineering, procurement and construction business. Central to this plan are the Group’s strong foundation in marine structures and the geographical proximity of the Group’s 52-acre fabrication yard to the heart of Sabah’s growing oil and gas activities. Upgrading of infrastructure is currently at advanced stage to expand the fabrication yard’s capabilities.

Oil prices have risen above USD85 a barrel as improvement in the manufacturing sector in the U.S. and China, the world’s two biggest economies, boosted optimism that growth in global oil consumption will remain strong. Also, the U.S. Federal Reserve’s second round of quantitative easing to unleash more dollar into the economy had weakened the U.S currency’s value, which in turn made the dollar-denominated crude oil relatively cheaper for buyers using other currencies. This latest oil price development in the current environment of depleting oil reserves and increasing long-term energy demand will drive up offshore exploration, development and production activities going forward. The resultant capital investments in upstream oil and gas sector would spur additional requirements for offshore support vessels (“OSVs”).

Barring adverse changes in the global and regional economic outlook, Coastal Group is on track to deliver solid revenue and earnings growth in 2010, backed by the strong revenue visibility of the shipbuilding division’s vessel sales order book.

The Mood of Investors

Airtime: Fri. Nov. 19 2010
Sharon Sager of UBS Private Wealth Management tells CNBC's Maria Bartiromo how she's developing strategies for clients who have become more conservative.


Related:
Why Retail Investors Still Avoid Stocks

INVESTING November 14, 2010, 9:18PM EST

Why Retail Investors Still Avoid Stocks

Major U.S. stock indexes have returned 80% or more since their 2009 lows, but individual investors remain wary. Investor psychology expert Brad Barber discusses why

Even as U.S. stocks trade at some of their highest prices in two years, individual investors continue to sell, leaving the buying to larger players like hedge funds and other institutions. A Nov. 10 Morningstar (MORN) report showed in October another $6.3 billion was pulled from U.S. stock mutual funds, which are used mostly by smaller, retail investors.

A leading expert on investor psychology, Brad Barber is a finance professor at the University of California, Davis, and head of the university's Center for Investor Welfare & Corporate Responsibility. In a Nov. 9 interview with Businessweek.com's Ben Steverman, Barber talked about how he interprets retail investors' reaction to the current rally. Edited excerpts of their conversation follow:

Ben Steverman: Even though the stock market is up, retail investors seem to be sitting on the sidelines. According to Morningstar, investors have pulled $64.2 billion from U.S. stock mutual funds so far this year through October, even after withdrawing $26 billion last year. When might that change?
Brad Barber: My sense is that sentiment for equities isn't going to get positive until the economy is on strong footing. Even though the market has come back, it hasn't really been accompanied by robust economic growth. That can to some degree explain why retail investors remain skittish. The back story of the returns has just not been strong for the last year or two.

By "back story," you're not really talking about the condition of the economy, but the stories that are told in the media about the state of the economy?
Yes, and it's that back story that I think would need to improve to see renewed excitement and participation by retail investors.

Do you think investor behavior is different this time, compared with market rallies after previous recessions?
The more recent crisis certainly feels different. Unemployment rates have been much higher for much longer. The talk on the news is constantly about the weakness in the economy. The Internet bubble bursting in 2000 was a dramatic event, but it was not accompanied by the magnitude of economic dislocation that followed this financial crisis. Losing your job is different from losing a lot of your retirement portfolio.

Does the behavior of these small retail investors have a real effect on the market? Or are they such a small part of the investment pool—alongside hedge funds, pension funds, and other large institutions—that they don't have much impact?
It is true that retail investors directly hold very little stock, under 20 percent [of total shares] these days. There's been a secular shift toward institutions holding investments on behalf of individuals. Having said that, sentiment can also affect institutions to some degree. Direct ownership of stocks by retail investors isn't a big [driver], but it's a good instrument for thinking about the sentiment of the market as a whole.

What is the track record of smaller investors? Do they tend to buy and sell at the right times?
The order flow of small investors perversely forecasts returns. What I mean by that is: If small investors seem to be buying a stock, it tends to forecast poor returns for the stock. Conversely, if small retail investors are selling a stock, it tends to portend strong returns for the stock.

For example, people might become enamored with the latest high-tech startup firms. Retail investors pile in, driving the prices up, but the reality is these companies aren't making earnings. Later, there's a day of reckoning. Conversely, you might have really stodgy, old-line companies, about which retail sentiment is pretty negative. But they're plugging along and posting reasonable earnings. The lack of retail sentiment for those stocks may beat down their prices temporarily, and those low prices would portend strong returns as long as they have earnings to back up the company.

So, sentiment causes fluctuations in prices above or below some level justified by the underlying fundamentals of the company.

Given all the losses investors have experienced, do you expect that Americans are going to permanently change the role stocks play in their portfolios?
There is a lot of evidence that people's attitudes about their portfolios change as a function of market conditions. There is a nice paper by Ulrike Malmendier [an economics professor at the University of California, Berkeley] and Stefan Nagel [a finance professor at Stanford University] looking at how investors allocate stocks in their retirement portfolios.

If you lived through the Great Depression, you're less likely to invest in stocks because you stomached a 15-year period where stocks basically had a zero return. Conversely, if you experienced stocks during the late '80s and '90s—pretty much an unrelenting bull market—you probably were bullish on stocks and tend to have a high allocation of stocks in your investment portfolio. The last decade, of course, has been pretty lousy. And so investors who were saving and coming of age in the last decade are probably going to have lower allocations to stock in their retirement portfolios. The punch line is "experience matters."

So relatively short-term market conditions tend to affect long-term investment decisions. People who came of age in this decade might be permanently much less likely to own stocks?
Or at least have a lower allocation to stocks. In the late 1990s, when I was teaching MBA students, it was hard to convince students that if you held stocks for 10 years that you had any risk of loss. That's not so hard anymore. [Laughter.] The example that I used to try to hammer home this point was Japan, which in the late 1990s had been mired in a 10-year crash. Now it's 25 years and counting.

To what extent is this reluctance to buy stocks rational behavior on the part of investors? And to what extent is it irrational, because investors miss out on stock gains and then, when sentiment finally turns positive again, might end up buying at the top of the market?
It's very difficult for people to understand their ability to tolerate risk until they experience it. It's all well and good to say "I can tolerate the gyrations of the markets." You can sit down with a financial adviser or you can go through online tutorials, but you don't understand until you actually live through it.

Folks go through these times where their portfolios are dropping 30, 40, and even 50 percent, and it causes them to lose sleep. Is it irrational to dial down your equity allocation when it's affecting your sleep and health? I don't think so.

Is it what most economists would recommend investors do? Probably not.

As someone who studies investor behavior, are there questions raised in the last couple of years that you're eager to answer?
The most pressing issue is how investors save and prepare for retirement. This will become even more pressing as we think about solutions to the underfunding of Social Security benefits.

There are a lot of folks doing work on these issues now: How can we get people to save adequately for retirement or make sensible investment choices?

http://www.businessweek.com/investor/content/nov2010/pi20101112_224434.htm

APM

Date announced 18/11/2010
Quarter 30/09/2010 Qtr 3 FYE 12/31/2010

STOCK APM C0DE  5015 

Price $ 5.3 Curr. ttm-PE 8.67 Curr. DY 3.02%
LFY Div 16.00 DPO ratio 43%
ROE 16.9% PBT Margin 16.3% PAT Margin 10.9%

Rec. qRev 291477 q-q % chg -7% y-y% chq 19%
Rec qPbt 47524 q-q % chg -12% y-y% chq 57%
Rec. qEps 16.18 q-q % chg -13% y-y% chq 65%
ttm-Eps 61.10 q-q % chg 12% y-y% chq 131%

Using VERY CONSERVATIVE ESTIMATES:
EPS GR 5% Avg.H PE 8.00 Avg. L PE 6.00
Forecast High Pr 6.24 Forecast Low Pr 3.61 Recent Severe Low Pr 3.61
Current price is at Middle 1/3 of valuation zone.

RISK: Upside 36% Downside 64%
One Year Appreciation Potential 4% Avg. yield 6%
Avg. Total Annual Potential Return (over next 5 years) 10%

CPE/SPE 1.24 P/NTA 1.47 NTA 3.61 SPE 7.00 Rational Pr 4.28



Decision:
Already Owned: Buy, Hold, Sell, Filed; Review (future acq): Filed; Discard: Filed.
Guide: Valuation zones - Lower 1/3 Buy; Mid. 1/3 Maybe; Upper 1/3 Sell.

Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr

----

APM Automotive records higher Q3 profit
Published: 2010/11/18


APM Automotive Holdings Bhd reported a pre-tax profit of RM47.524 million for the third quarter-ended Sept 30, 2010, up 57.3 per cent from RM30.219 million in the same period last year.

The profit was achieved over an 18.6 per cent increase in revenue to RM291.477 million against RM245.746 million previously.

In a filing to Bursa Malaysia, the company said its Malaysian operations registered a 17 per cent increase in revenue on the back of higher vehicle production while its overseas revenue rose 39.2 per cent, contributed mainly by its Indonesian operations.

The company expects to maintain its current level of business for the remaining quarter and is optimistic that it will perform well for the whole year. -- Bernama



Read more: APM Automotive records higher Q3 profit http://www.btimes.com.my/Current_News/BTIMES/articles/20101118204734/Article/index_html#ixzz15dcIIHIx

Kossan

Date announced 18/11/2010
Quarter 30/12/2010 Qtr 3 FYE 31/12/2010

STOCK Kossan C0DE  7153 

Price $ 3.21 Curr. PE (ttm-Eps) 9.09 Curr. DY 0.80%
LFY Div 2.57 DPO ratio 12%
ROE 27.0% PBT Margin 13.8% PAT Margin 10.4%

Rec. qRev 275635 q-q % chg 7% y-y% chq 31%
Rec qPbt 38108 q-q % chg 5% y-y% chq 83%
Rec. qEps 8.93 q-q % chg -5% y-y% chq 86%
ttm-Eps 35.32 q-q % chg 13% y-y% chq 92%

Using VERY CONSERVATIVE ESTIMATES:
EPS GR 5% Avg.H PE 8.00 Avg. L PE 5.00
Forecast High Pr 3.61 Forecast Low Pr 2.45 Recent Severe Low Pr 2.45
Current price is at Middle 1/3 of valuation zone.

 RISK: Upside 34% Downside 66%
One Year Appreciation Potential 2% Avg. yield 2%
Avg. Total Annual Potential Return (over next 5 years) 4%

CPE/SPE 1.40 P/NTA 2.45 NTA 1.31 SPE 6.50 Rational Pr 2.30



Decision:
Already Owned: Buy Hold Sell Filed Review (future acq): Filed Discard: Filed
Guide: Valuation zones Lower 1/3 Buy Mid. 1/3 Maybe Upper 1/3 Sell

Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr

----

Kossan Q3 profit jumps on unit expansion
Published: 2010/11/18

Kossan Rubber Industries Bhd's pre-tax profit for the third quarter ended Sept 30, 2010 jumped to RM38 million from RM21 million in same quarter of 2009.

Revenue increased to RM276 million from RM210 million previously.

In a filing to Bursa Malaysia today, it said the better results were due to the expansion in the gloves division with better product mix and margin.

"The other contributor was the higher selling price in line with the increased in raw materials, it said.

Going forward, Kossan Rubber said, it was cautiously optimistic in the remaining quarter of the financial year, with demand for gloves expected to remain strong. -- Bernama


Read more: Kossan Q3 profit jumps on unit expansion http://www.btimes.com.my/Current_News/BTIMES/articles/20101118200243/Article/index_html#ixzz15ddHVyy3

IOI Corporation Berhad

Date announced 18/11/2010
Quarter 30/09/2010 Qtr 1 FYE 30/06/2011

STOCK IOICorp C0DE  1961 

Price $ 5.9 Curr. ttm-PE 18.05 Curr. DY 2.88%
LFY Div 17.00 DPO ratio 52%
ROE 19.8% PBT Margin 18.8% PAT Margin 14.2%

Rec. qRev 3519260 q-q % chg 15% y-y% chq 7%
Rec qPbt 661746 q-q % chg 7% y-y% chq 6%
Rec. qEps 7.81 q-q % chg -9% y-y% chq -2%
ttm-Eps 32.69 q-q % chg -1% y-y% chq 66%

Using VERY CONSERVATIVE ESTIMATES:
EPS GR 5% Avg.H PE 17.00 Avg. L PE 11.00
Forecast High Pr 7.09 Forecast Low Pr 5.31 Recent Severe Low Pr 5.31
Current price is at Middle 1/3 of valuation zone.

RISK: Upside 67% Downside 33%
One Year Appreciation Potential 4% Avg. yield 4%
Avg. Total Annual Potential Return (over next 5 years) 8%

CPE/SPE 1.29 P/NTA 3.58 NTA 1.65 SPE 14.00 Rational Pr 4.58



Decision:
Already Owned: Buy, Hold, Sell, Filed; Review (future acq): Filed; Discard: Filed.
Guide: Valuation zones - Lower 1/3 Buy; Mid. 1/3 Maybe; Upper 1/3 Sell.

Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr


----


Published: Thursday November 18, 2010 MYT 1:29:00 PM

IOI Corp 1Q net profit up RM19.7 million

PETALING JAYA: IOI Corp Bhd saw its first quarter net profit increase by 4.13% to RM498.13 million from a year ago while pre-tax profit was 6% higher at RM661.7 million due to higher profits from its plantation unit and higher unrealised translation gain on foreign currency denominated borrowings.

The company told Bursa Malaysia on Thursday that it expects satisfactory performance for its present fiscal year due to strong crude palm oil (CPO) prices and a resilient property market.

For the three-month period ended September 30 2010, the plantation segment recorded a 38% gain in operating profit to RM345.3million from a year ago due to higher CPO prices realised and a marginal increase in fresh fruit bunches production.

Average CPO price realised for the first quarter was RM2,598/MT compared to RM2,294/MT from the previous corresponding period.

IOI Corp's first quarter revenue grew by 7.4% to RM3.52 billion.

http://biz.thestar.com.my/news/story.asp?file=/2010/11/18/business/20101118133526&sec=business

----



IOI Corp 1QFY2011 net profit up 4.12% to RM498.13m
Written by Surin Murugiah
Thursday, 18 November 2010 13:36

KUALA LUMPUR: IOI CORPORATION BHD [] net profit for the first quarter ended Sept 30, 2010 rose 4.12% to RM498.13 million from RM478.38 million a year ago, due mainly to higher profit contribution from the PLANTATION [] segment and higher unrealised translation gain on foreign currency denominated borrowings.

The company recorded revenue RM3.52 billion for the quarter, compared to RM3.26 billion last year. Earnings per share was 7.81 sen, while net assets per share was RM1.65.

In a filing to Bursa Malaysia on Thursday, Nov 18, IOI Corp said the plantation segment reported a 38% increase in operating profit to RM345.3 million for Q1FY2011 as compared to RM249.8 million for Q1 FY2010.

The higher profit was due mainly to higher CPO prices realised as well as a marginal increase in FFB production, it said.

Average CPO price realised for Q1 FY2011 is RM2,598/MT compared to RM2,294/MT for Q1 FY2010, it said, IOI Corp said its property development and investment segment’s operating profit of RM160.3 million for Q1 FY2011 was in line with Q1 FY2010.

The resource-based manufacturing segment’s operating profit decreased from RM158.9 million in Q1FY2010 to RM40.4 million in Q1 FY2011 due mainly to lower volume and margins and fair value losses on the adoption of FRS 139, it said.

http://www.theedgemalaysia.com/business-news/177288-ioi-corp-1qfy2011-net-profit-up-412-to-rm49813m.html

Chinese shares continue to drop over tightening policy concerns

(Xinhua)
Updated: 2010-11-17 15:57

BEIJING - Chinese equities continued to drop for a second day in a row Wednesday as investors feared prospects of higher interest rates and inflation control policies would hurt earnings.

The benchmark Shanghai Composite Index shed 1.92 percent, or 55.68 points, to close at 2,838.86.

The Shenzhen Component Index dropped 2.45 percent, or 299.78 points, to end at 11,917.49.

Combined turnover shrank to 288.4 billion yuan from 398.13 billion yuan the previous trading day.

Asian bubble watch: shares due for a correction

Asian bubble watch: shares due for a correction
November 17, 2010 - 2:44PM

Asia's booming financial markets are not yet bubbling over, with investors drawing a line at exotic perpetual bonds, but some equity valuations in red-hot South-East Asian bourses appear stretched.

Asia ex-Japan, with its favourable economic fundamentals and stable balance sheets, has been a magnet for foreign capital, one whose attraction have been made all the more powerful by expectations that money will stay cheap in advanced economies for a long time.

A growing number of emerging economies in Asia and elsewhere in the world have been imposing or considering capital controls to keep the influx of speculative money from feeding potentially destabilising bubbles and complicating policymaking even further.

Visiting bankers from the West have been struck by the boldness of Asia's nouveau riche, who last month bought three bottles of 141-year-old Chateau Lafite Rothschild wine at Sotheby's in Hong Kong for $US232,692 each, nearly triple the highest estimate.

It's no surprise then that some analysts say if any asset bubbles form in Asia, it would be among the most anticipated in modern history. Indeed, the phrase "asset bubble" has appeared in more than 3000 articles so far in 2010, more than any other year in the past decade, Factiva showed.

Below are highlights of the bubble risks traders and investors face in Asia. For now the risks appear relatively low.

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Bubble risks: Low to medium, on South-East Asia valuations, IPO frenzy

- Asia's hottest stock markets this year in the south-east may be due for a correction. Without one, they run the risk of forming a bubble.

- MSCI indexes for Indonesia, the Philippines and Thailand are trading at price-to-12-month forward earnings ratios that are 22 per cent above the five-year average.

- Valuations may contract, with the 30-day mean change in 12-month earnings estimates for the Philippines and Indonesia down 0.1 per cent, according to Starmine data.

- A gaggle of prominent shareholders liquidated nearly $US2 billion worth of equities in Hong Kong, South Korea, Indonesia and Malaysia last week, signalling a possible top of the market because of high valuations.

- Contrast that with Coal India's IPO on November 4, which encapsulated the frenetic year for IPOs. The $US3.5 billion offering drew $US52 billion in orders, and shares surged 40 per cent on the first day of trade.

- "When everyone at large starts talking optimism, that is the time to get cautious. Retail participation has increased a lot. There are plenty of 'tips' floating around. All these are danger signs." said Arun Kejriwal, director of research firm KRIS in Mumbai.

Bonds

Bubble risks: Low. Borrowers want to lock in long-term funding, but investors are asking for higher premiums.

- Risk on trading in the wake of the Federal Reserve's second round of quantitive easing has given way to profit taking in secondary markets as US Treasury yields spike.

- The issuance calendar is still full but upward pressure on yields and unfriendliness toward structures that push boundaries, such as perpetual bonds, may eventually cool primary markets.

- Perpetuals, which have no maturity and had not been issued by an Asian corporate in 13 years, issued by Cheung Kong Infrastructure, Hutchison Whampoa and Noble Group fared poorly in secondary trading after Noble's bond attempted to push through with what was viewed as an aggressive structure.

- Noble's 3-point drop in secondary trading was a reality check for bankers and a curb on bubble behaviour. Likewise, OCBC Bank's Lower Tier 2 bond with a 12-year non-call seven maturity - the first of its kind from an Asian bank - widened as much as 20 basis points two days after it was issued.

- Asia ex-Japan G3 currency bond issuance hit a record $US78 billion so far this year, with nearly six more weeks to go in 2010.

- Investors still are welcoming higher duration in both high-yield and high-grade names, for now. Watch how far down they go on the credit scale.

- Capital curbs have already cooled foreign inflows in some of South-East Asia's hot bond markets. While Indonesia has been hit by duration-cutting trades after posting equity-like returns for the second consecutive year, Thai bond yields have rocketed after Bangkok reimposed a 15 per cent withholding tax for offshore purchases of local bonds on October 13.

- In the Philippines, a US dollar shortage engineered by the central bank dimmed the relative allure of Philippine assets and weakened the peso sharply - one of the top performing Asian currencies so far this year.

Reuters

US stocks slide as global fears hit

US stocks slide as global fears hit
November 17, 2010

US stocks fell nearly 2 per cent on Tuesday as the prospect of more European bailouts and worries China will rein in inflation prompted investors to abandon risky assets.

The developments, especially questions about Ireland's financial stability, caused a spike in the US dollar, which hit commodity prices. That in turn sent equities lower, with natural resources companies leading the way down.

What you need to know

The SPI was 67 points lower at 4646
The $A was down at 97.66 US cents
The Reuters Jefferies CRB Index was down 3.2%

"Is (US) dollar strength just a correction in a larger trend of dollar weakness, or are we beginning to turn around here?" said Bill Strazzullo, partner and chief investment strategist at Bell Curve Trading in Boston.

"If it looks like the US dollar is finally stabilising here and gaining its footing, we're going to have a good-sized pullback in equities and commodities markets."

Asset classes have become increasingly entwined since investors placed bets ahead of the Federal Reserve's announcement of further quantitative easing. Now, many investors that bet on Fed stimulus are unwinding those risky positions.

One result was a slide in resource stocks, such as Alcoa Inc, which fell 2.8 per cent to $US13.03, and Exxon Mobil Corp, which dropped 2.2 per cent to $US68.94. US crude oil futures settled 3 per cent lower at $US82.34 a barrel, gold and metal prices fell and the US dollar index jumped 0.9 per cent.

The S&P materials sector gave up 2.2 per cent. Tech shares also stumbled, falling 1.9 per cent, as investors fled for safety.

The Dow Jones industrial average dropped 178.47 points, or 1.59 per cent, to 11,023.50. The Standard & Poor's 500 Index shed 19.41 points, or 1.62 per cent, to 1178.34. The Nasdaq Composite Index gave up 43.98 points, or 1.75 per cent, at 2469.84.

Ireland, which is grappling with a battered banking sector, said it was discussing stabilization measures with its European partners, while China is expected to unveil food price controls and crack down on commodity speculation to contain inflationary pressure.

The Chinese media reports increased expectations that China will further tighten monetary policy to help fight inflation.

The S&P found support around the 1176 level, which is roughly the 23.6 per cent Fibonacci retracement of the benchmark's recent rally from the 2010 low in July to its more than two-year high hit earlier this month.

After rallying nearly 13 per cent through September and October, the S&P 500 has given up nearly 4 per cent since November 5.

"If we don't see the S&P back above 1200 in the next couple days, then I think we're potentially putting in some sort of top here," said Strazzullo.

Continued speculation over whether the Federal Reserve will spend all of the $US600 billion it had earmarked for its latest round of quantitative easing also pressured the market.

St. Louis Fed President James Bullard said in an interview with Bloomberg Radio the central bank would scale down its planned purchases of Treasury bonds only if there was a strong improvement in the US economy.

Global developments overshadowed a favorable US corporate picture as Wal-Mart Stores Inc and Home Depot Inc raised their profit forecasts for the year.

The two companies were the only Dow stocks to rise. Wal-Mart added 0.6 per cent to $US54.26 after it also forecast positive same-store sales for the holiday season, and Home Depot rose 1 per cent to $US31.71, though it cut its full-year sales outlook.

Reuters

http://www.watoday.com.au/business/markets/us-stocks-slide-as-global-fears-hit-20101117-17w7w.html

European Union faces a battle for its very survival

European Union faces a battle for its very survival
November 18, 2010

The warnings about monetary union should have been heeded, writes Ambrose Evans-Pritchard.

The entire European Project is now at risk of disintegration, with strategic and economic consequences that are very hard to predict.

In a speech this week, the European Union President, Herman Van Rompuy, warned that if Europe's leaders mishandle the current crisis and allow the euro zone to break up, they will destroy the EU itself.

"We're in a survival crisis. We all have to work together in order to survive with the euro zone, because if we don't survive with the euro zone we will not survive with the European Union," he said.

Well, well. This theme is all too familiar, but it comes as something of a shock to hear such a confession after all these years from Europe's president.

He is admitting that the gamble of launching a premature and dysfunctional currency without a central treasury, or debt union, or economic government, to back it up - and before the economies, legal systems, wage bargaining practices, productivity growth, and interest rate sensitivity, of north and south Europe had come anywhere near sustainable convergence - may now backfire horribly.

Jacques Delors and fellow fathers of European monetary union were told by economists in the early 1990s that this reckless adventure could not work as constructed, and would lead to a traumatic crisis. They shrugged off the warnings.

They were told that currency unions do not eliminate risk: they merely switch it from currency risk to default risk. For that reason it was all the more important to have a workable mechanism for sovereign defaults and bondholder haircuts in place from the beginning, with clear rules that establish the proper pricing of that risk.

But no, the EU masters would hear none of it. There could be no defaults, and no preparations were made or even permitted for such a predictable outcome. Political faith alone was enough. Investors who should have known better walked straight into the trap, buying Greek, Portuguese and Irish debt at 25-35 basis points over German Bunds. At the top of the boom, funds were buying Spanish bonds at a spread of 4 basis points. Now we are seeing what happens when you build such moral hazard into the system, and shut down the warning thermostat.

Mr Delors told colleagues that any crisis would be a "beneficial crisis", allowing the EU to break down resistance to fiscal federalism, and to accumulate fresh power. The purpose of European monetary union was political, not economic, so the objections of economists could be disregarded. Once the currency was in existence, EU states would have to give up national sovereignty to make it work over time. It would lead ineluctably to Jean Monnet's dream of a fully fledged EU state. Bring the crisis on.

Behind this gamble, of course, was the assumption that any crisis could be contained at a tolerable cost once the imbalances of the one-size-fits-none monetary system had reached catastrophic levels, and once the credit bubbles of Club Med and Ireland had collapsed. It assumed, too, that Germany, the Netherlands and Finland would ultimately - under much protest - agree to foot the bill for a ''Transferunion''.

We may soon find out whether either assumption is correct. Far from binding Europe together, monetary union is leading to acrimony and recriminations. We had the first eruption this year when Greece's deputy premier accused the Germans of stealing Greek gold from the vaults of the central bank and killing 300,000 people during the Nazi occupation.

Greece is now under an EU protectorate, or the "memorandum" as it is called. Ireland and Portugal are further behind on this road to serfdom, but they are already facing policy dictates from Brussels, and will soon be under formal protectorates as well in any case. Spain has more or less been forced to cut public wages by 5 per cent to comply with EU demands. All are having to knuckle down to Europe's agenda of austerity, without the offsetting relief of devaluation and looser monetary policy.

As this continues into next year, with unemployment stuck at depression levels or even creeping higher, it starts to matter who has political "ownership" over these policies. Is there full democratic consent, or is this suffering being imposed by foreign overlords with an ideological aim? It does not take much imagination to see what this is going to do to concord in Europe.

My own view is that the EU became illegitimate when it refused to accept the rejection of the European constitution by French and Dutch voters in 2005. There can be no justification for reviving the text as the Lisbon Treaty and ramming it through by parliamentary procedure without referendums, in what amounted to an authoritarian putsch.

Ireland was the one country forced to hold a vote by its constitutional court. When this lonely electorate also voted no, the EU again disregarded the result and intimidated Ireland into voting a second time to get it "right".

This is the behaviour of a proto-fascist organisation, so if Ireland now sets off the chain-reaction that destroys the euro zone and the EU, it will be hard to resist the temptation of opening a bottle of Connemara whiskey and enjoying the moment. But resist one must. The cataclysm will not be pretty.

Telegraph, London

http://www.smh.com.au/business/european-union-faces-a-battle-for-its-very-survival-20101117-17xm1.html

'Fabulous' pink diamond sells for $47m

http://www.watoday.com.au/executive-style/luxury/fabulous-pink-diamond-sells-for-47m-20101117-17wh0.html

Royal Engagement

Congratulations 

Mamee-Double Decker (M) Berhad

Date announced 23/08/2010
Quarter 30/06/2010 Qtr 2 FYE 31/12/2010

STOCK Mamee C0DE  5282 

Price $ 3.53 Curr. ttm-PE 9.92 Curr. DY 2.99%
LFY Div 10.56 DPO ratio 30%
ROE 21.8% PBT Margin 11.0% PAT Margin 8.8%

Rec. qRev 120198 q-q % chg 4% y-y% chq 17%
Rec qPbt 13229 q-q % chg -17% y-y% chq -1%
Rec. qEps 7.24 q-q % chg -12% y-y% chq -1%
ttm-Eps 35.59 q-q % chg 0% y-y% chq 39%

Using VERY CONSERVATIVE ESTIMATES:
EPS GR 5% Avg.H PE 8.00 Avg. L PE 6.00
Forecast High Pr 3.63 Forecast Low Pr 2.01 Recent Severe Low Pr 2.01
Current price is at Upper 1/3 of valuation zone.

RISK: Upside 6% Downside 94%
One Year Appreciation Potential 1% Avg. yield 4%
Avg. Total Annual Potential Return (over next 5 years) 5%

CPE/SPE 1.42 P/NTA 2.17 NTA 1.63 SPE 7.00 Rational Pr 2.49



Decision:
Already Owned: Buy, Hold, Sell, Filed; Review (future acq): Filed; Discard: Filed.
Guide: Valuation zones - Lower 1/3 Buy; Mid. 1/3 Maybe; Upper 1/3 Sell.

Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr

Guan Chong Berhad

Date announced 16/11/2010
Quarter 30/09/2010 Qtr 3 FYE 31/12/2010

STOCK Guanchg C0DE 5102

Price $ 1.78 Curr. ttm-PE 6.71 Curr. DY 1.83%
LFY Div 3.25 DPO ratio 54%
ROE 43.8% PBT Margin 9.1% PAT Margin 6.0%

Rec. qRev 296563 q-q % chg 10% y-y% chq 83%
Rec qPbt 27002 q-q % chg 7% y-y% chq 264%
Rec. qEps 7.44 q-q % chg -8% y-y% chq 246%
ttm-Eps 26.54 q-q % chg 25% y-y% chq 699%

Using VERY CONSERVATIVE ESTIMATES:
EPS GR 5% Avg.H PE 6.00 Avg. L PE 5.00
Forecast High Pr 2.03 Forecast Low Pr 0.45 Recent Severe Low Pr 0.45
Current price is at Upper 1/3 of valuation zone.

RISK: Upside 16% Downside 84%
One Year Appreciation Potential 3% Avg. yield 10%
Avg. Total Annual Potential Return (over next 5 years) 13%

CPE/SPE 1.22 P/NTA 2.94 NTA 0.61 SPE 5.50 Rational Pr 1.46



Decision:
Already Owned: Buy, Hold, Sell, Filed; Review (future acq): Filed; Discard: Filed.
Guide: Valuation zones - Lower 1/3 Buy; Mid. 1/3 Maybe; Upper 1/3 Sell.

Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr

Ajinomoto

Date announced 27/08/2010
Quarter 31/06/2010 Qtr 1 FYE 31/03/2011

STOCK Ajinomoto C0DE 2658

Price $ 4.19 Curr. ttm-PE 9.95 Curr. DY 4.30%
LFY Div 18.00 DPO ratio 46%
ROE 12.1% PBT Margin 13.9% PAT Margin 10.5%

Rec. qRev 82127 q-q % chg 14% y-y% chq 15%
Rec qPbt 11439 q-q % chg 470% y-y% chq 29%
Rec. qEps 14.19 q-q % chg 482% y-y% chq 24%
ttm-Eps 42.10 q-q % chg 7% y-y% chq 29%

Using VERY CONSERVATIVE ESTIMATES:
EPS GR 5% Avg.H PE 10.00 Avg. L PE 6.00
Forecast High Pr 5.37 Forecast Low Pr 3.18 Recent Severe Low Pr 3.18
Current price is at Middle 1/3 of valuation zone.

RISK: Upside 54% Downside 46%
One Year Appreciation Potential 6% Avg. yield 6%
Avg. Total Annual Potential Return (over next 5 years) 12%

CPE/SPE 1.24 P/NTA 1.20 NTA 3.49 SPE 8.00 Rational Pr 3.37



Decision:
Already Owned: Buy, Hold, Sell, Filed; Review (future acq): Filed; Discard: Filed.
Guide: Valuation zones - Lower 1/3 Buy; Mid. 1/3 Maybe; Upper 1/3 Sell.

Aim:
To Buy a bargain: Buy at Lower 1/3 of Valuation Zone
To Minimise risk of Loss: Buy when risk is low i.e UPSIDE GAIN > 75% OR DOWNSIDE RISK <25%
To Double every 5 years: Seek for POTENTIAL RETURN of > 15%/yr.
To Prevent Loss: Sell immediately when fundamentals deteriorate
To Maximise Gain & Reduce Loss: Sell when CPE/SPE > 1.5, when in Upper 1/3 of Valuation Zone & Returns < 15%/yr

Addiction to cheap money

Addiction to cheap money
(China Daily)
Updated: 2010-11-05 14:26

The fresh round of quantitative easing launched by the US Federal Reserve Board (Fed) shows that the world's biggest economy, instead of abstaining, has become even more addicted to abnormally cheap credit.

In an all-out effort to shore up the US economy, on Wednesday, the Fed announced plans to purchase an additional $600 billion of longer-term US Treasury securities by the middle of next year.

The move, nicknamed QE2, does not bode well for the world economy, which is struggling to find a way out of the worst global recession in more than half a century.

Emerging market economies, the main engine of global growth, should take action to prevent the flood of cheap US money from sending their domestic inflation through the roof.

More importantly, the international community must work together to persuade the United States to give up its growing addiction to cheap money that, in all likelihood, will cripple any global effort to seek a rebalanced and lasting recovery of the global economy. There is little chance that the Fed can foster more employment while maintaining price stability with such an irresponsible monetary policy.

Compared with the painful fiscal consolidation that most debt-laden rich countries are undertaking to get their fiscal houses in order, quantitative easing, a roundabout process of printing money, looks a more tempting way to address debts and other economic woes. But, that will only be true if such cheap credit helps quicken a fundamental transformation of the US economy away from over-consumption toward investment-led growth.

The fact is that previous quantitative easing only prompted US banks to excessively increase reserves that are now a pool of inflationary fuel just waiting for the match of credit demand.

Worse, QE2 may even cause the US dollar to fall further, exerting a huge destabilizing influence on the rest of the world. The unevenness of the fragile global recovery means that most of the fast-growing developing countries are likely to fall victim to a surging inflow of international capital driven by the flood of cheap US credit.

When leaders of major developed and developing economies meet next week in South Korea to coordinate global efforts for a lasting recovery, they should not be misled by all the hoaxes about "currency wars".
Given the self-enhancing nature of this US addiction to cheap money, it is time to give the US a warning against going too far in its attempts to reflate its way out of the crisis.

It is irresponsible for the country with the world's major reserve currency to uphold the motto of "our currency, your problem". Nor is it fair for a rich economy to dilute its debts at the cost of the stability of the global economy and financial system, with developing countries bearing the brunt of its impact.

For the long-term benefit of itself and the world, the US should overcome its addiction to cheap money.


http://www.chinadaily.com.cn/business/2010-11/05/content_11508443.htm