Tuesday, 7 December 2010

Vietnam Real estate bubble – the accessory to inflation

Last update 23/11/2010 03:43:17 PM (GMT+7)

Real estate bubble – the accessory to inflation
VietNamNet Bridge – The real estate bubble is the accessory to inflation, and it should be considered as the “dangerous germ” which must not be allowed to live together with a healthy economy.

Minh, a securities investor, who went bankrupt due to the continued drops in stock prices, has unexpectedly got rich again. Several days ago, he came to a friend’s party as a real estate billionaire. Minh related that after he lost big sums of money on the stock market, he decided to sell all the remaining stocks he had. With the sum of money from selling shares, he bought 200 square meters of land near the Bao Son Paradise area in Hanoi at 30 million dong per square meter. Now he can sell the land plot at 60 million dong per square meter. If he sells the land plot right now, he will get a huge profit of six billion dong – the dream of many businessmen.

Living on virtual values

In theory, Minh’s sum of money has increased by two times. Meanwhile, the 200 square meter of land will still be the same and it has not been enlarged. The increased value can be described as a pumped ball that will return to its initial shape when it goes flat.

However, in urban areas, hundreds of thousands of people are living on the “bubble”.

The real estate fever not only has attracted professional real estate traders, but also individuals, both Vietnamese and foreigners. Even regular employees in state agencies have also jumped on the bandwagon.

Wealthy people rush to purchase land and keep land as valuable assets. People with lower income rush to purchase land to resell land later for profit. As for many ordinary workers, the money from trading land, not daily wages, is now the main income for their families.

No official statistics have been released, but it is estimated that the volume of traded land has reached several millions hectares with the added value of 30-40 percent. The value of the land may reach tens of trillions dong which obviously accounts for a big proportion in GDP.

The real estate bubble is feeding millions people.

People have their pockets picked

While millions people are getting richer thanks to the real estate bubble, another millions people are losing their opportunities to have accommodations.

A civil servant related that he has nearly one billion dong now deposited at banks. He has been saving money for the last 20 years and he hopes he can buy a mid-class apartment in the suburb area. However, he could not imagine that the real estate price would increase so dramatically. At the beginning of the year, an apartment in the area was priced at 20 million dong per square meter. Meanwhile, the price has jumped to 30 million dong. As such, with his sum of money, he would only be able to buy 30 square meters instead of 50 square meters as he previously thought.

According to experts, a reasonable sale price of apartment in multi-storey buildings (25-30 stories) is about 20 million dong per square meter which is high enough for real estate developers to cover expenses and generate profit. However, in fact, apartments are selling at 30 million dong per square meter.

As the price of real estate keeps rising, regular employees are getting poorer. Previously, they could purchase an apartment after 10 years of working, but now, they need 15 years or 20 years to buy an apartment.

The real estate price increases have brought about the increases of all other kinds of goods. House tenants have to pay higher rents, while the prices of materials, equipments all increase. The service fees of education, healthcare and transport all increase accordingly. The “price storm” is attacking every corner of society. It is obvious that the real estate bubble is the accessory to inflation.

A dangerous germ

In 2008, the US witnessed the worst financial crisis in the last 80 years. The crisis originated from a swelling real estate bubble.

Experts have warned that recently the real estate market in Vietnam recently has shown characteristics similar to the US real estate market during the crisis.

People are still rushing to purchase real estate which in turn is leading to virtual growth (the actual value does not increase). If the situation does not improve the real estate bubble is due to burst in a matter of days.

In the world, every family spends 33 percent of their monthly income to pay debts for their house. Meanwhile, in large urban areas in Vietnam, the figure may reach 80 percent.

Experts have warned that a debt crisis is likely to occur in a economy where people have to spend most of their income on accommodation.

Phan The Hai


Vietnam: Oversupply in resort real estate market

Last update 23/11/2010 09:00:00 AM (GMT+7)

Oversupply in resort real estate market

VietNamNet Bridge – The Ministry of Planning and Investment has requested local authorities to check the resort real estate development projects in their localities and report back to the ministry. The move has been understood by the public as the warning about the possible excess of the resort real estate projects.

The wave of developing resorts

Market surveys all show that in the past five years, the resort real estate market has been developing rapidly and going beyond the expectations of the management agencies.

Five years ago, there were only several resorts, namely Mui Ne Domaine, The Nam Hai (in Binh Thuan province), or Olalani, Indochina Riverside Tower in Da Nang, and some in tourist cities of Nha Trang and Vung Tau. Most of them were foreign invested projects.

However, the market has welcomed a lot of new investors, both foreign and domestic, over the past five years. The investors hope for big profit.

According to CBRE Vietnam, a real estate service provider, by the end of 2010, Vietnam will have some 55 resort real estate projects which will provide 5318 villas and 6601 apartments.

The figures make people believe that the resort market has become too hot.

In the region, Thailand is considered to have developed resort marketvery early. However, in Phuket, a famous tourist site for the past 20 years, there are only 5624 resort villas and apartments. Meanwhile, in Vietnam there are already 3745 apartments and villas in the central region. In fact, the number of high grade apartments and villas there is even higher than that in Phuket, 253 vs 135.

General Director of CBRE Marc Townsend described the investment wave as the “tsunami” which has landed in Vietnam.

It seems that people now prefer injecting their money in real estate projects to other investment channels, such as gold or securities, because they believe that real estate development can bring larger profit.

More harm than good

An expert from CBRE said that it seems that Vietnamese real estate developers have been too busy to develop the number of villas or apartments, not paying much attention to the quality.

Once the supply far exceeds the demand and goes beyond the management capability, this will be a big trouble.

An official from the Ministry of Planning and Investment said currently Vietnam has nearly no more land left along the coast, especially the localities with good infrastructure such as Da Nang and Binh Thuan.

This seems to be the blunder made by local authorities in the past. They hurried to call for investment by allocating beautiful land plots. many investors were allocated the land, even when they were not capable of carrying out their projects.

Under the current regulations, investors have to obtain permission from the Government only if their resort projects cover more than two hectares. Therefore, investors only register the projects with less than two hectares. As the result, the beautiful seaside has been divided into small plots.

The excessive development of the resort real estate sector, according to experts, may do more harm than good. Investors should be informed that the number of foreign guests and secondary investors is not has high as expected, as only 15 percent of resort real estate projects have been sold to foreigners, according to CBRE.


K-Star eyes dual listing prospects

K-Star eyes dual listing prospects
Posted on November 28, 2010, Sunday

KUCHING: K-Star Sports Ltd (K-Star) announced recently the company’s proposals to implement a sponsorship of a Depository Receipts Programme (DRP) in Taiwan.

Executive chairman and chief executive officer of K-Star, Ding Jianping commented, “The dual listing will also help promote public awareness towards K-Star in Taiwan, strengthening our international brand image and providing an alternative source of funding for the company.”

“Under our proposed TDR programme, the 100 million K-Star shares forming the underlying shares for the issuance of the TDRs shall comprise of up to 75.6 million new K-Star shares to be issued pursuant to the proposed share issuance and up to 24.4 million existing K-Star shares by certain existing shareholders,” he added.

The TDRs would be offered to potential investors in Taiwan by way of placement to identified third party investors and would be offered to the investing public in Taiwan.

The principal parties that would be involved in the Proposed TDR Programme included K-Star; Bank SinoPac, a financial institution based in Taiwan; Citibank NA Hong Kong, and Citibank Bhd and SinoPac Securities Corp as the underwriter for the offering of TDRs to investors in Taiwan.

The maximum gross proceeds to be raised from the proposed share issuance was expected to amount to approximately RM77.87 million, based on the indicative issue price of RM1.03 per new share, of which RM19.5 million would be used to expand K-Star’s production capacity.

The company also stated that RM15 million would be utilised for expansion of sales and marketing network; RM9 million to continue to boost the company’s branding and advertising efforts; RM3 million to enhance product design and development capabilities.

The balance of the fund would be allocated for general working capital and expected expenses for the Proposed TDR Programme and the Proposed Share Issuance.

“We are very optimistic about our prospects.

“Our company has recently expanded its footprints in the People’s Republic of China (PRC) and Russia and has successfully set up 19 wholesale points,” Ding said.

“We are pleased to continuously report sustainable growth for K-Star and we believe that K-Star is established and resourceful enough to venture into a dual listing. K-Star is eager to share its profit to a more diversified shareholder base through our dual listing,” he concluded.


K-Star expands footprints in China

K-Star expands footprints in China
Posted on November 20, 2010, Saturday

KUCHING: K-Star Sports Ltd (K-Star) announced that it was expanding its footprint in China by setting up six new wholesale outlets in Northern China through its wholly owned subsidiary, Fujian Jinjiang Dixing Shoes Plastics Co Ltd (Fujian Dixing).

According to its executive chairman and chief executive officer, Ding Jianping, “We have started developing the Northern China market since the middle of this year and as at the end of October this year, K-Star has successfully set up 19 wholesale points, in which six are new outlets located in Urumqi situated in Xinjiang, and the remaining in Russia.

“This marks the recognition and expansion of K-Star products to all the neighbouring countries. K-Star will further leverage on its current wholesale base and identify qualified distributors to operate and manage the point of sales,” he added.

Since its listing in June 2010 on the Main Market of Bursa Malaysia Securities Bhd, K-Star has been actively expanding its business in its quest to achieve its objective of being a long-term key player in the business.

Fujian Dixing, which was initially engaged in the production of shoe soles and canvas shoes, has broadened its business by venturing into the design, manufacture and distribution of sportswear besides its core business of canvas shoes.

Ding added, “K-Star has always believed in the promising export potential of China. This confidence propelled us to begin our first venture of setting up internal wholesale spots in Northern China.

“We have confidence this will help promote our sportswear brand for the export market and capture a greater market share in the country. The new wholesale platforms are expected to prosper alongside the flourishing economy churned by the development of the West and North China markets. ”

K-Star currently has overseas distribution networks in Russia and Eastern European countries including Finland, Ukraine, Belarus, Poland, Finland, Romania, Hungary and the Czech Republic, among other nations.

Fujian Dixing currently generates over 700 designs annually and manufactures approximately 7.9 million pairs of quality sports footwear, out of which 4.3 million pairs are distributed to their retail outlets in the PRC market in 2009.


MAAKL holds ‘Wealth Talk’ on market outlook

MAAKL holds ‘Wealth Talk’ on market outlook
by Ko Ping How kopinghow@theborneopost.com. Posted on December 7, 2010, Tuesday

KUCHING: The recently concluded ‘Wealth Talk’ on December 4 at Grand Continental Hotel was an inaugural event in the city organised by MAAKL Mutual Bhd (MAAKL). The talk aimed to help the public to make informed investment decisions entering the year 2011.

INAUGURAL EVENT: (From left) Senior general manager of MAAKL, Patrick Nge, Ng and Devadason. The ‘Wealth Talk’ is an inaugural event in the city organised by MAAKL.

MAAKL invited two professionals from the investment and financial planning fields who briefed participants on the stock markets’ outlook for 2011 and explained how good financial planning would help achieve short and long term financial goals.

Chief executive officer of Meridian Asset Management Sdn Bhd, Nicholas Ng, presented the talk on ‘Stock markets supported by liquidity but entering high risk zone’.

Ng stated, “What we are seeing since November for the US dollar was a technical bounce. The US really needed to sort out its economy and the huge amount of borrowing and printing of money is actually very bad for the US.

“There’s very little justification for a strong US dollar due to the recent rebound which is attributed to the weakness of the euro. At some point in time, the US economy will go back down to a weaker half next year and that’s where I think it will be a real challenge for the US dollar,” he added.

In response to where the FTSE Bursa Malaysia KLCI (FBM KLCI) would be heading in the upcoming year, Ng commented that, “We have an index of roughly 1,643 and I think it will have an eight per cent upside next year.”

He pointed out that investors could still make money in Malaysia but relative to North Asia, the risk would go up and ratio would be higher next year. Nonetheless, he opined that growth in the merging market would not be an issue and Malaysia would be recording roughly 5.2 to 5.4 per cent growth in 2011.

“North Asian countries like China would probably come down a little bit but will be at seven to maybe 8.2 per cent. Generally, in Asia, growth will not be a major concern,” viewed Ng.

On the topic of investment options, Ng expressed that Sarawakians were more localised that they focused only on local markets.

He stated, “Ideally, the way going forward is to diversify their investments especially into Pacific Mutual funds.”

He proposed Malaysians to look beyond national equities and go offshore to diversify their investments.

When queried on what stocks would have more importance in the future, he said that the election theme would be one area that could be focused on. Investing in large caps, goodwill and high dividend stocks would continue to do well even if markets were to correct in the first half of next year.

The second speaker, Rajen Devadason, chief executive officer of RD WealthCreation Sdn Bhd, a Certified Financial Planner and a Securities Commission-licenced financial planner with MAAKL talked on ‘Financial planning, asset allocation and the future of your wealth’.

Devadason said, “Based on the world wealth report published by Capgemini and Merrill Lynch, there are five asset classes that the very wealthiest put their money into. These are equities, investment real estates, fixed income such as bonds, cash in the bank and alternative investments.

“The smartest thing a normal individual can do is to see what the wealthiest people in the world are doing and learn their skills from them,” he added.

To answer whether foreign companies’ investment in FBM KLCI would have a positive effect, Devadason said that “If foreign companies come in and just pump money into Bursa Malaysia in a hurry, what happens is the market would take off like a rocket and this is hot money. So, Malaysians as serious investors should track and know the stocks. If we get to the point where the valuations are excessive, to get rich, you must buy low and sell high,” he enthused.

“If foreigners coming in pumped in lot money and our stock prices start to escalate, maybe it’s time for us to take some money off the table and to re-allocate. However, if the trend reverses, investors can get hurt badly. So, it can be a double-edged deal,” he pointed out further.

In conclusion, Ng noted that for higher risk-taking investors, alternative investments were good options. They included derivatives, options, futures or even arbitrage funds and commodities funds.

“There are lot of options and the most common with a cheaper entry cost is the exchange traded fund (ETF) that has also grown tremendously. There are many avenues now whereby new investors can take higher risks and at the same time use some of these instruments to hatch their underlined investments.”


The emergence of the underperformers

The emergence of the underperformers

by Ghaz Ghazali ghazghazali@theborneopost.com.
Posted on December 6, 2010, Monday

Earning numbers in 3Q10 not favouring outperformers – Analysts

SHIFT IN TREND: Photo shows the Bursa Malaysia building at Bukit Kewangan, Kuala Lumpur – the nation’s bourse and index centre. Companies pegged under ‘downgrade’ call have exceeded the ‘upgrades’ by 33 per cent as corporate earnings in the country have been slipping against expectations since last year’s fourth quarter.

KUCHING: The year’s third quarter results signals the rise of underperformers, which outnumbered outperformers by two to one – indicating continued pressure faced by certain key sectors, say analysts.

On a percentage basis, companies pegged under ‘downgrade’ calls exceeded the ‘upgrade’ ones by 33 per cent as corporate earnings in the country had been slipping against expectations since last year’s fourth quarter, observed OSK Research Sdn Bhd’s (OSK Research) head of research Chris Eng.

“Third quarter earnings were uninspiring particularly the small caps, with 45 per cent of companies reporting results that were below expectations compared with the big caps, of which 60 per cent were within expectations.

Sector-wise, only the media sector outperformed. On the flipside; the smaller steel, technology and O&G (oil and gas) companies reported weak results owing to lower margins, a stronger ringgit and delays in contract awards,” he outlined.

On the other hand, ECM Libra Capital Sdn Bhd’s (ECM Libra) head analyst Bernard Ching noted that while the trend appeared to favour underperformers in the reviewed quarter, positive earnings surprises were somewhat more than those in the negative.

“Even as positive ear-nings surprises for the third quarter – which comprised 18 per cent of stocks under our coverage – were lower than the 29 per cent reported in the preceding second quarter, there were fewer negative earnings surprises as well,” he pointed out, adding that 12 per cent of stocks under coverage had failed to meet estimates against 20 per cent in the preceding quarter.

Notable players that recorded such positive earnings surprises included telco giant Axiata Group Bhd, national airline Malaysian Airline System Bhd (MAS), O&G-related services provider Dayang Enterprises Holdings Bhd and construction conglomerate Sunway Holdings Bhd.

On the negative end, the research house weighted off building materials provider Lafarge Malayan Cement Bhd; consumer goods distributor Pelikan International Corp Bhd; O&G groups Petra Perdana Bhd and Wah Seong Corporation Bhd; plantation player Boustead Holdings Bhd; and construction company Sunway City Bhd.

Adding in a more optimistic take on the underperformers-versus-outperformers scenario, HwangDBS Vickers Research Sdn Bhd’s head of research Wong Ming Tek maintained that the restructuring of the KLCI in July last year should provide an added boost with higher weightings on bigger caps.

“The absolute 2010 net profit for our universe is set to surpass pre-financial crisis levels, supporting the KLCI (Kuala Lumpur Composite Index) to new highs in 2011. Coupled with impending Sarawak state elections, the government’s ongoing reforms and potentially strong CPO (crude palm oil) prices; we believe that the resilient economic growth, interest rate differential and weak US dollar could also see higher levels of foreign ownership.”

Similarly, ECM Libra’s Ching was also positive on the foreign ownership matter, highlighting that foreign net equity inflows would remain strong in the near term.

“We are still positive in the near term. Although the local index has retraced by about three per cent since hitting a high of 1,528.01 three weeks ago, we are unfazed by it.

“Rather, we believe the market will continue its uptrend in a more meaningful manner in next year’s first quarter, led by resilient domestic consumption, strong foreign net equity inflows, M&A (mergers and acquisitions) activities and also the Sarawak state election.”

On behalf of OSK Research, Eng believed that upgrades might again beat downgrades by the end of the fourth quarter, assuming that “things to turn for the better in the coming last quarter of this year.”

“For now, we maintain our 2011 fair value of 1,648 points, with our KLCI earnings growth to remain intact at 16 per cent. We maintain our ‘overweight’ call on the Malaysian market,” he added.


M’sian education sector set for next boom phase

M’sian education sector set for next boom phase
Posted on November 27, 2010, Saturday

KUALA LUMPUR: While the property sector now is in a flurry of consolidation through mergers and acquisitions, kicked off by UEM Land Bhd’s acquisition of Sunrise Bhd, followed swiftly by the just announced mergers of MRCB Bhd with IJM Land Bhd and Sunway Holdings Bhd with Sunway City Bhd, the education sector still remains ‘under the radar’.

MORE STUDENTS: The government is set to intensify its efforts to garner more students from the Middle East, China, Africa and other parts of South East Asia into Malaysia. - Photo from destination360.com
However, the fast growing private education business in Malaysia, which is currently valued to be worth some RM7.2 billion, seems to be stirring of late.

Ekuiti Nasional Bhd’s (EKUINAS) recent 51 per cent acquisition of APIIT/UCTI Education Group from Sapura Resources Bhd is seen as trailblazer for consolidation in the private education sector.

This is because of more outright acquisitions, mergers and the entry of fresh foreign players in time to come.

“There will be more mergers in the works as education entities that don’t merge may risk being left behind.

“There is urgency for smaller players to bulk up for scale and build up quality as the more renowned and established international players which have made their presence in Malaysia pose healthy competition to the growing market,” said Zakie Ahmad Shariff, chief executive of FA Securities Bhd and a former director of EduCity in Iskandar Malaysia.

This is more so as education has been identified as one of 12 National Key Economic Areas (NKEAs), with private education leading the

charge in catapulting Malaysia into the fastest growing education hub in South East Asia.

Malaysia has already become the 11th largest education exporting country with approximately 90,000 international students from more than 100 countries studying here in various international schools, colleges and universities.

Among the listed educational entities are Sapura Resources, SEG International Bhd, Help International Corp Bhd and Masterskill (M) Education Group Bhd.

Associate Professor Dr Rohaida Mohd Saat of the Faculty of Education, Universiti Malaya, lauded the move by EKUINAS and Sapura, saying, “the time has come for private colleges to merge, so as to gear themselves towards creating scale and meeting the increasing demands of foreign students flocking to Malaysia.”

Professor Dr Saifollah Abdullah from the Faculty of Applied Sciences at Universiti Technologi MARA said the Ekuinas Sapura pact was a perfect example of public-private partnership in the education sector.

The Education NKEA has been targeted to more than double the total gross national income to RM60.7 billion by 2020 from the current RM27.1 million.

Commenting on Malaysia’s attraction as an education destination, Dr Muhammad Azhar Zailani from the Faculty of Education, Universiti Malaya, said this is due to the competitive course fees, wide range of study options, many choices of universities and colleges and the existence of branch overseas university campuses.

“This allows students from different parts of the world to come to Malaysia, acquire prestigious qualifications from well-known universities from the West at an affordable price,” he said.

Aside from quality education, experts cite affordable living expenses, an economically sound and safe country and geographically safe environment as the main factors set to grow the education sector.

The government is set to intensify its efforts to garner more students from the Middle East, China, Africa and other parts of South East Asia into Malaysia.

To further build Malaysia’s participation in the global education sector, the government is also encouraging branch campuses of Malaysian educational institutes to go overseas.

Several Malaysian institutes of higher learning have branches overseas, including UCSI University and Limkokwing University in London.

Dr Muhammad Azhar said educational establishments must look towards merging with other established entities or be part of a larger educational network.

A notable example is INTI Educational Group that was acquired by Laureate International Universities from the United States.

With a presence in 21 countries globally, it has now become a leading educational establishment in the Malaysia as well.

Laureate said the reason why Malaysia was chosen as a preferred destination was its emphasis on infrastructure facilities and the government’s emphasis on developing Malaysia into an education hub.

In recent years, Kuala Lumpur, Petaling Jaya, Subang Jaya and Nilai have seen the mushrooming of many educational enclaves or precincts, attracting many foreign students in the process.

Malaysian educational players have also acquired smaller players and enlarged their base through listing their business as a way of tapping into greater capital resources as well as increasing student enrolment.

A case in point is HELP International Corporation Bhd and INTI Universal Holdings Bhd.

The listed holding companies of these educational establishments have strong collaboration with various overseas universities and attract many overseas students who want to acquire quality education at a reasonable cost.

Sapura Resources, which until recently held 100 per cent of APIT/UCTI Education, decided to divest 51 per cent of its stake to EKUINAS while holding the remaining 49 per cent along with management rights.

Now it appears both SAPURA and Ekuinas are in a better position to take advantage of the growth prospects of the fast-expanding education sector.

While some were quick to point out that Sapura was divesting from education, other observers argue that Sapura had in fact reinforced its commitment to the sector by getting a partner in order to grow its stake in the business. ­­— Bernama

Real returns with smart investment strategies

Real returns with smart investment strategies
Posted on November 27, 2010, Saturday

SEE your nest egg flourish with smart investing. It’s all about how much you invest and how often.

Successful investing is not about taking big risks, but more about being able to balance risk and return by investing in a meaningful portfolio.

Use investment strategies that do work: a balanced allocation of your portfolio’s assets among securities that suit your individual needs, the use of Cost Averaging (CA) to lower the cost of overall investments and dividend reinvestment programmes, and a well disciplined, long haul approach to investing.

Most important factor you have in reaching your goals is time. The more time you have, the more chance you have of success. If you’re thinking of embarking on an investment strategy like CA, know your facts first.

For example, CA involves the regular purchase of units in a managed fund or shares over a period of time. It can be done automatically via an investment plan and you may reduce the risk associated with market fluctuations while giving your portfolio the best chance of long term profitability.

Here are options for you to choose from when it comes to investing in your future:

1.Direct investing

You invest directly in the share market, property or real estate investment trusts (REITs). The downside is that it generally requires market knowledge, plus regular monitoring of market trends, tax and legal changes. Many working adults don’t have access to the right market information or expertise to do direct investing well.

2.Buying bonds

The general principle of bond investing is that when you buy a bond, you are lending your money for a certain period of time to the issuer, be it a listed company or not. It’s a good choice for investors who require fixed horizon and steady income.

However, investing in bonds are usually for the high- net-worth and institutional investors as bonds are usually offered at a high entry cost, in hundreds of thousands or millions of ringgit.

Additionally, investors are advised to pay attention to total return, not just yield as bond prices fall when interest rates rise. An option for the retail investors to access the asset class will be to invest in unit trust bond fund due to its low entry cost and diverse holdings which allows for diversification.


Historically the best, but most volatile way to grow your money is through the stock market. On a short-term basis, stock prices fluctuate based on everything from interest rates to investor sentiment, to the weather. But on a long term basis, you could potentially make (or lose) a lot of your money in stock market. Bear in mind that risk and return come hand-in-hand.

4.Managed funds

If you only have a small sum to invest, a good option is to put your money in a managed or unit trust fund. These are funds which pool the investments from a number of investors, enable you to access markets and assets that may be expensive or difficult to buy directly into, such as the China’s restrictive A-share market, emerging markets and even the fixed income space such as government bonds.

Additionally, unit trust funds are a good alternative to buying individual stocks, where in exchange for a small fee you will have the advantage of participating in several stocks within a fund. What happens is that the fund manager trades the fund’s underlying securities, realising capital gains or losses, and collects the dividend or interest income. The proceeds are then passed along to the individual investors. Most funds require only moderate investments, ranging from a few hundred to a few thousand Ringgit.

This article is brought to you by HwangDBS Investment Management, your Asian Financial Specialists. Log on to www.hdbsim.com.my or call 1-800-88-7080 to find out how you can cost average your investment via the HwangDBS Smart Save Plan.


Cocoaland’s new product line to be postponed

Cocoaland’s new product line to be postponed
Posted on November 23, 2010, Tuesday

KUCHING: Candymaker, Cocoaland Holdings Bhd (Cocoaland) postponed its proposed Cocopie and Gummy line of products as it was still scouring for a new plant to accommodate the additional lines.

In its research report, TA Securities Holdings Bhd (TA Securities) said the lines were expected to be completed and up-and-running in a year’s time.

On another note, Cocoaland was still in the trial-testing stage for original equipment manufacturers (OEMs) with big multinational corporations (MNCs) and thus, none would be reflected in its earnings this year.

In addition, the company which had begun marketing its own brands Fruit Ten and Cha in the market had been met with mundane response.

This was probably expected, as Cocoaland’s brand name was still relatively new in the Fraser and Neave Holdings Bhd (F&N) and Yeo Hiap Seng (M) Bhd (Yeo’s) dominated market, according to the research house.

It also mentioned that product and brand recognition traditionally took two to three years, but with Cocoaland’s synergistic relationship with F&N, it might allow Cocoaland’s products a shorter time to achieve that milestone thanks to F&N’s wide distribution network.

Furthermore, the research firm also commented on the company’s skyrocketing costs. The average price of sugar had increased more than 30 per cent year-to-date, cocoa powder by more than 20 per cent, packaging by more than 10 per cent and glucose by more than 15 per cent.

This was only partially mitigated by the weaker US dollar since 40 per cent of its sales were denominated in US dollars. TA Securities stated that trends were moving towards passing the costs to the consumers in the form of increasing selling prices by five per cent to 10 per cent.

Given the current circumstances, the research house expected net profit to be less than RM10 million on the back of weak first half of the year results in addition to operating losses of its beverage plant.

It pegged Cocoaland’s target price at RM2.14 per share based on financial year 2011 price earnings ratio of 16 times.


DISCOVER the key to long term financial success – through asset allocation.

Finding the right solution
by HWANGDBS Column. Posted on November 20, 2010, Saturday

DISCOVER the key to long term financial success – through asset allocation.

Asset allocation seeks to find the optimal investment mix while minimising your risks to help you achieve your goals. It allows you to spread your money across the asset classes – shares, bonds, Exchange Traded Funds (ETFs), commodities, property and cash to name a few, as different assets behave differently under different economic environments.

Ideally, both asset allocation and diversifying your investments should be done with meaningful returns and not for the sake of diversifying as it may dilute your returns. Portfolio rebalancing is needed, at least, on an annual basis to ensure everything is on track.

The asset allocation that works best for you at any given point in your life will depend largely on your time horizon and your ability to tolerate risk. Your goal should be to maximise your return for the amount of risk that you are comfortable accepting. To help you do that, you need a well allocated and diversified portfolio. Asset allocation can help you:

1.Ensure consistent returns over time. You’ll improve your chances of participating in market gains and potentially reduce the impact of poor performing asset categories by investing in several asset classes.

2. Reduce overall risk. Through portfolio diversification you can limit the volatility in your portfolio while improving its performance, by spreading the risk among different types of securities that don’t always behave the same.

3. Move forward towards attaining your goals. A well-allocated portfolio can reduce the need to constantly adjust investment positions in order to chase market trends.

Sorting out which works best

It’s important that your investments are allocated over a variety of asset classes as each asset class performs differently over time due to its unique balance of risk and reward. Over time and through your different life stages, the various investments in your portfolio may alter in value, due to changing market conditions.

Rebalance it regularly to effectively pursue your financial goals. This could mean realising your gains on portions of your investments or cutting your losses on others. The funds can then be used to purchase other assets in order to bring your portfolio back on track annually.

Discover your type

Which type of investor are you? Check out these categories on www.hdbsim.com.my

The young and the restless. Managing your finances at such an early stage will allow you to reap the rewards of long-term planning, enabling you to comfortably afford things that are important to you like a new home, further education, or even a baby.

Wonder women sexy, savvy and successful. You pride yourself on your accomplishments and there is no doubting your purchasing power. You understand that investing smartly is the key to reaching one of your ultimate goals: financial freedom.

The family way planning and informed financial decisions requires time, effort and patience as well as access to the best investment solutions that will be the foundation for your family’s financial stability.

Top of the hill. You are no stranger to investment risk. Your keen insight and uncanny judgment have brought you to where you are today. Isn’t it time you get everything you want?

The golden years. Now that you are financially liberated and free of the encumbrances of your career, you can indulge in the things you love the most… but that is assuming you planned well for your retirement.

This article is brought to you by HwangDBS Investment Management


Boustead assets sale a positive step forward

Boustead assets sale a positive step forward – Analysts
by Ronnie Teo ronnieteo@theborneopost.com. Posted on November 13, 2010, Saturday

KUCHING: Boustead Holdings Bhd’s (Boustead) proposed sale and leaseback agreement with Al-Hadharah Boustead Real Estate Investment Trust (AHBREIT) for its plantation assets was seen as a positive step forward by analysts.

PROFIT SHARING AGREEMENT: Ching says the variable rental payment will be based on a CPO price reference and there will be a profit-share agreement between Boustead and AHBREIT for any price of CPO sold above the reference price.

Hong Leong Investment Bank Bhd’s (HL Research) analyst noted that the proposed sale and leaseback of Sutera Estate in Sandakan and Taiping Rubber Plantation to AHBREIT was for a cash consideration of RM189.2 million.

“We view this positively due to interest savings and the reduction in gearing for Boustead,” he said.

According to ECM Libra Capital Sdn Bhd’s (ECM Libra) head analyst Bernard Ching, Boustead would profit by RM97.7 million in net gains from this venture along with an estimated interest savings of RM9.5 million for the financial year 2011 as reported by the group.

“The 3,580 hectare going into AHBREIT will still be captured by the group under its total hectarage calculation because it still gets to participate in the profits of the estates,” Ching pointed out. “As part of the leaseback agreement, Boustead will pay AHBREIT a fixed rental payment and also a variable rental payment.

“The variable rental payment will be based on a crude palm oil (CPO) price reference and there will be a profit-share agreement between Boustead and AHBREIT for any price of CPO sold above the reference price.”

Ching noted that the along with this new agreement, a new reference price and rental rates would be determined and known by next year.

“The agreement is as such that it has neutral impact to Boustead’s earnings, even in times like these when CPO prices are high.

“After all, Boustead’s 100 per cent owned subsidiary, Boustead Plantations Bhd does have a 60 per cent stake in AHBREIT and earns distributions and profit shares from the REIT,” he concluded.


Latexx advances market share

Latexx advances market share
by Justin Yap. Posted on November 11, 2010, Thursday

Company to focus on premium segments to cope with temporary headwinds

HIGH-TECH PRODUCTION: Photo shows a Latexx employee working with an incubator machine.
KUCHING: Latexx Partners Bhd’s (Latexx) ability to pass on costs to customers, coupled with its strategies to focus on the premium segments has enabled it to cope with the temporary headwinds and move on to advance its market presence.

Latexx announced results for the third quarter ended September 30, 2010 (3Q10) yesterday. The group recorded revenue of RM129.88 million for 3Q10, a 60.7 per cent growth from the same quarter a year ago (3Q09). For the current quarter, the group achieved net profit of RM17.63 million.

For the current year to date, the group sales revenue for the nine months ended September 30, 2010 increased 73.1 per cent to RM390.53 million from RM225.59 million for the corresponding period last year.

“The significant increase in revenue and improve-ment in the net profit of the current year was mainly due to the increase in overall sales volume, driven by the strong demand of gloves and the group’s capacity expansion,” said its chief executive officer (CEO) and chairman Low Bok Tek when contacted by The Borneo Post.

“The stronger performance was also attributed by measures taken to improve the efficiency in operation control as well as the intensified and aggressive marketing strategy,” he added.

The balance sheet position of the group continued to strengthen in 3Q10 compared with the preceding quarter. The net cash flow from operating activities as at September 30, 2010 was RM55.6 million, 30.8 per cent higher than the previous quarter of RM42.5 million.

When asked on the market glove demand, Low explained, “It had remained healthy although the concern for H1N1 had faded. Upon normalising, the demand for gloves still grew at 10 per cent to 12 per cent annually, which indicates a remarkable upside for any industry.

“Over the years, growing hygiene awareness and increased healthcare spending have made gloves a necessity in the healthcare sector, especially, in developed economies, thus making the industry resilient even when economy is slowing down.”

Looking at its strategic market positioning with thin nitrile gloves in the non-medical sector, Latexx head of corporate services Dr Liew Lai Lai said, “The sustained high level of latex prices is still the biggest challenge faced by all glove makers. Keeping abreast with the changing industry landscape, we have since adopted a few contingency strategies to adapt itself to the environment.

“Besides continuing to place more focus on the premium product segment that is relatively more resilient, we have also started offering a range of thinner, good quality and more price competitive nitrile gloves to both the medical and non-medical sector.”

Currently, almost 90 per cent of the group’s sales were to the medical sector; hence, the group was aiming to enlarge its revenue base by venturing into the non-medical sector. Latexx projected its range of thin and value priced nitrile gloves would be able to effectively substitute the lower-end natural rubber (NR) powdered gloves in the food and industrial market segment.

Latexx further foresaw that the latex price in the future would be lingering on the increasing trend and it believed that the sales of its range of thin nitrile gloves would increase substantially and significantly boost the revenue and profitability of the group by 2011.

The company also has strategically positioned itself in the premium NR gloves segment, with the launching of the first-in-the world NR powder-free gloves with unquantifiable protein level.

“This premium product range is currently the most effective solution to the threats of protein allergy for glove users,” said Liew.

“Based on the initial market response that we managed to obtain at this stage, the market is responding well and we strongly believes that these value-added natural latex gloves are able to create a demand and be widely accepted by the market and industry globally,” added Low.

He also revealed that the construction of an additional production plant adjacent to existing production facilities had been completed. The commissioning of glove production lines was done in accordance to schedule.

“Nine double formers and two single formers glove production lines were commissioned and have since started operation. The commissioning of the remaining glove production lines is in progress and is expected to increase the total capacity to nine billion pieces per annum by next year,” said the chairman.

The group continued to see a strong performance in its business for the remaining quarter of the year. “The board of directors expects the demand for the products and services to improve further in the fourth quarter and the business to remain strong until end of the financial year,” Liew concluded.


Supermax to increase nitrile glove mix to about 30 per cent

Supermax to increase nitrile glove mix to about 30 per cent
Posted on November 11, 2010, Thursday

KUCHING: Supermax Corporation Bhd (Supermax) plans to increase the nitrile glove mix to about 30 per cent by gradually converting its existing natural rubber powder-free production lines to nitrile lines.

Currently, Supermax produces a mix of 80 per cent natural rubber gloves and 20 per cent nitrile.

OSK Research Sdn Bhd (OSK Research) understood that about 70 per cent of all its lines were convertible, except for the remaining 30 per cent, which were dedicated for the production of natural rubber powder gloves.

The research house pointed out that this change in product mix was in tandem with the more stable demand for nitrile gloves.

OSK Research understood that management also intended to increase its current production of about 20,000 pairs per annum (p.a) to 2.5 million p.a by end-2011.

This was in line with its plan to gradually tweak its product mix towards higher margin gloves.

As mentioned before, management expected to increase its total capacity by 3.1 billion pieces of gloves by end-2010 and another 4.1 billion at end-2011, bringing its annual capacity to 21.7 billion pieces by end-2011.

The research house noted that management anticipated latex prices to peak at about RM8.50 per kilogramme (kg) at end-2010 followed by a fall in the first quarter of the financial year 2011 (1QFY11) despite the fact that rubber trees would be undergoing their winter season.

This was because management believed the current price run-up was fuelled by speculation rather than being due to actual shortage.

OSK Research’s target price for the company was RM7.84 per share based on a price earnings ratio of 13 times financial year 2011 (FY11) earnings per share (EPS).

Going forward to FY11, management expected a net profit growth of about 20 per cent, contributed by higher associate contribution, the establishment of more regional distribution centres and the production of higher margin examination gloves.


Investing with the big picture in mind

Investing with the big picture in mind
Posted on November 6, 2010, Saturday

YOU don’t have to be an expert to get started, but it helps to know the basics before you set a plan for investing. Since the whole idea of investing can be overwhelming and intimidating for anyone who has never done it, try taking small steps.

Here are some basic Do’s


•Get some financial education.

•Invest some time, then money.

•Read books and newspapers.

Attend seminars.

Get together with other like-minded people to learn about investment choices including the stock market, property or even a business.

You might also consider hiring a professional, like a financial planner to go through your current financial situation and goals, and work out a detailed financial plan for you. Besides giving you a professional perspective of your financial health, a good financial planner will know the kind of products in the market that will suit you.

But professional help doesn’t come cheap. So the best option would be to get a recommendation from neutral or independent sources such as the Financial Planning Association of Malaysia (FPAM) or the Securities Commission Malaysia before settling on a planner.

Always remember the three important principles of investing:

1. Investment Goals

What is the purpose of your investment? Is it to achieve high dividend yields or a consistent income yield? Once you’ve determined your short-term and long-term objectives, you can identify suitable investments, the level of risk you can tolerate, and what your expectations are.

2. Know your risk tolerance

High returns come with equally high risk. Realise your ability and willingness to lose some or all of your original investment in exchange for greater potential returns.

If you’re an aggressive investor, or one with a high-risk tolerance, a well-diversified equity fund should take up the majority of your portfolio. If you can take on only a moderate degree of risk, then perhaps a hybrid investment plan such as a 50:50 investment portfolio in a moderate risk fund with significant cash savings in a bank account is your calling.

3. Time horizon

Decide on how long you intend to invest and what stage of your life you’re at. If you are saving up for your daughter’s education in which you will need it in the near future such as within five years, then, you would likely to take on less risk because of a shorter time horizon. Also, maintain at least six month’s income in an easily accessible deposit account or put your money in liquid investments such as unit trust funds. This will allow you to have access to your money in the event of emergencies.

Here are two examples* to give you a general idea:

Scenario 1:

Sharon decides to start investing a sum of RM500 monthly, in an investment vehicle that will yield her an average of eight per cent per annum over the next 30 years till retirement. At the end of 30 years, the total sum of her investment would have amounted to RM750,000.

Scenario 2:

If Sharon decides to start investing five years later, a sum of RM500 monthly, in a similar investment vehicle that will yield her an average of eight per cent per annum over a period of 25 years till retirement, her total nest egg would have only amounted to RM478,000 due to the loss of an additional five years in compounded growth.

* Source: Investment Calculator from HwangDBS Investment Management corporate website www.hdbsim.com.my/tools/general-investment

This article is brought to you by HwangDBS Investment Management, your Asian Financial Specialists; we believe you deserve to live the life you want.


QL is estimated to need about RM 250 million per annum for FY 2011 to FY 2012 to finance its expansion plans

QL Resources to increase production capacity
Posted on November 5, 2010, Friday

KUCHING: QL Resources Bhd’s (QL Resources) recent proposal to undertake a private placement, share split and issuance of free warrants was aimed at increasing its production capacity in its existing poultry farms in Malaysia.

According to Kenanga Investment Bank Bhd (Kenanga Research), the proposed placement of 20,827,920 shares of RM0.50 each to third-party investors was expected to be completed prior to the proposed share split and free warrants issue, to be completed by the first quarter of 2011.

Assuming a five per cent discount from the five-day weighted average market price of RM5.26, the proposed placement was expected to raise gross proceeds of up to approximately RM104 million.

The research house stated that about 70 per cent of the proceeds from the private placement would go to increasing its production capacity in existing poultry farms in the country apart from developing poultry farms in Indonesia and Vietnam.

In addition, the proceeds would be utilised for QL Resources’ plantation development and oil mill construction in its 20,000-hectare plantation in Indonesia apart from development of its biomass renewable energy projects in Tawau, Sabah.

The group’s proposed share split would entail the subdivision of one existing ordinary share of RM0.50 into two shares held by entitled shareholders to increase affordability of its shares and encourage retail participation.

With regards to the group’s proposed free warrants, the research firm said it would be issued free to existing shareholders on the basis of one free warrant for every 20 existing QL Resources shares after the private placement and share split.

RHB Research Institute Sdn Bhd (RHB Research) in its research report said that it had previously highlighted the group to do a corporate exercise to raise capital as it had estimated a need for about RM250 million per annum for the financial years 2011 to 2012 (FY11 to FY12) to finance its expansion plans.

The research firm sustained a positive view on this move, stating that it would enable the group to lower its net gearing at 54 per cent by the third quarter of FY2011 against a current approximation of 60 per cent.

Budget 2011 boost for Economic Transformation Programme

Budget 2011 boost for Economic Transformation Programme
Posted on October 17, 2010, Sunday

PUTRAJAYA: Pemandu has received the necessary allocations to carry out the implementation of its Government Transformation Programme (GTP) and Economic Transformation Programme (ETP) initiative in 2011.

“The budget allocations clearly demonstrated the Government’s commitment to ETP. This will enable us to put up the eight per cent public funding required to catalyse the 92 per cent private sector investment.

“As the ETP is co-created by the private sector from the ground up through a 1,000-person workshop and 500-person nine-week lab, we now need the private sector to deliver on its promise,” said Senator Datuk Sri Idris Jala, Minister in the Prime Minister’s Department and chief executive officer of Pemandu.

“The estimated growths of 10.2 per cent and 6.3 per cent for private sector investments and private consumption respectively are aligned with the ETP’s strategy for a private sector-led and a more private consumption-driven economic expansion,” he added.

The ETP initiatives covered in the 2011 Budget include:

  • the Mass Rapid Transit (MRT) in Greater Kuala Lumpur/Klang Valley
  • measures to revitalise the domestic capital market
  • the launch of a Private Pension Fund
  • RM857 million allocation for local Electrical and Electronics sector
  • RM146 million allocation for the Oil, Gas and Energy industry
  • RM3.8 billion allocation to increase productivity and generate higher returns in the agriculture sector
  • RM85 million allocation for infrastructure facilities to facilitate construction of hotels and resorts in remote areas, and RM100 million allocation to further support the tourism industry
  • the RM3 billion eco-nature resort in Sabah
  • the abolishment of existing import duty of between five to 30 per cent on approximately 300 goods
  • RM297 million allocation to support palm oil replanting activities
  • RM127m allocation to support domestic oleo derivatives companies and RM23.3m to expand downstream palm oil industries
  • The set-up of the Wage Consultation Council to determine the rate and mechanism of the minimum wage policy
  • Allocation for Wholesale and Retail sector activities such as Tukar, Pakar and automotive workshop transformation.


Bursa M’sia delists 192 companies from 2005

Bursa M’sia delists 192 companies from 2005
Posted on October 13, 2010, Wednesday

KUALA LUMPUR: A total of 192 public companies have been delisted from Bursa Malaysia from 2005 till end of August this year, the Dewan Rakyat was informed.

Deputy Finance Minister, Datuk Dr Awang Adek Hussein, said a total of 203 public companies were also listed on the stock exchange during the same period.

He said 74 companies or 38 per cent of the 192 companies were delisted following privatisation process.

“Out of the 74 companies, 50 were off the list after take over offer and scheme arrangement, 12 following scheme payment and reduction in selected capital in line with the Companies Act. Another three companies were delisted following the sale of assets resulting from a merger where the assets had been transferred while another nine companies opted for voluntary delisting,” he said.

The minister said this when replying to a question from William Leong Jee Keen (PKR-Selayang) at the Dewan Rakyat sitting here.

Leong wanted to know the number of public companies listed on Bursa Malaysia through an initial public offer (IPO) and the number of companies that took private from 2005 till 2010 and the reasons behind the move.

Awang Adek said there were many other reasons for a company to seek delisting including the wish of the main shareholder to expand the company’s business direction without any obstruction from other shareholders.

A low share price that is not reflective of the actual asset value of the said share is another reason.

“It happens also when the company sells its assets and has no core business activity and both the main shareholder and the company’s management have no plans to start on a new core business,” he said.

Awang Adek also said that there had been a 15 per cent increase in the stock exchange’s Composite Index, rising from 1,272 points last year to 1,484 points todate.

“A rise of 15 per cent within a year is a good achievement. With the impending listing of several new companies including two subsidiary companies of Petronas on the local bourse, it should provide for some new activity and inspiration in the market,” he added. — Bernama

Poh Kong Holdings Berhad

Date announced 12-Jun-10
Quarter 31/10/2010 Qtr 1 FYE 31/07/2011


Price $ 0.47 Curr. PE (ttm) 5.90 Curr. DY 2.98%
LFY Div 1.40 DPO ratio 18%
ROE 10.2% PBT Margin 9.0% PAT Margin 6.4%

Rec. qRev 169451 q-q % chg 28% y-y% chq 11%
Rec qPbt 15191 q-q % chg 58% y-y% chq 11%
Rec. qEps 2.65 q-q % chg 39% y-y% chq 10%
ttm-Eps 7.96 q-q % chg 3% y-y% chq 17%

EPS GR 5% Avg.H PE 6.00 Avg. L PE 5.20
Forecast High Pr 0.61 Forecast Low Pr 0.38 Recent Severe Low Pr 0.38

Current price is at Middle 1/3 of valuation zone.
RISK: Upside 61% Downside 39%
One Year Appreciation Potential 6% Avg. yield 4%
Avg. Total Annual Potential Return (over next 5 years) 10%

CPE/SPE 1.05 P/NTA 0.60 NTA 0.78 SPE 5.60 Rational Pr 0.45

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

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

Stock Data: Recent Stock Performance:
Current Price (11/19/2010): .49
(Figures in Malaysian Ringgits)
1 Week 10.2% 13 Weeks 11.5%
4 Weeks 19.8% 52 Weeks 16.9%

Poh Kong Holdings Berhad Key Data:
Ticker: POH KONG Country: MALAYSIA
Exchanges: KUL Major Industry: Apparel & Textiles
Sub Industry: Apparel Manufacturers

2010 Sales 561,242,000
(Year Ending Jan 2011).
Employees: 1,047

Currency: Malaysian Ringgits Market Cap: 199,020,720
Fiscal Yr Ends: July Shares Outstanding: 410,352,000
Share Type: Ordinary Closely Held Shares: N/A

Day's Range: 0.46 - 0.47
52wk Range: 0.35 - 0.51
Volume: 273,000

Friday, 3 December 2010

Top 5 Things to Do to Make Money Investing Stocks

You can read all the investing books from Amazon.com Inc (Nasdaq: AMZN, stock), attend all the seminars you can afford and ask a million investing questions because Warren Buffett is your neighbor next-door but you can never duplicate and apply all the teaching in your way of investing. So let’s start with the top 5 things you should do to make money investing stocks or trading option (in no particular order):

First Thing to Do
You Should Study the Companies’ Fundamentals

Second Thing to Do
You Should Do Technical Analysis

Third Thing to Do
You Should Read the Pulse of the Market

Fourth Thing to Do
You Should Know When to Lock Your Profit

Fifth Thing to Do
You Should Minimize Your Emotion

Read more here.

Petronas Gas surges on LNG project

Petronas Gas surges on LNG project
Written by Joseph Chin
Thursday, 02 December 2010 09:21

KUALA LUMPUR: Shares of PETRONAS GAS BHD [] advanced in early trade on Thursday, Dec 2 after it secured a proposed liquefied natural gas (LNG) regasification project from its parent, Petroliam Nasional Bhd.

At 9.18am, PetGas was up 22 sen to RM11.36. There were 5,700 shares done.

The FBM KLCI jumped 11.91 points to 1,497.33. Turnover was 95.33 million shares valued at RM102.61 million. There were 304 gainers, 41 losers and 96 stocks unchanged.

PetGas announced on Wednesday the projects would be in Sungai Udang port, Melaka and would include two floating storage units (FSUs) to receive and store LNG; an island jetty and regasification units to regasify LNG; and subsea and onshore pipelines to transport the regasified LNG to the Peninsular Gas Utilisation pipeline network.


Blue Ocean Strategy

Blue Ocean Strategy
Slide Presentation

Thursday, 2 December 2010

The Ketuanan issue

Dr Wan Azizah struck at Umno’s soft spot — Kim Quek
December 02, 2010

DEC 2 — PKR President Datuk Seri Dr Wan Azizah Wan Ismail seemed to have struck at the Achilles’ heel of Umno when she officially condemned “Ketuanan Melayu” (Malay the master race) as the fraudulent ideology that has propped up Umno all these years.

Delivering her policy speech during the party’s annual congress on November 27, she said that the Malay supremacy concept was used by Umno’s elites to deceive the Malay masses for self enrichment and for maintaining their political power. As a result, the majority of Malays and Bumiputera have remained poor and neglected despite 53 years of Umno rule.

Calling the Malays to discard this ideology, she said: “The concept of Malay supremacy must be left behind so that our children will grow up with the vision of a dignified race.”

By any democratic standard, Dr Wan Azizah’s clarion call to abandon racism must be applauded as the voice of reason that is in consonance with fundamental values embraced by every member of the world community.

After all, isn’t it true that the last country practising institutionalised racism — South Africa — had given up its racist policy twenty years ago? Though Malaysia has largely escaped the kind of world condemnation accorded former apartheid South Africa, thanks to the Barisan Nasional government’s skilful image polishing, nevertheless, endemic racism remains a plague that has sabotaged national integration and thwarted economic growth.

Ketuanan Melayu indefensible

Perhaps aware that “Ketuanan Melayu” is indefensible in the eyes of the world, Umno was at a loss as to how to respond to Dr Wan Azizah’s unexpected frontal assault.

To keep silent would be to acquiesce to Dr Wan Azizah’s assertion and that would spell trouble — big trouble. For it is through inciting the primordial instinct of race that Umno hopes to scrape through the coming national election. So, how could Umno give up “Ketuanan Melayu”?

On the other hand, to defend the ideology would be to invite worldwide ridicule and condemnation. And that would not be pretty, keeping in mind that with the myriad of modern communication gadgets instantly transmitting news and messages, international backlash could be swift and unpalatable.

So, after a short interval to recover from Dr Wan Azizah’s surprise initiative, responses began to drip in from Umno’s top leaders, but these are either evasive or irrelevant, and none has dared to take Wan Azizal head on.

Deputy Umno President and Deputy Prime Minister Tan Sri Muhyiddin Yassin described Dr Wan Azizah’s assertion as an attempt “to salvage a sinking ship”, and to regain public support after a divisive party election. What about the Ketuanan issue? Not a word of rebuttal.

Umno Vice President and Defence Minister Datuk Seri Zahid Hamidi said Dr Wan Azizah was “only trying to divert public attention from the party’s serious problems.” He said PKR wanted to please the Chinese and Indians to gain their support for the next general election. Again, he avoided touching the Ketuanan issue.

Not unexpectedly, the dirty job of savage counter-offensive was left to Umno’s ultra racist wing Perkasa. Its youth leader Arman Azha Abu Hanifah attacked Azizah as “political prostitute”. He said that she and other PKR Malay leaders owed their professional achievement to “Ketuanan Melayu” policy and that they had now betrayed the race for the sake of gaining Chinese and Indian support.

Interestingly, Arman’s bad manner and insensitive blast at other Malay leaders seem to justify Dr Wan Azizah’s advocacy to abandon the “Ketuanan” mentality so as to regain dignity for the race. It is not only abhorrent conduct to call a respected national leader “prostitute”, but his inference that Malays are not capable of achieving success unless they are propped up by racial favouritism is outright humiliating to the race. In fact, Arman’s crass outburst has unwittingly made him the best poster boy of the ill fruits that “Ketuanan Melayu” has borne.

However, the icing of the cake in this episode is undoubtedly the novel theory put up by the vociferous Umno Cabinet member Datuk Seri Nazri Aziz to deflect Dr Wan Azizah’s criticism. He said “Ketuanan Melayu” is not about the Malay race, but about the Malay Sultans. He said the word was coined to protect the sovereignty of the Malay Rulers, not to emphasise racial supremacy.

Glaring evidence of racism

While Nazri may consider himself ingenious in coming out with this new interpretation to escape the “Ketuanan” trap, it sure holds no water. The bedrock of Umno’s hegemony is its racial ideology which has captivated its core supporters, and “Ketuanan Melayu” has been coined to symbolise Malay supremacy. It is through the indoctrination and implementation of this ideology that Umno has been able to win election after election; and Umno is not about to give it up for whatever reason.



I'll die in debt, say one in three in UK

Nine out of 10 people have run up unsecured debt and many fear they will never be able to pay back what they owe, a survey has claimed.

5:40PM GMT 30 Nov 2010

Around 89pc of people aged between 18 and 35 said they owed money on a credit card, loan or overdraft, the research showed.

A third of people admitted they did not think they would ever be debt-free, 54pc of whom said they would always need to borrow money in order to fund the lifestyle they wanted.

One in five of these people also claimed they were not worried about the possibility of their debts being passed on to their next of kin if they died before they were repaid.

Just over half who owed money said they did not feel in control of their debt, with 8pc admitting they had needed to ask for help with repayments from a friend or family member. Eight out of 10 people also told the research for discount website MyVoucherCodes.co.uk that they thought it was too easy to borrow money through their bank or on credit cards.

Farhad Farhadi, MyVoucherCodes.co.uk's personal finance expert, said: "The majority of British adults owe money in some way, shape or form, but to see that almost a third think they'll never be free from debt is quite alarming.

"When borrowing money from any source, how you are going to repay it should always be in the back of your mind.

"A lot of people don't really think about the consequences of borrowing money and it can be easy to get complacent, but keeping it all under control should be a priority from the off. Only borrow what you really think you can afford to pay back."

MyVoucherCodes.co.uk questioned 1,722 people aged between 18 and 35 during November.


KLSE Market PE


Well-managed companies set to gain

Tuesday November 30, 2010

Well-managed companies set to gain

By Teoh Kok Lin

ASIA'S stock valuations are not expensive especially if you pick the right companies to invest for the long term. I sensed lately that there is a growing concern when I speak to investors about Asia's or Malaysia's stock markets.

The fact that Malaysia's stock market index is now hovering near its all-time high of 1,516 points (set in January 2008) is one big cause of uneasiness for some; while EU financial problems and lukewarm US economic data have put a damper on sentiments for others. Some anxiety is not surprising; fresh in many investors' minds are the 2008 global stock market crash, the rebound of 2009 and very volatile markets throughout.

Unnerving investors

Volatile stock markets can be unnerving for investors; since 2008, major stock market indices such as in China, Hong Kong and the United States have experienced gains or losses of up to 3% to 5% a day such huge daily swings are no longer unusual or unexpected.

It is therefore understandable that some investors feel that stock markets (in Malaysia or elsewhere) are due for a big fall, either because stock prices are already too high and/or Western economies have too many unresolved problems. Even a double-dip global stock market crash continues to be bandied about with gusto.

I like to share some of my views on these doubts, especially with regards to Asia's stock market prospects. First of all, are stock prices too high? Asia's stock market indices today (including Malaysia) are still attractively priced and not close to the excessive levels seen in the late 2007/early 2008 market highs (See table). Hence I believe Asia stock prices in general are not expensive yet.

The current Asia bull market rally also means some stock markets will keep hitting new highs, and bull markets can last for many years (for example, the US S&P 500 Index rallied from 295 points in 1990 to 1,232 points in 2000, a continuous bull run for more than nine years, as compared to the current bull run in Asia of about two years).

Second, Asia today is experiencing a major shift in the world's economic centre of power from the West to the East. In this decade, Asia is likely to continue with its rapid economic growth while the West repairs it debt-laden economies.

Growth in Asia will be fuelled by the three big populous and increasingly rich nations of China, India and Indonesia where latent demand for consumer goods is built on a base of almost three billion increasingly wealthier consumers.

According to a World Bank report, China has 32 cars per 1,000 population while India (10 cars) and Indonesia (76 cars) has equally low car ownerships when compared to the United States (819 cars) or Australia (653 cars). For the next 10 years, I would hazard a guess that major car companies will likely sell more cars in Asia than in the United States every year.

On a similar vein, while there may be short-term negative sentiment in China's property sector, I believe that the underlying Chinese demand for housing will be very strong for many more years to come due mostly to increasing wealth (nominal per capita GDP rose from about US$1,000 in 2000 to US$3,735 in 2009 and likely to grow richer) and rapid urbanisation (2.7% annual rate of change) in a country with 1.3 billion population.

This decade, therefore, will offer tremendous opportunities for many established as well as entrepreneurial Asian companies to prosper.

Accurate information

Third, when one invests in stocks, it is the company's business that you invest in. Accurate and timely information regarding a company its business and management is important in order to separate the well-managed from the not-so-well managed companies.

After any stock market downturns, good companies will almost always rebound strongly; something that was quite evident during the 2009 stock market rally. It may be stating the obvious but picking the right stock (or well-managed company) will most likely determine whether one is investing successfully or not.

Finally, as long as the macroeconomic trend is favourable for Asian economies, it also represents fantastic business opportunities for well-managed Asian companies. As Warren Buffett says: If a business does well, the stock eventually follows.

Investing for the long term in companies that will reap the benefits of Asia's high economic growth for many years will likely reap handsome rewards no matter whether there is short-term market volatility, downturns or corrections. In that sense, I am very optimistic for Asian equities this decade.

The writer is the founder and chief investment officer of Singular Asset Management Sdn Bhd.


Wednesday, 1 December 2010

Reflections on Volume

Big volume without further upside equals distribution
Big volume without further downside equals accumulation
Volume tends to peak at turning points
Volume often precedes price movement
Volume is a relative study

Politicians should embrace 'Ketuanan Rakyat' and focus on their services to the public, helping ALL the people.

‘Ketuanan Melayu’ not in Constitution, says Prof Khoo
November 30, 2010

KUALA LUMPUR, Nov 30 — The terminology “Ketuanan Melayu” or Malay Supremacy need not be debated because it does not exist in the country’s constitution, said history expert, Prof Emeritus Tan Sri Dr Khoo Kay Kim.

He said that from the historical aspect, only the Rulers’ Supremacy was stated in the constitution where the people must show their loyalty to the Rulers.

“In the past, ‘Malay Supremacy’ was never mentioned within the Malay community. In history, such things are incorrect. What is stated in the Constitution is only the Rulers’ Supremacy, where you show loyalty to the state where you reside in.

“The Malays obtained the special privileges because they are the subjects of the Ruler. The position of the Malays is given special consideration and need not be disputed,” he said when contacted by Bernama, here tonight.

He was asked to comment on the statement by Parti Keadilan Rakyat (PKR) president Datin Seri Dr Wan Azizah Wan Ismail on the Malay Supremacy in her policy speech at the 7th National Congress of the party on Sunday.

Dr Wan Azizah called for the abolition of the concept of Malay Supremacy to enable Malaysian children to grown up with the vision of a ‘race of integrity’ or ‘Malay of Integrity’.

Khoo said the terminology ‘Malay Supremacy’ was only raised by politicians purely for political purposes, and he observed that politicians were now frequently raising issues that could lead to racial confrontations.

“Politicians should focus on their services to the public, helping the people. They should not encourage the people to quarrel,” he said.

Meanwhile, the Director of the Institute of Ethnic Studies, Universiti Kebangsaan Malaysia (UKM), Prof Datuk Dr Shamsul Amri Baharuddin shared Khoo’s opinion that the term Malay Supremacy was coined by politicians in portraying the political and economic position of the Malays.

Questioning Dr Wan Azizah’s motive in raising the issue, he said the statement by the wife of PKR de facto leader, Datuk Seri Anwar Ibrahim, was merely a political gimmick and purely to cover up the crisis faced by the party currently.

“I don’t know why the issue was raised. What I notice is “Anwar’s Supremacy” in the PKR. It is Anwar’s Supremacy that must be abolished. The Malay Supremacy is merely to demolish Anwar’s Supremacy. In my opinion, the concept (Malay Supremacy) does not exist,” he said.

He said Dr Wan Azizah should re-examine what was meant by the term supremacy and should not question the special privileges of the Malays which had been enshrined ever since the era of the Malay Sultanate.

Shamsul Amri said that looking from the economic aspect, the Chinese community dominated 70 per cent of the economy while the Malays had only 30 per cent and there was no such thing as the Malays dominating in all aspects.

“If we look at it, the 70 per cent should be the supreme group. So, what does the Malay Supremacy show? What does supremacy mean? She (Dr Wan Azizah) herself is not clear on the meaning of supremacy,” he said.

Dr Shamsul Amri said politicians should be thinking about issues that were relevant for discussion instead of raising issues that could bring about negative developments between the races. — Bernama


Upscale Americans Investing Abroad

Buy American? Upscale Investors Look Abroad
Published: November 19, 2010

Well-heeled American investors have been doing something lately that they resisted for decades — becoming more like their European, Asian and Latin American counterparts and substantially diversifying their portfolios outside their home country.

There are two reasons for this. The financial crisis and the slow recovery showed them that the United States was not immune to devastating crashes of the kind that wealthy people in emerging markets have tried to hedge against by investing abroad. And second, American investors are worried that their portfolios are going to suffer for the foreseeable future, given the size of the United States’ budget deficit, the weakness of the dollar and the uncertainty over the stock market.

“I’ve never seen a period in which clients have expressed such an interest in nondollar investments,” said Kent Lucken, managing director at Citi Private Bank. “People are spreading their chips around more prudently and I think more wisely.”

What is different is how directly these investors are going into non-American markets. They are not content with buying international equities or going into an international bond fund. They are looking to invest directly in Chinese private equity, Indian real estate, Brazilian equities denominated in reals and Australian government bonds. They are also opening cash accounts in multiple currencies.

“International clients understand the need to diversify currencies, but this is something new to U.S. clients,” said David Frame, global head of alternative investment at J. P. Morgan Private Bank.

The people putting as much as 40 percent of their portfolios into nondollar investments are quite wealthy. But consider it this way: What can investors of more modest means learn from what the wealthiest people in the country — with the best research and advice at their disposal — are doing with large portions of their fortunes?

UPSIDE Investors who lived through the 1990s will remember the crises in Asia, Mexico and Russia that shook global capital markets. Investing internationally has always carried risks and it is by no means without perils today.

But many investors see a different trade-off, one based as much on a stagnant or declining United States as on certain international markets that are growing, if not booming.

“When you make an investment in nondollar currencies, you’re making two investments at once,” said Tony Roth, head of investment strategies at UBS Wealth Management. “You’re betting the dollar will go down, but you’re also buying another investment. You need to be compensated for that source of risk.”

He cited the example of buying a one-year Australian government bond, yielding 5.25 percent. He said he believed that the American dollar was going to lose value and the Australian dollar was going to gain it. That’s Part 1. Part 2 is that the Australian government is stable, so an investor can count on receiving that 5 percent annual return. The alternative is less than half of a percent if invested in United States Treasuries.

“I’m going to receive a return,” he said, “that more than compensates me for the marginal risk I’m taking.”

But there are far more risky investments. And the ones that are less liquid — infrastructure in China, say, or a private equity fund in Brazil — carry more uncertainty. But like their equivalents in the United States, they provide a higher return, in theory.

Mr. Frame said clients were investing in Asian infrastructure and Asian private equity by pooling their money with other investors. “There is a lot going on when a country is growing and developing that is hard to address through the public markets,” he said.

While there’s an obvious "pull" to international investments, there is also a bit of a "push" out of the United States: investors who are making their portfolios more international are doing so because they believe that the role of the United States in the global economy is shrinking.

Mr. Roth said the United States contributed 40 percent of global gross domestic product 15 years ago and now contributed 21 percent. He predicted that that figure would fall to 12 percent in another 15 years. Going along with this is the shrinking market capitalization of American stocks compared with global stocks.

“We have the U.S. experiencing flat to 2 percent G.D.P. growth, but you have Brazil, India and China with substantially higher rates,” Mr. Lucken said. “Equity investors are investing abroad to capture higher returns and invest ahead of higher growth rates.”

DOWNSIDE The biggest risk is uncertainty, followed by a lack of knowledge. No one knows exactly what is going to happen, and there are always investors who rush in too quickly without fully understanding the risks.

Those risks run the gamut from income inequality that could create unrest, to legal systems that have not been tested by foreign investors, to managers abroad without established track records.

There is also the unforeseen. “I witnessed firsthand the collapse of the Soviet Union,” said Mr. Lucken, a former foreign service officer. “That speaks to the unique political risks in smaller developing countries.”

Also, South Korea and Brazil, which are now darlings of investors, were shaken by crises in the 1990s. “The history of success has been relatively short — the past 10, 12 years,” said Christopher J. Wolfe, chief investment officer for the private banking and investment group at Merrill Lynch.

But Mr. Wolfe said clients were investing across all asset classes when they invested internationally and that gave them greater diversification. It is also a big change from the time when “it used to be U.S. stocks and non-U.S. stocks,” he said.

Like all big changes, there are going to be fits and starts. But after what investors lived through over the last three years at home, some are willing to chance it.


Hunting for Returns Abroad

Are overseas investments worth the risk? Which ones can be part of the mix for a prudent investor?

Wealth Matters
Paul Sullivan writes about strategies that the wealthy use to manage their money and their overall well-being.