Merry Christmas!
圣诞节快乐！
Friday, December 25, 2009
Thursday, December 24, 2009
Seven-time champion Schumacher eyes record eighth F1 title
Michael Schumacher targeted an unprecedented eighth Formula One title after Mercedes announced yesterday he was coming out of retirement to race for them at the age of 41.
“Our aim can only be to fight for the championship,” the German told reporters in a conference call after signing a contract on Tuesday.
Media reports have suggested the German, who won his titles with Benetton and Ferrari and retired at the end of 2006, will earn €7mil (US$10mil) in what would be an all-German line-up.
“We are talking about a three-year deal, it’s not just a one-off thing,” said the former Ferrari ace of a contract that had been expected to be for just one year. “We are looking for continuation.”
Mercedes, who have taken over champions Brawn GP, have signed Nico Rosberg as their other driver for 2010. World champion Jenson Button has left the British-based team for McLaren.
A move to Mercedes will give Schumacher, who turns 41 in January, a potentially winning car and reunite him with Britain’s Ross Brawn - the technical director who guided him to all his titles and who is now the team principal.
It will also take Schumacher’s career full circle, since the German drove for the Mercedes sportscar team before breaking into Formula One with Jordan in 1991.
“I am happy to be able to give something back that Mercedes gave in the early days,” Schumacher said.
Schumacher had planned a comeback with Ferrari earlier this year as a stand-in for injured Brazilian Felipe Massa but had to abandon that idea due to a neck injury caused by a motorcycle accident.
Since his retirement, the German has worked as a consultant for Ferrari but the Italian team has said that is not a binding agreement.
Schumacher will be returning to a very different, and more cost-conscious, Formula One from the series he left after a record 91 wins from 249 starts.
Mercedes and Ferrari will be the only fully manufacturer-owned teams, with BMW, Honda and Toyota having all left in the past year and Renault due to sell a significant stake in their British-based operation.
Schumacher will be hoping to emulate the likes of Austrian Niki Lauda and France’s Alain Prost, champions who both came back to win titles after time out of Formula One.
Former champions Damon Hill, Schumacher’s leading rival in the mid 1990s, and Nigel Mansell have both said that age will be no impediment and that the German could return as a winner.
“It wouldn’t surprise me if Michael challenged for another world championship,” Britain’s 1992 champion Mansell, who won his title aged 39 and competed in Formula One until the age of 41, said at the weekend.
Schumacher’s return will allow 2008 champion Lewis Hamilton, who entered the sport only after Schumacher retired, to measure himself against Formula One’s most successful driver while also setting up an intriguing Anglo-German battle.
Hamilton and 2009 champion and compatriot Button will form an all-English pairing at rivals McLaren, who will still be powered by Mercedes engines.
There will also be a battle of the generations, with Schumacher lining up on a starting grid likely to include at least one driver half his age.
The sport’s oldest champion remains the late Argentine Juan Manuel Fangio, who took his fifth title at the age of 46. The oldest driver to win a grand prix is Italian Luigi Fagioli in 1951 at the age of 53. — Reuters
The Schumacher fact file
Name: Michael Schumacher
Date of birth: Jan 3, 1969
Birthplace: Kerpen, Germany
Height: 1.74m
Weight: 74kg
Wife: Corinna (married August 1995); children - Gina Maria, Mick
n Career details
Starts: 250;
Victories: 91
Poles: 68
Fastest Laps: 72
Points: 1,369
Grand Prix debut: 1991, Belgian GP, Jordan
Teams: Jordan (1991), Benetton (1991-1995), Ferrari (1996-2006)
World champion: 1994, 1995, 2000, 2001, 2002, 2003, 2004
Property tax let-off for owners
PUTRAJAYA: The real property gains tax (RPGT) announced during the Budget 2010 will only apply to properties sold within five years of their purchase, announced Datuk Seri Najib Tun Razak.
The Prime Minister said the 5% tax would now only be paid if the property was sold within five years of its purchase instead of the tax being imposed on the sale of property regardless how long its owners hold on to it as initially announced in the Budget.
He said the decision would see the Government forgoing revenue amounting to RM200mil, adding the move was made following requests by the Federation of Chinese Associations of Malaysia (Hua Zong) and the business sector.
“This policy was also decided upon as the Government wants to see stronger growth in the property sector next year. We are even willing to forgo a substantial revenue so that the sector can expand and grow.
“The property sector has shown signs of improvement but we feel that it requires further impetus so that it can continue to grow from strength to strength.
“We have met one of Hua Zong’s requests and we hope they will respond accordingly by working even closer with the Government in the future,” Najib said at the swearing-in ceremony of Hua Zong’s office bearers for the 2009-2011 term on Wednesday night.
Also present were Transport Minister Datuk Seri Ong Tee Keat, Health Minister Datuk Seri Liow Tiong Lai, Deputy Education Minister Datuk Dr Wee Ka Siong, Deputy Youth and Sports Minister Datuk Wee Jeck Seng and Hua Zong president Tan Sri Pheng Yin Huah.
Najib also announced that hotels undertaking additional investments to renovate, refurbish and expand their premises would enjoy a 60% re-investment allowance that has now been extended to 15 years from the previous 10 years.
He said this was an attempt to boost the country’s robust tourism industry, which has tremendous potential for further growth.
Najib also said that he wanted to see a more “active” private sector, which he said had been rather “lethargic” and had been more interested in investing abroad rather than domestically.
Tuesday, December 22, 2009
Gamuda 1Q earnings up 14.5% to RM63m
GAMUDA BHD posted stronger set of earnings in the first quarter ended Oct 31, with net profit at RM63 million, up 14.5% from RM55.04 million a year ago, due to higher contributions from all divisions.
The infrastructure-based company said on Tuesday, Dec 22 that revenue was marginally higher by 1.63% at RM623.96 million from RM613.96 million.
The infrastructure-based company said on Tuesday, Dec 22 that revenue was marginally higher by 1.63% at RM623.96 million from RM613.96 million.
Earnings per share were 3.13 sen versus 2.74 sen. It also declared a dividend of 6.0 sen per share compared with 4.0 sen a year ago.
Gamuda said for 1Q under review, the pre-tax profit of RM83.5 million was higher than the preceding quarter's profit before tax of RM80.4 million, "primarily due to higher contribution from the property division arising from strong property sales with effect from the middle of the last financial year".
On the prospects, it said with existing CONSTRUCTION [] projects progressing on schedule and the recovery of the property market, the group's performance is expected to improve in the remaining quarters of the current financial year.
On the Electrified Double Track project, it said work progress was behind schedule due to delays in design approval and late handover of land by the authorities.
"Under the terms of the contract signed by the Government of Malaysia and the project company, all land should be handed over to the project company early this year, but to-date, only 90% has been handed over.
"As a result of the delays, on Nov 9, 2009, the government granted the project company an interim extension of time of 11 months to complete the project. The project completion date is now revised from January 2013 to December 2013. The work progress is expected to pick up in the remaining quarters of the financial year," it said.
As for the New Doha International Airport project in Qatar, Gamuda said progress claims submitted to the Qatari government are being settled within the contractual period. It added the project was progressing on
schedule.
On the Yenso Park and sewage treatment plant projects in Vietnam, it said they were progressing well. The recent devaluation of the Vietnamese dong has no significant near term impact on the group.
Wednesday, December 2, 2009
Palm oil set to rise 'sharply' in 2010
Palm oil prices are poised to rise “sharply” next year as demand remains robust amid potential supply disruptions from El Nino, according to Dorab Mistry, director of Godrej International Ltd.
“Production has peaked this year and we’re entering the seasonal low-production period,” Mistry said in an interview in Bali, Indonesia today. “The bigger concern is the coming El Nino, which will affect production in the second half of 2010.”
Consumption in China and India, the two biggest importers of edible oils, is increasing and “rising from an already high base,” Mistry said. Godrej is the biggest edible oils supplier to India. Indonesia and Malaysia produce about 90 per cent of the world’s supply.
Mistry, who correctly predicted last month that palm oil futures would reach RM2,400 a metric ton by the first quarter of 2010, said prices may even climb as high as RM3,000 by the end of next year if crude oil advances to US$100 a barrel. He will issue another price forecast on Dec. 4, he said.
The most-active contract closed at a 15-week high of RM2,495 yesterday and traded at RM2,490 at the 12:30 p.m. trading break on the Malaysia Derivatives Exchange.
Palm oil, used in cooking and fuel, has climbed 47 per cent this year as crude oil gained 76 per cent and rains and freezing weather threatened harvesting of the soybean crop in the US, the biggest producer, potentially reducing output of rival soybean oil. -- Bloomberg
“Production has peaked this year and we’re entering the seasonal low-production period,” Mistry said in an interview in Bali, Indonesia today. “The bigger concern is the coming El Nino, which will affect production in the second half of 2010.”
Consumption in China and India, the two biggest importers of edible oils, is increasing and “rising from an already high base,” Mistry said. Godrej is the biggest edible oils supplier to India. Indonesia and Malaysia produce about 90 per cent of the world’s supply.
Mistry, who correctly predicted last month that palm oil futures would reach RM2,400 a metric ton by the first quarter of 2010, said prices may even climb as high as RM3,000 by the end of next year if crude oil advances to US$100 a barrel. He will issue another price forecast on Dec. 4, he said.
The most-active contract closed at a 15-week high of RM2,495 yesterday and traded at RM2,490 at the 12:30 p.m. trading break on the Malaysia Derivatives Exchange.
Palm oil, used in cooking and fuel, has climbed 47 per cent this year as crude oil gained 76 per cent and rains and freezing weather threatened harvesting of the soybean crop in the US, the biggest producer, potentially reducing output of rival soybean oil. -- Bloomberg
HwangDBS: Bursa set to see return of foreign funds
MALAYSIA'S stock market is likely to see the return of foreign funds, especially if global equities turn increasingly volatile ahead, says HwangDBS Vickers Research Sdn Bhd(HDBSVR).
The foreign research firm said as the risk-reward profile tilts to the opposite direction because of stretched valuations, strategists may be tempted to make a gradual tactical switch to more defensive low-beta markets like Malaysia to diversify their risks.
The prospect of an appreciating ringgit is an added appeal for investors in search of incremental investment returns.
HDBSVR said even though Malaysian stocks remain unexciting from a broad valuation perspective, there are "hidden gems" to be found using a bottom-up approach.
These are fundamentally under-valued stocks that were once favourites of foreign investors, but are now under-owned by them.
"Combing through our 'buy' list of big and mid-cap companies, under-owned stocks - with foreign shareholdings far below their recent peaks - that could increasingly come under the investment radar of foreign investors again are CIMB (with 33 per cent foreign shareholding as of end-June 2009 versus a peak of 54 per cent), IJM Corp (34 per cent vs 62 per cent), MRCB (19 per cent vs 44 per cent), SP Setia (28 per cent vs 56 per cent) and Tenaga (11 per cent vs 28 per cent)," it said in a market focus report titled "What foreigners want" yesterday.
Additional counters currently rated "buy" by the research firm that can increasingly gain traction among foreign investors again include Gamuda (45 per cent foreign shareholding in June 2009), Genting (44 per cent), Genting Malaysia (33 per cent), Hong Leong Bank (7 per cent), Proton (16 per cent), Public Bank (25 per cent) and RHB Capital (5 per cent).
HDBSVR noted that foreign investors were conspicuously absent from the scene when the Malaysian stock market jumped 51 per cent from a trough of 836 in mid-March 2009 to now.
"This was evident in the insignificant level of trading activity by foreign investors (just 25 per cent of trading value in January-September 2009) and the persistent net portfolio investment quarterly outflows (since third quarter of 2007) with foreign ownership standing at a five-year low."
Foreign ownership - standing at 21 per cent of overall market capitalisation as of September 2009 - is also at its lowest in five years.
The foreign research firm said as the risk-reward profile tilts to the opposite direction because of stretched valuations, strategists may be tempted to make a gradual tactical switch to more defensive low-beta markets like Malaysia to diversify their risks.
The prospect of an appreciating ringgit is an added appeal for investors in search of incremental investment returns.
HDBSVR said even though Malaysian stocks remain unexciting from a broad valuation perspective, there are "hidden gems" to be found using a bottom-up approach.
These are fundamentally under-valued stocks that were once favourites of foreign investors, but are now under-owned by them.
"Combing through our 'buy' list of big and mid-cap companies, under-owned stocks - with foreign shareholdings far below their recent peaks - that could increasingly come under the investment radar of foreign investors again are CIMB (with 33 per cent foreign shareholding as of end-June 2009 versus a peak of 54 per cent), IJM Corp (34 per cent vs 62 per cent), MRCB (19 per cent vs 44 per cent), SP Setia (28 per cent vs 56 per cent) and Tenaga (11 per cent vs 28 per cent)," it said in a market focus report titled "What foreigners want" yesterday.
Additional counters currently rated "buy" by the research firm that can increasingly gain traction among foreign investors again include Gamuda (45 per cent foreign shareholding in June 2009), Genting (44 per cent), Genting Malaysia (33 per cent), Hong Leong Bank (7 per cent), Proton (16 per cent), Public Bank (25 per cent) and RHB Capital (5 per cent).
HDBSVR noted that foreign investors were conspicuously absent from the scene when the Malaysian stock market jumped 51 per cent from a trough of 836 in mid-March 2009 to now.
"This was evident in the insignificant level of trading activity by foreign investors (just 25 per cent of trading value in January-September 2009) and the persistent net portfolio investment quarterly outflows (since third quarter of 2007) with foreign ownership standing at a five-year low."
Foreign ownership - standing at 21 per cent of overall market capitalisation as of September 2009 - is also at its lowest in five years.
Corporate earnings recovery gains momentum
The recovery in Malaysian corporate earnings is gaining momentum, analysts said, pointing to the better-than-expected slew of financial results that came in for the third quarter of this year.
The recently concluded financial reporting season, like the previous season, surprised analysts on the upside.
According to RHB Research Institute Sdn Bhd, the bulk (83.8 per cent) of the corporate results that it covered came in either within or above its expectations. A similar picture was reflected in the consensus numbers.
"This suggests that there is still room for earnings upside surprises in the quarters ahead as the economic recovery gains momentum, even though it may not be as significant relative to what we have seen during the past two quarters," it said in a note to clients yesterday.
The number of companies whose earnings it upgraded exceeded the downgrades, as was the case in the previous quarter. Only 16 of the 99 companies that it covered turned in worse-than-expected earnings.
OSK Research Sdn Bhd, meanwhile, said that its preliminary analysis of the third quarter results season indicated that it was "a very strong results season" as the upgrade to downgrade ratio reached multi-year highs.
The banking sector stood out as the top performer this season, while plantation disappointed the most.
"More companies are reporting better margins as a result of improving demand, better product mix and lower operating expenses on the back of the implementation of cost-cutting measures," RHB noted.
Despite the better report card, RHB kept its year-end target for the FBM KLCI unchanged at 1,260 points, citing near-term external uncertainties. The stock market benchmark index closed higher than that yesterday, at 1,266.71.
It, however, raised the index target for next year to 1,370 from 1,345 before.
OSK, in a report yesterday, said December would be a good time to invest in Malaysian stocks.
It pointed out that since 1996, the index has posted an average 3.96 per cent gain 85 per cent of the time in the last month of the year, reaffirming a long-held belief of window-dressing at the year-end.
A similar gain this month would take the index to the 1,308.97-level, in line with OSK's view of a 1,345 fair value next year.
The recently concluded financial reporting season, like the previous season, surprised analysts on the upside.
According to RHB Research Institute Sdn Bhd, the bulk (83.8 per cent) of the corporate results that it covered came in either within or above its expectations. A similar picture was reflected in the consensus numbers.
"This suggests that there is still room for earnings upside surprises in the quarters ahead as the economic recovery gains momentum, even though it may not be as significant relative to what we have seen during the past two quarters," it said in a note to clients yesterday.
The number of companies whose earnings it upgraded exceeded the downgrades, as was the case in the previous quarter. Only 16 of the 99 companies that it covered turned in worse-than-expected earnings.
OSK Research Sdn Bhd, meanwhile, said that its preliminary analysis of the third quarter results season indicated that it was "a very strong results season" as the upgrade to downgrade ratio reached multi-year highs.
The banking sector stood out as the top performer this season, while plantation disappointed the most.
"More companies are reporting better margins as a result of improving demand, better product mix and lower operating expenses on the back of the implementation of cost-cutting measures," RHB noted.
Despite the better report card, RHB kept its year-end target for the FBM KLCI unchanged at 1,260 points, citing near-term external uncertainties. The stock market benchmark index closed higher than that yesterday, at 1,266.71.
It, however, raised the index target for next year to 1,370 from 1,345 before.
OSK, in a report yesterday, said December would be a good time to invest in Malaysian stocks.
It pointed out that since 1996, the index has posted an average 3.96 per cent gain 85 per cent of the time in the last month of the year, reaffirming a long-held belief of window-dressing at the year-end.
A similar gain this month would take the index to the 1,308.97-level, in line with OSK's view of a 1,345 fair value next year.
Friday, November 27, 2009
Banks Play Down Dubai Exposure, Investors Still Wary
Banks outside the Gulf played down on Friday their exposure to Dubai debt, after fears the emirate could default and even derail world economic recovery prompted a sell-off in global markets.
Stocks from Tokyo to London were haunted by concerns that banks were exposed to state companies in Dubai, whose rise from a desert backwater into the business hub of the world's top oil exporting area had lured expatriate money and executives.
The crisis began on Wednesday when Dubai, part of the United Arab Emirates federation, asked to delay payment on billions of dollars of debt issued by conglomerate Dubai World and its main property subsidiary Nakheel, developer of three palm shaped islands that once lured celebrities and the super-rich.
"We have seen a classic risk aversion reaction in the markets over the past 24 hours. The dollar has slumped, the yen is stronger," a Societe Generale note said.
"Anybody who thought the exit profile for markets from the great recession and the great financial crisis was going to be a smooth one was kidding themselves." Dubai World had $59 billion of liabilities as of August, most of Dubai's total debt of $80 billion.
The numbers pales in comparison to the $2.8 trillion in writedowns the International Monetary Fund estimates U.S. and European lenders will have made between 2007 and 2010 as a result of the global credit crisis.
"The events in Dubai in recent days are one of the hiccups if you like, one of the difficulties, which affirms that we were right to highlight the uncertainty ahead of us and that the road ahead could be a bumpy one," European Central Bank Governing Council member Athanasios Orphanides said.
International banks' liabilities related to Dubai World could be as high as $12 billion in syndicated and bilateral loans, banking sources told Thomson Reuters.
French banks said their exposure to the Dubai crisis was limited and Italy's central bank said Italian banks should face no problems linked to the Gulf trade and tourism hub. Those sentiments were echoed by Chinese banks.
Those statements tempered losses in European stocks after investors around the globe fled shares, oil and other risky assets, fuelling flows into the low-yielding yen and safe-haven government bonds.
"At this stage, this set back, looks to be one that is very much country specific," the SocGen note said.
Abu Dhabi Exposure
While European and Asian banks scrambled to distance themselves from the Dubai crisis, lenders in Abu Dhabi, a fellow member of the UAE federation and home to most of the country's oil, appeared to have major positions.
They lent heavily to Dubai firms at the height of the property boom that saw the emirate build the world's tallest tower but went bust with the financial crisis in 2008.
Abu Dhabi Commercial Bank has at least 8-9 billion dirhams ($2.18-$2.45 billion) exposure to Dubai World and related entities, forcing the bank to book more provisions, a senior executive of the bank said.
First Gulf Bank has at least 5 billion dirhams ($1.36 billion).
JP Morgan said in a research note it was "less concerned" about global banks' direct exposure to Dubai World and was not worried about Abu Dhabi, a major oil producer which is sitting on hundreds of billions of dollars.
"We are more concerned about the spillover effect within the UAE with CDS spreads in Abu Dhabi increasing," it said.
"It remains unclear if the Dubai government will support the liabilities of government related entities and how ... neighbors will weather the storm." The price of insuring Gulf debt surged again on Friday.
Credit default swaps (CDS) for Dubai rose more than 100 basis points but CDS prices were way below previous peaks in the global financial crisis late last year and earlier this.
Nakheel's Islamic bond prices extended losses, falling 30 points to a record low of 40, according to Reuters data.
The $3.52 billion bond at the centre of the crisis, which was originally due to mature on Dec 14, 2009, had traded as high as 110 on Wednesday before the Dubai government said it would ask creditors to agree on a standstill of debt held by Nakheel and Dubai World until May 2010.
The debt crisis in Dubai has also pushed up debt insurance costs for other sovereigns in the Gulf, a wealthy region Western firms had turned to for help at the height of the credit crunch.
Analysts expect Dubai to receive financial support from Abu Dhabi, though it may have to abandon an economic model focused on developing swathes of desert with foreign money and labor.
But the prospect of a bailout did little to allay concerns among investors, already worried the global economy may not be recovering quickly enough to justify a near doubling of prices for emerging market stocks and many commodities since March.
"The biggest worry I have is whether this will trigger a repricing in the overall emerging market," said Arthur Lau, a fund manager in Hong Kong with JF Asset Management.
Stocks from Tokyo to London were haunted by concerns that banks were exposed to state companies in Dubai, whose rise from a desert backwater into the business hub of the world's top oil exporting area had lured expatriate money and executives.
The crisis began on Wednesday when Dubai, part of the United Arab Emirates federation, asked to delay payment on billions of dollars of debt issued by conglomerate Dubai World and its main property subsidiary Nakheel, developer of three palm shaped islands that once lured celebrities and the super-rich.
"We have seen a classic risk aversion reaction in the markets over the past 24 hours. The dollar has slumped, the yen is stronger," a Societe Generale note said.
"Anybody who thought the exit profile for markets from the great recession and the great financial crisis was going to be a smooth one was kidding themselves." Dubai World had $59 billion of liabilities as of August, most of Dubai's total debt of $80 billion.
The numbers pales in comparison to the $2.8 trillion in writedowns the International Monetary Fund estimates U.S. and European lenders will have made between 2007 and 2010 as a result of the global credit crisis.
"The events in Dubai in recent days are one of the hiccups if you like, one of the difficulties, which affirms that we were right to highlight the uncertainty ahead of us and that the road ahead could be a bumpy one," European Central Bank Governing Council member Athanasios Orphanides said.
International banks' liabilities related to Dubai World could be as high as $12 billion in syndicated and bilateral loans, banking sources told Thomson Reuters.
French banks said their exposure to the Dubai crisis was limited and Italy's central bank said Italian banks should face no problems linked to the Gulf trade and tourism hub. Those sentiments were echoed by Chinese banks.
Those statements tempered losses in European stocks after investors around the globe fled shares, oil and other risky assets, fuelling flows into the low-yielding yen and safe-haven government bonds.
"At this stage, this set back, looks to be one that is very much country specific," the SocGen note said.
Abu Dhabi Exposure
While European and Asian banks scrambled to distance themselves from the Dubai crisis, lenders in Abu Dhabi, a fellow member of the UAE federation and home to most of the country's oil, appeared to have major positions.
They lent heavily to Dubai firms at the height of the property boom that saw the emirate build the world's tallest tower but went bust with the financial crisis in 2008.
Abu Dhabi Commercial Bank has at least 8-9 billion dirhams ($2.18-$2.45 billion) exposure to Dubai World and related entities, forcing the bank to book more provisions, a senior executive of the bank said.
First Gulf Bank has at least 5 billion dirhams ($1.36 billion).
JP Morgan said in a research note it was "less concerned" about global banks' direct exposure to Dubai World and was not worried about Abu Dhabi, a major oil producer which is sitting on hundreds of billions of dollars.
"We are more concerned about the spillover effect within the UAE with CDS spreads in Abu Dhabi increasing," it said.
"It remains unclear if the Dubai government will support the liabilities of government related entities and how ... neighbors will weather the storm." The price of insuring Gulf debt surged again on Friday.
Credit default swaps (CDS) for Dubai rose more than 100 basis points but CDS prices were way below previous peaks in the global financial crisis late last year and earlier this.
Nakheel's Islamic bond prices extended losses, falling 30 points to a record low of 40, according to Reuters data.
The $3.52 billion bond at the centre of the crisis, which was originally due to mature on Dec 14, 2009, had traded as high as 110 on Wednesday before the Dubai government said it would ask creditors to agree on a standstill of debt held by Nakheel and Dubai World until May 2010.
The debt crisis in Dubai has also pushed up debt insurance costs for other sovereigns in the Gulf, a wealthy region Western firms had turned to for help at the height of the credit crunch.
Analysts expect Dubai to receive financial support from Abu Dhabi, though it may have to abandon an economic model focused on developing swathes of desert with foreign money and labor.
But the prospect of a bailout did little to allay concerns among investors, already worried the global economy may not be recovering quickly enough to justify a near doubling of prices for emerging market stocks and many commodities since March.
"The biggest worry I have is whether this will trigger a repricing in the overall emerging market," said Arthur Lau, a fund manager in Hong Kong with JF Asset Management.
Thursday, November 26, 2009
罰單先莫丟‧地方政府沒提控權晉上訴
柔佛‧新山）要把地方政府罰單丟掉，且慢！
柔佛州法律顧問拿督阿都拉曼提醒說，民眾千萬不可在此時把地方政府所發出罰款傳票如違例停車、沒有放置停車固本、公開焚燒等傳票棄之於垃圾桶，因為高庭較早時裁決地方政府沒有提控任何人的權力一案，如今已晉入上訴的程序。
他說，由於此課題已晉入上訴的階段，因此，柔佛州法律單位目前並不需要特別針對此事採取任何的行動，也不作任何法律解讀。
阿都拉曼週三（11月25日）列席柔州議會，他在休會時向《星洲日報》發表談話。
據他瞭解，若有關裁決上訴不得直，相信中央政府還會在國會尋求修改憲法，以解決因為此項裁決而削弱了地方政府的執法。
彭亨州淡馬魯高庭阿達爾司法專員早前推翻推事庭的判決，宣判地方政府並未賦予權限提控任何人，否則就抵觸聯邦憲法145（3）條文，即總檢察長擁有絕對的檢控權。
http://www.sinchew.com.my/node/140059?tid=1
柔佛州法律顧問拿督阿都拉曼提醒說，民眾千萬不可在此時把地方政府所發出罰款傳票如違例停車、沒有放置停車固本、公開焚燒等傳票棄之於垃圾桶，因為高庭較早時裁決地方政府沒有提控任何人的權力一案，如今已晉入上訴的程序。
他說，由於此課題已晉入上訴的階段，因此，柔佛州法律單位目前並不需要特別針對此事採取任何的行動，也不作任何法律解讀。
阿都拉曼週三（11月25日）列席柔州議會，他在休會時向《星洲日報》發表談話。
據他瞭解，若有關裁決上訴不得直，相信中央政府還會在國會尋求修改憲法，以解決因為此項裁決而削弱了地方政府的執法。
彭亨州淡馬魯高庭阿達爾司法專員早前推翻推事庭的判決，宣判地方政府並未賦予權限提控任何人，否則就抵觸聯邦憲法145（3）條文，即總檢察長擁有絕對的檢控權。
http://www.sinchew.com.my/node/140059?tid=1
Bumiputera contractors: A wasteful national mission to date
By Koon Yew Yin
Wednesday, 18 November 2009 07:54
Centre for Policy Initiatives
It is an indictment of our system that IJM is able to compete internationally for contracts but yet is required to work as a sub-contractor to Bumiputera companies on the North-South Highway in Malaysia.
On Oct 25, 2009 our Second Finance Minister Ahmad Husni Mohamad Hanadzlah said that government has vowed to cut down on wasteful spending to lower its budget deficit and all major public projects must go through the open tender system.
Earlier, the Auditor-General’s report for 2008 revealed continuing financial management weaknesses at every level of the government. Delays in project completion seem to be a perennial problem and the lack of oversight by various ministries and departments in the procurement of goods and services continue to cost the government hundreds of millions of ringgit.
These statements indicate perhaps that our Prime Minister Najib Razak may want to reverse his announcement on January 9 in Kuala Teregganu that the government would always look after Class F contractors. (Non- Bumiputeras cannot register as a Class F contractor).
The government had in fact already set aside RM900 million, which was RM300 million more than last year, for works to be undertaken by Class F contractors this year.
Producing competitive Bumiputera contractors
As reported on May 1, 2005, Malaysia had one contractor for every 614 persons. Most likely there are more contractors by now. This ratio is again likely to be amongst the highest in the world and is obviously costing the public a significant amount of money besides affecting our overall economic performance.
I would like to pose a few questions which may appear unkind or insensitive but nonetheless need to be asked.
Out of hundreds of high-rise buildings in Kuala Lumpur does anyone know of any Bumiputera contractor who has won any of the building contracts through an open competitive tender process? Out of hundreds of kilometers of highway in Malaysia, can any Bumiputera contractor who won any part of the highway contracts through open tender be identified?
The answer to the above questions unfortunately is in the negative. The evidence is that all the government’s well-intentioned efforts in trying to produce competitive Bumiputera contractors since 1957 have failed.
Why this has happened needs to be openly discussed rather than swept under the carpet. In this note, I share my experiences as a contractor and my knowledge of why Bumiputera contractors have failed in the past and what needs to be done by the government to correct this unhealthy situation.
Facts of life in the contracting business
Contracting is a very difficult business yet it is so easy to register as a contractor.
To register as a Class F contractor one has only to show that he has RM5,000. He does not even require a pass in Lower Certificate of Education (LCE). But it will take at least 10 years to learn how to overcome all the inherent difficulties and become competitive and efficient. Continuously giving out lucrative and over-priced contracts without open tenders will only make the recipients less competitive.
Secondly, studies have shown that there are more failures and bankruptcies in contracting than in any other business, and also almost all construction projects are NOT completed within the original scheduled time.
The delay will cost the contractor more and that is why you can often see uncompleted buildings and abandoned projects which have been undertaken by inefficient contractors. There are many reasons for this peculiar phenomenon.
1. Open tender system
Although this system is the best way to ensure completion of any project/contract at the lowest price, it is the most difficult obstacle any contractor has to face in the real competitive world. He must know his business very well and be efficient to face the open competition all the time. Like a good athlete, he has to keep fit and constantly be aware of the market conditions and his competitors.
There is a classic saying, ‘a cheap thing is not good and a good thing is not cheap’. But contractors always have to produce good work at the cheapest price.
In order to submit the cheapest tender, the contractor must be very optimistic in all his assumptions to get the cheapest rates. He must assume that he will not encounter any cash flow difficulties and that he will always get his progress payments on time to pay his creditors.
He must also assume that he will not encounter any difficulty in getting all the required materials on time to avoid any delay and also that there are ample workers for him to pick and choose from.
Furthermore, he must also assume that the heavens will be kind to him and he will not meet any inclement weather during construction. Invariably, many of these assumptions are proven wrong and thus completion delayed, and the infrastructure will cost more to complete than provided for in the contract.
2. The importance of teamwork
Teamwork is important in all business endeavours. It is more so in the contracting business. Every contractor must realise that his success is not going to be determined by his own knowledge, talent or abilities. It is going to be determined by his ability to develop a great team. Those who are closest to him will help determine the level of his success.
Every efficient contractor must have a reliable team comprising managers, sub-contractors, material suppliers, foremen and skilled workers. All the team players must cooperate with one another, bearing in mind that the main contractor’s survival depends on their contribution. Their main goal must be saving cost. If they cannot complete the contract within the tender price, all of them will also be affected.
3. Construction material pricing
There was no material price escalation clause in the conditions of contract before I became the Secretary General of the Master Builders Association. During the unprecedented oil crisis, building material prices shot through the roof. As a result, many contractors could not complete their contracts for schools and other projects. After several appeals the Public Works Department (PWD), now known as Jabatan Kerja Raya (JKR), eventually allowed only cement and steel for price variation reimbursement.
This was only a partial solution as hundreds of other items were excluded.
Without a protective price fluctuation clause for the other items, contractors are exposed to risk. At the same time, knowing that they have to undercut their competitors during the tender process, contractors would normally under-price to achieve the lowest tender. Invariably, most materials would increase in price due to inflation and other reasons. Contractors require many years of experience to be able to anticipate such price changes and to make adequate provisions for them whilst at the same time not overpricing their tenders and losing the bid.
4. No contract is exactly the same
No two high-rise buildings in KL are the same.
Construction of a building, a bridge or a stadium is always akin to making a prototype. The process is much more difficult than manufacturing any product where there is repetition. For example in making cars, the first prototype and the initial few cars may be more difficult to make but once everyone gets used to the routine, the manufacturing process will normally proceed smoothly.
However, in the construction of buildings or any civil engineering works, there is very little repetitive work. Every construction site is different and most of the people involved have never worked together before.
On top of this, there may also be inexperienced supervisory staff that can create a lot of difficulties for the contractors. Invariably, by the time all parties get used to the routine, the scheduled time is over.
5. Financing
Most contractors do not have sufficient capital to finance their undertakings.
Contractors generally do not have fixed assets like most manufacturers. They usually do not have land and buildings but, instead, they have construction equipment. Unfortunately, banks do not accept these moving assets as collateral for a loan. Without bank financing, contractors will obviously find it more difficult to undertake their business.
Beginning at the bottom: The key to success
I have provided some insight into why contracting is not a business that is as easy or profitable as it is commonly perceived to be.
There are other factors explaining why or how some of the most successful tycoons associated with the building or construction industry have managed to get where they are.
Firstly, it should be noted that the majority of listed companies were started by Chinese merchants most of whom incidentally did not have tertiary education. For example, Lim Goh Tong of Genting began his working career as a scrap iron dealer and a contractor; and Yeoh Tiong Lay of YTL Corp. started off as a small contractor.
Generally, Bumiputeras are not interested in working long hours in managing small businesses earning marginal profit. Because of the NEP, many have hopes of securing permits or concessions for big deals so that they can become instant millionaires. There are relatively few Bumiputeras involved in small and medium-scale enterprises (SMEs).
More Bumiputeras should follow the humble footsteps of the Chinese to become traders and merchants for building materials and similar goods. The business skill they can learn from these humble beginnings will carry them a long way. I am very sure some of them will eventually become good contractors and successful businessmen if they learn the trade at the bottom and not try to parachute into the contracting business.
The importance of skilled workers
Although there are already many Bumiputera engineers unable to find employment, most of the universities are still producing more and more engineers every year. But without a sufficiently skilled workforce, all the engineers in the world would not be able to complete a single project.
There are so few Bumiputera construction foremen, carpenters and other skilled workers. If you were to go into any building construction site, you would see the truth of what I am saying. How many Malay carpenters have you seen in KL?
Without skilled Bumiputera workers, it would be more difficult for Bumiputera contractors to succeed. In fact, most of the Chinese contractors started as apprentices and rose from the bottom to become successful contractors. More Bumiputeras should be encouraged to work as apprentices in construction sites. This is a necessary good practice to produce really good Bumiputera contractors.
The role of trade schools
There should be more trade schools and more Bumiputeras should be encouraged to learn construction skills like carpentry, welding, plumbing, bricklaying, etc. Very soon, skilled tradesmen will be able to earn more than degree holders as is the case in Australia or England.
The government should build more trade schools and not hesitate to offer scholarships to Bumiputeras to be trained in these trade schools. Presently, the construction industry is not short of engineers but it is very short of skilled workers and supervisors. If more Bumiputeras are properly trained in various crafts and blue collar skills, some of them will go on to become good contractors.
Time and more time
They say Rome was not built in a day. It is easier to produce engineers, doctors and other professionals than to produce efficient and competitive contractors who do not need government financial aid. Just giving out lucrative contracts to Bumiputeras is not the answer; in fact it is counter-productive as it simply makes them more inefficient and less competitive.
IJM Corporation Bhd has taken more than 40 years to attain a competitive level of competence. The record shows that IJM has secured on competitive tenders five toll road concessions in India. Three are currently in operation and two are under construction. The total length of the roads exceeds 1,000 kilometres, longer than our North-South Highway.
In addition, IJM completed a toll bridge in Kolkata and sold its interest for RM65 million profit after a short period of three years. IJM is also a very reputable LRT builder, having to date completed 15km of the elevated sections of the New Delhi Metro and it was recently awarded another 8km.
Based on open competitive tender, IJM won the contract to build the tallest building, a prominent future landmark for the Delhi Municipality, in New Delhi.
It is an indictment of our system that IJM is able to compete internationally for contracts but yet is required to work as a sub-contractor to Bumiputera companies on the North-South Highway in our own country.
Conclusion: Half-baked contractors are not in our national interest
Contracting is one of the most, if not the most, difficult business and it takes a very long time to produce competent contractors.
It is very dangerous to quickly produce half-baked ones as they will soon find themselves in financial difficulties and require bailouts. The bankruptcy record shows that a large number of debtors are Bumiputera contractors with many of them unable to pay back the loans given by government-controlled financial institutions.
The government must change its methods and policies which have proven unworkable. There is no urgency in producing more Bumiputera contractors as many of the key industries e.g. the banks, plantations, motor vehicles, taxis, rice etc are already under the control of Bumiputeras.
Our government must not be narrowly communalistic and should make use of all the groups, irrespective of race, that are more efficient in the contracting business.
Giving out contracts without a full tender process is akin to corruption. I urge the government to stop this corrupt practice and to utilize the savings from these enormous sums to implement the options suggested above.
Note on the Author
I am a 76-year-old chartered civil engineer and one of the founders of the three larger construction companies listed in Bursa Malaysia. These are Gamuda Bhd, Mudajaya Group Bhd, and IJM Corporation Bhd.
I was a member of the Board of Engineers, Malaysia for three terms. I was also on the Sirim Board responsible in writing the Malaysian standard specifications for cement and concrete. In addition, I was the Secretary General of Master Builders Association, Malaysia for nine years.
These days, I am completely retired. My intention in writing this article is honourable. Many people may not like reading what I have written and the truth may be difficult to accept. Nevertheless, this is my considered analysis for the benefit of my country, the Bumiputera contractors and the construction industry.
http://blog.limkitsiang.com/2009/11/25/bumiputera-contractors-a-wasteful-national-mission-to-date/#more-6708
Wednesday, 18 November 2009 07:54
Centre for Policy Initiatives
It is an indictment of our system that IJM is able to compete internationally for contracts but yet is required to work as a sub-contractor to Bumiputera companies on the North-South Highway in Malaysia.
On Oct 25, 2009 our Second Finance Minister Ahmad Husni Mohamad Hanadzlah said that government has vowed to cut down on wasteful spending to lower its budget deficit and all major public projects must go through the open tender system.
Earlier, the Auditor-General’s report for 2008 revealed continuing financial management weaknesses at every level of the government. Delays in project completion seem to be a perennial problem and the lack of oversight by various ministries and departments in the procurement of goods and services continue to cost the government hundreds of millions of ringgit.
These statements indicate perhaps that our Prime Minister Najib Razak may want to reverse his announcement on January 9 in Kuala Teregganu that the government would always look after Class F contractors. (Non- Bumiputeras cannot register as a Class F contractor).
The government had in fact already set aside RM900 million, which was RM300 million more than last year, for works to be undertaken by Class F contractors this year.
Producing competitive Bumiputera contractors
As reported on May 1, 2005, Malaysia had one contractor for every 614 persons. Most likely there are more contractors by now. This ratio is again likely to be amongst the highest in the world and is obviously costing the public a significant amount of money besides affecting our overall economic performance.
I would like to pose a few questions which may appear unkind or insensitive but nonetheless need to be asked.
Out of hundreds of high-rise buildings in Kuala Lumpur does anyone know of any Bumiputera contractor who has won any of the building contracts through an open competitive tender process? Out of hundreds of kilometers of highway in Malaysia, can any Bumiputera contractor who won any part of the highway contracts through open tender be identified?
The answer to the above questions unfortunately is in the negative. The evidence is that all the government’s well-intentioned efforts in trying to produce competitive Bumiputera contractors since 1957 have failed.
Why this has happened needs to be openly discussed rather than swept under the carpet. In this note, I share my experiences as a contractor and my knowledge of why Bumiputera contractors have failed in the past and what needs to be done by the government to correct this unhealthy situation.
Facts of life in the contracting business
Contracting is a very difficult business yet it is so easy to register as a contractor.
To register as a Class F contractor one has only to show that he has RM5,000. He does not even require a pass in Lower Certificate of Education (LCE). But it will take at least 10 years to learn how to overcome all the inherent difficulties and become competitive and efficient. Continuously giving out lucrative and over-priced contracts without open tenders will only make the recipients less competitive.
Secondly, studies have shown that there are more failures and bankruptcies in contracting than in any other business, and also almost all construction projects are NOT completed within the original scheduled time.
The delay will cost the contractor more and that is why you can often see uncompleted buildings and abandoned projects which have been undertaken by inefficient contractors. There are many reasons for this peculiar phenomenon.
1. Open tender system
Although this system is the best way to ensure completion of any project/contract at the lowest price, it is the most difficult obstacle any contractor has to face in the real competitive world. He must know his business very well and be efficient to face the open competition all the time. Like a good athlete, he has to keep fit and constantly be aware of the market conditions and his competitors.
There is a classic saying, ‘a cheap thing is not good and a good thing is not cheap’. But contractors always have to produce good work at the cheapest price.
In order to submit the cheapest tender, the contractor must be very optimistic in all his assumptions to get the cheapest rates. He must assume that he will not encounter any cash flow difficulties and that he will always get his progress payments on time to pay his creditors.
He must also assume that he will not encounter any difficulty in getting all the required materials on time to avoid any delay and also that there are ample workers for him to pick and choose from.
Furthermore, he must also assume that the heavens will be kind to him and he will not meet any inclement weather during construction. Invariably, many of these assumptions are proven wrong and thus completion delayed, and the infrastructure will cost more to complete than provided for in the contract.
2. The importance of teamwork
Teamwork is important in all business endeavours. It is more so in the contracting business. Every contractor must realise that his success is not going to be determined by his own knowledge, talent or abilities. It is going to be determined by his ability to develop a great team. Those who are closest to him will help determine the level of his success.
Every efficient contractor must have a reliable team comprising managers, sub-contractors, material suppliers, foremen and skilled workers. All the team players must cooperate with one another, bearing in mind that the main contractor’s survival depends on their contribution. Their main goal must be saving cost. If they cannot complete the contract within the tender price, all of them will also be affected.
3. Construction material pricing
There was no material price escalation clause in the conditions of contract before I became the Secretary General of the Master Builders Association. During the unprecedented oil crisis, building material prices shot through the roof. As a result, many contractors could not complete their contracts for schools and other projects. After several appeals the Public Works Department (PWD), now known as Jabatan Kerja Raya (JKR), eventually allowed only cement and steel for price variation reimbursement.
This was only a partial solution as hundreds of other items were excluded.
Without a protective price fluctuation clause for the other items, contractors are exposed to risk. At the same time, knowing that they have to undercut their competitors during the tender process, contractors would normally under-price to achieve the lowest tender. Invariably, most materials would increase in price due to inflation and other reasons. Contractors require many years of experience to be able to anticipate such price changes and to make adequate provisions for them whilst at the same time not overpricing their tenders and losing the bid.
4. No contract is exactly the same
No two high-rise buildings in KL are the same.
Construction of a building, a bridge or a stadium is always akin to making a prototype. The process is much more difficult than manufacturing any product where there is repetition. For example in making cars, the first prototype and the initial few cars may be more difficult to make but once everyone gets used to the routine, the manufacturing process will normally proceed smoothly.
However, in the construction of buildings or any civil engineering works, there is very little repetitive work. Every construction site is different and most of the people involved have never worked together before.
On top of this, there may also be inexperienced supervisory staff that can create a lot of difficulties for the contractors. Invariably, by the time all parties get used to the routine, the scheduled time is over.
5. Financing
Most contractors do not have sufficient capital to finance their undertakings.
Contractors generally do not have fixed assets like most manufacturers. They usually do not have land and buildings but, instead, they have construction equipment. Unfortunately, banks do not accept these moving assets as collateral for a loan. Without bank financing, contractors will obviously find it more difficult to undertake their business.
Beginning at the bottom: The key to success
I have provided some insight into why contracting is not a business that is as easy or profitable as it is commonly perceived to be.
There are other factors explaining why or how some of the most successful tycoons associated with the building or construction industry have managed to get where they are.
Firstly, it should be noted that the majority of listed companies were started by Chinese merchants most of whom incidentally did not have tertiary education. For example, Lim Goh Tong of Genting began his working career as a scrap iron dealer and a contractor; and Yeoh Tiong Lay of YTL Corp. started off as a small contractor.
Generally, Bumiputeras are not interested in working long hours in managing small businesses earning marginal profit. Because of the NEP, many have hopes of securing permits or concessions for big deals so that they can become instant millionaires. There are relatively few Bumiputeras involved in small and medium-scale enterprises (SMEs).
More Bumiputeras should follow the humble footsteps of the Chinese to become traders and merchants for building materials and similar goods. The business skill they can learn from these humble beginnings will carry them a long way. I am very sure some of them will eventually become good contractors and successful businessmen if they learn the trade at the bottom and not try to parachute into the contracting business.
The importance of skilled workers
Although there are already many Bumiputera engineers unable to find employment, most of the universities are still producing more and more engineers every year. But without a sufficiently skilled workforce, all the engineers in the world would not be able to complete a single project.
There are so few Bumiputera construction foremen, carpenters and other skilled workers. If you were to go into any building construction site, you would see the truth of what I am saying. How many Malay carpenters have you seen in KL?
Without skilled Bumiputera workers, it would be more difficult for Bumiputera contractors to succeed. In fact, most of the Chinese contractors started as apprentices and rose from the bottom to become successful contractors. More Bumiputeras should be encouraged to work as apprentices in construction sites. This is a necessary good practice to produce really good Bumiputera contractors.
The role of trade schools
There should be more trade schools and more Bumiputeras should be encouraged to learn construction skills like carpentry, welding, plumbing, bricklaying, etc. Very soon, skilled tradesmen will be able to earn more than degree holders as is the case in Australia or England.
The government should build more trade schools and not hesitate to offer scholarships to Bumiputeras to be trained in these trade schools. Presently, the construction industry is not short of engineers but it is very short of skilled workers and supervisors. If more Bumiputeras are properly trained in various crafts and blue collar skills, some of them will go on to become good contractors.
Time and more time
They say Rome was not built in a day. It is easier to produce engineers, doctors and other professionals than to produce efficient and competitive contractors who do not need government financial aid. Just giving out lucrative contracts to Bumiputeras is not the answer; in fact it is counter-productive as it simply makes them more inefficient and less competitive.
IJM Corporation Bhd has taken more than 40 years to attain a competitive level of competence. The record shows that IJM has secured on competitive tenders five toll road concessions in India. Three are currently in operation and two are under construction. The total length of the roads exceeds 1,000 kilometres, longer than our North-South Highway.
In addition, IJM completed a toll bridge in Kolkata and sold its interest for RM65 million profit after a short period of three years. IJM is also a very reputable LRT builder, having to date completed 15km of the elevated sections of the New Delhi Metro and it was recently awarded another 8km.
Based on open competitive tender, IJM won the contract to build the tallest building, a prominent future landmark for the Delhi Municipality, in New Delhi.
It is an indictment of our system that IJM is able to compete internationally for contracts but yet is required to work as a sub-contractor to Bumiputera companies on the North-South Highway in our own country.
Conclusion: Half-baked contractors are not in our national interest
Contracting is one of the most, if not the most, difficult business and it takes a very long time to produce competent contractors.
It is very dangerous to quickly produce half-baked ones as they will soon find themselves in financial difficulties and require bailouts. The bankruptcy record shows that a large number of debtors are Bumiputera contractors with many of them unable to pay back the loans given by government-controlled financial institutions.
The government must change its methods and policies which have proven unworkable. There is no urgency in producing more Bumiputera contractors as many of the key industries e.g. the banks, plantations, motor vehicles, taxis, rice etc are already under the control of Bumiputeras.
Our government must not be narrowly communalistic and should make use of all the groups, irrespective of race, that are more efficient in the contracting business.
Giving out contracts without a full tender process is akin to corruption. I urge the government to stop this corrupt practice and to utilize the savings from these enormous sums to implement the options suggested above.
Note on the Author
I am a 76-year-old chartered civil engineer and one of the founders of the three larger construction companies listed in Bursa Malaysia. These are Gamuda Bhd, Mudajaya Group Bhd, and IJM Corporation Bhd.
I was a member of the Board of Engineers, Malaysia for three terms. I was also on the Sirim Board responsible in writing the Malaysian standard specifications for cement and concrete. In addition, I was the Secretary General of Master Builders Association, Malaysia for nine years.
These days, I am completely retired. My intention in writing this article is honourable. Many people may not like reading what I have written and the truth may be difficult to accept. Nevertheless, this is my considered analysis for the benefit of my country, the Bumiputera contractors and the construction industry.
http://blog.limkitsiang.com/2009/11/25/bumiputera-contractors-a-wasteful-national-mission-to-date/#more-6708
Wednesday, November 25, 2009
MIDF expects 9.7pc IJM revenue growth
MIDF Research expects IJM Corp Bhd to post 9.7 per cent revenue growth year-on-year for the financial year 2010 on the back of strong billings on RM4.8 billion order book.
" We estimate the pre-tax profit margin in the 2010 financial year to be maintained at 11.5 per cent as cost pressure stabilises," it said in its research note today.
High material cost like steel, which peaked at RM4,000 a tonne, has since softened to around RM2,000 a tonne in the third quarter this year, which translated into healthier margins for construction players.
" We expect IJM Corp's financial year 2010 net profit to be at RM431.3 million, an improvement of 7.3 per cent year-on-year," MIDF Research said.
It said a stronger 2010 second half financial year is expected as IJM's RM4.8 billion order book will be enhanced by more projects announced under the second stimulus package. - Bernama
" We estimate the pre-tax profit margin in the 2010 financial year to be maintained at 11.5 per cent as cost pressure stabilises," it said in its research note today.
High material cost like steel, which peaked at RM4,000 a tonne, has since softened to around RM2,000 a tonne in the third quarter this year, which translated into healthier margins for construction players.
" We expect IJM Corp's financial year 2010 net profit to be at RM431.3 million, an improvement of 7.3 per cent year-on-year," MIDF Research said.
It said a stronger 2010 second half financial year is expected as IJM's RM4.8 billion order book will be enhanced by more projects announced under the second stimulus package. - Bernama
Palm hits 15-week high on weather fears
MALAYSIAN crude palm oil futures rose as much as 0.9 per cent today to hit a near-fifteen week high on fears that more rainy weather would cut into production.
Palm oil scaled its highest since Aug 14, largely ignoring weaker crude oil prices and slightly higher export data released by cargo surveyor Intertek Testing Services.
Malaysian planter Genting Plantations has given guidance of lower November and December output due to heavy rains and flash floods for its estates in Sabah — a top oil palm growing state in Borneo island, Kenanga Investment Bank said in a note.
The benchmark February contract on the Bursa Malaysia Derivatives Exchange rose as much as RM23 to RM2,501 (US$740.8). By midday, the most-active contract was trading up RM15 at RM2,493.
“The 2,500-ringgit level is a tough nut to crack,” said a trader with a foreign commodities broker.
“Weather is a great concern and the earlier export data was not so fantastic. We are waiting for Societe Generale de Surveillance data to confirm this.”
Cargo surveyor Intertek Testing Services reported today that Malaysian palm oil exports for Nov 1-25 only rose 1.2 per cent to 1.13 million tonnes from the same period a month ago. SGS will give its estimates later in the day.
Expectations of higher exports come as heavier rains sap palm oil yields in the central state of Pahang and the prospect of floods could complicate the transport of the vegetable oil to refineries and ports.
Oil prices slipped below US$76 a barrel on Tuesday, weighed by the slower-than-expected U.S. growth, although most vegetable oil markets priced in demand-supply factors instead.
U.S. soyoil for Dec. Delivery rose 0.5 per cent in Asian trade on strong import demand and the most-active September soybean oil contract on China’s Dalian Commodity exchange inched higher.
This is certainly a good news for plantation stocks. Personally, I like KLK-CH.
Previous related posts
http://cathoon.blogspot.com/2009/10/klk-ch-50-unrealised-profit.html
http://cathoon.blogspot.com/2009/11/palm-up-on-rising-oil-price-weather.html
Palm oil scaled its highest since Aug 14, largely ignoring weaker crude oil prices and slightly higher export data released by cargo surveyor Intertek Testing Services.
Malaysian planter Genting Plantations has given guidance of lower November and December output due to heavy rains and flash floods for its estates in Sabah — a top oil palm growing state in Borneo island, Kenanga Investment Bank said in a note.
The benchmark February contract on the Bursa Malaysia Derivatives Exchange rose as much as RM23 to RM2,501 (US$740.8). By midday, the most-active contract was trading up RM15 at RM2,493.
“The 2,500-ringgit level is a tough nut to crack,” said a trader with a foreign commodities broker.
“Weather is a great concern and the earlier export data was not so fantastic. We are waiting for Societe Generale de Surveillance data to confirm this.”
Cargo surveyor Intertek Testing Services reported today that Malaysian palm oil exports for Nov 1-25 only rose 1.2 per cent to 1.13 million tonnes from the same period a month ago. SGS will give its estimates later in the day.
Expectations of higher exports come as heavier rains sap palm oil yields in the central state of Pahang and the prospect of floods could complicate the transport of the vegetable oil to refineries and ports.
Oil prices slipped below US$76 a barrel on Tuesday, weighed by the slower-than-expected U.S. growth, although most vegetable oil markets priced in demand-supply factors instead.
U.S. soyoil for Dec. Delivery rose 0.5 per cent in Asian trade on strong import demand and the most-active September soybean oil contract on China’s Dalian Commodity exchange inched higher.
This is certainly a good news for plantation stocks. Personally, I like KLK-CH.
Previous related posts
http://cathoon.blogspot.com/2009/10/klk-ch-50-unrealised-profit.html
http://cathoon.blogspot.com/2009/11/palm-up-on-rising-oil-price-weather.html
Genting sees 3Q profit leap
GENTING BHD leapt into a net profit of RM371.33 million in the third quarter ended Sept 30, 2009 (3Q2009) from a net loss of RM40.38 million a year earlier. Revenue rose 1.3% to RM2.4 billion from RM2.37 billion, Bursa was told today.
Its cumulative nine-month net profit climbed 15.8% to RM798.94 million from RM690.08 million, while revenue was down 1.8 % to RM6.57 billion from RM6.69 billion.
Genting said its 3Q net profit was helped by higher gains from Resorts World Genting in Malaysia, and the group's casino operations in the UK. Its power unit also registered more profit as turnover rose amid lower operating cost at its Meizhou Wan electricity-generation plant in China.
"The lower profit from the other business divisions is due primarily to lower revenue," Genting said. During the quarter, the group's leisure & hospitality, and power divisions recorded higher revenue, while other units registered lower turnovers.
Revenue from its oil palm PLANTATION [] operations fell mainly due to lower prices amid less output of the commodity, while the real estate division was affected by a slower property market. The poorer performance at its oil & gas division was due to lower crude oil prices.
Looking ahead, Genting said it would incur significant pre-opening costs at its Resorts World Sentosa in Singapore as the conglomerate accelerated its human resource recruitment, training, besides sales and marketing programmes for the integrated resort.
"The performance of Meizhou Wan power plant could continue to be affected by lower than expected tariff increases, which are being negotiated, and a slight uptrend in coal prices," Genting said.
Its cumulative nine-month net profit climbed 15.8% to RM798.94 million from RM690.08 million, while revenue was down 1.8 % to RM6.57 billion from RM6.69 billion.
Genting said its 3Q net profit was helped by higher gains from Resorts World Genting in Malaysia, and the group's casino operations in the UK. Its power unit also registered more profit as turnover rose amid lower operating cost at its Meizhou Wan electricity-generation plant in China.
"The lower profit from the other business divisions is due primarily to lower revenue," Genting said. During the quarter, the group's leisure & hospitality, and power divisions recorded higher revenue, while other units registered lower turnovers.
Revenue from its oil palm PLANTATION [] operations fell mainly due to lower prices amid less output of the commodity, while the real estate division was affected by a slower property market. The poorer performance at its oil & gas division was due to lower crude oil prices.
Looking ahead, Genting said it would incur significant pre-opening costs at its Resorts World Sentosa in Singapore as the conglomerate accelerated its human resource recruitment, training, besides sales and marketing programmes for the integrated resort.
"The performance of Meizhou Wan power plant could continue to be affected by lower than expected tariff increases, which are being negotiated, and a slight uptrend in coal prices," Genting said.
Saturday, November 21, 2009
以缠红布麻绳起棺代表有冤情 明福遗体送双溪毛糯医院待验
早上11点45分更新
为了厘清赵明福的死因，其家人今日开棺。赵家家属、泰国著名法医普缇与法医人员已聚集在士毛月富贵山庄，并于9点准时开始进行祭拜和开棺仪式。
家属选择以缠红布麻绳起棺，代表有含冤待雪，同时减少开棺仪式的煞气，避免冲击怀孕的苏淑慧和胎儿。
11.15 赵明福棺木被运上灵车，随后被运往双溪毛糯医院。
普缇表示，赵明福遗体看起来相当完好，而她也肯定会出席明天的验尸工作。而家属律师哥宾星指出，各方皆满意这次的开棺程序，他感谢所有的工作人员和警方。
11.10 15分钟前，完成开棺确认，并且再次封棺。如今工作人员正拆除白幕。
10.45 起棺完成，现在进行清理工作，准备进入确认遗体的程序。
10.38 记者听到禁区内墓地工人起棺的吆喝声，众人纷纷转身背对坟墓。天上有许多鸟飞翔，根据黄十林说法，今天是鸣吠日，因此会有很多的鸟鸣和狗吠。
10.30 欧国辉指出，较早10点时，墓地工作人员已动土开挖，可见到赵明福棺木。如今开始正式起棺。
10.00 林吉祥在早上10点左右离开，他向媒体表示心情沉重，但认为为了找出真相，此程序是无可避免的。
他指出，我国贪污问题根深蒂固，并重提国际透明组织刚公布的全球贪污印象指数佐证，其中我国排名落在第56名，只获得4.5分，沦15年来最低名次。
“赵明福在雪州反贪会大楼离奇坠楼死亡，是造成我国贪污印象指数暴跌的主因。”
他也呼吁反贪会汲取赵明福命案的教训，遵守法庭裁决，不能够在办公时间以外盘问证人，否则我国肃贪工作将会越来越糟糕。
也是雪州行政议员的刘天球则表示，他跟欧阳捍华今天代表雪州政府出席开棺仪式，他期望未来不会有第二个赵明福的出现。
9.30 富贵山庄代表欧国辉表示，赵明福棺木将用麻绳吊起，而麻绳也会缠住红布，代表有冤情，也减少开棺仪式煞气，避免冲击怀孕的苏淑慧。
赵明福前上司欧阳捍华冀望这次开棺验尸能让真相大白，他也呼吁反贪会公布聘请英国法医华聂兹斯的费用。
9.02 诵经祭拜仪式开始，带领仪式的是富贵集团首席风水顾问黄十林。泰国著名法医普缇抵达现场，跟赵家、法医、警方和墓地人员进入白幕禁区范围内。
行动党国会领袖林吉祥、刘天球、欧阳捍华，和家属代表律师哥宾星也抵达现场。赵明福遗孀苏淑慧缺席，但其弟弟苏志海代表出席。
8.35 赵家兄妹赵明基和赵丽兰在8点半左右抵达现场，他们带着一袋祭拜使用的橙。而赵家律师林立迎早前也先行到场。法医和墓地工作人员现已进入墓地范围，准备开棺。
赵丽兰表示，他们以做好心理准备，也希望法医能够秉持专业行事，让真相水落石出。
早上8.15 警方在赵明福墓地围起警戒线，设立警戒区，禁止闲人和媒体进入；在警戒区内，赵明福坟墓四周更立起白幕，再设另一禁区，方便开棺仪式的进行。其临近也搭起两个临时帐篷供媒体和警方使用。
明福兄长赵明基负责确认
赵家昨日召开记者会透露，明福的双亲赵亮辉及张秀花将会在双溪毛糯医院守候，而其兄妹赵明基（右图中）和赵丽兰则在开棺现场。
根据富贵集团发布的开棺仪式流程，众人将在早上8点集合，过后工作人员将会安排赵家家属和警方，确认破土之处。
到了早上9点正，当局将会进行诵经和15分钟的祭拜仪式，9点15分钟才正式开始破土。
当局预料破土需时1小时，到10点15分钟起棺后，将会在现场开棺，以让赵家家属及警方确认是明福的遗体。
明福的兄长赵明基将会代表赵家，负责确认胞弟的遗体。
遗体送双溪毛糯医院待验
完成确认后，当局将会马上封棺，再把灵柩送上灵车，然后在大约11点运往双溪毛糯医院，以便在明日进行验尸工作。
警方将会封锁现场，限定媒体在30尺范围之外，只有法庭规定的相关人等，才可踏入警戒线内。
媒体只有在封棺仪式后，灵柩运送到灵车上时，才可进行拍摄采访工作。
普缇宣称有八成他杀可能
随着泰国著名法医普缇（Porntip Rojanasunan）在10月21日於验尸庭上做出震撼供证，认为赵明福死因有80%是遭到他杀，推翻两名政府法医的看法，其家人在10月27日正式入禀验尸庭，要求开棺验尸，进行第二次解剖，以图让真相水落石出。
验尸庭在11月4日批准赵明福家属要求开棺验尸的申请，但是却必须交由我国法医进行第二次的解剖，而普缇只能从旁协助。不过，推事阿兹米尔慕达法允许她在旁观察，以及提出特定的调查事项。
另一边厢，反贪污委员会也在11月13日宣布聘请英国的法医学权威华聂兹斯教授（Peter Venezis）为代表，与普堤一起，协助双溪毛糯医院的法医组主任沙希淡，为赵明福进行开棺验尸的重任。
http://www.malaysiakini.com/news/118001
Malaysia Q3 GDP shrinks less than expected
KUALA LUMPUR, Nov 20 (Reuters) - Malaysia’s economy contracted by 1.2 percent in the third quarter from a year ago, much less than the 2 percent contraction forecast in a Reuters poll, due to booming domestic demand, signalling the last quarter of the trade-dependent Southeast Asian country’s recession.
Economists in a Reuters poll had forecast gross domestic product would drop 2 percent after a 3.9 percent decline in the second quarter.
Central bank Governor Zeti Akhtar Aziz told a press conference that the economy had now shown growth for two consecutive quarters, expanding by 5.7 percent in the third quarter from the second after 4.8 percent in the second from the prior quarter.
“What we are seeing is a tremendous improvement taking place,” Zeti told a press conference, although she said doing better than the full year forecast of a 3 percent economic contraction would depend on the still uncertain global economy.
Malaysia is Asia’s third-most trade dependent country with exports reaching more than 100% of gross domestic product.
Other export-oriented Asian economies, although out of recession, are still feeling the effects of uncertain demand from the U.S. and Europe. Some economists believe however that some amount of decoupling will take place as domestic demand picks up the slack from inconsistent trade numbers.
Malaysia is also Asia’s biggest net oil exporter and second-largest gas exporter and also has large commodity exports and the prices of both have fallen sharply from a year ago.
The government had said that it expects growth to pick up in the second half of 2009 with positive growth in the fourth quarter as a 67 billion ringgit package of government spending and loan guarantees spread over two years kicks in.
Malaysia also recorded its first net portfolio inflows in the third quarter of 2009 since the first quarter of 2008 with 8.8 billion Malaysian ringgit ($2.60 billion) of inflows.
That comes after five consecutive quarters of outflows of portfolio investment totalling 114.4 billion ringgit.
Net foreign direct investment remained anaemic however at just 2.1 billion ringgit in the third quarter despite a raft of economic reforms aimed at boosting Malaysia’s attractiveness as a place to invest.
Unlike countries such as Indonesia who are considering following Brazil’s move to slow rapid inflows, Malaysia is not planning any action, Zeti said.
“We have more mature and more developed financial markets now, more diversified, so they are able to absorb these kind of flows, without disruption, so we are not concerned at this point,” she said.
Malaysia famously spurned cash and advice from the International Monetary Fund during the 1997-1998 Asian financial crisis and slapped on capital controls, which it has since removed.
Economists in a Reuters poll had forecast gross domestic product would drop 2 percent after a 3.9 percent decline in the second quarter.
Central bank Governor Zeti Akhtar Aziz told a press conference that the economy had now shown growth for two consecutive quarters, expanding by 5.7 percent in the third quarter from the second after 4.8 percent in the second from the prior quarter.
“What we are seeing is a tremendous improvement taking place,” Zeti told a press conference, although she said doing better than the full year forecast of a 3 percent economic contraction would depend on the still uncertain global economy.
Malaysia is Asia’s third-most trade dependent country with exports reaching more than 100% of gross domestic product.
Other export-oriented Asian economies, although out of recession, are still feeling the effects of uncertain demand from the U.S. and Europe. Some economists believe however that some amount of decoupling will take place as domestic demand picks up the slack from inconsistent trade numbers.
Malaysia is also Asia’s biggest net oil exporter and second-largest gas exporter and also has large commodity exports and the prices of both have fallen sharply from a year ago.
The government had said that it expects growth to pick up in the second half of 2009 with positive growth in the fourth quarter as a 67 billion ringgit package of government spending and loan guarantees spread over two years kicks in.
Malaysia also recorded its first net portfolio inflows in the third quarter of 2009 since the first quarter of 2008 with 8.8 billion Malaysian ringgit ($2.60 billion) of inflows.
That comes after five consecutive quarters of outflows of portfolio investment totalling 114.4 billion ringgit.
Net foreign direct investment remained anaemic however at just 2.1 billion ringgit in the third quarter despite a raft of economic reforms aimed at boosting Malaysia’s attractiveness as a place to invest.
Unlike countries such as Indonesia who are considering following Brazil’s move to slow rapid inflows, Malaysia is not planning any action, Zeti said.
“We have more mature and more developed financial markets now, more diversified, so they are able to absorb these kind of flows, without disruption, so we are not concerned at this point,” she said.
Malaysia famously spurned cash and advice from the International Monetary Fund during the 1997-1998 Asian financial crisis and slapped on capital controls, which it has since removed.
Friday, November 20, 2009
警方及專業人士監督挖墳開棺‧趙明福21日2度驗屍
（雪蘭莪‧加影）趙明福將在週六（11月21日）早上9時15分進行挖掘墳墓開棺儀式，並送往雙溪毛糯醫院進行第2度驗屍，目前重葬日期暫定為11月22日或23日。
富貴山莊首席營運長歐國輝受詢時指出，經過與警方和家屬3造會議後，週六早上的挖掘墳墓儀式將由富貴山莊職員負責，整個過程將由警方和法庭批准的專業人士監督。
他說，現場將會有2名攝影師全程拍攝整個過程，一名是負責攝錄影片，而另一名則是負責拍攝照片。
職員名單提呈警方
他指出，他們已經把10名職員的名單提呈給警方，名單裡清楚列明職員的詳細資料，警方當天將會檢查並核對所有工作人員和職員的護照或身份證號碼。
據他瞭解，趙明福墳墓四周將會圍起來，每個角落將會由一名警員負責駐守，趙明福墓地將會設立1個帳篷，同時也在對面的空地上設立另外2個帳篷，以方便警察、媒體和官員進行工作。
歐國輝說，他們會利用小型泥機進行挖掘工作，一直挖掘到“七星壽板”的位置後，他們將會利用人力打開壽板提取棺木。
須打破石灰墻提取棺木
他指出，由於墓穴裡沒有多餘的空間，他們必須打破四周的石灰墻，再從趙明福左邊的空地用繩子把棺材提取出來。
他說，趙明福家屬將會在挖掘之前向工作人員確認是趙明福的墓地，並簽署相關文件後才進行挖掘，這時家屬必須要離開墓地，只有職員、2名攝影師和法庭授權的相關人士監督整個過程。
“當棺木提取出來時，我們會先放在一旁空地，並且開棺由家人確認棺木裡是趙明福，然後就把棺木封起來送往雙溪毛糯醫院解剖。”
他指出，封棺後他們將會在墓園前方正在施工的地方開路，以讓車輛可以進入抬走趙明福的棺材。
富貴山莊負責重葬費
據知，整個挖掘和提取棺木的過程預料將會耗費約1小時，挖掘和提取棺木的費用將由警方負責，而重葬的費用則是由富貴山莊負責。
歐國輝說，這是富貴山莊首次因要再度驗屍而進行開棺儀式，與之前進行的拾金儀式大有不同，因為拾金儀式必須在天亮前進行，而今次的開棺則是要配合警方處理整個過程。
他表示，警方在這次的開館儀式中，尊重並配合家屬在風水上的要求。
據他瞭解，行動黨領袖如林吉祥等將會出席週六的開棺儀式。
Wednesday, November 18, 2009
Palm up on rising oil price, weather concerns
MALAYSIAN crude palm oil futures rose 1.2 per cent by midday today, boosted by rising oil prices and fears that rainy weather may cut output, traders said.
“From what everybody can see from the screen, it is crude oil that pushed the market higher. There is also talk about floods, and continued rains,” said a trader at a Kuala Lumpur-based brokerage.
Palm prices tend to track crude oil because of its use for biodiesel, which competes with fossil-based fuel.
The benchmark February contract on Bursa Malaysia Derivatives Exchange rose RM27 ringgit to RM2,369 (US$703.18) per tonne. Overall volume was 7,461 lots of 25 tonnes each.
“The market may continue to rise. I think RM2,400 will come,” the Kuala Lumpur-based brokerage trader said.
“I think the fundamentals are quite straight forward.
Exports are quite good and we have a little setback in production. So the market is well supported,” another Malaysian trader said. - Reuters
Tuesday, November 17, 2009
Overweight call on the CONSTRUCTION sector
AmResearch is maintaining its Overweight call on the CONSTRUCTION [] sector, where order book visibility should improve in the coming months as it expects up to RM62 billion worth of select cornerstone projects to be rolled-out over the next six to 12 months.
It said on Monday, Nov 16 its top picks for the construction sector are WCT, IJM and Gamuda. It also prefered steel to cement stocks for exposure to the building materials theme - another key beneficiary of a re-acceleration of infrastructure spending. It continued to like steel maker ANN JOO RESOURCES BHD [].
The pre-qualification tenders for the proposed Klang Valley Light Rail Transit (LRT) extension works were unveiled on Nov 3. Tenders are for facilities packages, which are is the main civil and infrastructure works, and other sub-packages.
Submission for prequalification bids will be opened until Dec 16 although tenders for the systems and rolling stock portion - which includes mechanical & electrical (M&E) - have yet to be called for.
The Edge Weekly reported the scope of works for the facilities package include guideway structures, actual stations and the park & ride buildings. Tt added that the main civil works programme could be broken down into six main packages. This includes the actual bricks-and-mortar structure for the tracks as well as LRT stations.
AmResearch said earlier reports stated the Klang Valley LRT extension works were expected to cost an initial RM7 billion. The project entailled construction of additional tracks linking both the Kelana Jaya (17km) as well as Ampang (17.7km)lines to Putra Heights along the southern tip of Klang Valley.
"Based on our channel checks, most big construction outfits in Malaysia have submitted bids for the civil works part of this massive project. But we our unclear as to how the work packages would be carved out - e.g. vertically or geographically spread," it said.
AmResearch said going by operating track record, it believed both IJM Corp Bhd (IJM) and GAMUDA BHD [] (Gamuda) are frontrunners for the LRT jobs. However, it did not discount possibility of a consortium being formed to facilitate entry of other local players at subcontractor level, which may include WCT BHD [] (WCT) and Loh & Loh Bhd.
As for the M&E portion, it said that the scope for local participation appears limited due to the high-level of technical expertise required to build and commission LRT systems.
It said on Monday, Nov 16 its top picks for the construction sector are WCT, IJM and Gamuda. It also prefered steel to cement stocks for exposure to the building materials theme - another key beneficiary of a re-acceleration of infrastructure spending. It continued to like steel maker ANN JOO RESOURCES BHD [].
The pre-qualification tenders for the proposed Klang Valley Light Rail Transit (LRT) extension works were unveiled on Nov 3. Tenders are for facilities packages, which are is the main civil and infrastructure works, and other sub-packages.
Submission for prequalification bids will be opened until Dec 16 although tenders for the systems and rolling stock portion - which includes mechanical & electrical (M&E) - have yet to be called for.
The Edge Weekly reported the scope of works for the facilities package include guideway structures, actual stations and the park & ride buildings. Tt added that the main civil works programme could be broken down into six main packages. This includes the actual bricks-and-mortar structure for the tracks as well as LRT stations.
AmResearch said earlier reports stated the Klang Valley LRT extension works were expected to cost an initial RM7 billion. The project entailled construction of additional tracks linking both the Kelana Jaya (17km) as well as Ampang (17.7km)lines to Putra Heights along the southern tip of Klang Valley.
"Based on our channel checks, most big construction outfits in Malaysia have submitted bids for the civil works part of this massive project. But we our unclear as to how the work packages would be carved out - e.g. vertically or geographically spread," it said.
AmResearch said going by operating track record, it believed both IJM Corp Bhd (IJM) and GAMUDA BHD [] (Gamuda) are frontrunners for the LRT jobs. However, it did not discount possibility of a consortium being formed to facilitate entry of other local players at subcontractor level, which may include WCT BHD [] (WCT) and Loh & Loh Bhd.
As for the M&E portion, it said that the scope for local participation appears limited due to the high-level of technical expertise required to build and commission LRT systems.
Monday, November 16, 2009
Prime Minister Najib requires superhuman effort to achieve high income status for the people of Malaysia
Media Statement by Dr Chen Man Hin, DAP Life Advisor in Seremban on 14th November 2009
To achieve high income status for the people of malaysia requeires a revolutionary policy and full support from the people.
PM Najib stated that his intention was to raise the present per capita income of US$7,000 to US$17,000 by the year 2020, assuming that the GDP increases on an average of 9% a year.
Later he revised his targets after realising that the targets were unrealistic. His new estimates were a 6% GDP growth annually and achieve per capita income US$13,000 in 2020.
What are the prospects of achieving a pci of US$13,000 by 2020? Dim.
Historically, it would be near impossible. In 1957 at independence, Malaysia enjoyed a pci of about US$500, the second highest in Asia after Japan. In 2008, Malaysia pci was US$7,000. It took 51 years to reach US$7,000. Year 2020 is 11 short years away to reach US$13,000, when it took 51 years to reach US$7,000.
If PM Najib has a revolutionary policy and inspire the entire nation to rally and work exceedingly hard, the objectives might be achievable.
I do not see the government wholly committed to full liberalisation of the economy which would attract foreign and local investors to bring in more FDIs into the country. Investors are not convinced that the lukewarm reforms by the Prime Minister are liberal enough for them to bring in their cash for investment. Statistics show that FDIs for the first half of this year are very much lower than the FDIs in the first half of last year.
Although the reforms to revoke the NEP were announced, in practice there is still a 121/2 per cent bumiputra allocation. Moreover the NEP attitude. The NEP machinery and regulations and NEP dependence are still evident and practised.
PM needs reminding that NEP was the major factor that cause Malaysia’s economy to fall behind South Korea, Taiwan, Hong Kong and Singapore. Note the pci of US$18,000 for S.Korea, US$17,000 for Taiwan, US$34,000 for Hong Kong and US$34,000 for Singapore. Malaysia with a pci of US$7,000 is way behind. The reluctance of PM Najib to do away with the NEP will the doom for all his so called reforms.
Corruption is another factor which will hamper PM Najib to grow the economy faster. Many investors feel that corruption adds to the cost of investments, and would make their investments risky.
PM Najib has a herculean task ahead of him. His reforms have to be more fundamental and drastic. Putting up a show of reforms will not make Malaysia a high income country.
Dr Chen Man Hin
DAP Life adviser
To achieve high income status for the people of malaysia requeires a revolutionary policy and full support from the people.
PM Najib stated that his intention was to raise the present per capita income of US$7,000 to US$17,000 by the year 2020, assuming that the GDP increases on an average of 9% a year.
Later he revised his targets after realising that the targets were unrealistic. His new estimates were a 6% GDP growth annually and achieve per capita income US$13,000 in 2020.
What are the prospects of achieving a pci of US$13,000 by 2020? Dim.
Historically, it would be near impossible. In 1957 at independence, Malaysia enjoyed a pci of about US$500, the second highest in Asia after Japan. In 2008, Malaysia pci was US$7,000. It took 51 years to reach US$7,000. Year 2020 is 11 short years away to reach US$13,000, when it took 51 years to reach US$7,000.
If PM Najib has a revolutionary policy and inspire the entire nation to rally and work exceedingly hard, the objectives might be achievable.
I do not see the government wholly committed to full liberalisation of the economy which would attract foreign and local investors to bring in more FDIs into the country. Investors are not convinced that the lukewarm reforms by the Prime Minister are liberal enough for them to bring in their cash for investment. Statistics show that FDIs for the first half of this year are very much lower than the FDIs in the first half of last year.
Although the reforms to revoke the NEP were announced, in practice there is still a 121/2 per cent bumiputra allocation. Moreover the NEP attitude. The NEP machinery and regulations and NEP dependence are still evident and practised.
PM needs reminding that NEP was the major factor that cause Malaysia’s economy to fall behind South Korea, Taiwan, Hong Kong and Singapore. Note the pci of US$18,000 for S.Korea, US$17,000 for Taiwan, US$34,000 for Hong Kong and US$34,000 for Singapore. Malaysia with a pci of US$7,000 is way behind. The reluctance of PM Najib to do away with the NEP will the doom for all his so called reforms.
Corruption is another factor which will hamper PM Najib to grow the economy faster. Many investors feel that corruption adds to the cost of investments, and would make their investments risky.
PM Najib has a herculean task ahead of him. His reforms have to be more fundamental and drastic. Putting up a show of reforms will not make Malaysia a high income country.
Dr Chen Man Hin
DAP Life adviser
Saturday, November 14, 2009
Exclusive Event with Warren Buffett and Bill Gates
In a rare and exclusive event, CNBC presents Warren Buffett and Bill Gates, together, taking questions from students at Columbia Business School in New York City. Host Becky Quick talks with the two billionaires, whose values run as deep as their wealth.
Friday, November 13, 2009
The world's richest men say go buy stocks, global economic panic is over
Capitalism is still alive and well, say the world's two richest men, despite lingering shocks from the longest, deepest recession since the Great Depression.
"The financial panic is behind us," said famed investor Warren Buffett, who recently made what he called an "all-in wager" on the U.S. economy by acquiring railroad Burlington Northern Santa Fe. "The bottom has come in stocks. Don't pass on something that's attractive today."
Sitting facing each other in an auditorium filled with nearly 1,000 cheering people at a CNBC-sponsored event at Columbia University in New York, the CEO of Berkshire Hathaway Inc. and Microsoft founder Bill Gates fielded questions from Columbia Business School students on the recession, investing and what's the next Microsoft.
There were at first reassurances that the U.S. economy had not collapsed since the last time the two sat in front of a student audience, in Nebraska in 2005.
"We proved that we can make mistakes," said Gates. "But the fundamentals of the system, a marketplace-driven system where we invest in education and a great infrastructure for the long-term, that's continued." Even in the country's "darkest hour," he said, American businesses were still innovating.
"Last fall was really blindsiding," Buffett said later. Still, "I did not worry about the overall survival of our economy."
The worst recession since the 1930s may be over, but the recovery isn't expected to be strong enough to stem job losses and get businesses hiring again. Employers shed a net total of 190,000 jobs in October, a government survey showed Thursday. It was the 22nd straight month of losses. And the unemployment rate jumped last month to 10.2 percent, a 26-year high.
The last time the economy saw a net gain in jobs was in December 2007.
Buffett also commended the Bush administration's actions last September, saying "only the government could have saved things" after the collapse of Lehman Brothers triggered a freeze-up in credit markets and panic on Wall Street.
In the future, however, Buffett said "there should be more downside to the head of any institution that has to go to the federal government to be saved for reasons of the greater society."
The two endeared themselves to the audience with tips. Buffett exhorted students to "marry the right person" and said, "The worst investment you can have is cash."
Gates, meanwhile, said he sees big opportunities in environmentally friendly energy and medicine.
"Capitalism is great," he said.
Gates wore a suit and tie, flashing the inner red lining of his jacket as he walked to his chair. Buffett, who earned a master's degree from Columbia in 1951, wore a sweater with the Columbia insignia.
Students in the audience said they were glad the two were so confident about the economy.
"That probably weighs a lot to a lot of people to hear Buffett say we're out of the crisis," said Andrea Basche, an Earth Institute student at Columbia.
Wednesday, November 11, 2009
Pelikan eyes RM5b revenue by 2012
The stationery maker aims to achieve the target through both regional and international mergers and acquisitions
Stationery maker Pelikan International Corp Bhd expects to hit RM5.05 billion in revenue by 2012, through mergers and acquisitions (M&As).
Its president and chief executive officer Loo Hooi Keat (picture) said the company is aiming at both regional and international M&As, but did not elaborate.
The main market-listed company, which posted revenue of RM1.3 billion last year, is anticipating its combined revenue to reach RM3 billion when it finalises the proposed acquisition of 66 per cent stake in Herlitz AG and its assets by year-end.
“We need to have economies of scale,” he told a media conference to announce the acquisition in Kuala Lumpur yesterday.
Pelikan, a 171-year-old German stationery brand, is acquiring 7.2 million shares in Frankfurt Stock Exchange-listed Herlitz, together with its Falkensee logistics centre and related assets, from Stationery Products Sarl, a wholly-owned subsidiary of global private equity firm, Advent International.
Loo said the purchase will cost Pelikan e45 million, while the voluntary general offer of the remaining 34 per cent stake in Herlitz will cost another e7 million.
The purchase price is at a 50 per cent discount to net asset, given the net assets of Herlitz and its property worth e104.5 million as at December 31 2008.
“If we take into account the property cost, which was built in 1994 for e175 million, it is a tremendous discount,” he said, adding that only a fifth of the 40ha land, which houses the Falkensee logistics centre, is currently utilised. e40 million will be financed from bank borrowings and the rest from internal funds.
Loo said the acquisition of Herlitz, Europe’s second leading stationery maker after Pelikan, will also result in over RM100 million cost savings from marketing and sales activities, co-branding as well as the integration of Pelikan’s logistics facilities into Falkensee.
He said by June next year, Pelikan will close its three logistics centres in Germany and move into the Falkensee logistics centre in Berlin that has two fully automated warehouses.
“We are not looking at retrenching our people (following the merger of logistic facilities), but we will retain them to support our expansion,” he said.
Loo said Pelikan has made a general offer for the remaining 34 per cent Herlitz shares with an offer price of e1.85 per share.
“After the announcement was made on Friday, it jumped to e3.25. When we negotiated the deal, the share price was at e1.50,” he said, adding that as of now, Pelikan will stick to e1.85 per share for the general offer.
Loo said synergies from the acquisition will result in a more comprehensive product range.
Founded in 1904, Herlitz is a leading manufacturer and distributor of office stationery and paper products in Europe and has strong market position in Germany and eastern Europe.
Stationery maker Pelikan International Corp Bhd expects to hit RM5.05 billion in revenue by 2012, through mergers and acquisitions (M&As).
Its president and chief executive officer Loo Hooi Keat (picture) said the company is aiming at both regional and international M&As, but did not elaborate.
The main market-listed company, which posted revenue of RM1.3 billion last year, is anticipating its combined revenue to reach RM3 billion when it finalises the proposed acquisition of 66 per cent stake in Herlitz AG and its assets by year-end.
“We need to have economies of scale,” he told a media conference to announce the acquisition in Kuala Lumpur yesterday.
Pelikan, a 171-year-old German stationery brand, is acquiring 7.2 million shares in Frankfurt Stock Exchange-listed Herlitz, together with its Falkensee logistics centre and related assets, from Stationery Products Sarl, a wholly-owned subsidiary of global private equity firm, Advent International.
Loo said the purchase will cost Pelikan e45 million, while the voluntary general offer of the remaining 34 per cent stake in Herlitz will cost another e7 million.
The purchase price is at a 50 per cent discount to net asset, given the net assets of Herlitz and its property worth e104.5 million as at December 31 2008.
“If we take into account the property cost, which was built in 1994 for e175 million, it is a tremendous discount,” he said, adding that only a fifth of the 40ha land, which houses the Falkensee logistics centre, is currently utilised. e40 million will be financed from bank borrowings and the rest from internal funds.
Loo said the acquisition of Herlitz, Europe’s second leading stationery maker after Pelikan, will also result in over RM100 million cost savings from marketing and sales activities, co-branding as well as the integration of Pelikan’s logistics facilities into Falkensee.
He said by June next year, Pelikan will close its three logistics centres in Germany and move into the Falkensee logistics centre in Berlin that has two fully automated warehouses.
“We are not looking at retrenching our people (following the merger of logistic facilities), but we will retain them to support our expansion,” he said.
Loo said Pelikan has made a general offer for the remaining 34 per cent Herlitz shares with an offer price of e1.85 per share.
“After the announcement was made on Friday, it jumped to e3.25. When we negotiated the deal, the share price was at e1.50,” he said, adding that as of now, Pelikan will stick to e1.85 per share for the general offer.
Loo said synergies from the acquisition will result in a more comprehensive product range.
Founded in 1904, Herlitz is a leading manufacturer and distributor of office stationery and paper products in Europe and has strong market position in Germany and eastern Europe.
Tuesday, November 10, 2009
HSBC Operating Profit Beats, US Bad Debts Slip
Europe's biggest bank HSBC Holdings said its underlying third-quarter profits were significantly ahead of a year ago and losses on U.S. consumer loans had shown their first fall in three years.
The news sent HSBC stock up over 4 percent to their highest in just over a year.
In a trading statement on Tuesday which lacked detailed figures on its quarterly results, HSBC said its investment banking arm had maintained its record performance in the quarter, following bumper performances by rivals including Britain's Barclays.
It said margins for the Global Banking and Markets arm were not as good in the quarter as they were in the exceptional first half, which benefitted from pent-up demand after the crisis hit at the end of 2008, but said margins were very good compared with previous years, including 2006 and 2007.
In the United States, which has been the focus of market concern, HSBC said loan impairment allowances for its consumer finance business declined, representing the first quarterly fall since the start of 2006 and their lowest level for over a year.
But the bank cautioned it was still too soon to call a turn in U.S. consumer impairments, which hit around $3 billion in the third quarter, though there were positive signs.
"Consensus forecasts (for unemployment, house prices) are moving down from some of the more pessimistic figures ... if these things all play out, those would be reflective of turning points. But I don't think anyone is confident to call those yet," Finance Director Douglas Flint told reporters.
Overall loan impairment charges and other credit risk provisions declined in the quarter and were at their lowest quarterly level since the second quarter of 2008.
"I believe the biggest jolt has now passed through the global economy," said HSBC Chief Executive Michael Geoghegan. "The world will likely see a two-speed recovery," he said, adding that emerging markets are likely to drive the recovery.
The bank said on a reported basis, including losses on the fair value of its own debt, third-quarter profits were lower than a year ago. The bank said it had seen a further tightening of credit spreads in October, resulting in an additional reduction in the gain from fair-value movements in its own debt.
HSBC also said its U.S. business would announce the sale of its U.S. vehicle loan servicing operations and $1 billion in vehicle loans to Santander's U.S. operations.
The news sent HSBC stock up over 4 percent to their highest in just over a year.
In a trading statement on Tuesday which lacked detailed figures on its quarterly results, HSBC said its investment banking arm had maintained its record performance in the quarter, following bumper performances by rivals including Britain's Barclays.
It said margins for the Global Banking and Markets arm were not as good in the quarter as they were in the exceptional first half, which benefitted from pent-up demand after the crisis hit at the end of 2008, but said margins were very good compared with previous years, including 2006 and 2007.
In the United States, which has been the focus of market concern, HSBC said loan impairment allowances for its consumer finance business declined, representing the first quarterly fall since the start of 2006 and their lowest level for over a year.
But the bank cautioned it was still too soon to call a turn in U.S. consumer impairments, which hit around $3 billion in the third quarter, though there were positive signs.
"Consensus forecasts (for unemployment, house prices) are moving down from some of the more pessimistic figures ... if these things all play out, those would be reflective of turning points. But I don't think anyone is confident to call those yet," Finance Director Douglas Flint told reporters.
Overall loan impairment charges and other credit risk provisions declined in the quarter and were at their lowest quarterly level since the second quarter of 2008.
"I believe the biggest jolt has now passed through the global economy," said HSBC Chief Executive Michael Geoghegan. "The world will likely see a two-speed recovery," he said, adding that emerging markets are likely to drive the recovery.
The bank said on a reported basis, including losses on the fair value of its own debt, third-quarter profits were lower than a year ago. The bank said it had seen a further tightening of credit spreads in October, resulting in an additional reduction in the gain from fair-value movements in its own debt.
HSBC also said its U.S. business would announce the sale of its U.S. vehicle loan servicing operations and $1 billion in vehicle loans to Santander's U.S. operations.
Saturday, November 7, 2009
GE Shares Up; Analyst Upgrades, Citing Asset Sales
Shares of General Electric rose 6.24% on Friday after Bernstein Research raised its rating on the largest U.S. conglomerate to "outperform," saying it saw major divestitures coming.
The world's largest maker of jet engines and electricity-producing turbines is likely to sell off businesses generating $25 billion to $30 billion of revenue — almost one-fifth of the company — over the next two to three years as it focuses on its core infrastructure operations, according to analyst Steven Winoker.
"Much of the bet on GE is a bet on the company's ability to reinvest proceeds in enterprises that add value for shareholders," Winoker wrote in a note to clients.
The sprawling Fairfield, Connecticut-based company — with operations from investing in commercial real estate to making light bulbs — for years faced investor calls to divest incongruous parts of its portfolio, including NBC and its GE Capital finance unit.
Chief Executive Jeff Immelt largely resisted those calls until last year, when the severe economic downturn began to pound GE's financial results, setting the stage for a sharp sell-off in its shares.
The company has since begun streamlining GE Capital — its Achilles heel through the current downturn — and according to sources is in talks about selling a 51 percent stake in NBC Universal to No. 1 U.S. cable company Comcast [CMCSA 14.6905 0.4905 (+3.45%) ].
CNBC is a unit of NBC Universal.
That deal would also require an accord with French media company Vivendi, which holds 20 percent of NBC Universal.
GE could sell NBC Universal, its appliance arm and parts of GE Capital, Winoker wrote.
"Going forward, we have more confidence in GE picking the right core/adjacent strategic properties and integrating them successfully," he wrote.
Still, selling off such large pieces of the company may not be easy. GE last year put its appliance arm and its U.S. private label credit card business on the block, but found no buyers.
Winoker hiked his price target on GE shares to $19 from $18. He had previously rated GE "market perform."
Over the past year they have been as high as $20.98 — a point reached on Nov. 5, 2008 — and as low as $5.87 on March 4.
KInsteel Bhd RM16.938 million profit
Kinsteel Bhd has recorded a lower pre-tax profit of RM16.938 million for its third quarter ended Sept 30, 2009, compared to RM102.744 million in the same quarter last year.
Its revenue fell to RM457.684 million from RM844.914 million previously following lower steel prices in the quarter, the group said in a statement today.
Nevertheless, Kinsteel said its performance was better than the preceding quarter where it recorded a pre-tax loss of RM74 million.
The improvement was mainly due to improved prices for steel products, it said.
For the nine-month period, Kinsteel posted a pre-tax loss of RM150.388 million, a reversal from its pre-tax profit of RM385.640 million in the same period last year.
Its revenue during the period fell to RM1.537 billion from RM2.08 billion previously.
The group is optimistic for the current financial year despite uncertainties in the economic climate as implementation of the government's spending under the stimulus package commenced.
Improvement in steel demand will depend on, among others, the effects of the government's stimulus packages, continuous stabilisation of the financial system and return of consumers' confidence, it said.
"While the operating climate is likely to remain challenging for the fourth quarter, there are signs of improvement in the market recently which augurs well for the group," it added. -- Bernama
Its revenue fell to RM457.684 million from RM844.914 million previously following lower steel prices in the quarter, the group said in a statement today.
Nevertheless, Kinsteel said its performance was better than the preceding quarter where it recorded a pre-tax loss of RM74 million.
The improvement was mainly due to improved prices for steel products, it said.
For the nine-month period, Kinsteel posted a pre-tax loss of RM150.388 million, a reversal from its pre-tax profit of RM385.640 million in the same period last year.
Its revenue during the period fell to RM1.537 billion from RM2.08 billion previously.
The group is optimistic for the current financial year despite uncertainties in the economic climate as implementation of the government's spending under the stimulus package commenced.
Improvement in steel demand will depend on, among others, the effects of the government's stimulus packages, continuous stabilisation of the financial system and return of consumers' confidence, it said.
"While the operating climate is likely to remain challenging for the fourth quarter, there are signs of improvement in the market recently which augurs well for the group," it added. -- Bernama
Friday, November 6, 2009
TA sees KL Kepong a buy at RM16.50
TA Securities has recommended a "buy" call on KL Kepong and raised the target price on the stock to RM16.50.
KL Kepong is scheduled to release its Q4 2009 result on November 24. "We expect the full year results to be within ours and consensus expectations," said TA.
TA estimated KL Kepong's core net profit to be RM664.7 million, a 42 per cent drop from the previous year's record earnings due to lower net profit across all the core business segments.
"We adjusted upward target price RM16.50 based on Sum-of-Parts valuation methodology," TA said.
"We continue to like KL Kepong as a proxy to CPO price which should benefit from continued tight supply-demand balance until H2 CY 2010," it added. - Reuters
KL Kepong is scheduled to release its Q4 2009 result on November 24. "We expect the full year results to be within ours and consensus expectations," said TA.
TA estimated KL Kepong's core net profit to be RM664.7 million, a 42 per cent drop from the previous year's record earnings due to lower net profit across all the core business segments.
"We adjusted upward target price RM16.50 based on Sum-of-Parts valuation methodology," TA said.
"We continue to like KL Kepong as a proxy to CPO price which should benefit from continued tight supply-demand balance until H2 CY 2010," it added. - Reuters
Buy call on Ann Joo at RM3.20: Ambank
AMBANK maintained its high-conviction BUY call on Ann Joo Resources Bhd (Ann Joo) - with fair value raised from RM3.20 per share to RM3.70 per share.
The group’s continued focus will be on the ASEAN region, where there is currently a void in blast furnace capacity - particularly in the supply of semi-finished steel.
Export sales are expected to rise to 50 per cent in FY2009F from less than 30 per cent a few years ago.
Ann Joo is set to leverage on robust regional steel demand - focusing primarily on long steel products. This structural repositioning puts the group in a sweet spot as an early beneficiary of accelerated infrastructure spending.
Annjoo share price is on clear uptrend but its warrant is moving side way. Because of this scenario, Annjoo-wb's premium has been steadily declining. Currently the premium is 16.6% and the gearing is 4.1. The expiry date is 10/1/2013 with 1161 days to go. The premium is relatively low as there is such as long time before it expires.
Ok, good luck.
GOon
Thursday, November 5, 2009
Think Like Warren Buffett
Back in 1999, Robert G. Hagstrom wrote a book about the legendary investor Warren Buffett, entitled "The Warren Buffett Portfolio". What's so great about the book, and what makes it different from the countless other books and articles written about the "Oracle of Omaha" is that it offers the reader valuable insight into how Buffett actually thinks about investments. In other words, the book delves into the psychological mindset that has made Buffett so fabulously wealthy. (For more on Warren Buffett and his current holdings, check out Coattail Investor.)
Although investors could benefit from reading the entire book, we've selected a bite-sized sampling of the tips and suggestions regarding the investor mindset and ways that an investor can improve their stock selection that will help you get inside Buffett's head.
1. Think of Stocks as a Business
Many investors think of stocks and the stock market in general as nothing more than little pieces of paper being traded back and forth among investors, which might help prevent investors from becoming too emotional over a given position but it doesn't necessarily allow them to make the best possible investment decisions.
That's why Buffett has stated he believes stockholders should think of themselves as "part owners" of the business in which they are investing. By thinking that way, both Hagstrom and Buffett argue that investors will tend to avoid making off-the-cuff investment decisions, and become more focused on the longer term. Furthermore, longer-term "owners" also tend to analyze situations in greater detail and then put a great eal of thought into buy and sell decisions. Hagstrom says this increased thought and analysis tends to lead to improved investment returns.
2. Increase the Size of Your Investment
While it rarely - if ever - makes sense for investors to "put all of their eggs in one basket," putting all your eggs in too many baskets may not be a good thing either. Buffett contends that over-diversification can hamper returns as much as a lack of diversification. That's why he doesn't invest in mutual funds. It's also why he prefers to make significant investments in just a handful of companies.
Buffett is a firm believer that an investor must first do his or her homework before investing in any security. But after that due diligence process is completed, an investor should feel comfortable enough to dedicate a sizable portion of assets to that stock. They should also feel comfortable in winnowing down their overall investment portfolio to a handful of good companies with excellent growth prospects.
Buffett's stance on taking time to properly allocate your funds is furthered with his comment that it's not just about the best company, but how you feel about the company. If the best business you own presents the least financial risk and has the most favorable long-term prospects, why would you put money into your 20th favorite business rather than add money to the top choices?
3. Reduce Portfolio Turnover
Rapidly trading in and out of stocks can potentially make an individual a lot of money, but according to Buffett this trader is actually hampering his or her investment returns. That's because portfolio turnover increases the amount of taxes that must be paid on capital gains and boosts the total amount of commission dollars that must be paid in a given year.
The "Oracle" contends that what makes sense in business also makes sense in stocks: An investor should ordinarily hold a small piece of an outstanding business with the same tenacity that an owner would exhibit if he owned all of that business.
Investors must think long term. By having that mindset, they can avoid paying huge commission fees and lofty short-term capital gains taxes. They'll also be more apt to ride out any short-term fluctuations in the business, and to ultimately reap the rewards of increased earnings and/or dividends over time.
4. Develop Alternative Benchmarks
While stock prices may be the ultimate barometer of the success or failure of a given investment choice, Buffett does not focus on this metric. Instead, he analyzes and pores over the underlying economics of a given business or group of businesses. If a company is doing what it takes to grow itself on a profitable basis, then the share price will ultimately take care of itself.
Successful investors must look at the companies they own and study their true earnings potential. If the fundamentals are solid and the company is enhancing shareholder value by generating consistent bottom-line growth, the share price, in the long term, should reflect that.
5. Learn to Think in Probabilities
Bridge is a card game in which the most successful players are able to judge mathematical probabilities to beat their opponents. Perhaps not surprisingly, Buffett loves and actively plays the game, and he takes the strategies beyond the game into the investing world.
Buffett suggests that investors focus on the economics of the companies they own (in other words the underlying businesses), and then try to weigh the probability that certain events will or will not transpire, much like a Bridge player checking the probabilities of his opponents' hands. He adds that by focusing on the economic aspect of the equation and not the stock price, an investor will be more accurate in his or her ability to judge probability.
Thinking in probabilities has its advantages. For example, an investor that ponders the probability that a company will report a certain rate of earnings growth over a period of five or 10 years is much more apt to ride out short-term fluctuations in the share price. By extension, this means that his investment returns are likely to be superior and that he will also realize fewer transaction and/or capital gains costs.
6. Recognize the Psychological Aspects of Investing
Very simply, this means that individuals must understand that there is a psychological mindset that the successful investor tends to have. More specifically, the successful investor will focus on probabilities and economic issues and let decisions be ruled by rational, as opposed to emotional, thinking.
More than anything, investors' own emotions can be their worst enemy. Buffett contends that the key to overcoming emotions is being able to "retain your belief in the real fundamentals of the business and to not get too concerned about the stock market."
Investors should realize that there is a certain psychological mindset that they should have if they want to be successful and try to implement that mindset.
7. Ignore Market Forecasts
There is an old saying that the Dow "climbs a wall of worry". In other words, in spite of the negativity in the marketplace, and those who perpetually contend that a recession is "just around the corner", the markets have fared quite well over time. Therefore, doomsayers should be ignored.
On the other side of the coin, there are just as many eternal optimists who argue that the stock market is headed perpetually higher. These should be ignored as well.
In all this confusion, Buffett suggests that investors should focus their efforts of isolating and investing in shares that are not currently being accurately valued by the market. The logic here is that as the stock market begins to realize the company's intrinsic value(through higher prices and greater demand), the investor will stand to make a lot of money.
8. Wait for the Fat Pitch
Hagstrom's book uses the model of legendary baseball player Ted Williams as an example of a wise investor. Williams would wait for a specific pitch (in an area of the plate where he knew he had a high probability of making contact with the ball) before swinging. It is said that this discipline enabled Williams to have a higher lifetime batting average than the average player.
Buffett, in the same way, suggests that all investors act as if they owned a lifetime decision card with only 20 investment choice punches in it. The logic is that this should prevent them from making mediocre investment choices and hopefully, by extension, enhance the overall returns of their respective portfolios.
Bottom Line
"The Warren Buffett Portfolio" is a timeless book that offers valuable insight into the psychological mindset of the legendary investor Warren Buffett. Of course, if learning how to invest like Warren Buffett were as easy as reading a book, everyone would be rich! But if you take that time and effort to implement some of Buffett's proven strategies, you could be on your way to better stock selection and greater returns.
Although investors could benefit from reading the entire book, we've selected a bite-sized sampling of the tips and suggestions regarding the investor mindset and ways that an investor can improve their stock selection that will help you get inside Buffett's head.
1. Think of Stocks as a Business
Many investors think of stocks and the stock market in general as nothing more than little pieces of paper being traded back and forth among investors, which might help prevent investors from becoming too emotional over a given position but it doesn't necessarily allow them to make the best possible investment decisions.
That's why Buffett has stated he believes stockholders should think of themselves as "part owners" of the business in which they are investing. By thinking that way, both Hagstrom and Buffett argue that investors will tend to avoid making off-the-cuff investment decisions, and become more focused on the longer term. Furthermore, longer-term "owners" also tend to analyze situations in greater detail and then put a great eal of thought into buy and sell decisions. Hagstrom says this increased thought and analysis tends to lead to improved investment returns.
2. Increase the Size of Your Investment
While it rarely - if ever - makes sense for investors to "put all of their eggs in one basket," putting all your eggs in too many baskets may not be a good thing either. Buffett contends that over-diversification can hamper returns as much as a lack of diversification. That's why he doesn't invest in mutual funds. It's also why he prefers to make significant investments in just a handful of companies.
Buffett is a firm believer that an investor must first do his or her homework before investing in any security. But after that due diligence process is completed, an investor should feel comfortable enough to dedicate a sizable portion of assets to that stock. They should also feel comfortable in winnowing down their overall investment portfolio to a handful of good companies with excellent growth prospects.
Buffett's stance on taking time to properly allocate your funds is furthered with his comment that it's not just about the best company, but how you feel about the company. If the best business you own presents the least financial risk and has the most favorable long-term prospects, why would you put money into your 20th favorite business rather than add money to the top choices?
3. Reduce Portfolio Turnover
Rapidly trading in and out of stocks can potentially make an individual a lot of money, but according to Buffett this trader is actually hampering his or her investment returns. That's because portfolio turnover increases the amount of taxes that must be paid on capital gains and boosts the total amount of commission dollars that must be paid in a given year.
The "Oracle" contends that what makes sense in business also makes sense in stocks: An investor should ordinarily hold a small piece of an outstanding business with the same tenacity that an owner would exhibit if he owned all of that business.
Investors must think long term. By having that mindset, they can avoid paying huge commission fees and lofty short-term capital gains taxes. They'll also be more apt to ride out any short-term fluctuations in the business, and to ultimately reap the rewards of increased earnings and/or dividends over time.
4. Develop Alternative Benchmarks
While stock prices may be the ultimate barometer of the success or failure of a given investment choice, Buffett does not focus on this metric. Instead, he analyzes and pores over the underlying economics of a given business or group of businesses. If a company is doing what it takes to grow itself on a profitable basis, then the share price will ultimately take care of itself.
Successful investors must look at the companies they own and study their true earnings potential. If the fundamentals are solid and the company is enhancing shareholder value by generating consistent bottom-line growth, the share price, in the long term, should reflect that.
5. Learn to Think in Probabilities
Bridge is a card game in which the most successful players are able to judge mathematical probabilities to beat their opponents. Perhaps not surprisingly, Buffett loves and actively plays the game, and he takes the strategies beyond the game into the investing world.
Buffett suggests that investors focus on the economics of the companies they own (in other words the underlying businesses), and then try to weigh the probability that certain events will or will not transpire, much like a Bridge player checking the probabilities of his opponents' hands. He adds that by focusing on the economic aspect of the equation and not the stock price, an investor will be more accurate in his or her ability to judge probability.
Thinking in probabilities has its advantages. For example, an investor that ponders the probability that a company will report a certain rate of earnings growth over a period of five or 10 years is much more apt to ride out short-term fluctuations in the share price. By extension, this means that his investment returns are likely to be superior and that he will also realize fewer transaction and/or capital gains costs.
6. Recognize the Psychological Aspects of Investing
Very simply, this means that individuals must understand that there is a psychological mindset that the successful investor tends to have. More specifically, the successful investor will focus on probabilities and economic issues and let decisions be ruled by rational, as opposed to emotional, thinking.
More than anything, investors' own emotions can be their worst enemy. Buffett contends that the key to overcoming emotions is being able to "retain your belief in the real fundamentals of the business and to not get too concerned about the stock market."
Investors should realize that there is a certain psychological mindset that they should have if they want to be successful and try to implement that mindset.
7. Ignore Market Forecasts
There is an old saying that the Dow "climbs a wall of worry". In other words, in spite of the negativity in the marketplace, and those who perpetually contend that a recession is "just around the corner", the markets have fared quite well over time. Therefore, doomsayers should be ignored.
On the other side of the coin, there are just as many eternal optimists who argue that the stock market is headed perpetually higher. These should be ignored as well.
In all this confusion, Buffett suggests that investors should focus their efforts of isolating and investing in shares that are not currently being accurately valued by the market. The logic here is that as the stock market begins to realize the company's intrinsic value(through higher prices and greater demand), the investor will stand to make a lot of money.
8. Wait for the Fat Pitch
Hagstrom's book uses the model of legendary baseball player Ted Williams as an example of a wise investor. Williams would wait for a specific pitch (in an area of the plate where he knew he had a high probability of making contact with the ball) before swinging. It is said that this discipline enabled Williams to have a higher lifetime batting average than the average player.
Buffett, in the same way, suggests that all investors act as if they owned a lifetime decision card with only 20 investment choice punches in it. The logic is that this should prevent them from making mediocre investment choices and hopefully, by extension, enhance the overall returns of their respective portfolios.
Bottom Line
"The Warren Buffett Portfolio" is a timeless book that offers valuable insight into the psychological mindset of the legendary investor Warren Buffett. Of course, if learning how to invest like Warren Buffett were as easy as reading a book, everyone would be rich! But if you take that time and effort to implement some of Buffett's proven strategies, you could be on your way to better stock selection and greater returns.
Wednesday, November 4, 2009
U.S. commercial property up in 3rd quarter
NEW YORK (Reuters) - The prices of investment-grade commercial real estate rose more than 4 percent in the third quarter, possibly signaling an end to the sector's year-long downward spiral, according to an leading property index released on Tuesday.
The 4.4 percent third-quarter increase in the MIT Center for Real Estate's transaction-based index (TBI) index is the first positive price change in the index in more than a year and the largest increase since the market downturn began in mid-2007.
"One quarter does not a trend make and we are still well below normal trading volume," David Geltner, director of research at MIT/CRE, said in a statement. "Nevertheless, this is the strongest sign of a bottom that we've had in two years."
The U.S. commercial real estate market has been in a downward spiral for more than two years. Borrowers are facing shortfalls in financings when loans come due. Some borrowers are struggling to meet even monthly payments.
The delinquency rate of U.S. commercial real estate loans securitized into Commercial Mortgage-Backed Securities (CMBS) hit 4.8 percent in October, up from 4.36 the prior month and dwarfing the 0.77 rate of a year earlier, according to Trepp, which tracks CMBS loans.
The TBI tracks the prices that institutional investors, such as pension funds pay or receive when buying or selling commercial properties such as shopping centers, apartment complexes and office towers.
The price index at the third quarter stood at 36.5 percent below its 2007 peak, up from its 39 percent deficit seen last quarter, which now could be the trough and suggests the U.S. commercial property market may have finally found a price bottom.
In addition, the number of transactions rose for the second straight month in the third quarter to 90 from 42 in the second quarter.
"The big news this quarter is not just that the price index increased, but that transaction volume substantially increased for the second quarter in a row, reflecting the first increase in market sentiment in two years," Geltner said.
MIT/CRE also compiles indexes that gauge movements on the demand side and on the supply side of the institutional property market. The demand-side index -- which tracks the changes in prices that potential buyers are willing to pay -- rose to 42 percent below the 2007 peak, up from 48 percent last quarter. It ended eight consecutive declines.
The 12 percent jump was the first increase in the demand index after eight consecutive quarters of decline.
"The demand index can be considered a gauge of market sentiment, at least among the all-important buy-side of the market," Geltner said.
The supply-side index -- which gauges the prices property owners are willing to accept -- continued to fall in the third quarter. It was down by 2.5 percent, to 30 percent below its peak.
"The combination of the upsurge in demand and the continued drop in sellers' prices led to the strong increase in transaction volume and the beginnings of a reliquification of the market," MIT/CRE Research Technician Holly Horrigan said in a statement.
The 4.4 percent third-quarter increase in the MIT Center for Real Estate's transaction-based index (TBI) index is the first positive price change in the index in more than a year and the largest increase since the market downturn began in mid-2007.
"One quarter does not a trend make and we are still well below normal trading volume," David Geltner, director of research at MIT/CRE, said in a statement. "Nevertheless, this is the strongest sign of a bottom that we've had in two years."
The U.S. commercial real estate market has been in a downward spiral for more than two years. Borrowers are facing shortfalls in financings when loans come due. Some borrowers are struggling to meet even monthly payments.
The delinquency rate of U.S. commercial real estate loans securitized into Commercial Mortgage-Backed Securities (CMBS) hit 4.8 percent in October, up from 4.36 the prior month and dwarfing the 0.77 rate of a year earlier, according to Trepp, which tracks CMBS loans.
The TBI tracks the prices that institutional investors, such as pension funds pay or receive when buying or selling commercial properties such as shopping centers, apartment complexes and office towers.
The price index at the third quarter stood at 36.5 percent below its 2007 peak, up from its 39 percent deficit seen last quarter, which now could be the trough and suggests the U.S. commercial property market may have finally found a price bottom.
In addition, the number of transactions rose for the second straight month in the third quarter to 90 from 42 in the second quarter.
"The big news this quarter is not just that the price index increased, but that transaction volume substantially increased for the second quarter in a row, reflecting the first increase in market sentiment in two years," Geltner said.
MIT/CRE also compiles indexes that gauge movements on the demand side and on the supply side of the institutional property market. The demand-side index -- which tracks the changes in prices that potential buyers are willing to pay -- rose to 42 percent below the 2007 peak, up from 48 percent last quarter. It ended eight consecutive declines.
The 12 percent jump was the first increase in the demand index after eight consecutive quarters of decline.
"The demand index can be considered a gauge of market sentiment, at least among the all-important buy-side of the market," Geltner said.
The supply-side index -- which gauges the prices property owners are willing to accept -- continued to fall in the third quarter. It was down by 2.5 percent, to 30 percent below its peak.
"The combination of the upsurge in demand and the continued drop in sellers' prices led to the strong increase in transaction volume and the beginnings of a reliquification of the market," MIT/CRE Research Technician Holly Horrigan said in a statement.
CFA level 2. Let's start the challenge!
Finally I have decided to start preparing for my CFA level 2. I'm glad to do so. The exam date is 6/6/2010. It is very challenging so I must really struggle to make sure i pass it next year.
I hope to become a CFA charterholder. Nothing is going to stop me until I'm successful.
The CFA designation is a mark of distinction that is globally recognized by employers, investment professionals and investors as the definitive standard by which to measure serious investment professionals.
To become a CFA charterholder:
- Become a regular member of CFA Institute (required to get your charter)
I still remember the time i spent on preparing for my CFA level 1. The memory is still very fresh on my mind. I spent 4-6 hours daily for 3 months to prepare for it. It was such as torture for me too.
This time I think I should spend more time on it as CFA level 2 is more challenging.
Ok, let's start the challenge!
GOon
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