Quater 3 2010 review
For the quarter under review, the Group’s turnover was RM184.8 million as compared to RM150.7 million in the 3Q2009, representing an increase of RM34.1 million (22.6%), whilst its pre-tax profit was RM15.3 million compared to RM8.4 million in the 3Q2009, an increase of RM6.9 million (82.1%). This is mainly due to the timber division.
Quarter 3, 2010
Timber
For the current quarter, the Group’s timber division registered a turnover of RM152.0 million, representing an increase of 25.2% or RM30.6 million as compared with RM121.4 million in the 3Q2009. Pre-tax profits increased by 88.5% or RM6.9 million to RM14.7 million when compared to RM7.8 million registered in the 3Q2009.
On a year-to-date (YTD) basis, the timber division registered a turnover of RM458.4 million, representing an increase of 47.0%, as compared to the previous year corresponding period of RM311.9 million. Consequently, the division recorded a net profit of RM20.1 million, an increase of 361.0% when compared with RM7.7 million pre-tax losses registered in the previous corresponding period. This is due to the overall improvement in both volume and average selling prices experienced since the beginning of the year.
On a year-on-year (YOY) basis, average round log prices increased approximately 35.0% compared to prices registered in 3Q2009, with, sales volume up by 21.4%. On a YTD basis, average round log prices are higher by approximately 12.3%, whilst volume increased by 39.6%. The Group’s key export markets for round logs is India (75%), China (10%), Hong Kong (5%), Vietnam (5%) and the remaining 5% exported to Japan, Taiwan and other Asian countries.
As for the Group’s plywood division, sales volume for the quarter in review was up by 13.8% as compared to 3Q2009. Average selling prices were up by 21.0% as compared to 3Q2009. On a YTD basis, average plywood prices were higher by 17.0% and volume up by 43.4%. The Group’s key plywood markets for the quarter in review were Japan (85%), Taiwan (13%) and other Asian countries (2%).
Current Year Prospects
Quarter 3, 2010
Timber
The third quarter 2010 saw further improvement in selling prices for timber products. Japan, a major buyer for tropical hardwood plywood products, expanded her economy again in third quarter 2010. The gross domestic product (GDP) grew at an annualized rate of 0.9 percent, higher than second quarter 2010 of 0.4 percent. The third quarter growth relied heavily on domestic demand (60% of GDP), boosted by a stimulus package for the automotive industry that provided incentives for buyers of low-emission cars. Total housing starts in September 2010, although similar to August 2010, were higher than September 2009. Building permits, year-on-year, were approximately 15% higher. Despite the good results, the Japanese government cautioned that softening overseas demand and continued strong yen may hamper the growth in following months in the absence of further incentives to spur Japan’s local consumption. Capital spending is expected to shrink as orders for Japanese goods slow down as a result of the strong yen which makes Japanese good less competitive overseas. This is evident in September 2010 drop in machinery orders as businesses revise their spending plans.
The abnormal weather condition experienced in the third quarter 2010 coupled with the forth coming monsoon at year end is expected to further hamper log production. As such, the tight log supply situation in Sarawak which started during the second half of 2010 is expected to continue in the following months. Accordingly, despite the uncertainties in the future growth of the Japanese economy, average selling prices for tropical timber products are expected to remain firm.
The Group will conscientiously monitor the tight log supply to its plywood mills to ensure its supply of plywood to its buyers is not materially hampered by the shortages of logs. Despite the log situation, the Group will still continue its focus on the production of high quality plywood products, i.e. floorbase plywood products, and strive to maintain its position as a market leader in the Japanese market.
Notwithstanding the above, the Group will remain cautious as to the prospect of the timber industry given the renewed concerns on the world major economies and calls for further economic aids in Europe.
Monday, November 29, 2010
Wednesday, November 24, 2010
Is the "Fear" Fully Manifested into the World Stock Market ?
For the past 2 weeks (after the end of US election), the world share markets are heading to a correction. All the bad news had since been released to the public to test the "Fear" factor among the investors. KLSE was hit south too after breake through the all time historical high at 1524 and marched through to reach a new high at 1531 on 10Nov10.
Has the bull lossing its' steam or it is it just heading to a temporary retracement before it resumes its much awaited run for the new year to come ?
If the Korean conflict slowly fizzle out which it seems likely judging from how the international media reporting the issues, it looks like the bull will continue to run until CNY and further break new high moving forward.
Has the bull lossing its' steam or it is it just heading to a temporary retracement before it resumes its much awaited run for the new year to come ?
If the Korean conflict slowly fizzle out which it seems likely judging from how the international media reporting the issues, it looks like the bull will continue to run until CNY and further break new high moving forward.
Saturday, November 20, 2010
Malaysia Central Bank Foreign Reserves Up US$500m as at 15Nov10
Malaysia Central Bank ( Bank Negara ) foreign reserves up US$500m to US$105.8b
KUALA LUMPUR: Bank Negara Malaysia’s international reserves as at Nov 15 rose to US$105.8 billion (RM326.5 billion) from US$105.3 billion (RM324.9 billion) on Oct 29 during the period the FBM KUALA LUMPUR COMPOSITE INDEX closed at an all-time historic high of 1,529.01.
“The reserves position is sufficient to finance 8.8 months of retained imports and is 4.5 times the short-term external debt,” it said on Friday, Nov 19.
In ringgit terms, the international reserves rose RM1.6 billion during the two-week period.
The market capitalisation of Bursa Malaysia increased from RM1.204 trillion on Oct 29 to RM1.209 trillion on Nov 15.
During the period, the KLCI surged to a all time high in history to reach 1,531.99 on Nov 9 and market capitalisation increased to RM1.228 trillion.
KUALA LUMPUR: Bank Negara Malaysia’s international reserves as at Nov 15 rose to US$105.8 billion (RM326.5 billion) from US$105.3 billion (RM324.9 billion) on Oct 29 during the period the FBM KUALA LUMPUR COMPOSITE INDEX closed at an all-time historic high of 1,529.01.
“The reserves position is sufficient to finance 8.8 months of retained imports and is 4.5 times the short-term external debt,” it said on Friday, Nov 19.
In ringgit terms, the international reserves rose RM1.6 billion during the two-week period.
The market capitalisation of Bursa Malaysia increased from RM1.204 trillion on Oct 29 to RM1.209 trillion on Nov 15.
During the period, the KLCI surged to a all time high in history to reach 1,531.99 on Nov 9 and market capitalisation increased to RM1.228 trillion.
Thursday, November 18, 2010
GM IPO Prices at $33 a Share, to be listed on NYSE and TSE
The hotly-anticipated initial public offering of General Motors priced at $33 a share Wednesday, landing it at the high end of expectations, which stood at $32-33 a share.
The offering will include 478 million shares of common stock. Including $4 billion of preferred stock and a greenshoe option, the total value of the IPO now stands at $15.8 billion, a record in the United States.
GM's stock will begin trading on the New York Stock Exchange Thursday under the symbol "GM." It will also trade on the Toronto Stock Exchange as "GMM."
Late Tuesday, the size of the IPO was expanded by about 30 percent, it was originally anticipated to price in a $26-29 range.
The higher pricing on the stock IPO represents a step toward recouping a $50 billion U.S. government rescue of the 102-year-old company, which had fallen from blue-chip status to bailout basket case in recent years.
The major stakeholders are the U.S. and Canadian governments and the United Auto Workers healthcare trust.
GM, earned a $4.1 billion net profit in the first nine months of the year and is on track for its first full-year profit since 2004.
The successful completion of the IPO will resulted in U.S. government's stake to drop from 61 to 33 percent.
( source CNBC )
The offering will include 478 million shares of common stock. Including $4 billion of preferred stock and a greenshoe option, the total value of the IPO now stands at $15.8 billion, a record in the United States.
GM's stock will begin trading on the New York Stock Exchange Thursday under the symbol "GM." It will also trade on the Toronto Stock Exchange as "GMM."
Late Tuesday, the size of the IPO was expanded by about 30 percent, it was originally anticipated to price in a $26-29 range.
The higher pricing on the stock IPO represents a step toward recouping a $50 billion U.S. government rescue of the 102-year-old company, which had fallen from blue-chip status to bailout basket case in recent years.
The major stakeholders are the U.S. and Canadian governments and the United Auto Workers healthcare trust.
GM, earned a $4.1 billion net profit in the first nine months of the year and is on track for its first full-year profit since 2004.
The successful completion of the IPO will resulted in U.S. government's stake to drop from 61 to 33 percent.
( source CNBC )
Monday, November 15, 2010
"Wilmar" effect on PPB recent share price dip ?
KUALA LUMPUR:
PPB Group saw its 18.34% owned Wilmar’s net profit for 3QFY10 ended Sept 30 dip by 60.3% to US$259.49 million (RM801.82 million) from US$652.95 million a year ago.
The weakness in the 3Q numbers was primarily due to the loss of US$37.1 million from the oilseed & grains segment against a profit before tax (PBT) of US$145.8 million in 2Q.
The decline in net profit was largely due to weaker performance in its oilseeds and grains segment and the absence of exceptional gain.
In FY09, Wilmar booked in gains from the sales of new shares in Wilmar China.
“Wilmar is the core earnings driver of PPB, contributing to about 75% of the group’s net profit for the past two years,” said an analyst with HwangDBS Vickers Research.
The concerns over lower earnings sparked some selling on PPB Group’s shares yesterday. Its share price was down 4.44% or 86 sen to RM18.50.
Trading at a forward price-to-earnings ratio of 14.61 times, the counter recently rocketed to-record high of RM19.58.
HwangDBS expects the conglomerate to register a net profit of RM2.05 billion for FY10 ending Dec 31, which is an increase of 26% from its actual net profit of RM1.63 billion registered in FY2009.
Another analyst with a foreign stockbroking group echoes this view, saying there was no way the remaining 15% earnings contributors could offset the loss of revenue generated by the world’s largest plantation firm to PPB.
In FY09, Wilmar contributed RM1.21 billion or 74% of PPB’s total net profit of RM1.63 billion. This marks a 35.5% increase in profit contribution to PPB.
Nevertheless, the analyst said PPB’s accumulated earnings could still remain relatively strong on a nine-month quarterly basis mainly due to the sale of its sugar businesses that was completed in January 2010.
PPB made a gain of RM1.17 billion from the sale of its sugar business to Felda Global Ventures Holdings Sdn Bhd.
PPB also sold its 50% stake in Kilang Gula Felda Perlis Sdn Bhd (KGFP) for RM26.31 million and its 5,797ha sugar cane plantation in Chuping, Perlis, for RM45 million.
It is worth noting that revenue generated from PPB Group’s other continuing operations (excluding Wilmar and the sugar businesses) amounting to RM2.01 billion for FY2009 was down 19% from a year earlier.
The decrease was mainly due to lower revenue registered by the flour and feed milling divisions in tandem with the decline in soft commodities in 2009, environmental engineering, chemicals trading and manufacturing divisions. PPB’s other divisions include property investment and development, livestock farming and film exhibition and trading.
For the six months ended June 30, PPB’s revenue of RM1.08 billion was about 4% higher than the RM1.04 billion in the same period a year ago.
The increase was mainly due to higher revenue achieved by the film exhibition and distribution division, and the chemicals trading and manufacturing businesses. Both of these divisions contributed about 17% of PPB’s total revenue.
At the profit before tax level, PPB posted a slight increase for 1HFY10 to RM628.49 million from RM626.08 million a year earlier.
The flour and feed milling division contributed higher profit due to an increase in sales volume and better margins, while film exhibition and distribution generated higher profit arising mainly from increased admissions.
CIMB Research downgraded Willmar’s stock to “neutral” from “outperform” and cut its net profit forecast for FY10 by 14% and FY11-12 forecast by 4% to 5% to account for lower crushing profit margins.
“The lack of assurance is only partially mitigated by improving prospects for its palm-refining margins, plantation earnings (from rising CPO prices) and earnings contributions from Sucrogen,” commented CIMB.
However, OSK Research, which recommends its clients to buy in dip, reckons the earnings contraction is a temporary setback.
“We are not overly concerned given Wilmar’s good track record although the results warrant a cut in our earnings forecast for FY10 to factor in weaker performance in the oilseed and grains segment, but cushioned by stronger CPO price,” said OSK Research in a note yesterday.
( Source : Theedge )
PPB Group saw its 18.34% owned Wilmar’s net profit for 3QFY10 ended Sept 30 dip by 60.3% to US$259.49 million (RM801.82 million) from US$652.95 million a year ago.
The weakness in the 3Q numbers was primarily due to the loss of US$37.1 million from the oilseed & grains segment against a profit before tax (PBT) of US$145.8 million in 2Q.
The decline in net profit was largely due to weaker performance in its oilseeds and grains segment and the absence of exceptional gain.
In FY09, Wilmar booked in gains from the sales of new shares in Wilmar China.
“Wilmar is the core earnings driver of PPB, contributing to about 75% of the group’s net profit for the past two years,” said an analyst with HwangDBS Vickers Research.
The concerns over lower earnings sparked some selling on PPB Group’s shares yesterday. Its share price was down 4.44% or 86 sen to RM18.50.
Trading at a forward price-to-earnings ratio of 14.61 times, the counter recently rocketed to-record high of RM19.58.
HwangDBS expects the conglomerate to register a net profit of RM2.05 billion for FY10 ending Dec 31, which is an increase of 26% from its actual net profit of RM1.63 billion registered in FY2009.
Another analyst with a foreign stockbroking group echoes this view, saying there was no way the remaining 15% earnings contributors could offset the loss of revenue generated by the world’s largest plantation firm to PPB.
In FY09, Wilmar contributed RM1.21 billion or 74% of PPB’s total net profit of RM1.63 billion. This marks a 35.5% increase in profit contribution to PPB.
Nevertheless, the analyst said PPB’s accumulated earnings could still remain relatively strong on a nine-month quarterly basis mainly due to the sale of its sugar businesses that was completed in January 2010.
PPB made a gain of RM1.17 billion from the sale of its sugar business to Felda Global Ventures Holdings Sdn Bhd.
PPB also sold its 50% stake in Kilang Gula Felda Perlis Sdn Bhd (KGFP) for RM26.31 million and its 5,797ha sugar cane plantation in Chuping, Perlis, for RM45 million.
It is worth noting that revenue generated from PPB Group’s other continuing operations (excluding Wilmar and the sugar businesses) amounting to RM2.01 billion for FY2009 was down 19% from a year earlier.
The decrease was mainly due to lower revenue registered by the flour and feed milling divisions in tandem with the decline in soft commodities in 2009, environmental engineering, chemicals trading and manufacturing divisions. PPB’s other divisions include property investment and development, livestock farming and film exhibition and trading.
For the six months ended June 30, PPB’s revenue of RM1.08 billion was about 4% higher than the RM1.04 billion in the same period a year ago.
The increase was mainly due to higher revenue achieved by the film exhibition and distribution division, and the chemicals trading and manufacturing businesses. Both of these divisions contributed about 17% of PPB’s total revenue.
At the profit before tax level, PPB posted a slight increase for 1HFY10 to RM628.49 million from RM626.08 million a year earlier.
The flour and feed milling division contributed higher profit due to an increase in sales volume and better margins, while film exhibition and distribution generated higher profit arising mainly from increased admissions.
CIMB Research downgraded Willmar’s stock to “neutral” from “outperform” and cut its net profit forecast for FY10 by 14% and FY11-12 forecast by 4% to 5% to account for lower crushing profit margins.
“The lack of assurance is only partially mitigated by improving prospects for its palm-refining margins, plantation earnings (from rising CPO prices) and earnings contributions from Sucrogen,” commented CIMB.
However, OSK Research, which recommends its clients to buy in dip, reckons the earnings contraction is a temporary setback.
“We are not overly concerned given Wilmar’s good track record although the results warrant a cut in our earnings forecast for FY10 to factor in weaker performance in the oilseed and grains segment, but cushioned by stronger CPO price,” said OSK Research in a note yesterday.
( Source : Theedge )
Friday, November 12, 2010
Petronas Chemical IPO Over price ?
Nov 12, 2010 4:22 AM GMT+0800
Petronas Chemicals Group Bhd., a unit of Malaysia’s state oil company is offering $4.2 billion in initial public offering.
The shares of Petroliam Nasional Bhd.’s chemical unit may price today at the top end of the offering range of 4.50 ringgit ($1.46) to 5.20 ringgit each in what would be Malaysia’s biggest IPO on record, according to two of the people, who declined to be identified before an announcement is made.
The benchmark FTSE Bursa Malaysia KLCI Index rose 19 percent this year and reached a record on Nov. 10, as international investors purchased more of the nation’s stocks than at any time since at least 1995, according to data compiled by EPFR Global. The IPO values Petronas Chemicals at 38.8 billion ringgit, or 16.3 times profit, a 38 percent premium to the industry median.
Biggest Offering
At the midpoint, the IPO would give government-owned Petronas a 184 percent return on its per-share stake valued at 1.71 ringgit, according to the prospectus and Bloomberg data.
The sale would eclipse the record $3.3 billion IPO from Kuala Lumpur-based Maxis Bhd., Malaysia’s biggest mobile-phone operator, last year and lift the nation’s initial offerings to an all-time high, the data show.
Petronas Chemicals, formed through the combination of more than 20 companies, will offer 2.48 billion shares for a 31 percent stake, the prospectus said. Petronas will get 72 percent of the proceeds, while the chemicals unit plans to use the remainder to build facilities and fund acquisitions.
Petronas Chemicals intends to pay 50 percent of annual earnings as dividends to shareholders, the prospectus said.
Relative Value
Wan Zulkiflee Wan Ariffin, chairman of Petronas Chemicals, said on Nov. 2 the company may invest as much as $1 billion in an ammonia and urea plant in eastern Malaysia that will use the nation’s natural-gas reserves in that area. Malaysia is the world’s second-largest supplier of liquefied natural gas.
Petronas’s holding in Petronas Chemicals was valued at 12.47 billion ringgit, or 1.71 ringgit a share, at the time of the unit’s formation, the prospectus said. The midpoint IPO price would make Kuala Lumpur-based Petronas Chemicals one of Malaysia’s 10 largest publicly traded companies, the data show.
Buyers would be paying about 16.3 times profits, based on the 1.19 billion ringgit the unit earned in the six months ended Sept. 30, the prospectus and data compiled by Bloomberg show. That compares with the median 11.8 times estimated earnings for 31 petrochemical companies globally, which gained an average of 47 percent so far this year.
Honam Petrochemical Corp., the Seoul-based maker of ethylene that is acquiring Malaysia’s Titan Chemicals Corp., trades at 8.1 times estimated profit. The shares have more than doubled in 2010.
Not Cheap
The valuation for Petronas Chemicals reflects a premium of 8.9 percent to shares in Malaysia. The 30 companies in the FTSE Bursa Malaysia KLCI Index trade at an average 14.97 times profit in the next 12 months after the gauge climbed to a record 1,528.01 on Nov. 10.
The stock index exceeded the previous high in January 2008 as investors poured more than $355 million into Malaysian equity funds on a net basis in 2010, data compiled by Cambridge, Massachusetts-based EPFR Global show. Asian IPOs have attracted a record $142 billion this year, Bloomberg data show.
The Employees Provident Fund and Kumpulan Wang Persaraan (Diperbadankan), two of Malaysia’s state-controlled retirement funds that oversee more than $150 billion, will buy 18 percent of the offering as strategic investors, the prospectus said.
Malaysia Marine & Heavy Engineering Holdings Bhd., the Kuala Lumpur-based rig-building arm of Petronas’s MISC Bhd., raised about 2 billion ringgit last month in the nation’s biggest IPO so far this year. Institutions placed orders for 27 times the number of shares they were allocated.
The country’s finance ministry may also divest its holdings in Percetakan Nasional Malaysia Bhd., the state-owned printing company, CTRM Aero Composites Sdn., an aerospace components maker, and two biotechnology companies, Najib said in March.
( Source : Bloomberg )
Petronas Chemicals Group Bhd., a unit of Malaysia’s state oil company is offering $4.2 billion in initial public offering.
The shares of Petroliam Nasional Bhd.’s chemical unit may price today at the top end of the offering range of 4.50 ringgit ($1.46) to 5.20 ringgit each in what would be Malaysia’s biggest IPO on record, according to two of the people, who declined to be identified before an announcement is made.
The benchmark FTSE Bursa Malaysia KLCI Index rose 19 percent this year and reached a record on Nov. 10, as international investors purchased more of the nation’s stocks than at any time since at least 1995, according to data compiled by EPFR Global. The IPO values Petronas Chemicals at 38.8 billion ringgit, or 16.3 times profit, a 38 percent premium to the industry median.
Biggest Offering
At the midpoint, the IPO would give government-owned Petronas a 184 percent return on its per-share stake valued at 1.71 ringgit, according to the prospectus and Bloomberg data.
The sale would eclipse the record $3.3 billion IPO from Kuala Lumpur-based Maxis Bhd., Malaysia’s biggest mobile-phone operator, last year and lift the nation’s initial offerings to an all-time high, the data show.
Petronas Chemicals, formed through the combination of more than 20 companies, will offer 2.48 billion shares for a 31 percent stake, the prospectus said. Petronas will get 72 percent of the proceeds, while the chemicals unit plans to use the remainder to build facilities and fund acquisitions.
Petronas Chemicals intends to pay 50 percent of annual earnings as dividends to shareholders, the prospectus said.
Relative Value
Wan Zulkiflee Wan Ariffin, chairman of Petronas Chemicals, said on Nov. 2 the company may invest as much as $1 billion in an ammonia and urea plant in eastern Malaysia that will use the nation’s natural-gas reserves in that area. Malaysia is the world’s second-largest supplier of liquefied natural gas.
Petronas’s holding in Petronas Chemicals was valued at 12.47 billion ringgit, or 1.71 ringgit a share, at the time of the unit’s formation, the prospectus said. The midpoint IPO price would make Kuala Lumpur-based Petronas Chemicals one of Malaysia’s 10 largest publicly traded companies, the data show.
Buyers would be paying about 16.3 times profits, based on the 1.19 billion ringgit the unit earned in the six months ended Sept. 30, the prospectus and data compiled by Bloomberg show. That compares with the median 11.8 times estimated earnings for 31 petrochemical companies globally, which gained an average of 47 percent so far this year.
Honam Petrochemical Corp., the Seoul-based maker of ethylene that is acquiring Malaysia’s Titan Chemicals Corp., trades at 8.1 times estimated profit. The shares have more than doubled in 2010.
Not Cheap
The valuation for Petronas Chemicals reflects a premium of 8.9 percent to shares in Malaysia. The 30 companies in the FTSE Bursa Malaysia KLCI Index trade at an average 14.97 times profit in the next 12 months after the gauge climbed to a record 1,528.01 on Nov. 10.
The stock index exceeded the previous high in January 2008 as investors poured more than $355 million into Malaysian equity funds on a net basis in 2010, data compiled by Cambridge, Massachusetts-based EPFR Global show. Asian IPOs have attracted a record $142 billion this year, Bloomberg data show.
The Employees Provident Fund and Kumpulan Wang Persaraan (Diperbadankan), two of Malaysia’s state-controlled retirement funds that oversee more than $150 billion, will buy 18 percent of the offering as strategic investors, the prospectus said.
Malaysia Marine & Heavy Engineering Holdings Bhd., the Kuala Lumpur-based rig-building arm of Petronas’s MISC Bhd., raised about 2 billion ringgit last month in the nation’s biggest IPO so far this year. Institutions placed orders for 27 times the number of shares they were allocated.
The country’s finance ministry may also divest its holdings in Percetakan Nasional Malaysia Bhd., the state-owned printing company, CTRM Aero Composites Sdn., an aerospace components maker, and two biotechnology companies, Najib said in March.
( Source : Bloomberg )
Friday, November 5, 2010
Mini Super bull run in the making before Chinese New Year ?
Comparing the circumstances back in 1993 against the current situation.
In the early 1990s, despite slowdown in the global economy, as the third largest economy in South-East Asia, after Indonesia and Thailand, Malaysia was supported by relatively strong macroeconomic fundamentals and resilient financial system. With the real GDP growing at 9.9%, ringgit appreciation, strong export growth and the Government’s measures to hold inflation low at 3.6%, the local stock market became an attractive alternative to foreign investors.
In 1991, Tun Dr Mahathir Mohamad unveiled the philosophy of “Malaysia Incorporated” which was a development strategy for Malaysia to achieve a developed nation by 2020.
Before 1993
Foreign investment in Malaysia was - long-term direct investment in manufacturing sector.
However, massive influx of foreign capital inflow helped fuel the super bull-run in 1993.
Within the year, the market increased by 98% to reach an all-time high of 1,275.3 points and foreign investors’ participation accounted for 15% of total trading value of our local bourse. Lured many retailers into the market
1993
Government planned several mega projects, such as
KL International Airport (RM8bil), Johor-Singapore Second Link (RM1.6bil) and Kuala Lumpur Light Rail Transit (RM1.1bil).
Government planning on privatising its own corporations, such as Petronas, KTM and Pos Malaysia had also driven these counters into prime trading targets.
Besides, the ease of accessing bank credit by investors also contributed to the market rally.
High percentage of loans was channelled to broad property sector as well as the purchase of securities.
1994.
Bank Negara introduced a number of selective capital controls in early 1994 to stabilise the financial system,
2010
Economic Transformation Programme (ETP) with the aim to boost our gross national income (GNI) to US$523bil in 2020 from US$188bil in 2009. GDP growth is anticipated to increase by 6% this year.
September 2010 saw net inflow of foreign funds again in our equity market. Over the past few weeks, the average stock market daily volume had been hovering above one billion shares per day.
According to Andrew Sheng in his book titled From Asian To Global Financial Crisis, there were two main indicators to irrational exuberance during the super bull run in 1993. The first was the amah (domestic maid) syndrome. We need to be careful when amahs got excited about the stock market. This was because they did not know what they were buying and would always be the last to sell. The second indicator was when businessmen began to speculate stocks in the stock market. This was because they might neglect their businesses and use some of their cash for speculation.
Comparing our current market situation with the 1993 bull run, there are certain similarities that we see, such as strong economic growth, ringgit appreciation, inflow of foreign capital and ease of credit.
Local retailer participation may be the last push factor towards the bull run.
( source : The star )
In the early 1990s, despite slowdown in the global economy, as the third largest economy in South-East Asia, after Indonesia and Thailand, Malaysia was supported by relatively strong macroeconomic fundamentals and resilient financial system. With the real GDP growing at 9.9%, ringgit appreciation, strong export growth and the Government’s measures to hold inflation low at 3.6%, the local stock market became an attractive alternative to foreign investors.
In 1991, Tun Dr Mahathir Mohamad unveiled the philosophy of “Malaysia Incorporated” which was a development strategy for Malaysia to achieve a developed nation by 2020.
Before 1993
Foreign investment in Malaysia was - long-term direct investment in manufacturing sector.
However, massive influx of foreign capital inflow helped fuel the super bull-run in 1993.
Within the year, the market increased by 98% to reach an all-time high of 1,275.3 points and foreign investors’ participation accounted for 15% of total trading value of our local bourse. Lured many retailers into the market
1993
Government planned several mega projects, such as
KL International Airport (RM8bil), Johor-Singapore Second Link (RM1.6bil) and Kuala Lumpur Light Rail Transit (RM1.1bil).
Government planning on privatising its own corporations, such as Petronas, KTM and Pos Malaysia had also driven these counters into prime trading targets.
Besides, the ease of accessing bank credit by investors also contributed to the market rally.
High percentage of loans was channelled to broad property sector as well as the purchase of securities.
1994.
Bank Negara introduced a number of selective capital controls in early 1994 to stabilise the financial system,
2010
Economic Transformation Programme (ETP) with the aim to boost our gross national income (GNI) to US$523bil in 2020 from US$188bil in 2009. GDP growth is anticipated to increase by 6% this year.
September 2010 saw net inflow of foreign funds again in our equity market. Over the past few weeks, the average stock market daily volume had been hovering above one billion shares per day.
According to Andrew Sheng in his book titled From Asian To Global Financial Crisis, there were two main indicators to irrational exuberance during the super bull run in 1993. The first was the amah (domestic maid) syndrome. We need to be careful when amahs got excited about the stock market. This was because they did not know what they were buying and would always be the last to sell. The second indicator was when businessmen began to speculate stocks in the stock market. This was because they might neglect their businesses and use some of their cash for speculation.
Comparing our current market situation with the 1993 bull run, there are certain similarities that we see, such as strong economic growth, ringgit appreciation, inflow of foreign capital and ease of credit.
Local retailer participation may be the last push factor towards the bull run.
( source : The star )
Jim Roger on US "Printing Money"
http://www.bloomberg.com/video/63885746/
Oct. 21 (Bloomberg) -- Jim Rogers, chairman of Rogers Holdings, talks about his investment strategy for commodities and the outlook for the Chinese economy. Rogers speaks from Singapore with Andrea Catherwood on Bloomberg Television's "The Pulse." (Source: Bloomberg)
Also he is not favourable to recent US Fed reserves move to "Print more money" to revise the economy
Oct. 21 (Bloomberg) -- Jim Rogers, chairman of Rogers Holdings, talks about his investment strategy for commodities and the outlook for the Chinese economy. Rogers speaks from Singapore with Andrea Catherwood on Bloomberg Television's "The Pulse." (Source: Bloomberg)
Also he is not favourable to recent US Fed reserves move to "Print more money" to revise the economy
Thursday, November 4, 2010
The Biggest Holders of US Government Debt
15. Taiwan
US debt holdings: $130.2 billion
Taiwan's holdings of US debt have fluctuated between $120.5 billion and $152.4 billion over the past year.
To date, Taiwan holds $130.2 billion in Treasury securities, which is only $1.2 billion more than the next highest national debt purchaser, Russia, whose holdings stand at $129 billion.
14. Hong Kong
US debt holdings: $137.8 billion
Hong Kong is one of the world's largest holders of US debt, although in 2010 the region has cut its holdings by approximately $10 billion from January levels.
13. Caribbean Banking Centers
US debt holdings: $159.1 billion
The US Treasury identifies this group as institutions in the Bahamas, Bermuda, the Cayman Islands, Netherlands Antilles, Panama and the British Virgin Islands.
Holdings are currently listed at $159.1 billion, up about $30 billion from a year earlier, but still off the group's high of $213.6 billion in March 2009.
12. Brazil
US debt holdings: $165 billion
The South American economic giant has $165 billion in holdings, according to the Treasury.
Brazil’s investment into US debt has been fluctuating slightly over the past two years, with current holdings testing the high of $170.8 billion hit in Feb 2010.
11. Oil Exporters
US debt holdings: $226.6 billion
Big oil means big money... and big investment into US debt.
Included in the group of oil exporters are Ecuador, Venezuela, Indonesia, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates, Algeria, Gabon, Libya, and Nigeria.
The group combines for a total of $226.6 billion, which is a slight increase from the $190 billion to $220 billion range they have maintained in recent history.
10. Insurance Companies
US debt holdings: $260.6 billion
According to the Federal Reserve Board of Governors, insurance companies hold $260.6 billion in Treasury securities. This group includes property-casualty and life insurance firms.
9. Depository Institutions
US debt holdings: $273.7 billion
As of March 2010 (the most recent numbers currently available), the Federal Reserve Board of Governors lists depository institutions as holding approximately $273.7 billion in US debt.
This group includes commercial banks, savings banks and credit unions and has nearly tripled from Q4 2008, when holdings stood at $105 billion.
8. United Kingdom
US debt holdings: $448.4 billion
Britain currently holds $448.4 billion in US debt. The country has been ramping up its debt in 2010, rising from $218.8 billion in January to $448.4 billion in the most recent numbers, which have them doubling in an 8 month span.
7. State and Local Governments
US debt holdings: $534.7 billion
US state and local governments have over a half-trillion dollars invested in American debt, according to the Federal Reserve.
The level of investment has remained very stable over the past three years, moving within the range of $534.7 billion and $550.3 billion from 2006 to 2009, and although the amount has been increasing, the total value of holdings are off the highs.
However, this number does not include an additional $181.6 billion of holdings of treasury notes in state and local government pension funds.
6. Pension Funds
US debt holdings: $643.8 billion
Pension funds control large amounts of money, reserved for personal retirements, and thus are obligated to make relatively safe investments.
This group includes both private and local government pension funds, totaling $643.8 billion. The private pension fund category also includes US Treasury securities held by the Federal Employees Retirement System Thrift Savings Plan "G Fund."
5. Mutual Funds
US debt holdings: $648.6 billion
According to the Federal Reserve, mutual funds hold the fifth largest amount of US debt compared to any other group, although mutual fund holdings have diminished by nearly $120 billion since December 2008.
Including money market funds, mutual funds and closed-end funds, this group of investments manages approximately $648.6 billion of US Treasury securities as of March 2010, which are the most recent numbers available.
4. Japan
US debt holdings: $836.6 billion
A major US trade partner, Japan holds a huge amount of American debt, and has traditionally been one of the US's largest debt holders, currently owning $836.6 billion of treasury securities.
3. China
US debt holdings: $868.4 billion
The largest foreign holder of US Treasury securities, China currently holds $868.4 billion in American debt, although it is off the all time highs of $900.2 billion in April 2010.
2. Other Investors/Savings Bonds
US debt holdings $1.266 trillion
With the most recent numbers from June 2010, this extremely diverse group includes individuals, government-sponsored enterprises, brokers and dealers, bank personal trusts, estates, savings bonds, corporate and non-corporate businesses for a total of $1.266 trillion.
Although the level of debt held in U.S. savings bonds has remained relatively constant since 2000, the broad category of "Other" investors has nearly quadrupled since reaching a four-year low in September 2007
1. Federal Reserve and Intragovernmental Holdings
US debt holdings: $5.345 trillion
That’s right, the biggest holder of US government debt is actually within the United States. The Federal Reserve system of banks and other US intragovernmental holdings account for a stunning $5.345 trillion in US Treasury debt. This is the most recent number available (June 2010), and marks an all-time high.
About a decade ago, the total government holdings were "only" $2.5 trillion.
US debt holdings: $130.2 billion
Taiwan's holdings of US debt have fluctuated between $120.5 billion and $152.4 billion over the past year.
To date, Taiwan holds $130.2 billion in Treasury securities, which is only $1.2 billion more than the next highest national debt purchaser, Russia, whose holdings stand at $129 billion.
14. Hong Kong
US debt holdings: $137.8 billion
Hong Kong is one of the world's largest holders of US debt, although in 2010 the region has cut its holdings by approximately $10 billion from January levels.
13. Caribbean Banking Centers
US debt holdings: $159.1 billion
The US Treasury identifies this group as institutions in the Bahamas, Bermuda, the Cayman Islands, Netherlands Antilles, Panama and the British Virgin Islands.
Holdings are currently listed at $159.1 billion, up about $30 billion from a year earlier, but still off the group's high of $213.6 billion in March 2009.
12. Brazil
US debt holdings: $165 billion
The South American economic giant has $165 billion in holdings, according to the Treasury.
Brazil’s investment into US debt has been fluctuating slightly over the past two years, with current holdings testing the high of $170.8 billion hit in Feb 2010.
11. Oil Exporters
US debt holdings: $226.6 billion
Big oil means big money... and big investment into US debt.
Included in the group of oil exporters are Ecuador, Venezuela, Indonesia, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates, Algeria, Gabon, Libya, and Nigeria.
The group combines for a total of $226.6 billion, which is a slight increase from the $190 billion to $220 billion range they have maintained in recent history.
10. Insurance Companies
US debt holdings: $260.6 billion
According to the Federal Reserve Board of Governors, insurance companies hold $260.6 billion in Treasury securities. This group includes property-casualty and life insurance firms.
9. Depository Institutions
US debt holdings: $273.7 billion
As of March 2010 (the most recent numbers currently available), the Federal Reserve Board of Governors lists depository institutions as holding approximately $273.7 billion in US debt.
This group includes commercial banks, savings banks and credit unions and has nearly tripled from Q4 2008, when holdings stood at $105 billion.
8. United Kingdom
US debt holdings: $448.4 billion
Britain currently holds $448.4 billion in US debt. The country has been ramping up its debt in 2010, rising from $218.8 billion in January to $448.4 billion in the most recent numbers, which have them doubling in an 8 month span.
7. State and Local Governments
US debt holdings: $534.7 billion
US state and local governments have over a half-trillion dollars invested in American debt, according to the Federal Reserve.
The level of investment has remained very stable over the past three years, moving within the range of $534.7 billion and $550.3 billion from 2006 to 2009, and although the amount has been increasing, the total value of holdings are off the highs.
However, this number does not include an additional $181.6 billion of holdings of treasury notes in state and local government pension funds.
6. Pension Funds
US debt holdings: $643.8 billion
Pension funds control large amounts of money, reserved for personal retirements, and thus are obligated to make relatively safe investments.
This group includes both private and local government pension funds, totaling $643.8 billion. The private pension fund category also includes US Treasury securities held by the Federal Employees Retirement System Thrift Savings Plan "G Fund."
5. Mutual Funds
US debt holdings: $648.6 billion
According to the Federal Reserve, mutual funds hold the fifth largest amount of US debt compared to any other group, although mutual fund holdings have diminished by nearly $120 billion since December 2008.
Including money market funds, mutual funds and closed-end funds, this group of investments manages approximately $648.6 billion of US Treasury securities as of March 2010, which are the most recent numbers available.
4. Japan
US debt holdings: $836.6 billion
A major US trade partner, Japan holds a huge amount of American debt, and has traditionally been one of the US's largest debt holders, currently owning $836.6 billion of treasury securities.
3. China
US debt holdings: $868.4 billion
The largest foreign holder of US Treasury securities, China currently holds $868.4 billion in American debt, although it is off the all time highs of $900.2 billion in April 2010.
2. Other Investors/Savings Bonds
US debt holdings $1.266 trillion
With the most recent numbers from June 2010, this extremely diverse group includes individuals, government-sponsored enterprises, brokers and dealers, bank personal trusts, estates, savings bonds, corporate and non-corporate businesses for a total of $1.266 trillion.
Although the level of debt held in U.S. savings bonds has remained relatively constant since 2000, the broad category of "Other" investors has nearly quadrupled since reaching a four-year low in September 2007
1. Federal Reserve and Intragovernmental Holdings
US debt holdings: $5.345 trillion
That’s right, the biggest holder of US government debt is actually within the United States. The Federal Reserve system of banks and other US intragovernmental holdings account for a stunning $5.345 trillion in US Treasury debt. This is the most recent number available (June 2010), and marks an all-time high.
About a decade ago, the total government holdings were "only" $2.5 trillion.
The impact on US Fed latest move on world economy
The Federal Reserve launched a fresh effort on Wednesday to support the struggling U.S. economy, committing to buy $600 billion in government bonds with new money.
1) US dollar will be weaken and hence increase capital inflows into Latin America and Asia especially China, causing hot money to boom in those countries especially in those respective stock market.
2) It will put pressure on the dollar to weaken, thus pushing up global commodity prices, including oil. So it will increase imported inflation pressure in some countries, including China
What the Fed's $600 Billion Plan Really Means
Why is the Federal Reserve buying bonds?
It wants to lower interest rates, in the hopes that doing so will loosen the supply of credit and spur more economic activity. The central bank’s main tool for reducing rates is to slash the short-term overnight lending that banks charge to one another, the so-called Federal Funds rate. Bring short-term rates down, and long-term rates tend to follow. In normal times, that’s as far as the Fed usually goes. In the past three years, the Fed has reduced the Fed Funds target rate 10 times, from 5.25 percent to between zero and .25 percent. It’s been at that extremely low level since the fall of 2008.
Once the Fed Funds rate can’t get any lower, what else can the Fed do?
It can buy assets, or engage in what’s known as quantitative easing (QE). Adjusting the Fed Funds directly influences short-term rates. The Fed can also influence long-term rates by purchasing (or selling) long-term debt in the open market. When lots of people -- or one big buyer -- buy bonds at the same time, it drives prices up and interest rates down. As the nation’s central bank, the Fed can create money and simply announce that it will buy large quantities of bonds.
Hasn’t it done something like that already?
Yes. In its first effort at quantitative easing, the Fed in 2009 and early 2010 bought more than $1 trillion in mortgage-backed securities in an effort to reduce interest rates on home mortgages. Partially in response to the purchases, mortgage rates fell to historically low levels.
So what is it doing now?
This is a smaller effort. The Fed says that, as part of an effort to lower interest rates, it will buy $600 billion of Treasury bonds between now and the end of June 2011, at a rate of about $75 billion per month. (The New York Fed has the details of the purchases here.)
But the market reacted at first by pushing interest rates on the 10-year and 30-year government bonds higher. What gives?
The Fed said it would focus its buying power on bonds that mature in four to six years,
with more than 85 percent of the purchases concentrated in bonds that mature between 2.5 and 10 years from now. Investors were expecting that the Fed might spend more on longer-dated Treasury securities, and sold them once they learned of the Fed’s plans.
Will these purchases alone guarantee that interest rates will fall?
No. Investors love to repeat the mantra: Don’t fight the Fed. But as much firepower as the central bank possesses, the Fed isn’t the only powerful economic force in the world. And interest rates can be impacted by all sorts of factors. If China’s central bank cuts back sharply on its purchases of U.S. government bonds, interest rates will rise. Investors’ attitudes about the pace of growth, or inflation, play an important role in determining market interest rates.
Whom is this good for?
In theory, it should be good news for borrowers of all types, but in particular corporate ones. If mid-term borrowing costs fall across the board, more companies should be able to refinance existing debt at lower levels, or take on new debt at lower cost. In theory, lower rates for big borrowers (i.e. banks) should mean credit will be more plentiful, or available on easier terms to businesses and individuals. And of course, any move the Fed makes to reduce interest rates tends to be a positive for stocks.
Whom is this bad for?
Savers. In this low-interest-rate environment, people who live on fixed incomes have had great difficulty finding safe instruments that deliver significant returns. To the extent this effort succeeds at holding longer-term interest down, it makes that task all the more difficult.
Government bonds are risk-free investments. What are the risks the Fed runs by taking more government bonds onto its balance sheet?
There are a couple of risks. First, low interest rates and the expansion of the Fed’s balance sheet tend to weaken the dollar. But the second -- and larger -- risk is that it won’t work. Interest rates are already exceedingly low, and it’s unclear how lowering them a bit more will induce companies and individuals to change their behavior significantly. Quantitative easing doesn’t directly address the underlying problem in the economy: that demand is too weak to fuel satisfactory growth. To combat weak demand, fiscal policy -- e.g., tax cuts, rebates, a payroll tax holiday, jobs program -- is often more effective than monetary policy. But fiscal policy remains paralyzed. Ideally, fiscal and monetary policy should be working in tandem. In the current situation, Bernanke is cranking up the volume while the political system is sitting on its hands. Imagine a two-engine jet trying to fly with only one engine revving.
( Courtecy of Yahoo Finance )
1) US dollar will be weaken and hence increase capital inflows into Latin America and Asia especially China, causing hot money to boom in those countries especially in those respective stock market.
2) It will put pressure on the dollar to weaken, thus pushing up global commodity prices, including oil. So it will increase imported inflation pressure in some countries, including China
What the Fed's $600 Billion Plan Really Means
Why is the Federal Reserve buying bonds?
It wants to lower interest rates, in the hopes that doing so will loosen the supply of credit and spur more economic activity. The central bank’s main tool for reducing rates is to slash the short-term overnight lending that banks charge to one another, the so-called Federal Funds rate. Bring short-term rates down, and long-term rates tend to follow. In normal times, that’s as far as the Fed usually goes. In the past three years, the Fed has reduced the Fed Funds target rate 10 times, from 5.25 percent to between zero and .25 percent. It’s been at that extremely low level since the fall of 2008.
Once the Fed Funds rate can’t get any lower, what else can the Fed do?
It can buy assets, or engage in what’s known as quantitative easing (QE). Adjusting the Fed Funds directly influences short-term rates. The Fed can also influence long-term rates by purchasing (or selling) long-term debt in the open market. When lots of people -- or one big buyer -- buy bonds at the same time, it drives prices up and interest rates down. As the nation’s central bank, the Fed can create money and simply announce that it will buy large quantities of bonds.
Hasn’t it done something like that already?
Yes. In its first effort at quantitative easing, the Fed in 2009 and early 2010 bought more than $1 trillion in mortgage-backed securities in an effort to reduce interest rates on home mortgages. Partially in response to the purchases, mortgage rates fell to historically low levels.
So what is it doing now?
This is a smaller effort. The Fed says that, as part of an effort to lower interest rates, it will buy $600 billion of Treasury bonds between now and the end of June 2011, at a rate of about $75 billion per month. (The New York Fed has the details of the purchases here.)
But the market reacted at first by pushing interest rates on the 10-year and 30-year government bonds higher. What gives?
The Fed said it would focus its buying power on bonds that mature in four to six years,
with more than 85 percent of the purchases concentrated in bonds that mature between 2.5 and 10 years from now. Investors were expecting that the Fed might spend more on longer-dated Treasury securities, and sold them once they learned of the Fed’s plans.
Will these purchases alone guarantee that interest rates will fall?
No. Investors love to repeat the mantra: Don’t fight the Fed. But as much firepower as the central bank possesses, the Fed isn’t the only powerful economic force in the world. And interest rates can be impacted by all sorts of factors. If China’s central bank cuts back sharply on its purchases of U.S. government bonds, interest rates will rise. Investors’ attitudes about the pace of growth, or inflation, play an important role in determining market interest rates.
Whom is this good for?
In theory, it should be good news for borrowers of all types, but in particular corporate ones. If mid-term borrowing costs fall across the board, more companies should be able to refinance existing debt at lower levels, or take on new debt at lower cost. In theory, lower rates for big borrowers (i.e. banks) should mean credit will be more plentiful, or available on easier terms to businesses and individuals. And of course, any move the Fed makes to reduce interest rates tends to be a positive for stocks.
Whom is this bad for?
Savers. In this low-interest-rate environment, people who live on fixed incomes have had great difficulty finding safe instruments that deliver significant returns. To the extent this effort succeeds at holding longer-term interest down, it makes that task all the more difficult.
Government bonds are risk-free investments. What are the risks the Fed runs by taking more government bonds onto its balance sheet?
There are a couple of risks. First, low interest rates and the expansion of the Fed’s balance sheet tend to weaken the dollar. But the second -- and larger -- risk is that it won’t work. Interest rates are already exceedingly low, and it’s unclear how lowering them a bit more will induce companies and individuals to change their behavior significantly. Quantitative easing doesn’t directly address the underlying problem in the economy: that demand is too weak to fuel satisfactory growth. To combat weak demand, fiscal policy -- e.g., tax cuts, rebates, a payroll tax holiday, jobs program -- is often more effective than monetary policy. But fiscal policy remains paralyzed. Ideally, fiscal and monetary policy should be working in tandem. In the current situation, Bernanke is cranking up the volume while the political system is sitting on its hands. Imagine a two-engine jet trying to fly with only one engine revving.
( Courtecy of Yahoo Finance )
Monday, November 1, 2010
Timber stock on the run ..... WTK !
WTK ... a pure timber related stock with major export to India and Japan, rebounded from its recent low after 1 US fund sold off its share holding to below 5%. WTK share price was badly cap as a result of such selldown.
If this breakout is real, the share price will shoot pass its recent high at 1.53 and thereafter headed north all the way to 2.70, giving a return of more than 100% in less than a year ...lets put our finger cross amist the world economy uncertainty ....check mate ?!
If this breakout is real, the share price will shoot pass its recent high at 1.53 and thereafter headed north all the way to 2.70, giving a return of more than 100% in less than a year ...lets put our finger cross amist the world economy uncertainty ....check mate ?!
Jaya Jusco over the top ?
AEON Bhd, the listed entity that hold Jaya Jusco brand of super and hyper market in Malaysia, saw its share price peak at all time high, 6.08. According to grapevine, this is related to the bid to take over Carrefour Operation in Malaysia, Thailand and Singapore. However, after reaching its peak at 6.08, it is down down all the way. It had fell through its MA 50. Will it continue to dip further or a rebounce is around the corner ?
Time to pause and monitor ....
Time to pause and monitor ....
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