I Wonder Why

These pictures tells us the stories behind certain occurrences.Thought you may want to know why.

A Sober Prediction of Malaysian Competitiveness

Growing Pains

Putrajaya’s one-party policy and its 40-year-old pro-Malay affirmative action program will spell trouble for the country’s economy, effectively turning Malaysia into the weakest link in Asia, a Bloomberg columnist said today.

Citing Putrajaya’s poor handling of opposition politicians and the search for MH370, William Pesek said Malaysia will continue to don headlines for all the wrong reasons if Putrajaya continues to be complacent in economic matters.

“Its 40-year-old, pro-Malay affirmative-action program chips away at the country's competitiveness more and more each passing year.

Quota System and a Unruly Taximen Protest

“The scheme, which disenfranchises Malaysia's Chinese and Indian minorities, is a productivity and innovation killer. It also has a corrupting influence on the political and business culture,” Pesek said.

Pesek based his observations on a new report from Sarah Fowler of UK-based Oxford Economics, which ranks Malaysia the "riskiest country in Asia of those we consider," more so than India, Indonesia and even coup-ridden Thailand.

In the report, Fowler said: “Prompted by its high levels of public debt, rising external debt and shrinking current account surplus, there has been a shift in the perception of risks towards Malaysia and away from Indonesia”

Pesek added that current-account surplus is dwindling, from 16 percent of GDP in 2008 to 3.7% last year, while household debt, according to Fowler, is "worryingly high" at more than 80% of GDP compared to less than 60% in 2008.

Fowler’s also wrote that Putrajaya’s “climate of entitlement amongst the Malay community limits entrepreneurialism and vested interests within the UMNO still resist change.”

Pesek said that the only thing holding Malaysia back is its insular political culture.

“The government's handling of Malaysia Airlines flight 370 said it all. Its deer-in-the-headlights response to the plane's disappearance was the product of an insular political culture.

“The trouble is, that insularity is holding back a resource-rich economy that should be among Asia's superstars, not its weakest links.” – June 5, 2014.

The Fall and Rise of YTL Corp

An Observable  W Wave Pattern

Having plunged from a strong 1.76 level to a low of RM1.61 because it was taken out of the Syariah Compliant List, YTL started moving northwards in a vibrant manner. It hit RM 1.71 before closing for a 9 sen gain at RM 1.70.

What can one deduct from this price resuscitation?

Adding Revaluation Value to YTL Corp

Is it a treasury buy-in that has caused new 'blood' of interest to course through the price trajectory artery of YTL Corp?

Maybe so, as a defensive reaction.

But I thing it is more that that this time around.

May be it was a re-rating perspective scenario brought about by an article from CIMB.

From the business pages, it can be read that CIMB Research has upgraded YTL Corp to Add from Hold, with the target price revised upwards to RM 2.42 per share from RM 1.94 based on a revaluation of the company’s cement business to better reflect its position as a key growth catalyst.

For the down-cast investor of YTL Corp who has yet to see the revival of YTL Corp to beyond RM 2.00 for a long, long time, this new development of YTL  Cement's revaluation is manna from heaven!

This research house has also upgraded earnings per share forecasts by 6% to 8% after factoring in construction earnings from the recent Track 4A concession to a consortium led by YTL Power. This was another good news for investors of both YTL Corp and YTL Power International.

According to CIMB Research, after many years of global expansion, YTL Corp has shifted focus back to the home front to reap the value of its investments across the infrastructure cycle, spurred by the current Economic Transformation Programme.

“Our recent meetings with management underscored the theme of YTL Corp shifting its focus from growth-via-acquisition abroad to growth-via-execution at home,” it said.

It added that “construction is poised to be a new powerful earnings catalyst” for the company. This has been kicked off with the recent RM 6 billion Track 4A independent power plant award, and that its order-book could very well swell further with the possible RM 8 billion express rail link (ERL) extension to Malacca and the RM 30 billion high-speed rail project to Singapore.

CIMB Research said YTL Corp’s valuations, at 10.3 times financial year ending June 30, 2015 price-to-earnings, were among the cheapest among regional conglomerates.

Brave Brinkmanship

That indeed is a sign of relief for tired YTL Corp shareholders!