Japan: Rising Sun Again?

This is an latest indicative report on the state of the Japanese economy.

Reuters reported today that Japan’s economy grew at the fastest pace in more than two years in the third quarter as stimulus lifted consumer spending and capital spending rose. However,analysts cautioned that growth will slow as falling wages reduce the lure of subsidies on cars and electronics.

Most economists say there is little chance of Japan’s economy, which extended its rebound to a second quarter, returning to recession as stimulus spending overseas should be enough to support a gradual rise in demand for Japanese exports.

The outlook for domestic demand is less encouraging because even though subsidies and tax breaks enacted by the previous government will remain in place until next year, an expected fall in year-end bonuses and a soft labour market mean households will have less to spend. This also means corporate spending will struggle to accelerate.

Japan’s economy grew 1.2 per cent in July-September from the previous quarter, faster than the median estimate for 0.7 per cent growth. It was the largest gain in gross domestic product (GDP) since a 1.4 per cent rise in January-March 2007 and compares with a revised 0.7 per cent expansion in April-June, which was the first growth in five quarters.

“With weakness ahead in private consumption or public spending, a slowdown is unavoidable in the January-March and April-June quarters,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo.

“The one bright spot is that capital spending turned positive. However, while this signals that capital spending is starting to rise from the bottom, the size is still not enough to promise the kind of speed that would be required to prevent a slowdown in the first half of 2010.”

The new Democratic Party-led government’s measures to support households will eventually help, but they may not make an impact until the second half of next year, economists say.

The Democrats are already mulling an extra budget to support growth, but Japan’s large debt burden means options are limited. Should other signs of weakness in the economy emerge, that could open the Bank of Japan (BOJ) to government pressure to ensure monetary policy and corporate funding measures remain supportive of growth.

National Strategy Minister Naoto Kan said that the economy remained severe despite the pick-up in GDP and that he saw signs Japan was entering deflation. He said the government wanted to work closely with the BOJ to avoid deflation from deepening.

“The economy is expected to continue to recover as overseas economies improve,” Kan told reporters after the GDP data were released.

“At the same time, the employment situation remains very bad and downside risks exist in overseas economies.”

Kan, who has previously said an extra budget may total ¥2.7 trillion yen (RM101 billion), also said today that the better-than-expected GDP data wouldn’t lead to a smaller budget.

December 10-year JGB futures eased to 138.74 after the GDP data, but later reversed course and climbed to 138.93 on concern that the economic growth will lose traction.

The yen held steady at about 89.60 per dollar but slipped about 10 ticks to 134.05 per euro.

The GDP figure translates into an annualised rise of 4.8 per cent, bigger than a 2.9 per cent expansion expected by economists. That follows 2.7 per cent growth in April-June and a 12.2 per cent contraction in January-March.

Private consumption rose 0.7 per cent, better than a forecast for a 0.5 per cent rise but slower than a 1.0 per cent increase in the previous quarter.

Domestic demand contributed 0.8 percentage point to growth, the first positive contribution in six quarters.


In an ominous sign for the manufacturing cycle, inventories of goods started to increase, contributing 0.4 percentage point to growth in July-September, the first positive contribution since October-December 2008.

“Companies have been increasing production for about a year now, and inventories are likely to start piling up toward year-end and around the Chinese New Year,” said Yasuo Yamamoto, senior economist at Mizuho Research Institute in Tokyo.

“This could lead to a slowdown in Japanese production and Japanese growth in April-June 2010.”

The domestic demand deflator fell 2.6 per cent in the third quarter from a year earlier, the largest drop in 51 years.

Capital expenditure rose 1.6 per cent, the first gain in six quarters and faster than a 0.1 per cent increase forecast by economists.

External demand contributed 0.4 percentage point, much slower than the 1.5 percentage point contribution in the previous quarter.

Economists polled by Reuters expect Japan’s GDP to grow 0.3 per cent in October-December and then slow to 0.1 per cent growth in January-March 2010.

It's still early dawn but the sun will rise over Japan,albeit slowly.

Playboy:Hefner's Baby Goes on Sale!

This is a very important milestone for mankind. Hugh Hefner has decided to relinquish control over the iconic Playboy magazine. So, what directions it will now take post Hefner is anyone's guess. How raunchy can it really get with internet pornography running wild real-time for free!

Let us read this Reuters news feature article circa 14 November 2009.

Playboy founder Hugh Hefner changed American pop culture, one centerfold at a time.

With his Playboy Enterprises Inc in talks to be sold for about US$300 million (RM1.014 billion) , the 83 year-old Hefner will be giving up control over the iconic adult entertainment empire he founded that was instrumental in shaping society’s opinions on nudity, sex and free speech.

With US$600, Hefner in 1953 published the first Playboy magazine with a partially nude photo of Marilyn Monroe at its center. The magazine would become not only one of the most successful publications ever, but also a brand that led many Americans to think about sex in a more carefree way.

“Hef” turned Playboy and its bunny head logo into a symbol for a lifestyle he embodied as bachelor extraordinaire, living in a mansion surrounded by wealth and beautiful women.

“This guy was one of the major players in the transformation of American culture in the second half of the 20th century and not just because he had a magazine with naked women in it,” said Robert Thompson, a professor of pop culture at Syracuse University.

In 1972, Playboy had a worldwide circulation of 7 million, but that has been in decline ever since, as the liberalization of sexual attitudes Hefner promoted became more mainstream — and more competitive.

But even as it grew ever more popular, the magazine created rivals such as Penthouse and Hustler. In the 1980s, adult videos grew into a major business and by the late 1990s, the rise of the Internet and free pornography on the Web became Playboy’s greatest rival for an audience.

Hefner remains in the limelight today, showing up at media events with numerous girlfriends by his side. He enjoyed a role in reality television show “The Girls Next Door” on cable network E! and his dating life and break-up with model Holly Madison made him a staple of celebrity magazines.

Hefner has said that growing up during the depression he always looked back wistfully to the 1920s age of flappers as an era of freedom he had missed.

He has described himself as having liberated America from its Puritan past and experts agree he did make sexual images and content more acceptable to Americans.

But Playboy magazine also showed men how to enjoy stylish clothing, good liquor, sports cars and other luxuries, and became a standard bearer for that lifestyle — real or imagined.

“All that kind of stuff just piled up issue after issue — promoting that idea of consumer abundance as being synonymous with the good life in this country — and Hefner is very important in promoting that idea,” said Steven Watts, author of “Mr. Playboy: Hugh Hefner and the American Dream.”

But as Playboy’s fortunes waned, some of the symbols of wealth that surrounded Hefner became harder for him to hang on to.

In the early 1980s, he had to give up a private jet plane with a bedroom, a miniature disco and a kitchen, Watts said.

Through the decades and despite the loss of business, Hefner continued to live the good life and made sure everyone knew it.

“Hefner really tries to completely disengage the notion of guilt and sin from having a good time and, the last couple of generations, that has pretty much prevailed,” said Thompson, the Syracuse professor. “Certainly, when I talk to my students, I don’t get a sense they’re feeling guilty about the good deal of fun they’re having.”

Rare Pure Moments!

Yes, these are rare sights.Truly wonderful pictures! Only those opportune with a handy camera ready to shoot can catch these moments. Do you agree?

Bursa KL: Momentum Maneuver

Some doyens of the stock markets said that it is very difficult to play in the Malaysian stock market.


Reason given:no momentum.

Bursa KL used to be flushed with funds when the foreigners were playing here in droves. After suffering huge losses because of the sub-prime debacle on Wall Street, a lot of these funds went back to stave off the hemorrhaging at home. So, less than 30% of the dabbling daily comes from foreigners. The rest are from our handful of institutional buyers and some picky retail players.
Retail players are generally weak. They play by the day. Once some counters show momentum, they buy into it and await. If they make profit on that day, they liquidate. If not, they timed themselves with the hope that the counter will run. We have seen in the past 10 days such movements. Time Engineering,Red-tone,YTL-E Solutions, Ramunia and A3 galloped away. After a lull, they are becoming hot again.Some are cantering well with heavy volume particularly Time Engineering. Expect action and fun next week if Wall Street is generous.


The other counters which will likely gallop away in the near future are JAKS, KPS,KHSB,RCE and MRCB. Watch for volume as they build strong shoulders to spring off!

The Tiger Roars Again!

Malayan Banking (Maybank), the country’s biggest lender reported its first-quarter,showing net profit has risen more than half as the rebound in Asian economies boosted fee-based income and its loan book.

Maybank, with a staggering market value of US$14 billion (RM47.6 billion), posted July-September net profit of RM881.8 million compared with RM572.2 million a year ago.

The earnings were higher than the average forecast of RM720 million by four analysts surveyed by Reuters.

The lender, 65 per cent owned by government-controlled agencies, has launched an ambitious restructuring plan this year to win a place among the top five banks in Southeast Asia following a series of expensive acquisitions in 2008.

Maybank shares have gained 50 per cent this year, outperforming the 46 per cent rise in the broader market index, but lagging the more than 100 per cent gain by Malaysia’s top wheeler dealer,CIMB.

Can the tiger's roar be heard loud and clear again in the financial jungles? Can it beat down the politically-connected CIMB?

We will let them each to tell us their stories in due time.

China in the Driver's Seat

The continuing rise of China will help drive economic growth and development in Asia in the long term, according to David Ng, an economic analyst at HwangDBS Investment Management Bhd

He is confident that a sustainable economic recovery will take place in Asia (excluding Japan), mainly with China as its driving force.

“We also foresee that plenty of Asian-themed investment products will be made available to the public which we believe will feature strong upside stories,” he said in a statement today.

Ng said a new pecking order has emerging as a result of the financial crisis, adding that “we are picking up more positive signs that point to a definite recovery such as the narrowing of corporate spreads, a turnaround in the global diffusion index and higher equity valuations or price to earnings ratios”.

According to him, the current global economy is still relatively fragile and economic growth is expected to remain below its potential for a few more quarters before making its full recovery.

Ng said HwangDBS IM is bullish on the Asian markets, adding that growth signals pointed to Asia as the most economically dynamic region in the world.

“China is at the front and is seen to be aggressive in its approach to stimulating local growth and consumption. Increased lending by banks, higher real wages, a booming middle class and growing individual wealth will inevitably lead to higher disposable income and consumption,” he said.

Ng said in the near future, companies in Asia would be able to generate more income and over the long-term be considered lucrative stocks to hold as dividends become a big part of the total returns.

“We have identified a few multi-year investment themes that will drive long-term growth such as China’s economic growth, the burgeoning global middle class, ageing and changing population trends,” he said.

“China is certainly our favourite pick. Its enormous government stimulus spending of more than US$586 billion (RM1.9 trillion) and aggressive re-leveraging will prompt a rise in local asset prices.”

Ng also advised investors to exercise extra vigilance in choosing suitable products for themselves.

“Economic cycles are getting shorter and the pendulum swings both ways,” he said.

“Simple investment basics works in any economic environment. In today’s environment, investors should slowly average in the market and exercise discipline once investment goals are met.”

Good advice, I think.

Maximizing Maxis?

Yeoh Pooi Ling reporting in The STAR today recorded some analysts as saying that the final price at RM4.75 of the IPO is below expectation.

Maxis Bhd has now set the price of its initial public offering (IPO) shares at RM4.75 each while institutional and cornerstone tranches are at RM5 per share, which will collectively raise about RM11.2bil from the listing of 2.25 billion shares on Bursa Malaysia.

The market capitalisation at the institutional price and its enterprise value would amount to RM37.5bil and RM42.5bil respectively, said Maxis after the close of its book-building exercise yesterday.

The institutional offering book, excluding the offering to cornerstone investors and approved bumiputera investors, was 3.7 times covered or equivalent to RM19.3bil, comprising some 500 global investors.


The IPO attracted orders of over RM26.5bil via its various tranches, with strong demand from international and Malaysian investors.

Foreign interest came from leading institutional investors familiar with Malaysia, 10 institutional investors new to Malaysia with orders of RM1.3bil in Maxis shares, as well as sovereign wealth funds, it said.

The institutional offering will raise RM5.3bil, of which over US$800mil will be from foreign investors. The bumiputra investors and cornerstone tranches attracted RM5.2bil for one billion shares.

Cornerstone investors have agreed to hold their shares for six months from the listing date and would in return obtain a preferential allocation for the IPO.

These investors include the Employees Provident Fund, Fidelity Funds-Malaysia Fund, Kumpulan Wang Persaraan (Diperbadankan) and Permodalan Nasional Bhd.

The retail offering of 212.3 million shares was oversubscribed by 180% for 381.2 million shares worth RM2bil.

UOB Kay Hian (M) Holdings Sdn Bhd head of research Vincent Khoo said the final prices were below expectation, as “it was widely expected that the institutional price would be at RM5.20 per share.”

“At RM5 per share, there is a modest upside upon listing as most estimated valuations would not be more than RM5.50,” he told StarBiz.

OSK Investment Bank, in a report, said the final price, at the lower end of the indicative range of RM4.80 to RM5.50, was a reflection of the valuation appetite among institutions for the stock.

“Maxis should have no issue meeting its dividend obligations.” the research house said.

Maxis, upon its listing on Nov 19, would become a component of the FTSE Bursa Malaysia KL Composite Index and increase the capitalisation of the market by over 4%.