Tricky Toilet Advice and Challenges

You just don't know how to react if you are bombarded with these advisories or confronted by this roll of currency-denominated toilet roll. Have fun.

ADB: Do not End Stimulus Spending as yet!

Reuters reported that the head of the Asian Development Bank warned it was too early for Asian countries to end stimulus policies started during the financial crisis and said he saw no big risk of price bubbles in China.

Haruhiko Kuroda said today that policymakers still needed to restore demand and stabilise financial systems to support the economic recovery.

China’s surprise move on Tuesday to raise bank reserve requirements was “quite appropriate” even if there were no big asset price risk in the world’s third-biggest economy.

“While we believe developing Asia is leading the global economic recovery, it is still too early to relax vigorous efforts to restore demand and stabilize financial systems,” Kuroda told a forum on the crisis.

He said the rebound in the world economy was fragile.

Asia is leading the recovery but growth is unlikely to lead to runaway inflation, Kuroda said.

“The timing of exit from policy stimulus needs to be tailored to countries’ individual situations, taking into account inflation risks where output gaps are turning positive, as well as debt levels,” Kuroda later told reporters.

Asian countries must boost internal demand to return to high growth rates and reduce poverty, with external demand likely to remain sluggish as advanced economies tread carefully back to pre-crisis growth levels, he said.

The ADB estimates developing Asia will grow 6.6 per cent this year after a 4.5 per cent expansion in 2009, with China charging ahead with 8.9 per cent growth this year

China rocked world financial markets with an increase in the amount that banks must set aside as reserves that was earlier than markets had expected. The move was likely prompted by concerns over a surge in inflation surge.

“Inflationary pressures have not been so much prominent in the Chinese economy at this moment. But in some cities, the real estate prices have risen sharply over the last several months and so the move by the Chinese central bank appeared to be quite appropriate,” Kuroda said, adding the move was not expected to undermine the V-shaped recovery.

“The monetary authorities have already adjusted slightly to a less expansionary monetary stance quite appropriately, and also the bank credit has been well supervised.”

I do hope that the policy makers can timed it right by ensuring that inflation is controlled within the ambit of a return of more steady growth. A soft approach to a better interest regime would be comforting to many.

Dayang-A Brief Anatomy

Yes, as expected Dayang Enterprise (Dayang)breached the RM2.00 resistance price and climbed up to RM2.07 before ending at RM2.01,for a 4 sen increase at the noon break. The parent company ,Naim Cendera has also been moving upwards.This movement of both counters gathered momentum after the purchase of BORCOS Shipping.

As mentioned in an earlier posting, Dayang was a sleeper of a share. From its initial listing in April 2008 at the offer price of RM1.45, it went up to RM1.53 and then slept there before going down to 70 sen in March 2009. It then slept at the range price of RM1.20-RM1.30 for most of the year. This is way below its offer price of RM1.45

Let us assume that you bought the share at RM1.50 on the initial listing week. That was 22 months ago today. At today's price,say at RM2.00, you have made RM500.

Let us now assume that you have placed the RM1,500 in a fixed deposit account of 4.5% at the same time in 2008 for a two years locked-down period. The calculated interest at the end of 2009 is provided on the higher side; in the region of RM150(RM75 +RM75 )or so. Therefore, you have actually made RM150 of interest income for the two years which is obviously better than the 2.5% rate today.

Now apart from the apparent capitalization gain of RM500 today, let us now consider the dividend paid out so far. The dividend declared in the year 2008 and 2009 were 7%(-25% government tax) each year. That will amount to a net dividend of RM105. The additional interim dividend just declared in December last year was RM50 tax exempt.That would mean that you have collected RM155.00 in dividend income. So, ringgit to ringgit,you gain more in dividend by RM5. And it is still not April yet,my friend.

For a Dayang investor,the net return to you thus far will be RM500 as capital gains plus RM155 bringing the value you have gained to RM655. Another final dividend will be due.

So, let us now annualised RM655 for the two years 2008 and 2009. This should work out to RM 327.50 annually.

As such the return to the original outlay of RM1500 is 49.12% per year. Isn't this better than even Amanah Saham unit trusts returns?

I believe Dayang has both the political and the economic drivers to move up. As an ancillary oil and gas player,Dayang has benefited plenty in maintenance service fabrication work, among others.It has a big book of RM677 million of contracts to keep it on its toes till 2012. It can also leverage of the technical expertise of Naim Cendera to assist in some of these contracts. Dayang’s current order book comprises mainly works for Petronas Carigali Sdn Bhd, Sarawak Shell Bhd/Sabah Shell Petroleum Co and Murphy Sabah Oil Co Ltd, and these largely made up of topside and offshore structures maintenance and work-overs services.

Dayang owns three subsidiaries, namely: Dayang Enterprise Sdn Bhd (DESB), which is principally involved in the provision of offshore topside maintenance services, minor fabrication works and offshore hook-up and commissioning; DESB Marine Service Sdn Bhd, which undertakes chartering of marine vessels services; and Fortune Triumph Sdn Bhd, which specialises in the provision of rental equipment.

Offshore topside maintenance for oil and gas in Malaysia is expected to grow by 8% to 10% per year over the next three years.Currently, offshore topside maintenance services accounts for more than 80% of Dayang’s group revenue and profit for the first half of this year. Can you imagine Dayang actually services 309 platforms out of the 400 in Malaysia!

This means that the company dominates some 77% share of this market segment.

By servicing 77% of the platforms in Malaysia, Dayang has gained the economies of scale as it is able to optimise its resource deployment, hence lowering its per unit cost of operation.

The near monopoly position in coastal Borneo to service the oil companies be it in shipping,general services or in expert engineering services should be the pivot of its strength.

To improve its strength,Dayang Enterprise Holdings Bhd has entered into a joint venture agreement with Alphaone Engineering Sdn Bhd to prepare proposals and execute projects in Brunei's oil and gas sector.

The 50-50 joint-venture company to be incorporated according to Brunei laws would have an authorised share capital of B$1 million, Dayang told Bursa Malaysia.

"The initial capital investment is estimated to be RM250,000 and Dayang's portion of approximately RM125,000 shall be funded by internally generated funds and/or financing from banks or financial instruments," it said.

It said the joint venture provided an opportunity for Dayang to venture into the overseas market in its effort to reinforce its competitive edge in the oil and gas industry.

Technically, I also believe it is a cornered stock with possibly very little market spread.

It should be a good stock to hold on to for a little while more.

This was clipped from the Pravda News Agency of Rumania.

"A sheep gave birth to a dead lamb with a human-like face. The calf was born in a village not far from the city of Izmir, Turkey.

Erhan Elibol, a vet, performed Cesarean section on the animal to take the calf out, but was horrified to see that the features of the calf’s snout bore a striking resemblance to a human face.

“I’ve seen mutations with cows and sheep before. I’ve seen a one-eyed calf, a two-headed calf, a five-legged calf. But when I saw this youngster I could not believe my eyes. His mother could not deliver him so I had to help the animal,” the 29-year-old veterinary said.

The lamb’s head had human features on – the eyes, the nose and the mouth – only the ears were those of a sheep.The governor of the province where the ugly goat was born said that the little goat was the fruit of unnatural relationship between the female goat and a man.

What is the world coming too? Endtimes?

Malaysia: Pay More! Pay More!

The local Chinese dailies have put out the warning.

Prepare to pay higher prices for grocery and food items and then some more after the Chinese New Year.

Federation of Sundry Goods Merchants Associations of Malaysia president Lean Hing Chuan said Chinese New Year delicacies like preserved meat would also see an increase by at least 10%.[Imported inflation?Foreign exchange issues?]

Federation of Malaysia Hawkers Association president Lee Teong Chwee said prices for hawker food should remain the same now but he did not rule out the possibility that it too could increase if there was a hike in toll prices and electricity and gas charges. [Fat hopes! They always increase during CNY]

“Hawkers dare not increase prices, fearing their customers would turn away from them.” [Not in KL/PJ!]

Nanyang Siang Pau reported that consumers might face a shortage of pork during the Chinese New Year.

The daily quoted Malaysian Pork Sellers’ Association chairman Goh Chui Lai as saying that consumers had to pay more for pork during the festive season.

Just look what 2010 has brought in and may bring in besides the aforementioned items.

There was this increase of sugar price by a whopping 20 sen. Then it was sandwich bread by some 30 sen. A potential toll increase? TNB rate hike? Mid-year petrol increase is definitely on, my friend.

Cry, my beloved country!

Malaysia: Potential Rate Hike?

Just when you think that Bank Negara Malaysia is impervious to savings and pensioners for the last couple of years,her comes Arab-Malaysian Banking Group giving their considered opinion that there could be a possible rate hike this year. How much? They opined a whopping 50 basis points. Why so? They say they were influenced by stronger economic economic conditions.

This is the report from the Business Times Singapore.

"The onset of the global financial crisis set the stage for interest rate cuts worldwide and the central bank followed suit, slashing rates aggressively by 150 basis points to bring down the overnight policy rate to 2 per cent.

Indeed, the three-month Kuala Lumpur Interbank Offered Rate now stands at 2.2 per cent which is a 20-year low.

The report noted that growth in gross domestic product terms showing signs of a turnaround with third quarter GDP contracting at 1.1 per cent compared to contractions of 3.3 and 6.2 per cent in the second and first quarter respectively.

Loan applications for the month of November also lent credence to stronger growth going forward: it rose 36.8 per cent year on year. In fact, the report noted that the actual figure applied for in November was RM47.8 billion, not far off from the last peak of RM52.8 billion set in August 2008.

In tandem with that, total loans approved in November rose by 37.8 per cent year on year compared to 25.4 per cent in October. Loans approved for the business community for the month rose almost 46 per cent.

Meanwhile,inflation which was negative in July was flat in November, indicating that inflation was likely to creep back to positive territory by the second half. Indeed, with rising global oil prices, the uptick could come even earlier.

With inflation and growth coming back, it seems only a matter of time before the central bank adjusts rates upwards. “Our assumption is for a one-time 50 basis points increase in the second half of 2010,” the Arab-Malaysian report predicted.

If that is borne out, it will be good news for savers who were penalised in 2006 and 2007 when real interest rates were actually negative because of inflation outstripping the cost of money.

It will also be good news for the banks. According to the Arab-Malaysian report, earnings growth for the banking sector as a whole for 2010 could be as much as 40 per cent. Growth in 2009 is estimated to be around 8 per cent.

The better earnings growth is expected to stem from lower loan-loss provisions which are expected to decline by 17 per cent after jumping 19 per cent last year.

The report indicated that its estimate of a 50 basis points increase was “conservative” as the central bank had actually slashed rates by 150 basis points since the onset of the global financial crisis. Thus, it was “not inconceivable” that the central bank make a bigger rate hike."

Do we dare a hope a 150 points rise? Nah! For a start,be thankful for 50 basis points.

Surely the Largest Flower Yet!

Something unusual happened in this town called Río Blanco, Veracruz , México. Nestled in the high mountains in the center zone of the State of Veracruz you will discover the largest flower plant listed as the largest flower of the planet.

It stands two meters high and weighs 75 kilos.




Amorphophallus titanum, also called cadaverous flower has the peculiarity of blooming only during three days every 40 years, a privilege that Mother Nature can bestow on this town in Veracruz.

MACC: The Taking on Bala 1-2-3

Yes, the glove has come off and has been flung on to the floor. This is the challenge from Abu Kassim Mohamed, the new head honcho of MACC.

Is this a case of 'a brand new vacuum will suck clean?' or is this more of the wayang kulit we have all seen for the entire duration of 2009?

So, Bala, the MACC is taking you on. You have to name the place and time outsdie Malaysia where you can meet up with the MACC. They are taking you on. One-Two and Three.

Do you have the gumption to pick up the glove and do the needful?

The Prudential Prediction: Overweights and Underweights

Like the photo above, you could be yawning at the stock-market scenario in 2010. You could also likely experience a roller-coaster ride this year. This is premised on the belief that Asian stock markets, after a rally in 2009, will ride 'the tiger' of the new headwinds expected in the US mortgage sector, Prudential Fund Management Services opined today.

While there is a V-shaped recovery in Asia, markets may have been overly optimistic about a US recovery, said Robert Rountree, the head of investment marketing of Prudential Fund Management Services in Singapore.

“We are not out of the debt crisis. The Americans have got a lot of mortgage hurdles in front of them and that will become apparent this year,” he averred.

US banks have seen delinquent loans growing rapidly on their books but the amount of loans that they have written off have been lagging behind quite significantly, he said.

“2010 is going to be a year when the American banks are going to come under pressure again. As these things start to unfold, you could well see a kneejerk reaction in Asian markets,” said Rountree.

Rountree said he is confident that Asia, with its strong reserves position and a robust banking system, to again emerge relatively unscathed.

“We are going to see another shift to the de-linking of the Asian stock markets and the Asian economies” from the developed world, he said.

“The long-term story of Asia will remain intact, any selloffs are buying opportunities,” he said.

In Asia, Prudential is overweight on China, India, Philippines and Thailand. The fund management firm is underweight on Malaysia and Hong Kong.[How sad!]

India is “expensive on current profit forecasts; but forecast earnings for 2010-2012 will likely surprise on the upside,” said Rountree.

For China, although valuations are no longer a bargain, “it is too early to sell,” he said.

Although the outlook for Malaysian equities does not look fantastic, Malaysian corporate bonds may shine after a lacklustre 2009, said Bernice Leaw, head of investment services at Prudential Fund Management Malaysia.

Malaysia’s corporate bonds may attract more interest than government bonds in 2010, helped by “favourable supply /demand dynamic,” said Leaw.

“Corporate bonds would tend to perform well over the mid-to-longer term as companies’ financial standing improves along with the economy,” she said.

Investors’ risk appetite has improved as the economy recovers and the government’s efforts to rein in budget deficits will lead to fewer government bond issuances.

As a result, government bond yields are expected to stay “range-bound on a weak bias,” she said.