Demise of Chan Hung Lieh

November 24th,2009 saw the sad passing of one of the greatest villain actor in Shaw Movies.

Chan Hung Lieh first started acting in " Come Drink with Me" in 1966 and scored international success.From then on, he got type-casted and was very successful in every dastardly role given to him by Shaw Brothers.

I have yet to see a villain in any Chinese movie who can exhibit such villainy as Chan. We will miss him dearly.

Bye Bye Dubai World!

Oh, how ambitious Dubai was. Its economic model? Debt financing through the concept of OPM(Others People's Money}. It was a wonderful concept those days, touted by most financiers.

Th country that could do no wrong by building anything, some of which even defy climatic constraints,finally buckled.

The fateful day was Nov 27. This is the report from the Straits Times of Singapore.

The Dubai Emirate government would not bail out its flagship, Dubai World of its US$59 billion debt. It was too massive for comfort. So, the Dubai Government asked for a six months' reprieve for its flagship holding company.It's called a 'standstill' for all repayments.

The payment standstill raised the spectre of the biggest sovereign default since Argentina in 2001.Global credit rating agency Standard & Poor's, which rules on a company's or government's ability to repay debts, said the announcement “may be considered a default”.

For the banks that financed the borrowing binge that fuelled Dubai's ascent — total debt is estimated at US$80 billion.

The reality check that landed on Wednesday was that Abu Dhabi, the oil-rich governing emirate of the United Arab Emirates, will not unconditionally bail out its reckless neighbour.

Instead, a genuine restructuring of Dubai's debt, with pain being shared equally between Dubai and its bankers, needs to take place.

The announcement shocked the markets and Dubai's bankers.

“It's shocking because for the past few months the news coming out has given investors comfort that Dubai would most probably be able to meet its debt obligations, and most analysts were of the view that Nakheel's commitments would be met,” said asset manager at SICO Investment Bank.

The bonds of Dubai World's property developer, Nakheel, dropped sharply and the cost of insuring against a Dubai government default soared.

To some extent the announcement of the standstill request was mitigated by earlier news on Wednesday that Dubai had raised US$5 billion from Abu Dhabi banks. Still, that figure was considerably less than the US$20 billion Dubai had been hoping to attract from investors in the region as well as abroad.

“What is interesting is the timing,” said Chris Davidson, an expert on the region at Britain's Durham University. “This indicates that the money from Abu Dhabi is not to be spent on Nakheel and Dubai World.”

The decision to take such a step comes just weeks before Nakheel, the developer of Dubai's famed palm-shaped islands, was due to make payment on its US$3.52 billion of Islamic bonds.

The conglomerate, which also owns Dubai's huge port operations and has taken stakes in glamorous overseas properties like Barneys and MGM Mirage in Las Vegas, has billions of dollars of payments due in the months that follow.

In 2006, its unit Dubai Ports World was locked in a Herculean tussle with Singapore's PSA International for British port operator P&O, which Dubai eventually clinched.

Earlier this year, Dubai raised US$10 billion in a bond issue that was taken up by the Abu Dhabi central bank.

It is clear now that these sums have not been enough — especially as many of the assets in Dubai World's diffuse portfolio have plunged in value over the last year.

Dubai World bosses have ruled out a firesale of any assets and say they are sure of a recovery in real estate prices, which have dropped by as much as 40per cent.

Dubai's economy was hit hard as the global credit crunch over the past year ended a six-year boom in the region and sent the emirate's once-flourishing property sector into decline.

The government said it had appointed a special support fund to manage the restructuring effort and that Deloitte had been hired as an adviser. “As a first step,” the statement said, “Dubai World intends to ask all providers of financing to Dubai World and Nakheel to 'standstill' and extend maturities until at least May 30, 2010.”

Dubai World is run by Sultan Ahmed Sulayem, a close adviser to Dubai's ruler, Sheik Mohammed Rashid al-Maktoum, who has insisted publicly that Dubai and Abu Dhabi will work together to reach a solution on the debt question.

But while Abu Dhabi may sit upon 9 per cent of the world's oil and manage the largest sovereign wealth fund, it is evident now that it is not willing to just write a blank cheque to cover all of Dubai's mounting debts — at least not right now.

The world exalted the magic that was Dubai World then. Today, it wants nothing to do with it no matter how fanciful its projects were. How sad.....

Britian: GDP Downgrade 2009

Things do not seems to look up for Great Britain. The Dubai meltdown has caused reverberations in the FTSE and now this.

Reuters has this to report London, circa Nov 27,2009.

British Chancellor Alistair Darling will downgrade the 2009 economic outlook when he presents his pre-budget report next month but still point to growth resuming at the turn of the year as he predicted in April.

Treasury sources told Reuters yesterday that the unexpectedly rapid fall in output in the first quarter of the year meant that the economy would probably shrink by around 4.75 per cent, instead of the 3.5 per cent decline estimated at the time the budget was made.

The British economy has now declined for six successive quarters, marking the longest recession in at least 50 years and lagging behind many other major economies that have already started growing again.

But Treasury sources are cautiously confident that growth will resume around the turn of the year, pointing to recent survey evidence from the Confederation of British Industry and official retail sales data for October.

"The assumption is that the economy grew between 0.2 (per cent) and 0.4 per cent in Q4," one Treasury source said.

Darling appeared to lay the groundwork for a downgrade of the 2009 forecast in his pre-budget report on Dec 9 when he told Parliament earlier yesterday that his initial forecasts had been in line with most forecasters when it was made.

"Since then, new data has shown that most economies, ours included, suffered a severe shock in the first quarter of this year," he said.

Treasury sources indicated that Darling would likely stick to his forecast for economic growth of 1 per cent to 1.5 per cent in 2010 as most forecasters were somewhere in the middle of that range, having predicted much lower out-turns in April.

Has Great Britain become the Old Man of Europe?

Genting: Better Profits in Q3,2009

Genting Bhd reported today a profit in the third quarter as more people visited its casinos and flagged a satisfactory performance for the full year.

“Whilst the global economy continues to show signs of recovery, the group remains cautiously optimistic of its prospects,” Genting said in its results statement.

Genting, valued at US$7.8 billion (RM26.5 billion), posted July-September net profit of RM371 million against a loss of RM40 million a year ago.

Analysts do not provide quarterly earnings forecast for Malaysian companies, but Genting’s third-quarter net profit accounted for 38 per cent of analysts forecasts of RM967 million for the full year.

The group’s unit Genting Singapore is building Resorts World Sentosa (RWS), the city state’s second integrated resort, and it is also the largest casino operator in the United Kingdom.

The casino in Singapore, seen as one of the group’s key earnings drivers in the future, is on track for a January opening.

“We presume that Genting Singapore will command 45 per cent share of the S$4 billion (RM9.6 billion) gaming market,” Andrew Lee, head of research at Maybank Investment Bank said in a recent note.

Genting, Southeast Asia’s largest gaming company, also has substantial interests in oil palm plantations, power generation and property development which it deems as non-core businesses for sale at the right price.

Out of 22 analysts tracked by Thomson Reuters I/B/E/S, 18 had buy or strong buy recommendations on Genting, with only two rating it a sell or underperform.

Genting shares have nearly doubled this year, outperforming the 45 per cent rise in the broader market index.

The Carry Trade: Hot Bubble,Double Trouble!

The Asian Development Bank (ADB) circa Nov 25 has raised red flags that Southeast Asian countries may suffer asset bubbles if hot money continues to flow in.

The Business Times Singapore reported that Noritaka Akamatsu, senior adviser at ADB’s Office of Regional Economic Integration, has said that some regional governments are thinking of limiting capital inflows in the “short-term, liquid side of the market”. This could destabilise financial systems.

“They are clear about the benefits of long-term inflows such as foreign direct investments, but there is concern about the short-term money,” he said.

Last week, Indonesia’s central bank said that it was “studying” possible limits on foreign ownership of short-term debt but has no plans for controls on capital or the currency.

Meanwhile, within Asia, the South Korean government plans to hold talks on what can be done to handle inflows financed with cheap US-dollar loans — the so-called carry trades.

The strong inflows into the region result partly from the yield differential between Asian economies and Western markets. The US has slashed its benchmark rate to near zero, and it is not clear if there will be a rate rise soon.

As a result, global investors seeking higher returns on their money are parking capital in regional assets — and driving up regional currencies against the greenback.

Akamatsu warned that the stronger currencies may crimp Asian exports growth to the West, as most South-east Asian economies are still run on export-oriented growth models.

To sterilise the effect on currency values, central banks typically raise the supply of domestic units, but this can potentially fuel domestic inflation.

And if central banks mop up the added liquidity in their systems by selling government bonds, this may leave them with higher debt on their books, and raises concerns about whether central banks are sufficiently capitalised to take on higher interest expenses.

Akamatsu also said yesterday that the ADB was working with the Chinese authorities to issue a yuan-denominated “panda bond” — a second tranche since 2005.

The money would be used to finance development projects in China, but he declined to disclose the amount or the timing of the issue, citing price sensitivity.

According to ADB’s Asia Bond Monitor, East Asia’s local-currency bond markets grew 15 per cent in the third quarter of 2009 from a year earlier, as governments and corporations took advantage of lower interest rates to fund spending.

So will Malaysian assets and stocks go up soon on this "hot air" money?

Bank Negara.: The Rate Stays!

For the sixth time, Bank Negara Malaysia kept the interest rates steady at 2.0 per cent,saying inflation will remain modest in 2010 as the economy revives.

Analysts said that the central bank appeared in no hurry to hike rates, in sharp contrast with some other central banks in region, and the bank said current monetary policy was “appropriate” and would continue to support economic activity.

The decision comes as Asia’s third-most trade dependent economy is recovering from an economic slump triggered by the global financial crisis. A pick-up in domestic demand helped the economy to contract less-than-expected 1.2 per cent in the third quarter.

“If there are any rate hikes, we think it will be in the second half of next year in the small magnitude of 25 to 50 basis points,” said Julia Goh, an economist with CIMB in Kuala Lumpur.

The Malaysian government kicked in with a RM67 billion ringgit stimulus package to cushion the impact of global slowdown, which the central bank said was helping the recovery.

The central bank noted that the private consumption and public sector spending would lend support to the economic growth going forward. While that was expected to turn inflation positive in the coming months, the central bank was not alarmed about price pressures building up in the economy.

“In the absence of further unanticipated price adjustments and external influences, inflation is expected to remain modest in 2010,” the central bank said in a statement.

The central bank said it would only hold six rate setting meetings from 2010 onwards, down from eight up until now, in accordance with a new act.

“As price pressures and inflation expectations are expected to remain contained going forward, the assessment is that the current monetary policy stance is appropriate and will continue to provide support for economic activity,” the statement added.

A Reuters poll showed 15 economists saying rates would be held at 2 per cent with the earliest sign of a hike coming after the first half of next year.

The central bank has cut the benchmark OPR by a total of 150 basis points since November in an attempt to reduce the impact of the global downturn on the local economy.

It stopped easing in April and has repeatedly said that rates are “appropriate” and that rate cuts had been “frontloaded”.

Inflation is not a worry as consumer prices have turned negative. It was a negative 2 per cent in September and inflation is not expected to return until the fourth quarter.

Bilingualism in both English and Mandarin is Better

This is an interesting article. It may yet pave the way for Malaysia to be more serious about developing English language skills then be hung out to dry in a deeply globalised world of intense global economic competitiveness.

This mysinchew.com article is appended.

NOV 24 – Unlike their ancestors, young generations from Johor Baru and Singapore do not emphasise family ties. Even though they are still maintaining certain blood relations, the sense of alienation becomes greater and greater as time goes by.

Sometimes, these young people will look down on each other but inevitably, they also reveal their sense of inferiority in front of each other.

When young people from Johor Baru go to Singapore, they will find that their command of English is terrible and, thus, they dare not speak English.

Similarly, when Singaporean young people come to Johor Baru, they always say, shyly: “I’m sorry, my Chinese is not good.”

Young people in Johor Baru (more appropriately, Malaysia) speak broken English while young Singaporeans speak terrible Chinese. This is the inevitable result of different education policies in the two countries, as well as a fact that must be accepted by the two governments.

Interestingly, after a few decades of bilingual education policy, Singapore found that the English standard of its young generation is fine but the Chinese standard is poor.

It may even affect their competitiveness in the future. Its Minister Mentor Lee Kuan Yew admitted that Singapore was headed in the wrong direction and he vowed to spend the rest of his life correcting the mistake.

After neglecting English for over 30 years, former Prime Minister Tun Dr Mahathir Mohamad realised the reality that English is, after all, the international language. Therefore, he made a sharp about turn before his resignation and implemented the policy of teaching Science and Mathematics in English.

When Prime Minister Datuk Seri Najib Tun Razak took the office, he decided to gradually stop the policy that was hastily implemented in the past. However, it is still a major educational goal for the Malaysian government.

Malaysia and Singapore, with interrelated historical and cultural backgrounds, have to bear the consequences of educational deviations.

As Malaysia had neglected English, its young generation is not able to make good use of English in learning and communications. As a result, the country can only cultivate “kampung champions” who are unable to walk out from their local communities.

As Singapore had neglected Chinese, English has become the “mother tongue” of its younger generation (primary school first year students from English-speaking families have increased to the current 60% from the 10% in 1982). It does not conform to its national interests as Singapore has targeted China’s vast economic market.

In fact, we are committed to enhance our English standard while Singapore is committed to enhance its Chinese standard based on a common objective: a better integration with the world and compete in the international market.

It is going to become a bilingual world. It will be a greater advantage if we can master more languages. But when will our young people be no longer afraid to communicate in English and Singaporean young people, to speak Chinese? 10 years? 20 years? Or 30 years?