Monday, February 25, 2008

Dato' Seri Anwar Ibrahim My Hero

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I actually wanted to write this ages ago. In fact this article should be written 12 years ago way back in 1996. I was 22 years old. A young ambitious chap who just graduated from Melbourne University in Australia.

I have to admit that I wasted most of my time there. Being a Bank Negara scholar, I took things for granted. Late nights out, jamming session, movies/videos (during that time VCD has not been invented :)took priority over my studies. I was totally wrong to underestimate the commitment required for an undergraduate course. Perhaps my excellent SPM results have somehow make me think I was smart enough to go thru university years. How wrong I was.

I can still recalled my first semester exam taken in autumn 1993. It was a Business Computing paper. The night before the exam, AC Milan came to town to play the Australia national team. Me and my college buddies decided that since we know so much about computers, perhaps some time off could be taken to witness the Italian job on football. To be honest, it was a grand occasion. The likes of Paulo Maldini commanding the left pitch was a sight to behold. We came back after supper and started to panic rushing thru the lecture notes and tutorial. I failed the exam miserably. It served me right. It was partially an eye opener (still tak sedar diri) for me since I was under contract to complete the degree with honours within the stipulated time (4 years in my case). I barely got thru the others (my highest mark was 60) and have to re-sit the Business Law exam. My first year was a total disaster, academically and personally.

I tried to buck-up and concentrate more on my studies in my 2nd and 3rd year although the distraction was sometime too hard to resist. Baillieu Library became my second home. In order for me to be accepted to continue the 4th year (Hons), I need to at least obtain an average of 75% throughout my 3 years as an undergraduate. The law of average was too cruel on me. My 1st year result brought down the average to 73%, just 2% short of the required grade. I went to see the Hons program co-ordinator and begged her mercy to accept me as the Hons candidate. Failure to be accepted in the Hons programme could cost me RM240,000 for breach of contract. She tried her best but I guess her best wasn't good enough (sounds familiar?). I tried to console myself by enjoying my Graduation Day. At least I've got a degree :)

December 1995. I came back for good from Australia. Ready to serve the Central Bank of Malaysia. But I was brought to reality when the then Assistant Governor, Rafiah Salim call all scholars to her office. When it came to my turn, she crunched my results and threw it to me saying, "With results like this, you are not good enough to work at the bank" I was totally embarrassed and devastated in front of my colleagues. She treated me like rubbish. Demanding me to pay RM240,000 for breach of contract. I actually offered myself to work at any post (guards included) as long I could serve my contractual obligation with the Bank. After all, I did have a degree, not a total disaster in my own opinion. Even some of my seniors didn't complete the Hons. year but were still accepted to work in the bank. But to her, I was public enemy number 1. The one who tarnished the prestigious image of the Central Bank. All my appeals went to deaf ears and they started to issue a demand letter for breach of contract. I will never forgive Rafiah Salim for what she did on me and my family.

My family was in disarray after knowing that I need to pay RM240k. How on earth can we earn that much? My father, being a hot tempered guy, always directed his anger towards Ibu. Pity my mum, I would say she's the most patient human being in the world, tolerating my father's antics without even raising her voice. We tried to seek help with this so-called helpful politician but to no avail. We even seeked the assistance from Datuk Salomon Selamat, my father's schoolmate, the then YDP SDARA, my very own alma mater.

He promised us that he'll do his best but whenever my father called him, he kept on giving the same answer and finally told us that he can't assist us after we were made to wait for more than 5 months. A true politician indeed! I have nothing personal against Datuk Salamon. Just disappointed with his know everybody attitude but in reality....? It would be completely fine if he told us that he can't help us during our very first meeting. But having to waste precious months like menunggu bulan jatuh ke riba is a bit to much for me.

In the mean time, I went to this job interview at a Bank Negara affiliate. If I'm not mistaken some kind hearted BNM's HR staff called me and ask me to go for the interview. Lucky enough I was accepted but my offer letter was withheld thanks to Rafiah Salim who convinced the Governor not to allow my contract to be transferred to BNM's affiliate.

I totally ran out of hope. My father drafted a last appeal letter addressed to Anwar Ibrahim of the Ministry of Finance. About 3 days after that, we received a call from his secretary En. Muhammad Ahmad, if I recalled correctly. He called to get a clearer picture on my case and say he'll recommend to Dato Sri Anwar to write to BNM's governor to appeal on my behalf. Having been toyed around by many politicians, I didn't put my hope that high and was prepared for another disappointment. Two days later, I received the news I've been waiting for 9 freaking months. BNM has agreed to transfer my contract and release me from any contractual obligation.

Anwar Ibrahim did it in 5 days. The others took almost 5 months before saying they can't do anything to help me. For that I owe him my sincerest gratitude. Forget about all the nasty things accused on him (I don't even care if all the accusations were true) Dato Sri Anwar Ibrahim is my savior. A true hero indeed. You'll surely get my vote of thanks.

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Wednesday, February 20, 2008

January Inflation Lower Than Expectation

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Source: Citigroup Malaysia Economic Flash

CPI inflation edged down slightly to 2.3% in January, from a ten month high of 2.4% in December. This was slightly lower than market expectation of 2.4%. Lower CPI inflation was largely attributable to a fall in clothing and footwear (-1.4%) prices, as well as slower price increases in food and beverages (Jan: 3.9%, Dec 4.2%) and transport (Jan: 1.0%, Dec: 1.3%)

We expect CPI inflation to head north in the coming months. Global food supply disruptions and structural increase in demand have contributed to food price increases globally. Price controls have led to shortages of common food items such as flour and cooking oil in Malaysia. A National Price Council has already been established to stabilize prices and ensure sufficient supplies of essential goods through a national stockpile. A 10-15% hike in petrol and diesel prices seems likely after elections on March 8, which will raise CPI inflation by 0.5-1%-pts. CPI inflation should average 2.8% in 2008, up from 2% in 2007.

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Saturday, February 16, 2008

How Subprime Crisis Started

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This is so hilarious. A light hearted presentation on how the sub-prime crisis started. On a more serious note, things are not looking that good at all. Expect more writedown of subprime losses in future and maybe the most dreaded recession is just around the corner. For the time being lets sit back and enjoy this witty show.

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Tuesday, February 12, 2008

Malaysia as Safe Harbor During Emerging Markets' Storm?

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Source: The Wall Street Journal Asia, 11 February

ASIA'S STOCK-MARKET volatility led investors to yank huge sums out of Asian stock funds, with seven consecutive weeks of net redemptions. Though stockholders seem worried that selloffs will ripple through much of Asia if the U.S. economy slides into recession, they are treating Malaysia as a haven among emerging markets.

Equity funds focusing on Malaysia took in $28.4 million in the week ending Jan. 23, according to EPFR Global, a Boston firm tracking stock-fund flows. That is a tiny amount, yet stock funds that invest in the rest of the Asia-Pacific region, excluding Japan, saw net outflows of $1.6 billion the same week.

Malaysian shares aren't immune to ailing global markets, but as a group, they have held up better than shares on any other exchange in Asia. The country's benchmark, the Kuala Lumpur Composite, is a mere 0.01% off last year's high of 1447.04 -- a hiccup compared with the double-digit losses in Singapore and South Korea, and far steeper declines in Hong Kong and Shanghai, where indexes are more than 20% below their 12-month highs.

"Malaysia is always countercyclical. When things go down, it's a place to hide," says Bhaskar Laxminarayan, chief investment officer for Asia at Swiss bank Pictet & Cie. So what makes the country so resilient?

One major difference between Malaysia and the region's other markets is the makeup of the country's bellwether stock index. Malaysia's economy relies heavily on manufacturing -- the vast majority of its exports to the U.S. and Europe are manufactured products, especially in the technology sector.

Despite this, most of those exporters aren't publicly traded. For example, about 50% of Malaysia's exports consist of electronics goods. One big exporter, semiconductor giant Intel Corp., operates its largest overseas manufacturing facility in Malaysia but Intel Malaysia doesn't have shares listed on the local bourse.

Another driver of the country's economy: rising commodity prices. The country is a big producer of palm oil and mineral oils, which it exports mostly to Japan and developing markets. "Malaysia is the beneficiary of commodities prices that the government can put back into the economy," by providing stimulus measures, such as corporate tax cuts, and financing needed infrastructure projects, says Melvyn Boey, the Malaysia strategist for Merrill Lynch.

Palm-oil producers make up about 20% of the Kuala Lumpur Composite index. Domestic financial institutions represent 23%; utilities, 12%; and telecom companies, 7%.

Analysts remain bullish about palm-oil plantation stocks in the coming year. Among the sector favorites are large-capitalization plays, such as IOI Corp. and IJM Plantations. Now the second-biggest stock on the exchange, IOI shares provide the added advantage of being widely traded, making them easier to buy and sell than many of the smaller stocks available. IOI shares have lost about 2% so far this year, ending the Feb. 6 trading session at 7.60 ringgit ($2.35).

For Wai Kee Choong, Malaysian equity strategist at Citigroup, the price slip is a buying opportunity -- he expects IOI stock to reach 10.05 ringgit in the next 12 months. Among palm-oil producers, Mr. Choong also recommends IJM Plantations, whose shares have defied the broader selloff by gaining 15% so far this year, closing at 3.78 ringgit on Feb. 6. Mr. Choong's 12-month price target is 5.63 ringgit.

Both Messrs. Choong and Boey give the Malaysian index as a whole an "overweight" rating. U.S. investors could profit further from a strengthening ringgit, one of the best-performing currencies in Asia this year. A strong ringgit boosts stock gains when they are converted back to U.S. dollars.

One investor who has accumulated shares in Malaysia amid recent trading volatility is Khiem Do, portfolio manager in Asia for Baring Asset Management, who agrees that the country's publicly traded stocks are somewhat shielded from a pullback in spending by U.S. consumers. "We thought that it would be a safer market while the world struggles," Mr. Do says.

Bank stocks, which are focused domestically, have also attracted analysts and investors. Because they don't invest overseas, Malaysia's financial institutions aren't teetering under bad U.S. subprime credit and aren't expected to disclose that they are holding bad debt.

Citigroup's Mr. Choong particularly likes Public Bank and Hong Leong Bank, which, he says, have expanded domestic lending and are positioned to benefit from rising credit-card expenditures in the country. Hong Leong's shares have dropped 7% so far this year, closing at 5.90 ringgit on Feb. 6, while Public Bank's stock rose 3.6% to finish at 11.4 ringgit. Mr. Choong's 12-month targets for those stocks are 7.46 and 12.53, respectively.

Despite concerns about its exposure to a slowdown in U.S. spending, Malaysia's economy is still expected to grow at a 6% rate this year. One economist, Robert Prior-Wandesforde of HSBC, calls the country "a test case for decoupling." The theory, somewhat discredited in recent weeks by sharp declines in Asian stocks, is that emerging economies have diversified sufficiently to withstand an adverse turn in the U.S. economy. Mr. Prior-Wandesforde, in a report dated Jan. 22, points to increases in domestic consumption; local spending on infrastructure; rising exports to new markets, such as China and India; and a flow of capital from the Middle East that is establishing the country as a center for Islamic finance.

Still, Malaysia's stock market doesn't warrant unbridled optimism. Analysts caution that the index could wind up in negative territory for the year if economic news out of the U.S. worsens and prompts a mass exodus from emerging markets. Also, investors have long complained of Malaysia's lethargy when it comes to revamping its financial system and building incentives for corporate reform. For years, the stock market was burdened by a complicated history with foreign investors. In the throes of the 1997-1998 Asian financial crisis, then-Prime Minister Mahathir Mohamad blamed foreign-currency speculators for causing a plunge in the country's currency, ringgit.

To stop its fall, Mr. Mahathir pegged the ringgit to the U.S. dollar and imposed strict capital controls to prevent foreigners from exiting ailing investments, sparking a firestorm of criticism from the financial community overseas. Although Malaysia has lifted crisis-era controls, foreign investors remain reluctant to invest. The index surprised some investors last year by returning 32%. More commonly, Malaysian shares have underperformed the rest of the region, gaining 21.8% in 2006 and 0.8% in 2005.

Personally, I'm not as bullish as the guys above. Apart from the upcoming election, there is not much excitement in the local stock market, especially if you are taking a trading, rather than an investment view.

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Wednesday, February 06, 2008

Industrial Production Rises at Fastest Pace in a Year

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Announced: Wednesday, 6 February at 12:01 pm (Malaysia time)
Industrial Production (% YoY) - Actual 5.7%, Forecast 1.8%, Consensus: 2.7%, Previous 3.2%.

Bottom Line
Industrial production surprised on the upside in December, led by robust manufacturing production. The surprisingly strong manufacturing numbers may have been lifted by resilient domestic demand, as well as production ramp ups ahead of the Christmas holidays. Notwithstanding the surprisingly strong December data, we maintain the view that manufacturing production will slow over the next 3-6 months as the US economy slips into recession, posing severe headwinds for electronics exports.

In Brief
Industrial production (IP) growth picked up to 5.7% in December 2007, beating consensus forecasts (+2.7%), and the fastest growth in a year. November production growth was also revised upwards to 3.2%, from 2.7% previously. Strong December production was entirely due to a 6.8% jump in manufacturing output, up from 3.1% in November, and strongest since November 2006. Mining grew at the same pace as in November (+3.3%), while electricity production slowed to 2.3%, from 3.3% in November. For full-year 2007 as a whole, industrial production rose 2.2%, a sharp slowdown from 4.8% in 2006. Manufacturing edged up just 1.9%, from 7.5% the previous year.

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Tuesday, February 05, 2008

Super Bowl - Patriots vs Giants

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A man had 50 yard line tickets for the Super Bowl. As he sits down, a man comes down and asks if anyone is sitting in the seat next to him. "No," he says, "The seat is empty."

"This is incredible," said the man. "Who in their right mind would have a seat like this for the Super Bowl, the biggest sporting event in the world, and not use it?"

He says, "Well, actually, the seat belongs to me. I was supposed to come with my wife, but she passed away. This is the first Super Bowl we haven't been together since we got married in 1970."

"Oh ... I'm sorry to hear that. That's terrible. But couldn't you find someone else, a friend or relative, or even a neighbor to take the seat?"

The man shakes his head. "No, they're all at the funeral."

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