Bear Market Rally Is Ending !!!

May 7, 2009
To gauge whether this is a bear market rally,let’s recollect some of the comment given by the pros:
George Soros
“It’s a bear-market rally because we have not yet turned the economy around,”. “This isn’t a financial crisis like all the other financial crises that we have experienced in our lifetime.”



Warren Buffet

” Yeah, it would be too soon. We are not reaching the end. At some point, we’re going to reach the end and I don’t know when that will be, but I know whatever the day is, May 4, in terms of the figures we’re getting out of all our businesses. The American economy is very slow and at the moment and, still getting slower. But that will turn and I can’t predict when. I hope it’s very soon. “
Wilbur Ross, Chairman and CEO, WL Ross & Co, said
 “the US government’s stimulus programmes have prevented the economy from going off the cliff. But was quick to add that the revival in the US economy will take time.He feels a V-shape recovery in the near-term is unlikely. “
Tan Teng Boo
“We are in the early stage of a bull market.”
“the economic outlook for the Asia and the Pacific region will take longer than other parts of the world to recover from the global slow-down”
Volume in KLCI has been surging but the index is directionless now. That’s why the index gain so little with such a huge volume.I think small investors are jumping into the market and big government funds are selling their shares now.
This situation may continue for quite a long time because the funds which are holding huge volume of shares can only sell a billion shares per day.
The big funds can’t sell them at once because the volume can’t be taken by small investors in a day. They need to do it slowly to avoid massive selling in the market which may spook small investors. If small investors turn their heads away,big funds will be unable to unload their shares.
I believe the funds still need a few weeks to unload their shares to retail investors.When all the shares have been unloaded into the market, the KLCI index will start to drop slowly but daily. This happens because small investors who are mainly speculators/traders/pigs , will wait for huge rally so they can sell their shares at a profit. But what if the huge rally does not come (the number of sellers > the number of buyers)?
Small investors will unload their shares to cut loss/margin call. Other small investors will panic and when all of them sells,massive selling will be induced.
This is how the big funds architect the ups and downs of the market. Small investors have to go back to work,save some money and come back to play again when the market is UP again.   
It’s an ongoing cycle which keep most of us working for the rest of our life.You can’t really go against big funds which have a team of professionals plus big capital.
These big funds don’t have to compete against each other because the number of PIGS to be slaughtered are enough to fill their hunger.They just have to coopoerate with each others to push up the market.It’s not an open/efficient market here in Malaysia when the whole market is monopolize by government controlled vehicles.
Do you think you can beat them in the game of investing?Well,think again.

GLC-Should you buy/sell/hold them?

March 10, 2008

images7.jpgInvestors are unloading their shares in GLCs to wait for any policy changes related to these companies.Before you do the same thing and follow the crowd,let’s analyse the situation calmly.

What are GLCs anyway?To answer this question,we should define Khazanah.

Khazanah Nasional is the investment holding arm of the Government of Malaysia and is empowered as the Government’s strategic investor in new industries and markets. As trustees to the nation’s commercial assets, our main objective is to promote economic growth and make strategic investments on behalf of the Government which would contribute towards nation building.

Khazanah is also tasked to nurture the development of selected strategic industries in Malaysia with the aim of pursuing the nation’s long-term economic interests.

Khazanah has investments in over 50 major companies, both in Malaysia and abroad, and our companies are involved in a broad spectrum of industries.

Khazanah is also the key agency mandated to drive shareholder value creation, efficiency gains and enhance corporate governance in companies controlled by the government, commonly known as Government-Linked Companies, or GLCs.

Who are in Khazanah?For this answer,let’s refer to this website.

Will the election results affect GLCs?Of course! In the years ahead,we will see rapid changes and improvement in GLCs.With check and balance from the oppositions,GLCs will have to succeed the transformation which they have promised. Will transformation of GLCs always work.Since the answer is very long,I provide you with this journal for leisure reading. corporate-governance-in-government-linked-companies.pdf

So,should you buy GLCs? Yes,but not now.Maybe when the price is much lower.Should you hold if you have invested in GLCs?Yes,their values will certainly go up when the economy benefited from better administration.

Can you give me a list of GLCs?Sure,why not? 31jan2008_investstruc.pdf

Astro: A long term play

January 17, 2008

In this post,i would like to share one of the hidden jewel overlooked by the financial community.With the boom in the commodities and Oil & Gas industries,all attention seems to be focusing on companies in these industries. This has left some jewels to be undervalued.

By valuation,Astro’s operation in Malaysia is estimated at RM 4.30 (TheEdge,31/12/07). Compared to the current price of RM 3.70, the price provided a safety margin of around 14%. This valuation is only based on financial numbers only.

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If you look at management side of the valuation, Astro has the best corporate governance. Let’s look at what happened to A.K’s companies like Tanjong plc, Measat and Maxis. We can be sure that A.K has always created value for its shareholders in long term. The companies which A.K controlled never destroyed value in long term. In short term,the share price is a bit bumpy. But that’s business.Without taking risk,a company will not grow.And growth caused money! (TheEdge)

Many financial analysts just look at short term. They reported losses in Astro as something bad. Do you want a company which keep on growing or just sit there? Being in a business myself, i saw the potential that A.K wanted to seize in India and Indonesia. In the world of globalisation,those who refuse to fight will be wipe out.That’s why A.K took all his companies out from M’sia even before the globalisation idea came into Malaysia.

The next thing you might want to ask is the level of risk that Astro is taking currently.A company can crumble because of bad management and financial factors.In term of management,there is no doubt that the management is extremely great people.Just check out their profile.Next,is the cash part.Astro has very healthy cashflow and currently has no borrowings plus Astro’s account has over RM 1 billion cash in its account.That means around RM 0. 50 per share.If you buy it at RM 3.70,you are paying RM 3.20 for Astro only and get the cash for free.It offers a 26% of safety margin over its RM4.30 valuation.

If you pay RM 3.70 today (actually you are paying only RM3.20), what do you get in return? Let’s me explain this in two parts: Venture in Indonesia and India. No point discussing about Malaysia because we know Astro has satelitte pay-tv license until 2017.

Indonesia’s Venture (Please read the following news)

News 1

News 2

Astro, the dominant satellite tv operator in Malaysia, is hoping to finalise arrangements with the Jakarta-based Lippo Group to jointly operate an Indonesian satellite pay tv service undertaken by Lippo’s unit, PT Direct Vision, in a preliminary deal that was concluded in March this year.

News 3

The Lippo Groupis a giant conglomerate based in Jakarta, Indonesia, with interests in banking, finance and other enterprises. Its flagship, Lippo Ltd., listed $3.6 billion in assets in 1995. The firm owns only one small bank in the United States but has extensive interests in Indonesia, Hong Kong and China. It was founded by Mochtar Riady, an ethnic Chinese born in Indonesia.

News 4

Khazanah Nasional Bhd and CIMB Group have decided to merge Lippo Bank and PT Bank Niaga of Indonesia to comply with Bank Indonesia’s single-presence policy.

Bank Niaga, a 64%-owned subsidiary of CIMB Group, has submitted Khazanah’s plan to merge the two banks to the Indonesian central bank.

The single-presence policy requires those who control two or more banks in Indonesia to merge them, sell their stakes or form a holding company for their banks by end-2010, and are required to submit their plans by Dec 31.

Khazanah owns a 93% stake in Bank Lippo and 64% indirect stake in Bank Niaga via CIMB.

News 5

“The operators of the Astro service, MEASAT Broadcast Network Systems, are a wholly owned subsidiary of Astro All Asia Networks plc, a consortium company comprising of government-linked and private companies. Major shareholders include the Usaha Tegas Group (42.7%) and Khazanah Nasional Berhad (21.6%). Astro was listed on Bursa Malaysia in October 2003”.