Forbes Chinese Celebrity List

On April 28, Forbes China Magazine released 2010 China celebrity list, Jackie Chan took the number one overall spot, And Yao Ming who was ranked number one for the pass 6 years since 2004 fell to 4th place. However Yao is still number one in income with 255,300,000 yuan. Bear in mind that its not just income alone that determine the list but their media exposure as well.

1. Jackie Chan (成龙)

Occupation: Actor
Income: 206,000,000 yuan / $30m
Income Rank: 2
Internet Search Rank: 5
Newspaper Rank: 2
Magazine and TV Rank: 7

First person to sing a concert at the Bird’s Nest, His movie Little Big Soldier (2010) breaks hundred fifty million yuan at box office.

2. Jay Chou (周杰伦)

Occupation: Singer, Actor, Director
Income: 122,500,000 yuan / $18m
Income Rank: 3
Internet Search Rank: 3
Newspaper Rank: 4
Magazine and TV Rank: 15

Tests the water in Hollywood, directed “Panda Man” and suffered a setback, no time to release a new album.

3. Andy Lau (刘德华)

Occupation: Singer, Actor
Income: 86,200,000 yuan / $12.6m
Income Rank: 6
Internet Search Rank: 2
Newspaper Rank: 3
Magazine and TV Rank: 17

(One of the four heavenly Kings of Cantopop) Lau participated in three new films, fans pay close attention to his marital status.

4. Yao Ming (姚明)

Occupation: Professional athlete
Income: 255,300,000 yuan / $37.5m
Income Rank: 1
Internet Search Rank: 27
Newspaper Rank: 1
Magazine and TV Rank: 17

The first person in China with dual role of basketball player and the boss. (Yao Ming bought his former club Shanghai Sharks)

5. Zhang Ziyi (章子怡)

Occupation: Actress
Income: 69,000,000 yuan / $10.1m
Income Rank: 11
Internet Search Rank: 12
Newspaper Rank: 9
Magazine and TV Rank: 1

Despite many troubles, persists in shooting “The Grand Master” (2010). 25 magazine covers, no one else can compare.

6. Zhao Benshan (赵本山)

Occupation: Actor
Income: 95,600,000 yuan / $14m
Income Rank: 4
Internet Search Rank: 6
Newspaper Rank: 6
Magazine and TV Rank: 71

Zhao’s group performs national tour, “Liu Laogen Big Stage” now has 10 locations, but his health is worrying.

7. Jolin Tsai (蔡依林)

Occupation: Singer
Income: 46,500,000 yuan / $6.8m
Income Rank: 12
Internet Search Rank: 24
Newspaper Rank: 5
Magazine and TV Rank: 44

Singed with owner and released album “Butterfly”, created new fashion brand “72 changes”.

8. Donnie Yen (甄子丹)

Occupation: Actor
Income: 86,000,000 yuan / $12.6m
Income Rank: 7
Internet Search Rank: 43
Newspaper Rank: 22
Magazine and TV Rank: 7

Income, endorsement soaring, among the ranks of kung fu stars.

9. Liu Xiang (刘翔)

Occupation: Professional athlete
Income: 64,600,000 yuan / $9.5m
Income Rank: 12
Internet Search Rank: 24
Newspaper Rank: 5
Magazine and TV Rank: 44

“Flying Man’s” comeback is nearly perfect.

10. Fan Bingbing (范冰冰)

Occupation: Actress
Income: 30,500,000 yuan / $4.5m
Income Rank: 27
Internet Search Rank: 10
Newspaper Rank: 18
Magazine and TV Rank: 2

The most hard-working actress, starred in six films in one year.

11. Lin Chi-ling (林志玲) 29.2m / $4.3m
Actress, Model

12. Eason Chan (陈奕迅) 35.8m / $5.3m
Singer, Actor

13. Lu Chen (刘谦) 43.8m /$6.4m
Magician

14. Nicholas Tse (谢霆锋) 28.2m / $4.1m
Singer, Actor

15. Aaron Kwok (郭富城) 36m / $5.3m
Singer, Actor

16. Li Yuchun (李宇春) 22.3m / $3.3m
Singer

17. Sun Honglei (孙红雷) 29.5m / $4.3m
Actor

18. Zhou Xun (周迅) 26.5m / $3.9m
Actress

19. Huang Xiaoming (黄晓明) 32m / $4.7m
Actor

20. Zhao Wei (赵薇) 19.6m / $2.9m
Actress, Singer

21. Li Bingbing (李冰冰) 34m / $5m
Actress

22. Leehom Wang (王力宏) 73.4m / $10.8m
Singer, Actor

23. Chow Yun-Fat (周润发) 80m / $11.7m
Actor

24. Jet Li (李连杰) 95m / $14m
Actor, Philanthropist

25. Zhang Yimou (张艺谋) 41m / $6m
Cinematographer, Director

Other notables:

32. Jacky Cheung 32.5m / $4.8m

37. Tony Leung Chiu Wai 18.6m / $2.7m

41. Carina Lau 21m / $3m

52. Charlene Choi 17.5m / $2.5m

76. Leon Lai 6.75m / $0.99m
(please note that Leon Lai is now the owner of a big artiste management company and his earnings power should be a lot more than that)

96. Tang Wei 5m / $0.73m

Marina Bay Sands Casino Opening

From opening accounts from the blogs, it looks like MBS is a few rungs up on RWS in terms of class, design and service. Looks spectacular.




MBS and RWS comparison
Marina BaySands / Resorts World Sentosa
Cost S$7.5 bn / S$6.6bn
Slots 1,500 / 1,300
Tables 670 / 530
Hotel Rooms 2,600 / 1,800
MICE floor 1,291,669 sq. ft. / 647,880 sq. ft.
Casino floor 161,000 sq. ft. / 161,000 sq. ft.
Retail space 800,000 sq. ft. / 330,000 sq. ft.
Restaurants 17 / 60
Non-gaming : Sands Skypark / Universal Studios Sg
Amenities: Helix pedestrian walkway / Marine Life Park



Marina Bay Sands opening timeline
17-Apr Temporary occupancy certificate granted
25-Apr Casino license granted
27-Apr Marina Bay Phase 1 (Soft opening)
- 963 of 2600 hotel rooms
- Full casino (161K sq. ft.)
- Portion of MICE and retail space
- 3 celebrity, one 24hr. restaurant, 2 noodle bars
23-June Marina Bay Phase 2 (Grand opening)
- Remaining hotel rooms/suites (2,600 total)
- Additional retail and MICE space
- Entertainment pavilion
- SkyPark (exact timing subject to change)
August 2010 All restaurants should conclude opening
December 2010 Marina Bay Phase 3
- All retail should conclude opening
- Science museum opens
- Light and water show on Marina Bay debuts

Why I Like Sealink

SEALINK is principally involved in the shipping business including chartering of vessels, shipbuilding and repair of vessels and letting of properties. Sealink International Bhd, incorporated in 1974 was founded by Mr Yong Foh Choi. Initially, the group provided chartering services of marine vessels to non-oil and gas industries such as the navy, fishing, dredging, logging and mining companies in and outside Malaysia.



The group ventured in chartering vessels in 1994 and later on started its shipbuilding business in 1997. The group is an integrated service provider that builds and operates a diverse fleet of offshore marine support vessels in Malaysia, serving the global offshore oil and gas exploration and production industry. The group's shipyards, located in Miri, Sarawak have the capacity to build up to eighteen vessels per annum, depending on the size and complexity of the vessels. The Group was ISM certified by the Marine Department in 2005.

The main shareholders of the company are Sealink Holdings 51.8%; Yong Kiam San 13.4% and Yong Foh Choi 9.1%. The group has over 299 suppliers as of 2007 which increased steadily from 146 in 2005. Its biggest supplier is Ming Kiong Agencies (S) Pte Ltd from Singapore. Its biggest Malaysian supplier is Scott & English Sdn Bhd. The group's customers include both local and international companies from the USA, Australia, China, India, Latin America, Europe, East Africa, Southeast Asia and the Middle East.

Sealink, which owns two shipyards in Miri capable of building up to 18 vessels a year, now operates a diverse fleet of 33 offshore support vessels used mostly in the oil and gas industry. The company, one of the largest tug and barge operators in Malaysia, plans to increase its fleet to 40 vessels by end 2010.

Sealink has close ties with Boustead Heavy Industries, and judging from its location, the prospects for Sealink looks very bright indeed.




Why are investors not considering this stock? I have no idea. This is a wonderful gem of a company. Sealink reported net profit of RM8mil in 4QFY09, taking its FY09 net earnings to RM50.1mil. Thats a net EPS of 10 sen and the share price really has no business trading below 80 sen!

The industry had a tough 12 months but Sealink has proven to be able to ride it out very well. Lower-than-expected earnings can be attributable to lower recognition from its shipbuilding unit with only one vessel sold last year. This unit suffered from a weak external credit market amid global financial crisis - its vessels are not sold in Malaysian waters to avoid competing with its
chartering unit. Both shipbuilding and chartering divisions suffered declines in turnover - 21% and14% drop respectively - although EBIT from chartering unit was stable, attributing to healthy margins of 30%. Those are temporal issues and not management issues, the company's business model is still very attractive going forward.

Sealink’s shipbuilding order book has dropped below RM100mil - given that no new vessels were sold. While it is true that tight credit hampers demand from foreign buyers, this only applies to speculators. Demand is still there for offshore support vessels, although the market remains a buyers’ market with vessel prices at a 10%-15% discount. This is the main reason why Sealink is opting to keep its vessels for chartering - stronger margins to boost its bottomline. Sealink remains hopeful that Petronas tenders will be awarded by end of this year - where three to four vessels are earmarked for this tender.

Signs of activity picking-up in oil and gas are visible with Sealink having secured contracts worth RM58mil. It announced that it had won two long-term charter contracts:
(1) Supply of an AHTS for one year
(2) A utility vessel for two years
The charter rates should be in-line with rates secured recently by Tanjung Offshore at US$1.70-US$1.80/bhp/day. The group also announced that it had completed a vessel sale to be delivered in 2QFY10F.




As if to give the Malaysian public a tight slap in the face, the company has just announced that they will award a 4 sen dividend per share. Looks like the controlling shareholders will reward themselves, and this will allow them to continue to hold onto their shares for future capital gains without having to sell down their shares. 4 sen on a 65 sen share is a dividend yield of 6%.

The Board of Directors of SIB had on 28 April 2010 recommended a final single tier dividend of 4 sen per share, amounting to RM20,000,000 for the financial year ended 31 December 2009. The declaration of the final single tier dividend is subject to the approval of the Company's shareholders at the forthcoming Annual General Meeting of the Company.
The proposed dates are as follows:-
Dividend entitlement date : 15 July 2010
Payment date : 30 July 2010



Sealink is trading at a very cheap PE of 6-7x a discount of 45% versus its peers at 11x. Net asset per share at 85 sen. Cash in bank at RM49.5m. The finance cost is at a very low RM10.5m a year compared to its recent net profits of RM50.1m. The company is slated to make a net profit of RM61m for 2010 or 12 sen per share.

NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

Top Equity Strategists' Targets For S&P500

Bespoke Investment has managed to tally the top equity strategists' predictions for the S&P500 for the end of the year. Like them or not, a lot of big funds do listen to them. The underlying bullishness for the 2H of 2010 is still intact, but I think we will go a bit lower before moving back up. Whats surprising is that Goldman Sach's year end target has already been reached technically. Does that mean that they will adopt a more bearish stance from now till year end in their proprietary trades? Barclays, Citigroup and Morgan Stanley have year end targets lower than present levels - if they are right, we are in for a disappointing 2010.

The consensus year-end S&P 500 price target of major Wall Street strategists surveyed by Bloomberg now stands at 1,264, which is up 3.18% from the consensus of 1,225 at the start of the year. A move to the average year-end price target of 1,264 would represent a gain of 13.34% for the full year and a gain of 4.27% from the S&P's current level. UBS, Bank of America, and Credit Suisse are the most recent firms to up their year-end targets. So far this year, 7 of the 13 strategists have increased their estimates. As shown, UBS now has the highest year-end S&P 500 price target at 1,350, followed by Deutsche Bank at 1,325, and JP Morgan, Oppenheimer, HSBC, and Bank of America all at 1,300. Three strategists now have year-end targets that are lower than the S&P 500's current level -- Barclays (1,210), Morgan Stanley (1,200), and Citigroup (1,175).

The S Pellegrino World's Best 100 Restaurants

The World’s 50 Best Restaurant Awards 1-100 (2010)

Restaurant Region Awards

1 Up 2 Noma Denmark The S.Pellegrino Best Restaurant in the World, The Acqua Panna Best Restaurant in Europe
2 Down 1 El Bulli Spain Restaurant Magazine Chef of the Decade
3 Down 1 The Fat Duck UK The Chef's Choice sponsored by Electrolux
4 Up 1 El Celler de Can Roca Spain
5 Down 1 Mugaritz Spain
6 Up 7 Osteria Francescana Italy
7 Up 3 Alinea USA The Acqua Panna Best Restaurant In N.America
8 Up 33 Daniel USA The Highest Climber sponsored by Cocoa Barry
9 Down 1 Arzak Spain
10 Down 4 Per Se USA
11 Up 29 Le Chateaubriand France
12 Up 26 La Colombe South Africa The Acqua Panna Best Restautant in South Africa
13 Down 4 Pierre Gagnaire France
14 Up 2 L'Hotel de Ville - Philippe Rochat Switzerland
15 — Le Bernardin USA
16 Down 5 L'Astrance France
17 up 9 Hof Van Cleve Belgium
18 Up 6 D.O.M. Brazil The Acqua Panna Best Restaurant in South America
19 Up 10 Oud Sluis Holland
20 Up 29 Le Calendre Italy
21 Up 9 Steirereck Austria
22 Up 3 Vendome Germany
23 Down 2 Chef Dominique Finland
24 Down 4 Les Creations de Narisawa Japan The Acqua Panna Best Restaurant in Asia
25 Up 25 Mathias Dahlgren Sweden
26 Up 5 Momofuku Ssam Bar USA
27 Up 19 Quay Australia The Acqua Panna Best Restaurant in Australasia
28 Up 17 Iggy's Singapore
29 Down 11 L'Atelier de Joel Robuchon France
30 New Entry Schloss Schauenstein Switzerland
31 6 Le Quartier Francais South Africa
32 Down 20 The French Laundry USA
33 Down 4 Martin Berasategui Spain
34 New Entry Aqua UK
35 Up 7 Combal Zero Italy
36 Up 12 Dal Pescatore Italy
37 New Entry De Librije Netherlands
38 21 Tetsuya's Australia
39 New Entry Jaan Par Andre Singapore
40 New Entry Il Canto Italy
41 Re-Entry Alain Ducasse Au Plaza Athenee France
42 Down 10 Oaxen Krog Sweden
43 Down 29 St John UK
44 Re-Entry La Maison Troisgros France
45 New Entry wd~50 USA
46 New Entry Biko Mexico
47 Down 24 Germany
48 New Entry Nihonryori RyuGin Japan
49 New Entry Hibiscus UK
50 New Entry Eleven Madison Park USA

51	Maison Pic	France
52	Jean Georges	USA
53	L'Atelier de Joel Robuchon	Hong Kong
54	Wasabi	India
55	Robuchon A Galera	Macau
56	Bras	France
57	De Karmeliet	Belgium
58	Marcus Wareing at The Berkeley	UK
59	Lung King Heen	Hong Kong
60	Rouge	Canada
61	Etxebarri	Spain
62	Tantris	Germany
63	Akelarre	Spain
64	Gastehaus Erfort	Germany
65	Bo Innovation	Hong Kong
66	Zuma	London
67	Marque - Winner of Breakthrough Award 2010	Australia
68	Ruscalleda Sant Pau	Spain
69	Chez Panisse	USA
70	Quique Dacosta	Spain
71	Ristorante Cracco	Italy
72	Pujol	Mexico
73	Attica	Australia
74	Rust En Vrede	South Africa
75	Varvari	Russia
76	La Grenouillere	France
77	Langdon Hall	Canada
78	Les Amis	Singapore
79	Can Fabes	Spain
80	La Gazzetta	France
81	Plavi Podrum	Croatia
82	The River Café	UK
83	Mirazur	France
84	Gunther's	Singapore
85	Doce Uvas	Russia
86	Manresa	USA
87	Enoteca Pinchiorri	Italy
88	Quintessence	Japan
89	Restavracija JB	Slovenia
90	Amber	Hong Kong
91	Masa	USA
92	Le Gavroche	UK
93	Café Pushkin	Russia
94	Semifreddo	Russia
95	Alain Ducasee at The Dorchester	UK
96	Cepage by Les Amis	Hong Kong
97	La Pergola	Italy
98	Le Louis XV	France
99	Le Pre Catela	Paris
100	Amador	Germany

Investors Say The Darndest Things

Many times, investors ask the stupidest question. Not to whack them but sometimes we have to sit back and think the context of our questions or comments. Some will sound absolutely silly, and it drives at our assumptions and fallacies in thought and logic. Investment is not a "you like, you play lor", it can ruin your finances. Its better for me to point them out than to have investors dumping tons of it without proper consideration.



The ones that make you roll your eyeballs:

So you think the stock you like can rise... aarrr?

Thanks for the tip, I made 10%, you think can hold on for another 5%?

Why my stocks go up so slowly but come down very fast one?

When a stock stays forever at 1.00 nobody wants it, when it moves to 1.30 they start to ask questions, when it runs to 1.80 they don't ask anymore, they just jump in. Herein lies most of investors' problems: why we cannot spot them earlier; there is a lot of danger in momentum investing without knowledge; there is no regard for what is fair value; we tend to let the market tell us what to speculate in; we have little regard for risk-return assessment; we probably don't know what the fuck the company does...



The really good ones:

The 4 most dangerous words in investing is 'This time its different' - Sir John Templeton

If you are stupid enough to believe in anything then I will be smart enough to be sell you whatever it is you desire.

Hope is someone who has a dream but no way of putting it together.

I wish everyone could get rich and famous and everything they ever dreamed of so they can see that’s not the answer. - Jim Carrey

If you can count your money, you don’t have a billion dollars. - J. Paul Getty

I leave you with this quote:

"I have enough money to last me the rest of my life, unless I buy something"

Marina Bay Sands Is Open, OMG... The Restaurants They Have!!!

Don't care much about casinos in general, but I like playing Texas Holdem poker when they have special rooms for the game. The most exciting part about Marina Bay Sands casino has to be the restaurants they have managed to lure to their premises. Mario Batali, Wolfgang Puck, Daniel Boulud, Santi Santamaria, Guy Savoy and Tetsuya Wakuda are all there. I am really looking forward to try all of them, especially my all time fav Tetsuya Wakuda.

SINGAPORE, April 27 — Las Vegas Sands, the world’s most valuable casino firm, expects to recoup its US$5.5 billion investment in its Marina Bay Sands casino in Singapore within five years, CEO Sheldon Adelson said today.

His comments came at the opening of Singapore’s second casino resort as global operators such as Las Vegas Sands and Steve Wynn’s Wynn Resorts seek growth in Asia, lured by the region’s growing wealth and Chinese passion for gambling.

“The Asian people see gaming as a form of entertainment. In the West, we have a different approach,” Sheldon said.

Las Vegas Sands said it hoped to attract 70,000-80,000 visitors a day to its casino and other facilities.

Marina Bay Sands is the world’s second-most expensive casino after MGM Mirage’s CityCentre in Las Vegas.

Adelson said the Singapore casino will provide credit to selected gamblers rather than rely on junket operators as is the practice in Macau.

Feedback from junket operators indicates most of them are not keen to operate in Singapore because of the disclosure requirements demanded of them by authorities, said Sheldon.

“We don’t have junket reps in Las Vegas,” said Adelson, who is also the firm’s founder and major shareholder. “It’s not a system that is seen worldwide. It’s uniquely Asian and primarily in Macau.”

Singapore legalised casino gaming in 2005, but not all Singaporeans welcomed the decision, fearing the casinos would attract crime and lead to problem gambling among it citizens.

The city state’s gaming rival, the former Portuguese enclave of Macau, crammed with over 30 casinos and the only place in China where casino gambling is legal, has already eclipsed gambling revenues seen in casino capital Las Vegas. — Reuters

How Others View AirAsia & MAS

Its wonderful to see how we are perceived, corporate wise. We have such vested interest and then some more. Left on its own, imagine ten vest interests vying for the same pie - we get a detente, a war where nobody really wins because the country loses out on a roadmap to move forward, we loses on getting efficiency, we pay higher prices collectively, we use resources ineffectively, we keep cannabalising among ourselves, we do not allow consolidation and stifle competition, we remove ourselves from being able to compete. Our auto industry is a prime example, and we are stuttering with our airlines - only the spin doctors will tell you its a good thing.

Sydney Morning Herald: Australia is caught up in a battle between economic liberals and protectionists that is delaying the expansion of air services - and the reduction of airfares - between Australia and Malaysia.

The Malaysian government is siding with the protectionists who argue that the government-owned Malaysia Airlines has to be protected from aggressive new price competition from Air Asia X if it is to avoid the fate of Japan's national carrier, Japan Airlines, which has gone broke and is trading under bankruptcy protection.

AirAsia X's budget beds

AirAsia X has become the first low-cost carrier to introduce flatbed seats to its aircraft.

The government is blocking Air Asia X from starting new services from Kuala Lumpur to Sydney and Seoul - two of Malaysia Airlines' most lucrative routes.

By contrast, Air Asia X is about to increase services between Kuala Lumpur and Melbourne to twice daily, charging regularly available fares of A$600-A$800 return and sales fares as little as A$100 one-way.

Air Asia X, which also flies daily from Kuala Lumpur to Perth and the Gold Coast, was mainly responsible for a 25 per cent increase in travel between Australia and Malaysia last year.

"The complexity is that there's no one single position from the Malaysian Government," the CEO of Air Asia X, Azran Osman-Rani, says. "A lot of stakeholders in the government want to see us fly. The tourism ministry is right behind us because they see how we have stimulated tourism with our flights from Melbourne and Perth in 2009 when most markets shrank. The ministry of transport is equally supportive; they submitted the paper recommending that we be granted rights. A lot of ministers who we've met think it will be a plus for the economy.

"We've made many presentations to the prime minister and the economic council [of Malaysia]. We don't have anything in writing but the informal feedback we've received is not positive and I can only surmise that the conflict is related to Malaysia Airlines, which is owned by the Ministry of Finance and the National Sovereign Wealth Fund.''

Osman-Rani says that two new 377-seat Airbus A330 aircraft arriving in June and July that would have operated the Sydney service now have to be allocated to other routes, including new daily flights the carrier is about to start to Delhi and Mumbai in India.

They will also be used to increase the Melbourne frequency to twice daily on all days of the week, Osman-Rani says.

The carrier has also begun swapping its premium economy seats for lie-flat beds with a pitch of 60 inches, which the carrier will be selling for as little as A$1000 return on the Melbourne-Kuala Lumpur route, Osman-Rani says.

However, the carrier is persisting with nine-abreast economy seats of 31 inches, which are just 16.5 inches wide - half an inch less than the standard 737/767 seat or 1½ inches less than the 18-inch-wide economy seat in the A330 in standard eight-abreast configuration.

Some Corrections On MYR & Bank Negara Strategy

My learned friend Hisham has rightly pointed out the "corrections" below:

hishamh said...

'Under the government’s exchange rate regime, the exchange rate of the MYR is controlled against “a trade-weighted basket of currencies.”'

This is plain wrong - Malaysia has not followed a basket of currencies approach since before the 1997 crisis. It's also inconsistent with...

"The upward trend in the ringgit against the U.S. dollar and the revival of capital inflows into the equity market have increased central bank intervention in the FX market to support exports."

...which implies a different sort of currency regime entirely.

In any case, watch changes in reserves as a signal of intervention. If trade and capital inflows were attracting central bank intervention to absorb upward pressure on MYR, then you would expect an increase in international reserves...which isn't there. Taking into account revaluation loss from the MYR's appreciation, then change in reserves for the year to date (2010) is a big fat zero.

11:50 AM

Goldman Sachs & God

In financial markets, Goldman Sachs is like a god. Goldman Sachs was about the only big investment bank that did well during the subprime financial crisis, JP Morgan did OK as well. But both went about doing alright in very different ways. Now people are complaining that Goldman Sachs cooperated (conspired?) with a hedge fund hustler in John Paulson (maverick or genius depending on whom you are talking to) to assemble and sell "synthetic collateralized debt obligations" that everyone involved, except maybe the purchasers knew would probably fail. The hedge fund hotshot made $1 billion.



I think Goldman Sachs did what a great investment bank should have done anyway. If you are smarter than the rest, you do the smart thing. Its a for profit entity, Goldman Sachs made most of its money by trading anyway, not by marrying trades.

Goldman Sachs is a convenient pinyata for those wanting to point out and punish those who behaved unethically and profited from the crisis. What GS did was not illegal but probably unethical. The basis for saying that is that most of the buyers of synthetic CDOs did not know the full extent of what they were buying - or did they? You don't go around buying billions of that stuff and then claim that you don't know what you were buying!!?? So what if GS knew that it was probably a bad trade for those who bought the CDOs. If you bought IOI Corp via GS, and then 6 months later IOI fell by 50%, is GS culpable?

GS, John Paulson, Steve Eisman, Mike Burry and the others in the brilliant new Michael Lewis book, The Big Short, basically got the right read on the subprime markets. Its never ethical to make money when you are short the markets, you can try to justify it but its not ethical. Its a profitable bet, its a calculated bet, its a knowledge bet, you are betting that the majority of the markets are wrong. In any crisis, its the majority who will suffer.

If you read The Big Short, you will fully understand how little GS and John Paulson knew of what they were doing. Those who were really the geniuses were people like Mike Burry and Steve Eisman, who were vilified and laughed at for a couple of years when they tried to short the subprime markets.

Dimon steered JP Morgan away from the subprime market early enough with an edict to his employees not to touch the stuff, but JP Morgan did not make bets against the subprime market. But then again, JP Morgan is not a big player in proprietary trading.

What was stupid was the GS CEO Blankfein saying that they are doing God's work. Just run GS as what we all know it is, a devil's playground where money is God. You do not need to make excuses on how you made money as no one expects you to be saintly or even ethical (really). Those who now trumps the word "ethical" as an absolute requirement for the character of the firm are deluding themselves. Ethics are just classes you take for GS to appease the lawmakers. It will never be allowed to conflict with money making motives. In fact, if you read The Big Short, you will know that GS was just like Bears Stearns, Citigroup and Merrill Lynch, holding the stuff on their books. It wasn't till late into 2006 that someone wised up at GS and said this was pretty stupid stuff if more than 7% of the loans defaulted - they actually went to 30% default rate in the end. Thats a risk they measured and a risk they acknowledged, the rest of the investment banks and AIG never put into their model that property prices could stop rising or that defaults could ever be higher than 3%.

If fact, if the subprime crisis imploded 6 months earlier, GS would have lost billions just like the rest. I guess, that is what people want, to have GS suffer alongside with all of them. Do any of those who shorted subprime (John Paulson, Mike Burry, Steve Eisman, GS, etc.) really have an edge - no, they just figured it was a better bet to go the other way. No one will know for sure that their bets will turn out exactly the way they wanted. We all buy and sell stocks with the information we have and the big picture beliefs that we hold. Some will be better at it but it does not mean they will be right. Just because they better correctly in a big way, is that a crime? Just be better consumers, be better investors - the only thing was that were some people DUPED, like in a Ponzi scheme? GS is not big enough to do that, and if you read the still excellent book The Big Short, you will know that GS was probably a bit lucky.

Can you really put in ethics into the mantra of an investment bank? Seriously folks, ... its a nice to have, but its never going to happen in reality. Should it be something we should work towards to, yes, by all means ... are we going to get there, I seriously doubt it, not when the people are paid by how much they bring into the bank and not by whether they had been ethical. Can we penalise them, probably, but will it be big and hurting enough to bring about a change in behaviour? I doubt that, not when people are making hundreds of thousands a year in bonuses or more.



Sydney Morning Herald, April 26, 2010

AS THE mortgage crisis in the United States gained momentum and many banks were suffering losses, Goldman Sachs executives traded email messages saying they would make ''some serious money'' betting against the housing markets.

The messages, released on Saturday by the US Senate Permanent Subcommittee on Investigations, appear to contradict statements by Goldman that left the impression the firm lost money on mortgage-related investments.

In the messages, Lloyd Blankfein, the bank's chief executive, acknowledged in November 2007 that it had lost money initially. But it later recovered by making negative bets, known as short positions, to profit as housing prices plummeted. ''Of course we didn't dodge the mortgage mess,'' he wrote. ''We lost money, then made more than we lost because of shorts.''

In another message, dated July 25, 2007, David Viniar, Goldman's chief financial officer, reacted to figures that said the company had made a $US51 million profit from bets that housing securities would drop in value. ''Tells you what might be happening to people who don't have the big short,'' he wrote to Gary Cohn, now Goldman's president.

On Saturday Goldman denied it had made a significant profit on mortgage-related products in 2007 and 2008. It said the committee had ''cherry-picked'' email messages from the nearly 20 million pages of documents it provided.

This sets up a showdown between the committee and Goldman, which has aggressively defended itself since the Securities and Exchange Commission filed a security fraud complaint against it nine days ago. Tomorrow seven current and former Goldman employees, including Mr Blankfein, are expected to testify at a congressional hearing.

Carl Levin, head of the committee, said the email messages contrasted with Goldman's public statements about its trading results.

''The 2009 Goldman Sachs annual report stated that the firm 'did not generate enormous net revenues by betting against residential related products','' Senator Levin said. ''These emails show that, in fact, Goldman made a lot of money by betting against the mortgage market.''

On October 11, 2007, a Goldman executive, Donald Mullen, predicted a windfall because credit-rating companies had downgraded mortgage-related investments, which caused losses for investors.

''Sounds like we will make some serious money,'' Mr Mullen wrote, and received the response, ''Yes we are well positioned.''

Documents released by the committee appear to indicate that in July 2007 Goldman's accounting showed losses of $US322 million on positive mortgage positions, but its negative bet - what Mr Viniar called ''the big short'' - brought in $US373 million.

Messages from as early as 2006 show Goldman executives discussing ways to get rid of the firm's positive mortgage positions by selling them to clients. In one, Mr Viniar wrote: ''Let's be aggressive distributing things.''

On December 14, 2006, he called Goldman's mortgage traders and risk managers to a meeting and concluded they would reduce overall exposure to the subprime mortgage market. This was largely done by making bets against the market to cancel out bets it had placed that the market would rebound. A day after the meeting Mr Viniar wrote to Tom Montan, co-head of the securities division, saying, ''There will be very good opportunities as the market goes into what is likely to be even greater distress and we want to be in position to take advantage of them.''

This typified exchanges on whether to continue to neutralise Goldman's exposure to subprime mortgages or expand investment in them well into 2007. By November 30, 2007, Goldman had largely cancelled out its exposure to subprime mortgages by increasing its bets that the market would continue to slide, according to the document.

Goldman also released statements for its mortgage trading unit which showed traders in what was known as the structured products group made a profit of $US3.69 billion as of October 26, 2007, more than covering losses in other parts of its mortgage unit.

Several traders from that group will testify tomorrow and their profitable short positions are likely to be of interest to the committee.

Malaysian Stocks & Ringgit

In 2010, the KLCI gained 5.42% YTD as of early-April 2010, registering as the second best performer in Southeast Asia. As fiscal risks in the EU affected capital inflows, the KLCI decreased by 5.6% until early-February 2010. However, with positive domestic investments, better GDP data, the central bank’s interest rate hike and expectations of a domestic currency appreciation, stock market surged by 7.6% until early-March 2010 from February. After experiencing some correction in mid-March, the KLCI rallied again with the expectation of the government’s sustained market liberalization scheme, enhancing foreign investor sentiment. The KLCI reached 1341.8 on April 5, 2010.

The P/E ratio of the KLCI increased to 19.17 in early-April 2010 from 18.19 in late-February 2010 as the stock market rallied. The P/E ratio of the KLCI is still relatively low compared to stock markets in India and Malaysia. However, compared to South Korea and Singapore, the KLCI’s P/E ratio is high. The estimated P/E ratio for 2010 was 15.95 as of April, still attractive relative to other equity markets.

Foreign investment turned to net inflows in March 2010. According to a statement from Bursa Malaysia in April 2010, foreign institutional investments bought MYR8.9 billion (February: MYR5.0 billion) and sold MYR7.8 billion (February: MYR5.7 billion). The positive economic outlook and the recovery of exports and industrial production helped improve foreign investor sentiment. However, foreign retail investment in the stock market was unchanged in March 2010.



Local institutional and retail investment registered slight net outflows in March 2010 after posting net inflows in February. Bursa Malaysia said that local institutional investors invested MYR12.6 billion (February: MYR7.7 billion) while they sold MYR13.1 billion (February: MYR7.1 billion) in March. Meanwhile, local retail investors bought MYR6.9 billion (February: MYR3.8 billion) and sold MYR7.2 billion (February: MYR3.7 billion).

After falling to a decade low of 14 in 2009, initial public offerings (IPOs) will pick up in 2010 due to government efforts to relax investment rules in the stock market. According to Bursa Malaysia, the securities commission as of early February 2010 had already approved almost 20 IPO applications. Malaysia’s government also plans to list 10-15 government-related companies in the stock market in 2010.

After sharp depreciation in late 2008, Malaysia’s currency, the ringgit (MYR), gained 1.2% in 2009 due to an increase in the current account surplus, capital inflows and U.S. dollar (USD) weakness. However, because of the sluggish domestic economy, slow export recoveries, smaller foreign portfolio investment and FX intervention by the central bank, MYR appreciation was relatively limited compared to other Asian currencies. In 2010, while capital inflows into the equity and debt markets might continue to support the MYR, movements in the currency will be determined by the central bank’s FX intervention and the current account balance.

Higher commodity prices and exports will support the MYR in 2010. Policy rate hikes and the interest rate differential with the U.S. and Japan will boost carry trade. However, MYR appreciation will be limited as the central bank is expected to continue to intervene in the FX market to maintain export competitiveness vis-à-vis China. Moreover, any weakening of risk appetite and capital inflows, increasing imports and any political instability will constrain the ringgit appreciation.

The MYR had appreciated 6.65% YTD against the USD as of early-February 2010, becoming one of the best performers among Asian currencies. After strengthening by 2.9% until mid-January, the MYR depreciated by 3.9% until early February 2010 due to the correction in the domestic stock market and capital outflows amid the global uncertainty. However, the MYR began to appreciate again from early-February led by the stock market recovery and positive GDP data, improving investor sentiment. The central bank’s interest rate hike in early-March 2010 provided extra momentum for the MYR appreciation. Between early February and early April 2010, the MYR appreciated 6.1%. On April 5, 2010, the MYR marked 3.23 per USD.



External Balances: Exports picked up in September 2009 and has continued to improve led by higher export commodity prices, global inventory restocking and strong exports to China and India. As these effects are expected to sustain in H1 2010, exports will continue to show the recovery. The rise in exports will likely to increase intermediate goods imports in the coming months, which may somewhat narrow trade and current account surpluses in 2010. Nevertheless, surpluses will be sustained in 2010 due to Malaysia’s much larger exports than imports.

Capital Flows: After massive capital outflows in late 2008 and early 2009, capital flows somewhat returned in 2009 with the revival of the global risk appetite and somewhat improved political stability. However, compared to its peer countries, capital inflows in domestic market were relatively weak in 2009 due to the concerns about rising the government’s debt and sluggish economic recovery. In 2010, analysts forecast that coupled with the central bank’s interest rate hike in March, further monetary tightening will support capital inflows as interest rate gap against the U.S. widens. However, for further improvement of capital inflows, the government needs to show the significant progress in its economic reforms including larger domestic consumption, financial market liberalization, fiscal consolidation and political stabilization.

Central Bank Policy: The upward trend in the ringgit against the U.S. dollar and the revival of capital inflows into the equity market have increased central bank intervention in the FX market to support exports. Central bank intervention in the FX market will remain dominant until exports and global commodity prices recover, and China allows the renmimbi to appreciate. Large FX reserves and external surpluses are a plus to deal with export contraction and weak capital flows. Trends in the USD and Singapore dollar will also be important determinants of the MYR's movement. In 2008, the central bank intervened in the FX market to protect the ringgit from sharp depreciation amid capital outflows.

Under the government’s exchange rate regime, the exchange rate of the MYR is controlled against “a trade-weighted basket of currencies.” The central bank has prohibited offshore MYR trade since 1998. The fixed exchange regime was removed in 2005.

Commentary On Selected Stocks

As I have mentioned before, the market is at a crossroad. There are many who have left the table with their chips as they cannot find decent counters with good upside over the next 6 months. Volume has been not that high but the markets have been able to sustain the current levels. Do not be too enamored with the index level as the main indices are controlled by local funds. If the global equity sentiment is neutral, the local funds can and do control the local indices. All they have to do is have sustained interest in the banks, throw in MISC, Axiata, Tanjong, BAT and a few other big ones, you can literally manage the index.

As for volume counters, investors would have saved a lot of money if they follow my emphatic avoidance calls on KNM. Talam is the new kid in town. Better prospects, coming out of PN17, I think 18-20 is doable. Dufu, Unisem, JCY and Notion are having a mini-rubber glove like party on their own. Don't like Scomi or Ramunia.

QL finally found traction, a good long term hold.

Generally, I would advocate at least a 50%-70% in cash going into May.



NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

Who Should Replace Alex Ferguson?

If you are a Chelsea, Liverpool or Arsenal fan, please stop reading and please forget about putting in suggestions - we don't need to hear from you lot. It was surprising to hear Ferguson saying that he wanted David Moyes to get his job. According to the bookmakers, they have Jose Mourinho as the favourite.



Well, what can you say about Jose, you will only love him if he's in your team, or he is with the team that helped beat your biggest rival.

David Moyes may be Ferguson's choice because of his Glaswegian roots, I don't know. Never know how close men in kilts are. Ferguson's choice could be shaped by him wanting a British to take over the reins. I do think that that is a critical factor - to ensure Manchester United being able to retain the culture and traditions befitting a great British football club, I think its vital that the manager remain a British.



As good as Arsenal became under Wenger, it lost a lot of its culture, just look at the mix of players they have. You can place Arsenal in the Bundesliga or Italian League and be none the wiser. You can be a pragmatic football club like Arsenal or Chelsea where results matter the most, or you stay a prominent football club because of traditions, because you want to maintain the roots, the legacy and the memory of how they got to where they are today.

While I recognise David Moyes' achievements with Preston and Everton, I think he lacked the "genius switch". Moyes is a grinder and a pragmatic strategist, he does not have that jenaisequa (pardon my Japanese) quality that I seek for to lead such an illustrious and special club like Manchester United.

Like it or not, Ferguson has that genius switch, so did Bill Shankley and even Mourinho - its the ability to assemble a team that clicks, its the ability to make 1+1 that equals more than 2. Its the ability to devise strategy that works brilliantly as though luck played a major part in it. Its that instinctive factor of knowing what works and how to manage over inflated egos, and maintain the strong club spirit.

My number one pick to replace Ferguson: Martin O'Neill. He has proven himself time and time again with a so-so side. I like his temper and his passion, I like his "longer than usual tenure" with clubs, his stick-with-it-ness. I think he is a brilliant football strategist and a perfect fit for Manchester United.



p/s On a separate note, I think its very sad that Lorena Ochoa of Mexico is leaving golf, and after playing professionally less than 10 years. I think she is the best female golfer... ever, and at the same time, the most under-rated female golfer ever as well. I get so pissed off the way mainstream media only focus on the American ladies, heck, even the Korea lady golfers get better coverage than Ochoa. If you look at her stats, she is the female Tiger Woods, but some things are more important to her. Best wishes Ochoa!!!

Volcanic Ash 2 and aftermath.

Who can you really believe?
Maybe we will find out but it could go two ways:
1/ This was one mother of an overreaction. but hang on a moment. Maybe it is better to err on the side of safety and life preservation? Quite so .....to a point and the point is were the decision makers qualidied in knowledge and consultation to make that decision? Because if they were not they were (and still will be) causing huge damage to people, companies and the economy. Did the authorities talk first with airlines, plane manufactures, scientists and all relevant parties before taking such drastic and catyclismic action. If they did then fine. If they did not they are hugely culpable for the massive damage done.
2/ If it was not overriaction how could the airlines not support the action taken? Did they put economic survival ahead of safety? Were they prepared to take riskis with passenger lives? Bearing in mind they would have killed people including staff, lost their equipment and irreplaceablly damaged their reputation I think not.

I am not particularly interested in a witch hunt but I am incredibly interested in making sure decisions like this are made better in future. Maybe that will be the only good coming out of all this.

The Aftermath

So, if the air lanes stay open what happens now?
Sadly it will be quite a time before the schedules get back to normal and people are where they should be. The airlines will continue to be in pain for even longer as some future flights will come back half empty as the expected holidaymakers were prevented from going out in the first place. Also I would not be surprised if some firms might continue flying less if they discover those contingency video conference calls worked rather well. Some airlines and hotels may also suffer (or otherwise) when travellers evaluate how they performed through this crisis i.e. did they help stranded passengers and did they meet their financial and moral commitments in this respect.
Time will tell.

SGD Appreciation Bodes Well For Other Asian Currencies

Busy these couple of days, saw an interesting article, thought you all should read it:

RGE: On 14 April, the Monetary Authority of Singapore (MAS) made an aggressive policy tightening move. The MAS re-centered the SGD target band at the prevailing level of SGD’s nominal effective exchange rate and changed the band’s slope from a zero percent appreciation to one of “modest and gradual appreciation.” Judging from past experience, we believe the slope of the new target band is likely to be around 2% a year.

Source: RGE, Bloomberg

The MAS’s move reflected the growing confidence about the strength of the recovery as well as concerns about inflation risks associated with domestic demand later this year. The MAS has just revised its GDP growth forecast for 2010 from 4.5-6.5% to 7-9% and its CPI projection from 2-3% to 2.5-3.5%. RGE fully shares this view. Singapore’s growth and inflation have surprised significantly on the upside and the recovery is broad-based led by the rebound in manufacturing and services. RGE expects Singapore to grow 8.0% in 2010—the strongest performer in Southeast Asia—and inflation to average 3.0%.

Source: RGE

A rebound in economic activity, high food and commodity prices, closing output gaps, rising private demand and wage pressures will increase headline and core inflation in the coming months (see Figure 3). Upside surprises to growth and record low policy rates are leading Malaysia, Singapore and India to frontload monetary tightening into H1 2010 in order to contain inflation expectations. Capital inflows, potential CNY appreciation in Q2 2010 and slower growth at home and in U.S. and China in H2 2010 will lead EM Asia to maintain caution over the pace of rate hikes in H2 2010, but rely more on currency appreciation to curb inflation.

Source: RGE, Bloomberg

We started to track a “Long Asia” currency basket in December 2009 and formally introduced it in January 2010. “Long Asia” is an equal-weight long basket of four Asian currencies—CNY, INR, IDR and KRW—against JPY (see Figure 4). The basket appreciated by 9.1% (spot) since its inception.

Source: RGE, Bloomberg

As we noted above, our outlook on Asian FX is generally bullish, but we believe this is the right time to rebalance the ‘Long Asia” basket by replacing IDR with MYR. First, Malaysian GDP growth has surprised significantly on the upside. RGE forecasts Malaysia to grow 5.4% in 2010 as supportive private demand, commodity prices and exports to China, reviving global electronics cycle and Asian inventory cycle drive exports and industrial activity in the near term. The rate hike in March—which came earlier than its neighbors—will support capital inflows and the currency. Malaysia will hike rates by 25 basis points (bps) in May and by another 25 bps in H2 2010—more than what RGE initially forecasted—to contain speculative investment and lending to households. By contrast, there was little upside surprise to growth in Indonesia, while inflation is rising slower-than-expected and core inflation continues to ease. RGE also believes that Indonesia will delay rate hikes at least to Q3 2010—later than RGE’s initial forecast—amid political uncertainty.

Second, Bank Indonesia’s decision to phase out a 1-month certificate facility (SBI) by June can lead to a near-term IDR weakness. 1-month SBIs account for about 50% of all open-market operations. In addition, 1-month tenor attracts the bulk of foreign capital (besides SBIs, non-residents can also invest in government bonds). In the past, changes in foreign holdings of SBI had a noticeable impact on IDR. BI hopes that non-residents will switch into longer-term instruments, but this remains an open question at the moment.

As such, we choose to close our current “Long Asia” recommendation (long CNY, KRW, IDR, INR against JPY) and open a new “Long Asia” basket which tracks long CNY, KRW, MYR and INR positions (equal weights) against JPY.

An important caveat here is that unlike Singapore, the larger Asian economies will be more prone to use a sequence of policy measures—including credit curbs, raising reserve requirements and interest rates hikes—in addition to the exchange rates, as recovery and inflation risks gather momentum. Another key consideration is that growth and interest rate differentials will drive capital inflows, prompting further tightening (or at least no further liberalization) of real estate regulation, credit controls (such as margin requirements) and soft capital controls. The difference is of course that a very small, very open economy can do much less with these alternative routes to tightening than a larger, more closed one. Even though this will not be enough to reverse the general currency appreciation trend, it can increase volatility and limit or reduce risk-adjusted returns.