Yo....How?

StarBiz: IOI Corp Bhd expects minimal disruption to its group operations following the resignation of group executive director Datuk Yeo How, which will take effect end-July. A company spokesman said Yeo, had been instrumental in ensuring there was a strong management team and good corporate culture. “Besides, group executive director Datuk Lee Yeow Chor, who oversees the group's operations, is also familiar with the areas covered by Yeo. “Hence there should be minimal impact on group operations as his impending resignation had already been discussed awhile back,” she told StarBiz yesterday. On Tuesday, IOI Corp announced Yeo would be leaving the group to pursue a new career. It was learnt Yeo could have accepted a job offer by a Singapore-based plantation group.


Credit Suisse Research said in a note to clients yesterday IOI Corp's valuation premium was affected on concerns over Yeo's departure.
It said the “delicate balance” between executive chairman Tan Sri Lee Shin Cheng's entrepreneurship and Yeo's good capital management and corporate governance would be affected. It downgraded IOI Corp to underperform from outperform and cut its target price to RM7 from RM10.


I believe CS’s down grading is way too drastic. The research outfit cuts practically 30% of their earlier target price due to the departure of Yo, er sorry, Yeo. Sure, the new person taking over him must be a super efficient and experienced guy but how would you quantify the 30% cut. Is the calculation like this?: IOI is basically helmed by 3 main Executive Directors or "Pillars"(Tan Sri Lee, Yeo and Lee Yeow Chor). So each person’s contribution would be 30%. Could CS’s drastic downgrading due to its earlier wrong call for IOI at RM10.00 and now to save face…..just whack it to RM7.00 without raising investors’ queries?


However, the IOI Corp spokesman described Credit Suisse Research's comment and inference as unfair to the company and Yeo for his efforts in putting systems in place over the years. Other analysts said although there might be a momentary spike in the IOI's share price, it was unlikely to be permanently impacted by this news. RHB Research Institute said any knee-jerk reaction in IOI Corp's share price should be temporary, given that there was no change in substantial share ownership and Tan Sri Lee was still the main driver of the business. “Yeo's personal shareholding in IOI Corp is only 0.01% and less than 0.01% for IOI Properties Bhd, so we don’t expect any potential major selldown of Esos (employee share option scheme) shares,” it said in a report.


Yes. Yeo has approximately 712,500 shares in IOI and 4,000 shares in IOIP, ie roughly over RM5 m in value.


RHB Research said Tan Sri Lee would already have someone in mind to replace Yeo and a likely candidate would be Yeow Chor, his eldest son who has been on the board since 1996. It maintains its outperform call with a fair value of RM9.35 per share.


True. Yeow Chor could be the candidate, but can he takeover all this functions from Yeo who has been overseeing finance, commodity marketing and palm based manufacturing for all these years? Yeow Chor’s plate is already full (involved in 4 core business sectors: 1)oil palm plantations, 2)oleo chemical manufacturing, 3)specialty fats and oils and 4)property development and investment) unless some of his existing job functions are passed over to the other ED which is Tan Sri Lee’s brother. This man’s job function in IOI is not clear as it was not mentioned at all in the 2007 Annual Report???


IOI Corp closed 10 sen down at RM7.10. It was the most active counter with 13.52 million shares done.


There were initially two questions in my mind when I saw the news yesterday. I hurriedly typed IOI’s share and asked myself whether there were any impact on the share price and IOI's management from Yeo's departure. The computer screen at that time shows the share price was down 10 sen only at RM7.10. With regard to management, I would say IOI has lost a very valuable asset of the company which may take a while to be replaced. This Malaysian CFO of the year holds 3 very important positions in the Group. He overseas the Group’s finance, commodity marketing and palm based manufacturing business units. As such, his resignation from the company would definitely be felt in many years to come and hopefully IOI will be able get another replacement as capable as Yeo soon.

I was then curious to know “Why would a 51 years old man who is the top 3 guy in this award winning plantation company and who has served the company for last 24 years think of resigning?" Although the reason given was “pursue a new career in a Singapore-based plantation group”, it give rise to other more bigger questions. Why did he choose another plantation based company? Are there any unresolved internal conflicts or is it because he felt bored with the challenges in IOI that he would love to experience bigger challenges? Or is he not paid enough? I am afraid only Yeo and IOI would be able to answer them. For your information, Yeo gets on average RM120,000 per month for his work. (Tan Sri Dato Lee gets RM1.83 mil per month while his son Yeow Chor gets RM120,000 per month-Fees, Bonuses, BIK, EPF and other benefits. Source: 2007 Annual Report)



* Isn’t it ironic?…Yeo joined IOI in 1983. According to IOI’s Annual Report, IOI Group’s business within a short time span of 24 years since 1983 has grown tremendously. The Group’s operating profit for 1993 was RM500 m and has now turned into RM2.2b in 2007. Does Yeo brings good fortune to the company too? Will IOI’s fortune remains as good as before?

*AFP: Central Banks in Indonesia, Philippines, South Korea and Taiwan have been reported to be selling USD to prop up their own currencies lately in a bid to fight inflation stemming from the surging oil prices. This stance is a direct opposite strategy from before where the countries weakened their currencies to boost export of their goods.

*SET falls biggest in 4 months by 2.64% yesterday to closed at 833 pts as foreign investors fled the market mainly on growing apprehension about the country’s political instability. Will we be considered a risky political destination one day or are we already one now based on the political tension we are currently facing?

*Indonesia will quit OPEC soon as they are now a net importer of oil. Daily production for the country is 927,000 bpd while consumption is 1,250,000 bpd. As a comparison, Malaysia’s production and consumption is 750,000 bpd and 500,000 bpd.

*China may allow foreign investors to buy/sell its commodities futures via the expansion of the QFII program soon.

China ready for its Futures

Some updates regarding China’s implementation of stock index futures and share margin financing. Both these issues have been circulating in the market since early this year.

Stock Index Futures-Thomson News: China has completed all necessary preparations for the launch of stock index futures, the official Xinhua news agency reported, citing a senior securities regulator.“After two years of careful preparation, all the work is ready,” Xinhua quoted Fan Fuchun, vice chairman of the China Securities Regulatory Commission, as saying at a financial forum in Shanghai.

Stock and Margin Financing- Caijing News: Despite two years of regulatory planning and market speculation, China still has no agenda for addressing potentially risky stock and margin lending. A government official said under condition of anonymity that “a pilot project will not be adopted.” But the official also hinted that stock and margin lending could have a future in China, noting risk control would be a top priority, participants would be strictly selected and only first-tier securities firms may qualify. Lenders should have high credit ratings, the official added, and fund management firms would be barred.


MyTake: To be an international financial market, China must definitely incorporates both futures trading, share margin financing and other forms of trading into its market. It will be interesting to find out what are the rules and requirements proposed by the Chinese Authorities. As China started its financial markets very much latter than most other countries, it is imperative for them to take the best of available standards while improving them further to suit their market environment.

* A "watched" phone doesn't ring, so go back to sleep! What a lousy day at work today. Clients and market players are getting impatient and loosing confidence towards the market by the day. The KLSE CI finishes down 14 points or down 1.07% at 1,261 with a paltry volume of 400m shares. Losers outnumber winners by 2:1. Contrastingly, the Shanghai Stock Exchange went up 83 points or 2.5% at 3,459.

* Maybank’s CEO was ‘grilled” by Members of Parliament today with regard to the bank’s high acquisition price for Indonesian bank BII.

* SHKP’s Chairman Walter Kwok was outsted yesterday. The company named the Kwok brothers' mother as the new Chairman of the company. "Mother knows best" I supposed but I believe the saga has not ended just yet. (discussed here previously).

* Did our Government used its emotion rather than careful thoughts before implementing the “No petrol and diesel sale” for foreign registered cars within the 50km radius of ours/neighbouring countries' borders? Are the subsidies saved more than the foregone spending by foreigners on shopping/entertainment/food/investments etc if they decided not to come here?

* Still on fuel. Hundreds of truck drivers protested in the UK yesterday. Diesel now cost an average of 1.28 pound in the UK. Did you know that the fuel taxes in the UK made up about 63% of the cost of fuel?

GPacket: Priority to deploy WiMax

GreenPacket(GP)'s share price has been very volatile for the last couple of weeks. Its share price was at a low of RM2.20 and shot up to RM2.80 before going back lower to RM2.08 today. One of the main reason given for the sell down was due to the poor 1Q08 results released last week(see below). I was curious to find out whether there are any other reasons for the selldown on this “up and coming ... down”company which was initially listed on the MESDAQ in 2005 before transferring to Main Board last year. Below are some information about this company. Conclusion is at the end of the analysis.

Business Activities

Provides networking product and solutions and converged telecommunication services. Revenue breakdown by region is as follows:-Local 40% Asia/Pacific 40% MENA etc(Middle East North Africa) countries 20%.

Results (Revenue/Net Profit(Loss)/EPS)

'05 RM40m/RM31m/10sen
'06 RM99m/RM56m/19sen
'07 RM123m/29m/9sen
'1Q08 Revenue 22.3m/(2.7m)/-0.8sen nta RM1.25
P/E based on last year eps is 23X

According to the Notes to the Accounts : The 1Q08 loss was mainly attributed to the slower implementation of projects by telecommunication companies in the China market, heavy promotional activities for the broadband business and higher share of losses incurred by the associated companies.

Some of the key 31 Dec 07 balance sheet figures

Cash and bank balances RM242 m
Very low borrowings except for RM4m HP Creditors
Trade receivables RM46mil
Debtors turnover days = 140 days( about 4.7 months) (06: 197 days) Note: Company says normal trade credit terms range from 30-90 days.

Target for 2008

Internal target of triple digit growth in Revenue as its diversification plans start to bear fruit.

Shareholders

Green Packet Holdings/Puan Chan Cheung(CEO) 34.6%
OSK Holdings Bhd 16%
Goldman Sachs International 5.74%
The Goldman Sachs Group Inc 5.74%
And other impressive foreign funds
Top 30 shareholders take up 85% shares available. Balance free float 15%
Market capitalization RM733m (based on RM2.20 per share)

Shares buy back available as Treasury shares to date 4,659,700 shares which represents a 1.2% of total shareholding of GP(purchase price ranges between RM2.18 – 2.93) and cost approximately RM11.6 m based on RM2.50 per share. So far there are no sales of the Treasury shares in the open market. Why are they buying? Is it due to the followings?Confidence with the company’s future potential, company has the funds available, avoiding potential hostile takeovers by buying more shares available in the open market, supporting share prices while company’s diversification plans start to bear fruits or planning to reward the shareholders via share distribution instead of dividends in the future??

New Businesses expected to kickoff for the 2nd half 2008 onwards

1) WiMax (target 25% population by 2008, 35% by 2009 and 46% by 2010. It will starts from Klang Valley and moves towards Johor and Kedah).
2) Collaboration between MCMC, City Hall and P1 on the proposed KL Wireless Metropolitan Project.
3) Software wireless solutions services in line with China's launching of 3G services
4) Other wireless networking solutions business

WiMax

What are the Pluses?

a) GP via subsidiary P1 will be able to capitalized the 1st mover advantage in WiMax . GP has done Malaysia proud as this is the 1st large scale WiMax deployment in SEA and second in Asia after South Korea.

b) Spin-off-Interest from countries egs Indonesia, Thailand, Vietnam and the Philippines which are issuing licenses in the next 6 months to 1 year to work with GP due to its expertise.

c) Intel Capital's RM50m investment in GP (or about RM2.80 per share) will advance and accelerate Wimax’s momentum . (Intel in the latter part of this year is expected to offer WiMax/WiFi/module for notebooks based on its next generation chip Intel Centrino 2 processor technology. Similarly in the US; Intel, Google, Comcast, Time Warner and Bright House has agreed to invest US3.2b in a new joint venture to speed up deployment of next generation mobile WiMax networks).

d) Big potential market. Wimax Forum projects more than 133 m Wimax users globally by 2012. WiMax should be launched at a much cheaper rate than 3G as it is available easier and free from heft royalty fees requires for 3G mobile devices and equipments.

What are the Negatives?

a) Worries about the interoperability of devices in Malaysia and overseas countries resulting customers' decision to wait and see. WiMax Forum has not certify these 2.3 GHz products and transmission equipment yet.

b) Systems have not proven yet to be profitable commercially as it is still new.

c) Market is unsure how fast Intel can come out with its Centrino 2 processor. This smart chip would enable handsets/notebooks and cameras to be WiMax ready.While waiting, 3G companies and Mobile Virtual Networks companies will be all out to outbid each other for a slice of the wireless network customers. Note: TM aims to sign up 250,000 new streamyx customers in the next 7 months in its new campaign targeting rural and urban folks. It has now 1.12 m customers. TM controls 90% of broadband market. (Malaysia's internet penetration rate is 12% only). Speed is the essence.

China Business

The yet to be launched 3G services in China is hampering GP's business take up. However, based on what was reported yesterday, China will give out 3G licenses as soon as the current telecommunication restructuring and the testing of its own 3G systems TD-SCDMA are completed, probably in 6-12 months time. So this good news to GP.

Conclusion

GP has to work very hard to ensure all its targeted business ventures starts off well without much obstacles. It is most important that all the variables fall into place perfectly when the implementation starts. GP has been very forthcoming especially on its WiMax rollout plans and has worked very hard to ensure all systems go with the help of P1's experienced CEO Micheal Lai (ex TM Net CEO). However, GP is in a very competitive market (software/telecommunication and wireless networks). Besides competition from its fellow WiMax providers(Redtone, YTLe and Asiaspace), GP must also fend of 3G companies especially TM as the latter company has the financial muscle, economies of scale and good networks ready to be deploy. Attractive price point or overall value proposition would draw new customers and GP's first major target is the existing TM's subscribers. The WiMax business must start off with a 'bang' as GP needs to counter the slowing down of its existing business. Unfortunately, this year would only be an investment year (RM300m is expected to be spend on WiMax) for the company as it was only expected to make money in the 4th year after it is launched. Question in mind is whether GP and other WiMax providers are able to challenge the 3G operators in terms of offerings and making money in the same time? Do I dare to take a bet on GP now? Err....maybe latter when WiMax is launched.

Note: In the meantime, GP is set to continue buying shares in the open market until the company's business yields result....Notice how this counter provides support around RM2.08 (which is also close to the latest March 08 esos price of RM2.09)

* 3G licenses will be issue in China soon as the current telecommunication industry's restructuring is completed. China Mobile yesterday lost more than 25b yuan after the Government said it will reorganize the industry to help smaller companies. The share was down 7.5% to HKD115.70.

* The Wall St Journal: China has cleared the National Security Fund, which is worth more than US75b to invest more freely with local private-equity funds. Good news for the Chinese markets.

* Redtone ventured into internet tv today to offer alternative channel to viewers via broad band internet connection. It did not mentioned its latest WiMax rollout plans for East Malaysia.

* BT Malaysia: Malaysia's export of palm oil to India has been on a declining basis since 1999. India is expected to import only 142m MT of palm oil for 2008 (2007: 511m, 1999: 2,376m) One of the reason given was that India buys more from Indonesia rather than Malaysia especially the crude palm oil rather than the refined oil.

* Contemporary drawing above by Zheng FanZhi was auctioned off at HKD9.5m(or RM4.75m)!

Technical Analysis - May 26 2008

S&P500 Chart (1,376, last week 1,425 or -3.4% w.o.w)

The daily charts has weakened again during the week although there was some improvement last week. For example, daily MACD is showing a negative cross over 3 days ago. For weekly charts, MACD is slows down on positive cross over and it is still at -10. The MACD Hist is positive. The DMI (+ & -) has weakened drastically and the ADX seems to deteriorated a little (ie from 22 a week ago to 21). The daily charts needs to do better from now otherwise the Index may quickly fall into down trend again. The index needs to defend 1,360 to have a chance to maintain its uptrend. The index is expected to trade between 1,330 and 1,400.

KLSE CI (1,275, last week 1,301 or - 2% w.ow)

The daily charts has weakened during the week. The daily MACD did not managed to stay above water this week and has a negative cross over 2 days ago. The daily DMI (+ & -) has met each other and their is a strong possibility they will have a negative hook down soon while the ADX has worsened(now 15 from 19 a weak ago). As a result, weekly indicators are still showing downward pressure. The index did not managed to stay above the 1,297 and the revised level of 1,286 and as such fallen out of the uptrend channel created since March this year. The index needs to defend 1,250 to limit the down slide.The index is expected to trade between 1,230 and 1,285.

HangSeng (24,714, last week 25,610 or - 3.5% w.o.w )

The daily charts are still weakening as evident from the MACD's negative cross over 10 days ago.. The weekly DMI (+ & -) has a slight negative hook down and the ADX is at 18.The MACD has crossed over positively but slower at -54 from -46 a week ago and MACD Hist is also positive. The Daily Indicators needs to improve this week for uptrend to continue. Immediate support is at 24,000 while resistance is at 25,500.

Nikkei 225 (14,012, last week 14,236 or -1.5% w.ow)

The daily charts deteiorated during the week and the daily MACD as a negative cross over 2 days ago. For weekly charts, MACD has positive crossover and improved to -351 from -400 a week ago and the MACD Hist is positive. The DMI (+ & -) are improving but no cross over yet. The ADX has weakened at 28(last week 30). The index was unable to maintain 14,200 but is expected to trade on the uptrend between 13,800 to 14,600.

* Vromm....... Lewis Hamilton(McLaren -Mercedes) won the F1 Monaco Grand Prix yesterday. This win is his 2nd win of the season, besides the Australian GP. How green are F1 cars these days? Not really green yet, maybe in years to come. In its bid to lower fuel consumption in the race cars, Federation Internationale de I'Automobile in Paris, an organisation that governs much of the world's auto racing proposed 1 1/2 years ago a "10 year total freeze" on engine development to have F1 leading the way to a greener future. It encourages rapid innovation in hybrid and alternative fuel systems eg kinetic energy recovery systems. F1 is behind the curve with regard to green technology. The Indy Racing League already uses 100% ethanol while NASCAR is following soon.

Smart Investing/Trading for the week ending May 23 2008

Weekly US Markets Update and Outlook

U.S. stock market looks for relief from inflation

MarketWatch: Stocks could use a holiday during the coming Memorial Day-shortened week from the escalating energy prices and inflationary data that have dogged the equities market, fueling persistent worries about the ailing U.S. economy."Oil stands a good chance to rationalize its price; it should come down, and we will receive no readings on inflation in the economic-data calendar -- the two things that haunted the market last week," said Art Hogan, chief market strategist. On Friday, stocks sealed weekly losses after a report showing the number of unsold U.S. homes piled up to a 23-year high in April. The Dow shed 145 points, or 1.2%, to 12,479 on Friday. General Motors Corp. led blue-chip losses, falling 4.5% after the automaker said it anticipates taking a $1.8 billion hit in the second quarter and further cutting production. Shares of rival Ford Motor Co. gave up 4.1% after it backed off its often-stated goal of returning to profitability in 2009. Dragged down by the consumer-discretionary and energy sectors, the S&P 500 Index fell 18 points, or 1.3%, to 1,375. The technology-laden Nasdaq Composite Index declined 19 points, or 1%, to 2,444. For the week, the Dow industrials lost 3.9%, the S&P 500 3.5% and the Nasdaq 3.3%.

Crude futures ended last week with a gain of almost 5% after a four-session winning streak, ending at $132.19 a barrel on Friday after briefly touching a record high of $135.09 in electronic trading Thursday. Next week's economic docket will have the government reporting on durable-goods orders in April on Wednesday, with the number expected to slide 1.5%, along with a like drop in shipments. The following day brings a preliminary reading on first-quarter GDP, with is likely to climb 1% from an early reading of 0.6%. Other economic data on Thursday include initial jobless claims for the week just ended, with analysts forecasting a climb of 5,000 to 370,000. On Friday, the government is expected to report a 0.2% rise in personal income for April, while a separate report will offer a reading of manufacturing activity in the Chicago region. On the earnings front, PC giant Dell Inc. reports its fiscal first-quarter earnings after Thursday's market close, with analysts looking for good, albeit not great results.

Weekly KLSE Index Update and Outlook

I Capital on daily KLSE Composite Index. Its attempt on testing the psychological level at 1,305 was short-lived mainly due to inflation concerns over the gravity-defying performance of crude oil price accompanied by a sharp rise in prices of food commodities.Moreover, the possibility of local political defections is still a major concern surrounding the KLCI. Will there be any positive leads for a breakout of the ascending triangle of the KLCI or will it undergo a correction again?

* Jeanne Abdullah was conferred the highest honorary award by the renowned Soka Women's College of Soka University in Tokyo for her significant contribution to and support of the development of women in Malaysia. Please refer here for her outstanding contributions to Malaysian women.

* Fair to all finally? Federal Government has decided to standardise the prices of subsidised goods in Sabah and Sarawak with that being charged in Peninsular Malaysia. Why only now?

* Good news! No hike in petrol price in Malaysia at least until September despite spiralling global crude oil prices. Unfortunately in Indonesia, fuel price was raised by 30% yesterday as the Government could not afford the subsidies that are exploding along with world oil prices. The increase was met by angry students clashes with police.

How high can you go?

AFP: Highlights and lowlights of the long, strange trip to $130+ for a barrel of oil since 1970.

1970: The official price of Saudi crude oil is fixed at $1.80 per barrel.
1974: Prices pass $10 per barrel after the first oil shock, sparked by the October 1973 Arab-Israeli war.
1979: The Islamic revolution in Iran causes a new oil shock and prices top $20.
1980: The barrel surpasses $30 and hits $39 in early 1981 at the height of the Iran-Iraq war.

Sep-Oct 1990: Iraq invades Kuwait and prices rise above $40 per barrel.

Aug 2005: Prices rise above $70 when Hurricane Katrina hits the Gulf of Mexico, damaging major offshore oil installations.

Jan 2, 2008: Prices hit $100 amid concerns over violence in Nigeria, stability in Pakistan and supply problems in the key U.S. market.

Mar 13, 2008: Light sweet crude closes above $110 a barrel for the first time amid fevered speculation over the weakening dollar and China's and India's ever increasing demand.

May 6, 2008: A brighter outlook for the U.S. economy helps push world oil prices over $120 a barrel.

May 21, 2008: Oil jumps to $133.82 a barrel as official data reveal unexpected declines in U.S. energy inventories amid increasing Chinese demand.

MyTake: Somehow, I do not seem to agree totally with the reasons given for the increase in oil prices especially for the period May 2008. Are the events so serious enough to spike the price so high? Are there any other reasons for its increase? Hmm....let me "gue$$"....

* 1Q08 GDP growth for Singapore is 6.7%. April's CPI is 7.5%. April's CPI for Hong Kong is 5.4%

* Pakistan's stocks fall 4.2% today as its inflation rose to 17.2% in April. Central bank is expected to raised interest rate to 12%. Notably, MCB Bank which Maybank has proposed to have a stake was down by 5% today to 320.85 rupees. As we know, Maybank's purchase price is 470 rupees. As such, Maybank is now paying almost 32% more or extra RM0.70b for a 15% stake in this bank! uhh...I can feel the pain in my heart now...don't you Malaysia?!....

* Island in dispute. 1st top Picture: Alleged Singapore's photo of Pedra Branca(background-Johor mainland with hills) 2nd Picture: Alleged Malaysia's photo of Pulau Batu Puteh- Johor mainland with hills which are 7x Larger/Higher than Singapore's. International Court of Justice today rules that Singapore will get this island with a ruling 12-4 in favour of the republic. Wonder whether our local folks will accept the lost in a gentlemen manner? ICJ will probably say "There are many other pressing issues to be tackled...get on with your life la!"

Let this be an early warning

Speculators may be banned from trading commodities in the near future if this proposal is accepted in the US. This proposal may serve as an early warning to speculators to be careful now and not be caught off guard if there are some changes in the trading regulation soon. Will this be the start of Government's interventions in the commodities markets to reduce the eratic spike in the oil prices? Of late, oil prices have shot passed the roof drastically due to various factors including speculation and indeed if not "tackled" soon, may cause poor civilians to riot and economies into recession or worse into stagflation. My comments are in red.



Bloomberg: The chairman of a Senate oversight committee has said he is considering legislation to place limits on large institutional investors in commodities markets, which have posted record prices this year in agricultural products and oil.
I believe the above is one of the many measures which are being weighed on to stem speculation by market players in view of the heightened price volatility in the commodities market in recent months. However, I cannot totally agree that speculators are solely to be blame for the increase in oil prices.


The legislation would be aimed at speculators and other investors who use commodities as a way to hedge against swings in other investment instruments like stocks and the dollar, said Joseph Lieberman, chairman of the Senate Homeland Security and Government Affairs Committee, at a hearing Tuesday.
This view was echoed by the OPEC, Royal Dutch Shell, European Commission(EC) and many industry experts. The EC says " commodity market speculators must bear at least some of the blame for the soaring global food prices and their activities need to be carefully monitored".

Crude oil reached $132.25 a barrel Wednesday, the highest price ever, and it has almost doubled in the past 12 months. Wheat, corn, soybeans and rice have all set record highs this year on the Chicago Board of Trade, spurring food inflation. The Reuters/Jefferies CRB index of 19 commodities surged 31 percent in the year that ended April 30. "We may need to limit the opportunity people have to maximize their profits because a lot of the rest of us are paying through the nose, including some who can't afford it," said Lieberman, Independent of Connecticut. The plunging value of the dollar, the U.S. housing crisis and widespread problems in the banking sector have led investors away from traditional instruments and toward commodities, witnesses said.


Jeffrey Harris, chief economist for the Commodity Futures Trading Commission, told the committee it was clear that there were more institutional investors in commodities. He said they have not systematically driven up prices. Prices "are being driven by powerful fundamental market forces and the laws of supply and demand," Harris said.
It is ironic as most economists comments that I read are almost identical with this guy. Similarly, the US Energy Secretary was quoted as saying the record oil prices fairly reflect tight supplies and strong global oil demand, and speculators were not at fault for pushing oil prices up.


Michael Masters, a portfolio manager for Masters Capital Management, told the lawmakers that investors were buying up commodities and holding their positions, creating an artificial premium. Assets allocated to commodity index trading strategies rose to $260 billion as of March, from $13 billion at the end of 2003, he said.
Wow, an increase of 20x more funds available for hedging and trading within 4 years! More monies to drive the markets. Many funds launched during the passed 2 years are targeting investment in commodities, may it be stocks or futures.


Senator Claire McCaskill, Democrat of Missouri, said the CFTC might be failing to adequately regulate this speculative investing and tighter regulations might be needed. "The people of America are about to pick up pitchforks" as rising food costs pinch consumer budgets, she said. The U.S. Department of Agriculture said Monday that it expected food prices to rise as much as 5.5 percent this year, up from an earlier forecast of 5 percent and the fastest increase since 1989.
Agree with her comments on CFTC totally. This is one area regulators need to look at, and fast.


Harris of the CFTC cautioned against a hasty reaction to recent volatility in commodity markets. "Diminishing the ability of futures markets to serve their hedging and price-discovery functions would likely have negative consequences for commerce in commodities and ultimately for the nation's economy," he said.
Well, the man has to protect his self interest and business. He has to sound like he is a proponent of efficient market theories/hypothesis.

But Masters, of Masters Capital Management, said the CFTC was turning a blind eye toward market-distorting speculation. "Institutional investors are one of, if not the primary, factors affecting commodities today," he told the committee. "As money pours into the markets, two things happen concurrently: the markets expand and prices rise."A report released Wednesday by Greenwich Associates argued that surging commodity prices reflect rising involvement of speculative investors. Greenwich, a research firm, said a third of those investors had been in the markets for less than three years.

Goldman Sachs Group and Morgan Stanley top the rankings of derivatives dealers, followed by Barclays Capital Group and JPMorgan Chase.
Yes, regulators and legislators should start looking at these companies' futures trading records, transactions and contracts immediately.

Masters proposed that the government prohibit commodity index investing as a vehicle for pension funds, curtail swaps trading and reclassify some positions to distinguish between legitimate physical hedgers and speculators.
On a larger context, my solution to contain eratic spike of futures prices while taking into the account of ever increasing demand would be to 1) pressure the US to start appreciating its dollar again, 2) start tightening and amending the rules and regulations pertaining to futures trading to minimise speculation or manipulation (egs increased deposit amount of futures contract, requiring all buyers/sellers stating their reason for buying/selling with supporting documents and investigate all big programmed buying/selling contracts etc) and 3) sudden concerted intervention by Governments in the futures markets(but I suspect it will be difficult to be implemented as it would be costly and subject to heavy criticism). I will not recommend stopping futures trading all together. I know it will be difficult to determine who are genuinely buying the product for hedging, trading, speculating or manipulating. Intervention may distort efficient pricing and against the free market spirit but if nothing is done now, how sure are you that the price we are buying now are not distorted and efficient? (topic was discussed here previously) .

* Some news on the effects of higher oil prices - Singapore's petrol prices could reached S$2.50 (or RM5.80) per litre by year end. If oil price were to hit US180 per barrel, petrol price is the US could reached US6.00 (RM19) per gallon or RM5 per litre [1 gallon=3.79 litres].

* In Paris, fisherman clashed with riot police over rising fuel which disrupted operations at ports and oil terminals.

* In China, at least 5 Chinese provinces' petrol stations are out of diesel or limited diesel for sale as oil firms divert supply from the price-capped retail sector to avoid further losses due to soaring crude oil.

* Did I hear correctly the Senates are planning to sue OPEC for their unwillingness to increase production? Are these people getting despair and running out of solutions to tackle the current issues in hand?

* Have not even mentioned the effects of rising crude oil prices on transportation, food prices and on other products yet.

* Rising oil prices will not have any effect on these people. The top 10 richest in Malaysia based on Forbes survey are:
1) Robert Kuok, US$10 billion.2) Ananda Krishnan, US$7.2 billion.3) Lee Shin Cheng, US$5.5 billion.4) Teh Hong Piow, US$3.5 billion. 5) Lee Kim Hua(Genting) & family, US$3.4 billion.6) Quek Leng Chan, US$2.4 billion.7) Yeoh Tiong Lay & family, US$2.1 billion.8) Syed Mokhtar Al-Bukhary, US$1.8 billion.9) Vincent Tan, US$1.3 billion.10) Tiong Hiew King, US$1.1 billion.

When is enough enough?

FT.com: Fears of a shortage within five years propelled long-term oil futures prices to almost $140 a barrel on Tuesday, further stoking inflationary pressures in the global economy. Investors rushed to buy oil futures contracts as far forward as December 2016, pushing their prices as high as $139.50 a barrel, up more than $9.50 on the day. The spot price hit a record $129.60 a barrel. Veteran traders said they had never seen such a jump and said investors were increasingly betting that oil production would soon peak because of geopolitical and geological constraints. Neil McMahon, of Sanford Bernstein, said: “Peak oil views – regardless of whether right or wrong – are seeping into the market and supporting high prices.” Anne-Louise Hittle, of Wood Mackenzie, added that investors were shifting their focus from the short-term to the medium-term, where supply fears played a bigger role. Since January, long-term futures oil contracts, such as those for delivery in 2016, have jumped almost 60 per cent, while near-term prices have gone up 35 per cent. That trend was exacerbated by T. Boone Pickens, the influential investor who believes world oil production is about to peak as aging fields run dry. He warned that oil prices would hit $150 a barrel by the end of the year. “Eighty-five million barrels of oil a day is all the world can produce, and the demand is 87m,” Mr Pickens told CNBC. “It’s just that simple.” Mr Pickens’s view is still in the minority in the oil industry. But concerns over future oil supplies are fast moving into the mainstream and influencing investors. Politicians have expressed concern that speculators are forcing prices higher and Joseph Lieberman, the influential senator, said he was considering legislation to limit big institutional investors in commodities markets. Some energy executives have warned that geopolitical supply constraints will mean production will not be able to match demand as early as 2012 to 2015. This comes as demand, especially from China, is set to continue to grow, while that of the US slows. Adam Sieminski, chief energy economist at Deutsche Bank, said: “The price is going to go up until governments that subsidise oil consumption in Asia and the Middle East can no longer afford it.” So far China is doing the opposite, having recently retrenched subsidies. Analysts say Chinese demand could surge further as the country faces shortages of coal and hydropower. Nervousness about Chinese energy demand was exacerbated on Tuesday when officials said 32 power plants had been forced to close because of coal shortages. PetroChina and Sinopec, the two biggest domestic oil groups, also have diverted fuel supplies to the quake-hit Sichuan region.



MyTake: So far, nobody has been able to predict accurately how oil prices fare since 2002. Most analyst gets the oil prices forecast by multiplying a certain percentage of increase to the current prices as it move along. According to Reuters, yesterday was the 11th of the last 13 sessions that crude prices have hit trading or closing records, if not both. It seems to me that speculators are testing or dangling higher prices in the long term futures contracts so as to get the short term contracts to move up north further. Technically, crude oil futures may hike up further in the next few sessions before profit taking sets in as the RSI is showing almost 80 representing overbought situation. As highlighted in the chart above, the crude prices growth has been very smooth since late 2006 resulting many investors/traders/hedge funds having full confidence of its upside potential. In general the supporters of bullish oil/commodities provide the following the reasons for the rise a) increased demand(eg China, India, Middle East and other emerging countries), b) supply interruption(due to social/political situations), c) weakening of a main trading currency USD(due to US monetary loosening policy), d) increased money supply(ie "printing money" into the economy resulting "too much money chasing too few goods" e) declining production by OPEC/Non Opec members and f)speculation. Beside comments from Pickens(an oil man turned corporate raider), some of the renowned "oil gurus" from Goldman Sachs like Arjun Murti has predicted oil's "super spike" to drive crude oil to USD200 per barrel in the next 6-24 months. He also says that oil would average about USD141 in the 2nd half of 2008 due to constraints in production, lack of substitutes and lower production. However, OPEC which has been pressured to increase oil production lately seems to think otherwise. I dare not say they are the innocent party or the hapless victim to all these problems. But it argues that the oil prices increase had more to do with financial volatility rather than fundamentals. It also notes that record oil prices are infact slowing down demand. According to OPEC, price increase is due to speculative buying, weak dollar, hedging tool for inflation and geopolitical fears rather than supply shortage.This "speculative buying" argument is supported recently by Venezuelan's oil minister and even Royal Dutch Shell's chairman who says that he was puzzled by the price volatility as he did not see any supply bottleneck. So to the speculators and OPEC members who are watching the possible destruction of economies due to high oil prices, when is enough enough? They will probably tell you back "when we have enough!".



* Some facts and figures on Malaysian oil production. Production per day is 750,000 bpd and exports is 250,000 bpd. So a price increase of USD1 will increased Malaysia's export revenue by USD91m!? Cost of production is probably US30-50 per barrel only. (Note:Saudi's production per day is 8.1m barrel while Russia is 7.1m barrel).


* Government subsidy on oil is RM45b if the oil prices is between USD110-120 per barrel. Government will fork out RM25b while Petronas will pay RM20b.


* Assuming world's oil reserves is about 1.1T barrels, the consumption of say 85m barrels per day will wipe out oil reserves in 35 years but if you increase world's consumption by 5% each year, the years left with oil reserves would be reduced much drastically.

* According to OSK Research, an increase of US1 in oil prices could strip away RM50m from MAS's bottom line and RM10m from Airasia's assuming no hedging and adjustment in fuel surcharge.


* Ramunia's share received a boost today after it has announced it has terminated its RM2.2 billion contract secured from an Indian concern in January as it was unable to come up with the required performance bank guarantees and insurance certificates. This news is considered favourable as MISC has implied that it wishes to review Ramunia's existing projects especially this Indian project before finalising the Due Deligent. (go here for previous posting). So when can the Due Deligent be out ah?

M-shares soon?

TheStar: A group of seven companies from China, with a combined asset value of over RM1bil, is looking at the possibility of listing on Bursa Malaysia. US-based Hampton Court Holdings LLC chief executive officer Dr Marcus Lee, who headed the group that was in Malaysia to study fund-raising opportunities, said each of the Chinese firm was valued at over RM100mil. The companies are involved in various industries such as agriculture, manufacturing and jewellery. Dr Marcus Lee : "We see good potential for Chinese companies to list on Bursa Malaysia. Some of these companies are excited about the prospects of listing on the exchange,”he told StarBiz. So far only a few China-based company have listed on Bursa. Among them is Sino Hua-Ann International Bhd, via a takeover of Antah Holdings Bhd late last year. Another is Media Chinese International Ltd (MCI), the merged entity of Sin Chew Media Corp, Nanyang Press Holdings Bhd and Hong Kong-listed Ming Pao Enterprise Corp Ltd. Media Chinese is also listed in Hong Kong. Lee said the Chinese firms were encouraged by the easier rules on foreign listing in Malaysia. Some of the changes included relaxation on foreign equity, dual listing in Malaysia and other exchanges, full fungibility/tradability across exchanges as well as cross-border mergers and acquisitions and international fund-raising exercises. "The Chinese companies were here to explore fund-raising opportunities via initial public offerings or through commercial and investment banks. If the response (to listing or fund-raising exercise) is good I'm confident there will be many more China-based companies coming to Malaysia. "This (Chinese companies listing on Bursa) is only the tip of the iceberg,”he noted. Lee said many of the chief executive officers who came on this trip were also chairmen of the firms. On the regulatory requirements for listing, he said: “We do not see any major problems as these Chinese companies are very established with solid track record. "We urge the regulatory bodies, including the exchange, to seriously look at this opportunity for Malaysian investors to gain exposure to a huge growing market and a presence in China." On dual listing for China-based firms, he said it could happen via Hong Kong or other exchanges. Dual listing is not new. It's practised in many established exchanges,”Lee said.

MyTake: I am very sure many exchanges in New York, London, Tokyo, Hong Kong, Seoul and Singapore would be glad to take them aboard if they qualify based on their track records. Likewise, these potential companies would rather choose such places before giving Kuala Lumpur a second look. For information, there are now more than 70 top notch Chinese companies listed in NYSE, 100 over companies in Singapore and Hong Kong covering financial, industrial and utilities sectors. These exchanges practise very stringent listing requirements and high disclosure requirements. Are these companies attracted by our less stringent listing requirements? Will we be taking the lesser quality ones? Malaysia has been extremely slow to attract China shares listing compared to Singapore which first started its China shares listing way back in 2002. Remember how we got excited when Avenue Securities says that at least 3 companies from China would be listed by year end 2006 via RTO? One would wonder what have happened to them now. I am also curious to know how would SC ammend its listing requirement policies to be less stringent especially on foreign and local equity participation. Although less stringent listing rules is one of the criteria assessed by these potiential companies, some of the equally important criteria in their evaluation includes sound economic and financial fundamental, favourable legal and investment environment, stable government, high international market liquidity, strategic geological location, complete infrastructure and comparatively high living standards. Does Malaysia has these attributes or at least some of them? How do we fare compare to the other countries?

* Dr M has asked UMNO members to resign in order to force Badawi to step down as UMNO President. Does this man, M above has the courage and sincerity to follow what his dad says?

* Bloomberg reveals that there are at least USD35b in the mortgage related writedowns not reflected in the income statements yet. Global writedowns and credit losses to date is US379b.

* Joint advice from Malaysian Ministry of Agriculture and FAMA: Starfruit is nutritious and can be eaten by anyone except chronic kidney patients undergoing dialyisis treatment.

* BNP Paribas(via TheStar): Taking fundamental and historical patterns into account, the shortest commodity bull market lasted 15 years while the longest was 23 years. BNP expects agriculture commodity prices to rise further over the next 10 years despite having hit record levels. This statement seems to support what was discussed here previously.

* The Standard: Billionaire investor Lee Shau-kee said his investment strategy will switch to aggressive from defensive in August, and he forecasts the Hang Seng Index to hit 30,000 by that time.

Technical Analysis - May 19 2008

S&P500 Chart (1,425, last week 1,388)

The daily charts has strenghtened during the week. For weekly charts, MACD is still improving on positive cross over and it has now improved to -10 from -16 a week ago. The MACD Hist is positive. The DMI (+ & -) is weakening albeit closer with no hook up and the ADX seems to deteriorated a little (ie from 24 a week ago to 22). The index is improving and needs to stay above 1,414 to maintain its uptrend. The index is expected to trade between 1,400 and 1,444.

KLSE CI (1,301, last week 1,285)

The daily charts has improved during the week. The daily MACD managed to stay above water and continuing its uptrend. The daily DMI (+ & -) has a positive hook up while the ADX has improved(now 19 from 17 a weak ago). Weekly indicators are still showing slight downward pressure but is better than last week. The index has to make sure it stays above the 1,297 to avoid falling out of the uptrend channel created since March this year. The index is expected to trade between 1,285 and 1,340.

HangSeng (25,619, last week 26,241)

The daily charts are still weakening as evident from the MACD. The weekly DMI (+ & -) has a slight negative hook down and the ADX is at 19(last week 20). The MACD has crossed positively over at -46 from -138 a week ago and MACD Hist is also positive. The Daily Indicators needs to improve this week for uptrend to continue. Immediate support is at 24,800 while resistance is at 26,400.

Nikkei 225 (14,236, last week 13,655)

The daily charts improved during the week. For weekly charts, MACD has positive crossover and improved to -400 from -495 a week ago and the MACD Hist is positive. The DMI (+ & -) are improving but no cross over yet. The ADX has weakened at 30 but still indicating the strong trend is still intact. The index has broken the resistance of 14,200 and is expected to trade on the uptrend between 14,000 to 14,600.

* Happy Wesak to everyone! Wesak Day is an annual holiday observed by practicing Buddhist in Cambodia, Sri Lanka, Malaysia, Myanmar, Thailand, Singapore, Vietnam, Indonesia, Hong Kong and Taiwan. It is a day where it represents the significance of "The birth, enlightenment and passing away of Buddha"

Smart Investing/Trading for the week ending May 16 2008

US Markets Updates and Outlook

Stocks seek to push higher, along with oil surge

Oil near $128 creates headwinds but also supports market

MarketWatch: Stocks will attempt to continue the market's two-month advance next week, with rising investor optimism about the U.S. economy helping overcome concerns over surging crude and other commodities. "The crude-oil rebound is creating some headwinds for this market," said Paul Mendelsohn, chief investment strategist at Windham Financial Services. "But the market is increasingly under the belief that this widely anticipated recession may have fizzled, or if we are into one, that it's going to be mild." On Friday, the broad market staged a late comeback, with surging oil and gold prices fueling gains in energy, metals and other commodities-related stocks. The Dow Jones Industrial Average fell 5.86 points to end at 12,986.80, pressured by financial stocks American Express Co. and J.P. Morgan Chase & Co. But oil stocks Chevron Corp. helped support the blue-chip index. The technology-heavy Nasdaq Composite Index fell 4.88 points, or 0.2%, to 2,528.85. With the lift from the energy and commodities sectors, the S&P 500 Index rose 1.78 points, or 0.1%, to 1,425.35. For the week, the Dow industrials rose 1.9%, the S&P 500 2.7% and the Nasdaq 3.4%. Stocks have been in rebound mode since mid-March, after the near-collapse and subsequent bailout of Bear Stearns Cos. along with massive interventions by the Federal Reserve and the U.S. government -- seemed to put a floor under the market. Concerns that the high price of oil and food will further pressure the U.S. economy were highlighted Friday by a survey showing consumer sentiment dipped to a 28-year low in May But the report further pressured the dollar, which in turn helped boost the price of oil to a new record high just below $128 a barrel. When the U.S. unit drops, dollar-denominated commodities such as oil and gold become cheaper for holders of other currencies, leading the market to lift their price.

Elusive recession

A litany of economic reports over the past week confirmed overall weakness in the U.S. economy. But the data consistently came above market expectations, which are influenced by forecasts from economists at major Wall Street banks. "We've been getting good economic numbers and earning numbers, which overall have come in better than expectations," commented Mendelsohn of Windham Financial. The credit crisis that began last summer and the associated weakening of the U.S. economy have continued to pressure the greenback. The weak dollar increasingly has become a matter of global concern, as energy and food prices have ballooned all over the globe.

Benign neglect?

At the April 11 meeting of the G7 group of industrialized nations, world financial leaders are believed to have tried "talking up" the dollar, or raising the threat of possible global market intervention to lift the U.S. currency. The buck, which began stabilizing against major counterparts after the Bear Stearns near-collapse in mid-March, began firming up after the G7 meeting. "But you got to be careful what you wish for," warned Ritholtz of Fusion IQ. "The sectors of this market that are doing best are the energy, commodities, and industrials sectors, where all benefit from a weak dollar. A continuing rally in the dollar would have a negative impact on the S&P 500." Besides commodities-related stocks, multinationals' earnings have been boosted by dollar weakness, as U.S.-made goods become cheaper overseas while repatriated profits benefit from currency translation. By boosting exports and profits, the weak dollar is therefore also helping shore up the U.S. economy. This, along with the U.S. central bank and the government's interventions, including tax rebates, are leading some observers to believe that election-year politics might be at work. "The government is pushing the problems down the road, hoping the recession will occur later rather than sooner," said at Windham's Mendelsohn. "In the meantime, keeping the dollar low is part of U.S. policy." "We're also not going to be far from having $1 trillion of stimulus being thrown into the U.S. financial system and economy," the strategist added. "Even if it's all inflationary, the market likes that, and it's right to like it." Data next week will likely continue highlighting further concerns over inflation, when the April producer-price index is reported on Thursday. Friday will bring existing-home sales data for April, as well as another consumer-sentiment survey. On Wednesday, the market's attention will turn to minutes from the Fed's last meeting on interest rates, when the central bank signaled that it would pause its campaign to lower interest rates.

KLSE Technical Update and Outlook

I Capital on the weekly KLSE Composite Index. While it is in the midst of testing 1,305-resistance level, buying momentum is crucial to sustain the breakout. The weekly MACD and DMI are still on the way up but have not confirmed their bullishness yet. Looking at the neutral trend indicators, further consolidatioon is expected. Will there be any fresh leads to push the market?

* Lingam's Video Clip - Probing the Famous 6 - lets hope this is not a political stunt but the beginning of serious actions by the Government to tackle the many abuses of power and corruptions in our country.

* With so many natural disasters that struck us recently causing loss of lives, properties and business, one would wonder how many people have life insurances to protect themselves against loss of life and income. Below are some insurance penetration rates-measured by the ratio gross life insurance premium and GDP of some selected countries:- Malaysia(45% of the population has life insurance, penetration rate 5%), India 4%, China (Beijing/Shanghai 4%, Sichuan province 2%), Singapore/US 8%, Japan/Taiwan 11%. Average developed countries 6-9%.

* Sunday Star: Australia expects a GDP growth of 9.25% next year due to increasing export prices but productivity growth is about 1.4% for the passed 5 years. Inflation now is 4.2% and in order to fight inflation, the Government has proposed in its Budget amongst others: 1) cut spending by A$7b and 2) increase intake of skilled migrants to a record level of >30% (ie 133,500 of the total intake of 190,300 will be skilled migrant) to improve productivity.

HK's Camilla

Reuters: A power struggle at the top of Hong Kong's largest property firm intensified on Thursday after its chairman filed suit against his brothers to stop them firing him, according to the firm and court documents obtained by Reuters. Sun Hung Kai Properties Chairman Walter Kwok, who took leave of absence on Feb 18, accused his younger brothers Thomas and Raymond of trying to have him dismissed without legal basis, and argued that any attempt by the defendants to remove him would constitute a breach of agreement. Kwok added that he believed his brothers had proposed his dismissal because of heath concerns. He said those concerns were linked to a diagnosis of bipolar disorder -- a condition characterized by abrupt mood swings -- that he was contesting. The company said it was seeking legal advice after Kwok filed his suit, which sought among other things to prevent a board meeting called to vote on his dismissal. "Mr. Kwok filed his injunction just an hour before our meeting, and because the court did not have time to deliberate it, we were forced to suspend our meeting," Sun Hung Kai said in a statement on Thursday. "This does not indicate any judgment on the part of the court." The suit marks the latest twist in a saga splashed across local newspapers since February, highlighting a widening rift within a firm touted in a Euromoney poll as Asia's best-managed company in 2007. Sun Hung Kai in March posted a forecast-beating 17 percent jump in fiscal half-year earnings, buoyed by an upswing in Hong Kong home sales. Analysts had said Kwok's leave of absence -- publicly explained by the company as time off for him to go on a series of business trips -- would not unduly affect the stock because of a well-established internal management structure. But Sun Hung Kai shares have fallen 2.4 percent since Kwok's departure, versus a 7.4 percent gain on the main Hong Kong blue chip index. In the suit, Kwok said his siblings had disagreed with his attempts to enhance internal transparency and accountability, especially as related to an investigation into the award of contracts to a select group of contractors. He said that disagreement and others over various management initiatives prompted his brothers to attempt to remove him from his post. Apart from Thomas and Raymond Kwok, who with Walter Kwok had long overseen Sun Hung Kai and are estimated to have a combined fortune of $24 billion, the suit also named more than a dozen others related to the firm.

MyTake: It is a well known fact that the family’s rift started when Walter’s mistress Ida Tong Kam-Hing aka "HK Camilla", begins to meddle and wield increasing power in the Kwok family business. According to Lee Shau Kee (Henderson’s Chairman and Vice-Chairman/non executive board member of SHKP) it was Walter’s mum that forced the leave on Walter over Ida Tong to protect the Kwok’s family business interest. However, I believe it will be difficult to remove Walter as SHKP’s Chairman and CEO and redesignate him to a non-executive post unless the Board of Directors have strong evidence that he is mentally incapable to lead the company or he has failed to perform his duties at the behest of the directors. Furthermore, if he is fired without a cause, the director's contract of service will usually entitle him to compensation and may include a generous “golden parachute” which also acts as a deterrent to his removal. Many Asian businesses are very prone to bring directors' spouses and"partners" into the business and often it does not go down well within the other family members which resulted serious family disputes. For the passed 36 years with the company, Walter has done exceptionally well for this award winning property developer except for a year in 2005 which the developer was criticised for being lack of transparency in its public sales of residential properties to speculators/end users, by practicing “internal sales” of uncompleted units and announcing inflated prices etc. During this period of uncertainty, it would be best SHKP be careful, transparent and forthcoming with its plans with Walter and its strong assurance that the company is still functioning well with a good management team. Any effort lesser than this is tantamount to destroying the confidence of investors placed in this company since years ago. SHKP's market capitalisation is HKD343b and it employs 27,000 employees. SHKP's share price peaked in January 2008 when it hits HKD175.40 per share but is now hovering around HKD133.

* Japan reports a 1Q08 GDP growth of 0.8% today(4Q07 was 0.6%)

* United Nation expects the World economy to grow 1.8% in 2008 (actual 2007:3.8%) It says the economy is on the brink of severe downturn. This estimate is quite different from IMF's forecast of 3.7% growth in 2008 (posted here previously)

* Central bankers in the US and the UK are paying more attention to the way LIBOR is calculated after unusual move in the interest rate and concerns about its accuracy.

* Bursa Malaysia says it may missed the set target of 30 IPO listings for this year. As at 24 April, it has listed 2 Main Board Companies, 5 Second Board companies and 4 Mesdaq companies.