Yea 205, Nay 228

This is really unexpected. The US House representatives voted down the USD700b financial proposal amid an intense "fear and haste" environment. What is really surprising is that only 1/3 of the Republicans voted for Bush's plan while 2/3 of the Democrats voted for it.

Without doubt, the US markets and other world markets plunged like no other business due to losses of confidence in the banking system. Hey, didn't RBA warned us of a "nasty" period earlier here before? New records were created yesterday:

Egs.

* Dow Jones -778 points with USD1.2T value wiped out
* S&P500 worst tumble since Black Monday Oct 19 1987
* Oil slumped more than USD10
* Reuters/Jefferies CRB Index of 19 commodities had its biggest tumble since 1956
* VIX Index- fear index closed at its highest levels in its 28 years of history

The impact of slamming down the proposal will without doubt resulting a possibility to salvage/renegotiate/modify the bailout plan amid with different considerations. The earliest they can do this is on Thursday when the House reconvened and when it is the turn for the Senate to vote. However said, the US public does not seem to be in favour of the plan to be reconsidered again. A poll done by CNN asked whether "Should the House reconsider its rejection of the USD700b economic recovery bill?" The latest verdict : Yes 47% and No 53%. Without the bill, Treasury is in a bind. Without a comprehensive administrative tools, they will need to look at issues of institutions one by one and the rescue will take longer compared to if you have the plan.

Meanwhile the Asian markets which have initially taken the bad news violently when they tumbles more than 4% in early trade closed slightly better. Could a tweaked and modified bailout plan is in the works or markets just closed better due to window dressing for the 3rd Quarter? Irregardless, the longer the time taken to adopt a comprehensive plan will sink US and other economies deeper into recession.

* Reuters: S.Korea and Indonesia will ban shot selling of shares until the end of the year. Hong Kong authorities will monitor short selling diligently.

* Bloomberg: Dexia, world's biggest lender to local government will received USD9.2b bailout from Belgium, France and its shareholders.

Selamat Hari Raya Aidilfitri

On the eve of Hari Raya Aidilfitri, I wish all my Muslim friends an enjoyable and memorable festive season with your loved ones and friends!

Technical Analysis - September 29 2008

S&P500 (1,213, last week 1,255 or -3.35% w.o.w )

The index had another tough up and down week. However, despite that, the daily MACD managed to clinch closer to a positive uptrend, supported by the parabolic SAR. The index needs to continue its push up further if it wants to push back its daily indicators into the positive region again and avoid any fall back. The weekly charts are still in a negative territory. The index may find support at 1,200 and 1,185 while resistance is at 1,250.

KLSE CI (1,021, last week 1,026 or -0.49% w.ow)

The index was lacklustre the whole week. Although most of the daily indicators remained to be weak, the MACD and its Histogram had a slight positive crossover a few days ago. As noted last week, the index needs to work overdrive to turn the daily indicators to a positive position to avoid any broken uptrend. The weekly charts continued to be weak. The index is expected to trade between 1,000 and 1,070.

HangSeng (18,682, last week 19,328 or -3.34% w.o.w )

Despite dropping more than the KLCI and Nikkei during the week, some of the daily indicators like MACD and Parabolic SAR are showing positive signals. The Daily MACD had a positive crossover a few days back but are moving horizontally indicating the market needs to move up very soon to avoid a fall back. The weekly charts are still in a negative territory. There is a common unease that the index may succumb to selling pressure this week/near future as there is a gap to be filled between 17,800 and 18,600 or about 800 points between them. Supports are seen at 18,500 and 17,800 while resistance is at 20,500 and also at 20,900.

Nikkei 225 (11,893, last week 11,921 or –0.23% w.ow)

Like the other markets, the daily indicators are improving and it will need further improvement from the index to maintain the momentum. The Index has much work to do in order to have any positive readings in its daily indicators. The weekly charts are still weak. The support is seen at 11,700 and resistance is at 12,500.

* Newsweek: China's Premier Wen Jiabo: US crisis to hit China. " Ten years ago, China-US trade stood at only USD102.6b. Today the figure has soared to USD302b, a 1.5 fold increase. A shrinking US demand would certainly have an impact on China's exports".

* Bloomberg: The House may consider the USD700b bank rescue package tonight and Senate will vote by Oct 1.

* Bank woes everywhere! (1) Fortis-the largest Belgian financial services firm received USD16.3b rescue from Belgium, the Netherlands and Luxembourg after investor confidence in the bank evaporated last week. (2) UK Bradford and Bingley- Britain's largest lender to landlords may be taken over by another bank or nationalised today. (3) Similar to Wachovia. (4) AIG eyes sales of 15 more business to repay USD85b US government loans.

* Maybank now gets discounts from Temasek and Kookmin Bank- why bargain so hard before this?

* Japan's government today approves an extra budget to fund a USD17b economic package.

* South Korea's won fall to a 5 year low with its intraday high of 1 US: 1,198.3 Kr

Smart Investing/Trading for the week ending September 26 2008

Weekly US markets update and outlook

U.S. stock indexes look to Washington for direction


MarketWatch: U.S. stocks are headed to an uncertain Monday, with investors looking for a weekend resolution to the Bush administration's rescue plan for Wall Street even as another major bank failure fueled worries of more collapses to come. "Traders will probably trade small with the high drama in Washington going on. If we finally do get an agreement, the market will get the lift but it won't last more than a day before the reality of the poor economic backdrop and the upcoming earnings season comes into focus," said Elliot Spar, option-market strategist at Stifel, Nicolaus & Co. On Friday, the Dow Jones Industrial Average ended higher for a second consecutive day, rising 118.20 points to 11,140.26 on hopes that Congress will come to an agreement on the rescue plan this weekend. The blue-chip index fell 2% for the week. Of the Dow's 30 components, 19 ended higher, with financials leading the blue-chip turnaround. J.P. Morgan Chase gained 11%, while Bank of America Corp. climbed 6.8% and American Express Co. climbed 3.82 points to 1,213.00, giving it a weekly decline of 3.2%, while the Nasdaq Composite Index dropped 3.23 points to finish at 2,183.34, a weekly loss of 4%.

Trading volume was roughly half of what would be typical in a more normal trading week, with analysts attributing the decline to reluctance on the part of long-term investors to enter the fray. "It's worth keeping in mind that this is a bear market that is accompanied by a recession, and you shouldn't be increasing allocation to stocks, but holding the line or reducing. What Washington can do is make this a little bit better or a great deal worse. They can grease the wheels of the credit creation mechanism some," said Hugh Johnson, chairman of Johnson Illington Advisors.

Crude oil for November delivery shed $1.13, or 1.1%, to close at $106.89 a barrel on the New York Mercantile Exchange. It ended the week with a gain of 4%. The dollar was slightly higher against the euro Friday but lost ground to the yen and pound, barely budging in the U.S. session as investors waited for developments on the proposed $700 billion financial rescue plan. Treasury prices rose, pushing yields down, as concerns about the economy resurfaced following mixed signals on the status of the rescue package intended to stabilize foundering financial markets. Two-year note yields fell 4 basis points, or 0.04%, to 2.11%.

On Thursday, word that a tentative bailout deal had been reached unleashed a full-scale stock rally, with the Dow closing nearly 200 points higher and breaking a three-day losing streak. The bank package, however, encountered resistance when a White House meeting blew up in acrimony, with House Republicans reportedly rejecting a demand by Democrats that they return to the table. Democratic leaders now say they won't bring the package to a vote unless Republicans support it.

Adding urgency to the financial sector's dire straits was the move on Washington Mutual with regulators seizing and then selling the bank to J.P. Morgan Chase & Co. for $1.9 billion. And, reports surfaced late Friday that Wachovia Corp. was in early merger talks with suitors including Wells Fargo, Citigroup and Banco Santander of Spain. The week ahead brings a slew of economic data, including the employment report for September on Friday. Whether any of the reports prove to be market movers largely depends on if the rescue package is a done deal by the time the data are released.

"Recent data confirm that the economy is already slipping into a full-blown recession. With credit markets frozen, we think that failure to enact a bailout plan would almost guarantee that outcome," wrote Barclays Capital analyst Paul Sheard in a Friday note.

Weekly KLCI Update and Outlook

ICapital on Weekly KLCI. The KLCI has responded negatively to the ailing financial system in the US when it was pulled to drop below 1,000 points last week. Furtheremore, domestic political concerns added volatility to the KLCI. The weekly MACD and DMI continued to plunge deeper into the bearish territories while the stochastic oscillator is still stuck in the oversold position. Apparently, the technical readings will remain discouraging until investors' confidence is restored.

* Singapore's first F1 night racing is on! Who says space is a constraint in Singapore?

* Another eventful week for politics. Umno General Assembly brought forward to March 2009, Badawi to decide whether to decide on contesting for UMNO top spot by Oct 9, Teresa Kok gets egged/racial/vulgar/life threatening warnings/petrol bomb etc, Anwar plotting quietly?....

* While we are at that...the Chinese Taikonaut has done the country proud with their first ever space walk in history.

* Baltic shipping rates slumped the most in 23 years!

* Why does Bank Negara need to tell Maybank they are buying BII at an exorbitant price? Don't the mangement of Maybank knows? What happened to Maybank nowadays? Where have the prudence gone? The minority shareholders and public are not stupid you know? Bank Negara should also have a look into Maybank's acquisition of MCB of Pakistan.

* AFP: NZ in recession in the first half of the year. 1Q = -0.3%, 2ndQ = -0.2%. NZ's last recession was in 2nd half of 1997 and early 1998 amid the Asian financial crisis.

* China has approved its short selling and margin loan facilities for its stock markets. Watch the Chinese markets get battered further?

Panic....You sell, I sell

While we wait with bated breath on whether the USD700b bailout bill would be signed into a law by the US Congress within the week to steer the US markets from a financial disaster; Japan, China and other larger holders of US government debt are watching each others moves and stances regarding the hugh debt investments they are holding. They may be asking themselves "Should we sell first or wait?", "Are our investments safe?" or "Will US default in the debt?". I believe this is worrisome as any of the big selling of IOU may trigger panic selling among the others as well. Will any form of agreement between the holders as suggested below help to stem the possibility of panic selling?

Bloomberg: Japan, China and other holders of U.S. government debt must quickly reach an agreement to prevent panic sales leading to a global financial collapse, said Yu Yongding, a former adviser to the Chinese central bank.

``We are in the same boat, we must cooperate,'' Yu said in an interview in Beijing on Sept. 23. ``If there's no selling in a panicked way, then China willingly can continue to provide our financial support by continuing to hold U.S. assets.''

An agreement is needed so that no nation rushes to sell, ``causing a collapse,'' Yu said. Japan is the biggest owner of U.S. Treasury bills, holding $593 billion, and China is second with $519 billion. Asian countries together hold half of the $2.67 trillion total held by foreign nations.

China, Japan, South Korea and others should meet soon to seal a deal, said Yu, a former academic member of the central bank's monetary policy committee. The talks should involve finance ministers, central bank governors and even national leaders, he said.

* Bloomberg: 3 months interbank offered rates rose in Singapore, HK and Australia today as concerns that the US law makers may delay or dilute the Treasury Department's USD700b plan to bailout the banking system.

UN's World Investment Report: Outflows of FDI from Malaysia rose to USD10.98b last year from USD6.04b in 2006. Inflows increased to USD8.4b last year from USD6.04b in 2006.

* Fuel prices reduced again today for the 2nd time in 2 months. RON 97 RM2.45 per litre(Previous:RM2.55), RON 92 RM2.30(Previous RM2.40) and Diesel RM2.40 (Previous RM2.50) Crude oil is currently trading at USD106 per barrell.

* A quarterly survey by the Chinese Central Bank showed that residents' interest in buying a home had dropped to a 10 year low as China's property market enters a downward correction.

* China Economic Review: Foreign funds will return home as RMB slows against USD. China's currency has lost 0.45% against the USD since June this year.

Now Warren Buffett smells blood....

"... the catalyst needed for the market to start its meaningful uptrend is not here yet but will only come about when Warren Buffett and the likes start buying in the market or when states and pension funds, national funds or even tax payers monies are being used to prop up badly beaten stocks (HK uses it successfully in 1998) and the buying of defaulted housing loans and schemes from banks and companies. These type of intervention is not talked about as it touches on bail-out, especially this year is an election year. However, if things get real tough, these desperate measures will probably save the day".

This was what I wrote on March 19 this year(here) after the Fed Reserve lowered its Fed Fund rate by 75 basis points to 2.25%. At that time the US markets have gone down by more than 10% in less than 3 months and many were asking whether we have reached the bottom then and are we seeing light at the end of the tunnel? So another half year latter now and with the US financial markets tumbling almost 15% to date, the billion dollar question arises again. As you probably notice, the main difference now compared to then is that tax payers monies are now being used to rescue companies(Bear Stearns- Fed backed/Fannie/Freddie/AIG)and financial experts like Warren Buffett (investing about USD5b in Goldman Sachs) are slowly coming into the picture and these are probably some of the important points to note indicating markets are getting desperate while going from bad to worse and shrewed investors are taking opportunity to buy certain good value stocks with a bargain. Based on these facts and technical charts, I believe the US markets could have found its temporary bottom last week. The technical indicators for S&P500 are still not showing any positive signs yet and will provide a big confirmation if it does with fresh buying momentum in the coming weeks. The road ahead is still very rocky with high probabilities that many more big corporate names going under and more house buyers defaulting loans etc. In the meantime, Americans must take this crisis to seriously improvised, take some financial beating(including the egos) and shedding excesses along the way...otherwise the recovery ahead would be slow and painful...

* Bloomberg: Warren Buffett stands to gain USD437m on the Goldman Sachs's deal deal!

* FBI investigationg companies(Fannie/Freddie/AIG/Lehman Brothers) at the heart of financial meltdown. This is a good move. Find out what went wrong and how to improve from here.

* Bloomberg: Pakistan may default on its debt soon? Moody's Investors Service cuts its outlook on the country's credit rating on Tuesday. Citing heightened prospects of "missed repayments" on the nation's debt. Pakistan's government debt is the riskiest in the world. I shivered thinking Maybank's investment in Pakistan.

* Malaysia's August inflation at a 27 years high at 8.5% . Other countries' inflation seems to peak in July and starts to tapper off in August

Have a speedy recovery!

Most of the world leaders are hoping and praying hard that whatever effort put up so far by the Federal Reserve will help progressively to stem the financial malaise facing by the US currently. As mentioned by Bloomberg, the latest financial aid of USD700b (and the final tab could be more than USD1T) which is more than 70% of US's GDP to stabilise the banking system will caused the country's national debt to reach the highest level since 1954 and a budget deficit exceeding USD1T. It is without doubt the US bond prices and the USD will be weakening further...crude oil and other commodities prices will be stronger. I believe the hope/pray for a speedy recovery will not be granted till much latter time down the road. The US economy(and others as well) are still fragile, credit and property bubble are still there, inflation making a comeback from hiding and most importantly confidence has not returned yet.

China Daily: China hopes the steps the US is taking to stabilize its financial market will bear results soon, President Hu Jintao told his US counterpart George W. Bush over the phone Monday. The Foreign Ministry said the conversation followed Bush's request a day after the Federal Reserve (Fed) agreed to change its last two major investment banks, Goldman Sachs and Morgan Stanley, to bank holding companies.

Hu told Bush: "We have noticed the US has taken some important measures to stabilize its domestic financial market, and we hope they achieve quick results and improve the economic and financial situation."


The two leaders spoke at the end of a weekend of intensive talks between the Bush administration and the US Congress to hammer out details of a rescue plan. The administration has sought an unprecedented $700 billion to bail out the financial market and prevent the economy from plunging into a deep recession.

Hu said the US plan was both in the interest of the US and China. "It is conducive to maintaining stability in the global financial market and promoting a stable and healthy development of the world economy."

Briefing Hu on the US financial situation, Bush said the American government has realized the seriousness of the financial problem and would take further steps to stabilize the domestic and global markets. Seven Chinese banks reportedly hold more than $720 million worth of bonds issued by the collapsed investment bank, Lehman Brothers. But China's capital controls and the overwhelming domestic focus of its banks and insurers have so far largely insulated it from the effects of the Wall Street turmoil.

Nevertheless, a thriving US economy is in great interest of China because it has invested an estimated two-thirds of its $2-trillion foreign exchange reserves in dollar bonds. China is a big holder of US treasuries and debts issued by the two mortgage giants, Fannie Mae and Freddie Mac, too, which the Bush administration nationalized this month.

Hence, a drastic rise in the US government's debts, which will push down bond prices and/or lower the dollar's value, would mean a huge loss for China.

The financial turmoil has seen many a Wall Street giant being humbled. Lehman went bankrupt, Merrill Lynch was bought by Bank of America, AIG had to be rescued by the US government and Fannie Mae and Freddie Mac were nationalized.

The latest change on Wall Street, undergoing the biggest restructuring since the Great Depression, saw the Fed changing the status of Goldman Sachs and Morgan Stanley from investment banks to bank holding companies.

The change will allow them to open commercial banks that will take deposits and bolster their resources. The request to change the two investment banks to bank holding companies was granted by a unanimous vote of the Fed's board of governors late on Sunday. The change also means the two companies will be under the direct regulation of the Fed, which exercises jurisdiction over the country's bank holding companies.The two institutions' banking subsidiaries will face stricter regulations - the same as commercial banks.

* now RPK is sent to Kamunting to be detained under ISA for 2 years or more.

* People's Daily: Indonesia is to delay its announcement of inflation in September and export figure from earlier schedule on October 1 due to Hari Raya Aildil Fitri's celebration. Central Bank's estimates is between 11.5% - 12.5%.

Technical Analysis - September 22 2008

S&P500 (1,255, last week 1,252 or +0.23% w.o.w )

Despite 2 impressive closings(Thursday and Friday) last week, the daily MACD, RSI, Stochastics Indicators and DMI (+ and -) continue to be weak although some form of improvement can be seen.The index went to a recent low of 1,134 during the week. There is a possibility the good closings on the two days indicate a technical rebound after reaching a temporary bottom scenario.The rebound came about as the stochastics and RSI were both at an oversold position. The weekly charts are still in a negative territory. The index needs to continue its uptrend if it wants to push back its daily indicators into the positive region again. The index may find support at 1,210 and 1,185 while resistance is at 1,320.

KLSE CI (1,026, last week 1,044 or -1.7% w.ow)

The daily indicators remained to be weak despite an impressive closing on Friday. During the weak the index went to a recent low of 963. There is a possibility the good closing on Friday indicates a technical rebound after reaching a temporary bottom scenario.The rebound came about as the stochastics and RSI were at an oversold position. The weekly charts continued to be weak. The index needs to work overdrive to turn the daily indicators to positive position. The index is expected to trade between 1,000 and 1,070.

HangSeng (19,328, last week 19,353 or -0.13% w.o.w )

Despite 2 impressive closings (Thursday and Friday) last week, the daily MACD, RSI, Stochastics Indicators and DMI (+ and -) continues to be weak although some form of improvement can be seen. The index went down to a recent low of 16,284 during the week. There is a possibility the good closing on the two days indicate a technical rebound rather than the reaching of a bottom scenario. The rebound came about as the stochastics and RSI were both at an oversold position. The weekly charts are still in a negative territory. The index needs to continue its uptrend if it wants to push back its daily indicators into the positive region again. However, the index may succumb to selling pressure this week/near future as there is a gap to be filled between 17,800 and 18,600 or about 800 points between them. Supports are seen at 18,500 and 17,800 while resistance is at 20,500 and also at 20,900.

Nikkei 225 (11,921, last week 12,215 or -2.41% w.ow)

Despite an impressive close on Friday, the daily/weekly indicators are still in the negative territories. During the week it went down to a recent low of 11,301. As in other markets, there is a possibility the Nikkei is currently in a technical rebound after reaching an oversold position during the mid week. The Index has much work to do in order to have any positive readings in its daily indicators. The support is seen at 11,700 and resistance is at 12,500.

* Bloomberg: Goldman and Morgan Stanley -investment banks have now become banks regulated by the Federal Reserve to widen their sources of funding.

* Say No to short sell if it does not work in your favour....UK, Australia and Taiwan are following the US's footsteps....

* BT: This year has probably the slowest IPO since 1989 for Bursa. So far only 18 companies have been listed compared to 30 targeted.

Smart Investing/Trading for the week ending September 19 2008

US Markets Update and Outlook

Marketwatch-Investors are putting behind them one of Wall Street's most tumultuous weeks in the hope that government plans to take the bad assets of ailing financial firms off of their balance sheets will help stem the year-long credit crisis. "It was the booster shot that the market was looking for," Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank, said of the government's measures. "Next week, people will want to get more details on how this whole thing is working then we'll start looking at economic numbers again." As markets went into freefall over the past week, members of Congress, along with the U.S. Treasury, the Federal Reserve, and the Securities and Exchange Commission, hammered out plans to enact an emergency rescue package for a financial system that had reached full-crisis mode. On Friday, the Dow Jones Industrial Average jumped 368.75 points to end at 11,388.44. The market had already rallied Thursday in anticipation of the move and of measures aimed at protecting the stocks of 799 financial firms. Over those two sessions alone, the Dow rallied 778 points, or 7.3%, marking its biggest two-day point gain in eight years.

A long-awaited plan

The government's plan includes efforts to relieve financial firms of assets linked to bad home loans, which have been at the center of the credit crisis that flared up in August of 2007 and led to the collapse of investment firm Bear Stearns in March and of Lehman Brothers on Monday. "This was what we needed to happen, to remove those assets dwindling on balance sheets," Fitzpatrick said. "We have a much better picture today onto how we're going to work our way out of this," he said. "Taking out the big names on Wall Street was not working as we had also started taking out some high-quality names along with it and we were seeing a spill-over into other asset classes." The inability to price those bad assets nearly brought lending between banks to a halt over the past week, forcing central banks around the world to take extraordinary actions, including large injections of liquidity into the system. The S&P 500 Index gained 48.56 points to finish at 1,255.07. The Nasdaq Composite Index jumped 74.80 points to end at 2,273.9, giving it a 0.6% gain for the week.

But the nearly flat finish for stocks doesn't tell the whole tale. As Lehman Brothers sought bankruptcy protection, the Dow industrials tumbled 504 points on Monday, its worst point drop since Sept. 17, 2001. As investors fled to safety, government bonds surged, and yields on two-year notes also surged the most since 2001 Monday, before jumping by the most in more than 20 years Friday. Gold jumped more than $70 an ounce on the New York Mercantile Exchange Wednesday, its biggest one-day jump in dollar terms since at least 1980. In electronic trading Friday, the precious metal then tumbled by more than $68, its biggest drop in 28 years. The volatility index, otherwise known as the market's fear gauge, spiked to its highest level in six years.

On the New York Stock Exchange, trading volumes for all shares traded by the NYSE Group spiked to 4.2 billion on Thursday, the highest on record. "What we can say is that volatility is extremely high by historical standards," said Ken Tower, senior vice president at Quantitative Analysis Services. "What we need to see is volatility to come down, as it reflects market uncertainty," he said. "Let's see more about the government's plan and what the market makes of it on Monday."

Once the dust settles

"We've now weathered this recent storm," Tower said. "If somebody wants to talk to me about a two or three months rally, then OK. But it's not the end of this overall downturn, with the economy still going down the drain." On Wednesday, Fed Chairman Ben Bernanke will present the central bank's economic outlook to the Joint Economic Committee in Congress. Ahead of this on Wednesday, investors will get another glimpse of the state of the housing market, with data on the sales of previously-owned homes in August. New home sales data will come out Thursday. Also on Thursday, data on orders of big-ticket items, or durable goods, will be released, along with the weekly jobless claims tally. On Friday, the final estimate of second-quarter growth will come out. Once investors digest the government's actions, "we'll get back to an economy that's slowing and the market has to get back to dealing with that," said Deutsche Bank's Fitzpatrick.

KLSE CI Technical Update and Outlook


ICapital: On Monthly KLSE CI. Its monthly MACD is bearish while its stochastic oscillator is grossly oversold. The recent sharp descent is due to the financial turnmoil in the US and also the local political worries. The melting of confidence among investors suggests that we will likely continue to see an uptake in volatility until the technical readings turn around. As the KLSE CI is now nearing the 50% retracement target, will the KLSE CI be able to bounce off this support?

* An estimated USD700b may be used to bailout financially distressed US banks/insurers and other related entities. Now as the government gets involved with private mortgage related assets which cannot be valued and trade, who will finally bear all the losses?

* Mahathir and his pegging suggestions....plz...once is enough for us to suffer for years...

* Still wanting to intervene...China will do away with the stamp duty levied on stock purchase and use government funds to buy shares to support the mainland stock market.

The richest men in the US

Below is the latest Forbes report on America's richest men.

Forbes: The rich haven't gotten richer--or poorer--this year. The price of admission to this, the 27th edition of The Forbes 400, is $1.3 billion for the second year in a row. The assembled net worth of America's wealthiest rose by $30 billion--only 2%--to $1.57 trillion.

Rising prices of oil and art paved the way for 31 new members and eight returnees, while volatile stock and housing markets forced 33 plutocrats from our rankings.

With a net worth of $57 billion, Bill Gates remains the richest man in America despite losing his crown to Warren Buffett for a few months this spring. Buffett's shares in Berkshire Hathaway have fallen 15% since February.Newcomers to the list include fertilizer tycoon Alexander Rovt, car dealer and art collector Norman Braman and Patrón tequila founder John Paul DeJoria.

Also new: Mark Zuckerberg, the 24-year-old founder of social networking site Facebook, who debuts on The Forbes 400 with an estimated net worth of $1.5 billion.

Among the returnees are Urban Outfitters chief Richard Hayne and Gap founders Donald and Doris Fisher, who rode the swelling contemporary-art market back onto the list. The couple's art collection is believed to be worth more than $1 billion.

The Forbes 400 is a snapshot of estimated wealth on Aug. 29, 2008, the day we locked in prices of publicly traded stocks. Given how unsettled the stock market is, some of those on our list will become significantly richer or poorer within weeks--even days--of publication. Many, including AIG shareholders Eli Broad and Steven Udvar-Hazy, have lost hundreds of millions of dollars.

The average net worth of The Forbes 400 is $3.9 billion.

The biggest loser this year was casino mogul Sheldon Adelson, whose fortune has fallen $13 billion in the past 12 months--$1.5 million per hour--as shares of his Las Vegas Sands have dropped 75% from their all-time highs last October.Fellow casino kingpin Kirk Kerkorian lost $6.8 billion this year as his stock in MGM Mirage fell 70% since last fall.

Other tycoons who have lost big bucks this year include Min Kao of global positioning system maker Garmin (down $2.9 billion), Google guys Sergey Brin and Larry Page (down $2.7 billion and $2.6 billion, respectively), eBay founder Pierre Omidyar (down $2.6 billion) and media maven Sumner Redstone (down $2.5 billion).

This year's biggest gainer is New York City Mayor Michael Bloomberg, whose estimated net worth rose $8.5 billion after he bought back a 20% stake in his financial data and news firm Bloomberg L.P. from Merrill Lynch this summer, finally putting a price tag on the private media outfit.Several Forbes 400 veterans fell off the list this year. Among them: former AIG head Maurice (Hank) Greenberg and former eBay chief Margaret Whitman.

Two-thirds of the members of The Forbes 400 have fortunes that are entirely self-made, while only 19% of the group inherited their entire fortunes.There are 42 women on the list with an average net worth of $4.2 billion. Oprah Winfrey saw her wealth increase $200 million to $2.7 billion.

Six members of last year's list died, including potato king John Simplot and building supplies magnate Kenneth Hendricks. He is replaced by his wife, Diane. Other deaths included medical device inventor James Sorenson and Cargill heir John Hugh MacMillan III. Read the rest of the report here.


* Kicking the ball back to Badawi. Will Badawi convene an emergency parliament meeting on Tuesday to suit Anwar? I really don't think Badawi will accede to Anwar's demand.

* Markets go "V" shape today...HangSeng was down more than 1,350 points or 7.7% during intraday but closed almost unchanged...Singapore's STI was down more than 110 points or 4.6% -intraday but closed unchanged...KLSE was down almost 40 points or almost 4% -intraday but closed unchanged....no no no it closed down 11 points or 1.1%.

* Mergers and acquisitions ...Lloyds TS is set to acquire HBOS for USD22.2b, Morgan Stanley is considering a merger with Wachovia and several banks, WaMu gets bids from JP Morgan, CitiGroup and Bank of America.

Bloomberg: The FTSE Group has promoted South Korea's stock market KOSPI to "developed" status effective September. As such, it could potentially attract funds amounting to USD3T investing in its market.

Knock! Knock! Who is at the door now?

The Federal Reserve has of late doing "bailouts" of near collapsing companies. These kind out bailouts were previously considered a bane in the western world and was used as an excuse to slam the Asian governments during the Great Asian financial crisis of 1997. Heard of this saying before, "Profits are privatised, losses are nationalised"? Well, free market is only good if it works in your favour. So who will be next come banging or rather begging at the door?

Reuters: In one $85 billion fell swoop, the U.S. Federal Reserve may have wiped out what credibility it won resisting Lehman Brothers' rescue plea and opened its door to countless other companies to come calling for cash.

By providing a massive loan to American International Group on Tuesday, just two days after refusing to use public funds to save Lehman Brothers from bankruptcy, the central bank also invited tough questions on how exactly it determined whether a company was too big to fail.

Between the $29 billion the Fed pledged to swing the Bear Stearns sale to JPMorgan in March, $100 billion apiece to rescue mortgage finance firms Fannie Mae and Freddie Mac, up to $300 billion for the Federal Housing Authority, Tuesday's $85 billion loan to insurer AIG and various other rescue deals and loans, taxpayers are potentially on the hook for more than $900 billion.

"They pretended they were drawing a line in the sand with Lehman Brothers but now two days later they're doing another bailout," said Nouriel Roubini, a professor at New York University's Stern School of Business.

"We're essentially continuing a system where profits are privatized and...losses socialized," Roubini said, adding that auto makers, airlines and other struggling businesses would no doubt be asking for government help too.

The government was hard pressed to say no to AIG because of concerns that its collapse would harm thousands of companies around the world and cause chaos in the $62 trillion market for credit default swaps, where it is a big player.Many on Wall Street were clamoring for a rescue earlier on Tuesday, and AIG's share price swung wildly throughout the day as rumors swirled of an on again, off again government rescue.

But Roubini said instead of handing out money to firms that made bad bets -- which could inadvertently encourage more risky behavior if companies think they have a safety net -- the government should be buying up mortgages and rewriting the terms so that households are not buried in debt.

STRINGS ATTACHED

To be sure, the Fed attached quite a few strings to its AIG funding deal. The loan carries a high interest rate, the government can veto any dividends, and AIG is expected to sell assets over the next two years to repay its debt. Senior management will be replaced.

But the central bank also followed a pattern established with Bear Stearns in March and repeated with Fannie and Freddie earlier this month of essentially wiping out shareholders while protecting those who held debt.

Some economists warned that investors had caught on and were betting on future bailouts by selling stock and buying bonds in struggling firms. That ends up pushing down a company's share price, which can exacerbate its troubles."If the message is that any time something like this pops up we're going to wipe out the equity and coddle the bondholders, that is its own sort of moral hazard," said Michael Feroli, an economist with JPMorgan in New York."I don't think you have to be a die-hard free market advocate to be at least a little bit concerned."

BERNANKE ON THE HILL

Fed officials said that they needed to act because of AIG's extensive involvement in financial markets. Through its insurance, risk and asset management businesses, AIG has dealings with many thousands of companies all over the world, so a bankruptcy would have had huge global repercussions.

RBC Capital Markets analyst Hank Calenti pegged the market impact of an AIG failure at more than $180 billion, or about half of the total capital that financial firms have raised since the beginning of the credit crisis last year.

But JPMorgan's Feroli said the Fed could have chosen to let AIG fail, just as it had done with Lehman.

"We don't know if the disease would have been worse than the medicine," he said. "We'll never know. But we know we lived through Lehman."

He said the central bank needed to clearly explain when and why it would act to salvage a company in jeopardy or face the prospect of a long line of companies seeking bailouts.

Fed Chairman Ben Bernanke, who has stayed out of the public eye during the Lehman and AIG drama, is due to testify before a congressional committee next week and can expect some pointed questioning, Feroli said.

"He needs to provide some sort of clear demarcation of what is or is not a systemic risk."

"Of the many unconventional actions taken by the Fed in the current crisis, this may likely prove to be the most controversial and should make Bernanke's...testimony on Capitol Hill an interesting event."


* Badawi and Najib swapping post. Badawi is now Minister of Defence while Najib takes over Minister of Finance. Badawi getting ready.....?

* Cakap tak serupa bikin: Bank of Korea Governor says "Foreign exchange rates should be set by the market" Question. Why all the intervention by the Korean government for the last few months to arrest the steep fall in Won currency then?

* Reuters: Good news!We should learn from them? The Philippines had a budget surplus of USD36m in August despite an increase in infrastructure spending to try and shield the economy from global turbulence.

* Bad news for Maybank's shareholders. In a new twist of event, Bank Negara has reinstated its approval for the bank to buy BII after Bapepam says it is willing to give special treatment to the bank by giving it more than two years to cut its stake in BII by 20 per cent subject to certain conditions. The share is currently at RM6.90 ie down 6.8% or 50 sen.

* The Fed Reserve left the Fed Funds rate unchanged at 2% yeasterday.

* BT: Aviva's Consumers Attitudes to Savings 2008 reported most Malaysians prefer to opt for safe mediums such as savings account rather than stocks and other investment vehicles. The most common is the savings account(94%), savings policy-life insurance(35%) and Unit Trust (23%).

China going for growth

Seekingalpha.com: China cut their benchmark central bank rate for the first time since February 21st, 2002. The People's Bank of China cut their one-year lending rate from 7.47% to 7.20%, which will be effective today.

Above we highlight a chart of China's central bank rate and its Shanghai Composite equity index over the last ten years. As shown, rates rose in lockstep with China's equity markets from late 2005 to late 2007.

As the Shanghai Composite has nearly given up all of its bull market gains since 2007, China's 1-year lending rate had remained the same in the face of rising inflation and continued GDP growth. Based on the chart above, however, rates may have a ways to go on the downside.

MyTake: The latest economic data for China does provide two important facts:1) growth is slowing and 2) inflation seems to have peaked in July and is coming down. China seems to believe it can afford to go for monetary easing now to push for growth again. Besides reducing interest rate, China also reduces the Reserve Requirement ratio from 17.5% to 16.5%. So with these monetary easing steps being implemented, expect to see the slide in RMB soon!(and stock market to go up, in theory...) The slide my be capped by China's narrow and managed currency trading bandwidth. Will the hot money rush out of China from now? I expect some form currency intervention and funds outflow management to be implemented soon.The slide may be a blessing to to China as it strengthens its grip in international exports further. The US/Europe would definitely be very unhappy!

* Sept 16 come and go? Wait for another 2 days?

* After Dow's 4.4% drop overnight, Asian markets are all in a sea of red...drop ranging from 1.5% to 6%.

* Crude oil for Oct 2008 delivery is now at USD91.8 per barrel. Will Badawi or Anwar be announcing the cut in petrol and diesel prices this time?

* Bloomberg: Cash infusion in the financial system. The Fed Reserve has added USD70b in reserves to the US banking system. Bank of Japan and Reserve Bank of Australia added USD14.4b and USD1.7b respectively. Similar actions are being implemented by ECB, Bank of England and Swiss Central Bank.

* Bloomberg: Washington Mutual is cut to Junk by S&P due to mortgage losses.

* BT: Jakarta rejects Maybank's special appeal and as such the pact to buy BII will probably be lapsed by September 26. Maybank now risks losing its RM480m deposit. However, the lapsing of the highly expensive deal should be viewed positively as evident by the today's upgrading by AmResearch and Affin.

Technical Analysis - September 15 2008

S&P500 (1,252, last week 1,242 or +0.8% w.o.w)

The daily MACD and DMI (+ and -) continues to be under pressure last week and are still in negative hook down. The weekly charts eg MACD has also deteriorated and is also in a negative territory. The index is currently very weak. The index may find support at 1,200 while resistance is at 1,280.

KLSE CI (1,044, last week 1,071 or -2.5% w.ow)

The daily MACD finally succumbed to heavy selling last week and turned negative during the week. The weekly charts continued to be weak. The index is expected to trade between 1,025 and 1,100.

HangSeng (19,353, last week 19,933 or -2.9% w.o.w ).

The daily/weekly indicators are all in the negative cross over. The daily 200 days ema is at 19,800. At this moment, it is unlikely this level will be maintained and as such the next support levels are at 18,500 while resistance is at 20,500 and also at 20,900.

Nikkei 225 (12,215, last week 12,212 or +0.02% w.ow)

The daily/weekly indicators are in the negative territories. It will probably take another week of selling before the market to set a technical rebound again. The support is seen at 11,700 and resistance is at 12,500.

* So will tomorrow eventually be a non-event? The political events that build up to the eve of September 16 are surely "hot" stuff though.

* the markets certainly will be heading south tomorrow(not to mention today) judging the market news for the last 24 hours. Merril Lynch will be swallowed by Bank of America which values ML at USD44b, Lehman Brothers ready to file bankruptcy and AIG requires some bridging loans worth USD40b. Will the firewalls that ring fencing to the rest of the US financial system hold against the engulfing financial contagion. Markets in Japan, HK, China and South Korea are closed for mid-autumn festival today. Sell down will start tomorrow for them! Opps your lanterns are on fire!!

* TheEdge: Deutshce Bank slashes its KLCI year end estimates to 975 points and calling it "Underweight".

Smart Investing/Trading for the week ending September 12 2008

Weekly US Markets Update and Outlook

Stocks' direction hangs on Lehman's fate
On tap: Hurricane watch, Fed meeting, Goldman, Morgan Stanley earnings


MarketWatch: The direction of U.S. stocks next week will largely depend on the fate of Lehman Brothers amid widespread speculation that the beleaguered 158-year-old investment firm may be bought out or bailed out before the weekend is over. "That seems to be on top of everybody's minds," said Robert Pavlik, chief investment officer at Oaktree Asset Management. "People are expecting some kind of announcement by Sunday night." The Treasury Department and the Federal Reserve were working with Lehman to resolve its problems, including talking to potential buyers of the bank, according to The Wall Street Journal. Besides Lehman, investors will also monitor Hurricane Ike, which was last headed toward the Texas coast, carrying dire warnings from the National Weather Service. Next week also brings a Fed decision on interest rates and earnings from investment firms Goldman Sachs and Morgan Stanley.

Drama on Wall Street

Friday capped another dramatic week for stocks, starting with the government takeover of mortgage giants Fannie Mae and Freddie Mac last Sunday, the latest emergency move to try and control continued damage from the year-long credit crisis. While the move led stocks to rally Monday and led to a steep drop in mortgage rates this week, it wasn't too long until Wall Street was on the hunt again for the next potential shock to the system. Lehman Brothers, which heavily dabbled in assets linked to bad home loans, saw its shares plunge 77% this week and had put itself up for sale by Friday, according to three people familiar with the situation. "One way or the other, Lehman has to be taken care of," said Paul Mendelsohn, chief investment strategist at Windham Financial Services. "The [systemic] risk is too big to let it fail." In volatile action Friday, the Dow Jones Industrial Average fell 11 points to 11,421, which still left the blue-chip average with a 1.9% gain for the week. The S&P 500 index rose 2 points to 1,251 Friday and was up 0.8% on the week. The Nasdaq Composite climbed 3 points to 2,261, giving it a 0.2% weekly gain.

A post Lehman rally?

Even amid hopes of a resolution for Lehman Brothers, fresh worries emerged that insurance giant AIG might be downgraded by ratings agencies, and its shares sank more than 30% on Friday. "With what's going with AIG, that may be the next big thing dominating headlines next week," Pavlik said. "At $12 a share, is the firm going to be able to survive another week?" After a Lehman buyout, "we might get another one-day bounce," the strategist said. "But I think there's a bigger picture problem looming out there."

Contrary to the near-bankruptcy and subsequent bailout of investment firm Bear Stearns, which had led to a two-and-a-half-month rally, the market this time remains weary about the continued fall-out of the credit crisis. Still, some analysts hope that by taking out the big players, whose failure would threaten a collapse of the financial system, smaller victims will go out more quietly and the market will eventually look beyond its current problems. "Bear Stearns, Freddie Mac/Fannie Mae, and Lehman: All three had to be taken care of to prevent a possible chain reaction," Windham's Mendelsohn said. "We're taking out some dominoes so that the next thing that happens, it shortens the impact of the reaction."

Fed meets, Goldman reports


The Federal Reserve will also meet on Tuesday to decide on interest rates. The central bank is again widely expected to leave rates unchanged, but economists expect it to point to increasing signs of weakening economic growth, while noting that inflation pressures have receded, along with sliding commodities prices. Tuesday will also bring quarterly results from Goldman Sachs, followed by those of fellow investment firm Morgan Stanley on Wednesday. The two are thought to have escaped relatively unscathed from the bad home loans crisis that has hit many on Wall Street and elsewhere.

"The question for the market at this point is would the Fed cutting interest change anything," Mendelsohn said. "Because the problems in the mortgage market are not linked to the Fed's interest rates." Still, faced with rising unemployment and further evidence of economic weakness, the market has now erased previous bets that the Fed would raise rates by year end and has started pricing rate cuts instead.

Also on Tuesday, the August consumer price index will be released, providing another glimpse into inflationary pressures. "Softer commodity prices, a firmer greenback and weak demand will likely drive producer and consumer inflation lower in the months ahead," according to Sal Guatieri, senior economist at BMO Capital Markets. "This opens the door a crack for renewed Fed easing if the economy takes a turn for the worse," he wrote in a note. Crude-oil futures on Friday briefly fell below the $100-barrel mark for the first time since April, even as traders braced for potential harm to energy facilities from Hurricane Ike.

KLSE Technical Analysis and Outlook


ICap: The KLSE CI is below its 30-day, 50-day and 50-week moving averages. Its daily MACD is turning down and its DMI is bearish.

On Plantation index, it has fallen to its 50% retracement target with its monthly MACD and DMI decisively bearish. However the stochastic oscillator has yet to become oversold. The Plantation Index has suffered a sharp setback pressured by the sharp fall in crude oil price due partly to the greenback's appreciation against all other major currencies including the RM. Nevertheless, will OPEC's intention to limit oil supply in the market come to its rescue?

* Picture above courtesy of TheStar. Do they really know what they are doing? Sin Chiew reporter(first to report on "penumpang" news) released yesterday. According to reports, she was detained under ISA as the police was afraid she will no go for questioning! However, according to Syed Hamid, she was detained under ISA because her safety is under threat and needed protection. Can ISA be used for such matter? Now, who is right and who is wrong?

Selling it for a song?

TheStarBiz: Metdist SA, which owns 51.4% of Metrod (M) Bhd, has launched a takeover to acquire the remaining 48.6% stake in Metrod for RM84.56mil or RM2.90 per share.
Metdist is a global metal trading firm based in Britain and controlled by Lord Raj Kumar Bagri, who is also Metrod chairman.Metdist yesterday informed the Metrod board that its unit MetTube Sdn Bhd had acquired 5.56 million shares, or 9.27%, for RM16.12mil in direct business transactions from Bank Perusahaan Kecil & Serdahana Malaysia Bhd and Tieton Group Ltd.The acquisitions increased Medist’s shareholding in Metrod from 42.14% to 51.4% and triggered the mandatory takeover offer. Metrod rose from RM2.70 at midday to RM2.99 at 4.52pm before trading was halted. The shares will resume trading today.

Metdist said it intended to maintain the listing status of Metrod after the acquisition of the remaining 29.16 million shares. It added that it would not compulsorily acquire any of the remaining shares.It also said the offer would not fail due to insufficient financial capability of MetTube and that every shareholder who accepted the offer would be paid in cash.It said if MetTube were unable to meet the public shareholding spread requirement, it would use “commercially reasonable endeavours” to rectify the shortfall in the public shareholding spread.MetTube was incorporated in Malaysia in 1989 and its principal activities are manufacturing and sale of copper and copper alloys products including billets, tubes, pipes and extrusion.

For the second quarter ended June 30, Metrod posted net profit of RM30.83mil on revenue of RM561.81mil.Its net asset per share was RM4.43 while it had cash of RM90.18mil as at June 30.

MyTake: I have covered this company earlier this year. I believe Metdist's offer is way too low and minority shareholders that sell it at RM2.90 will be selling it for a song. Metdist is very smart and savvy to offer a way out to its weak shareholders during this current weak market. My reasons are written here before. You do your own calculation. Now, you understand what I mean?

* ... I am shocked and angry! This is really bad!! Desperate times? Now RPK, Teresa Kok and a SinChiew reporter are under ISA's arrest.. how about Ah Mad and the likes....it will be the talk of the nation for sometime.

* Flip-flop again! BizWeek: Malaysia cops windfall tax on power producers as it was said to cause these companies unable to meet loan obligations and to raise new financing. Why can't they think carefully before implementing them? Anyway, we have always been like this....what so shocking about it? Our foreign investors will again shake their head with disbelief.

* Bloomberg: China's industrial output expands at slowest pace in 6 years on weak exports demand, power shortages and factory shutdowns during the Olympic Games.

* Bloomberg: Lehman will find a "stronger financial partner" by September 15? Treasury and Fed are set to broker a deal by then.

Finding safe heavens

What a lousy day at the stock markets today or rather it has been like this for the past 9 months or so? The major markets across Asia were down by 2% to 3% today and most of them are currently in their 2 years low. Did the investors panic in view of the 911 aniversary today? This week in particular, markets were once again dogged by deteriorating sentiment surrounding the credit crisis and economic growth prospects. The 158 years old investment bank Lehman reported its worst ever quarterly loss overnight (passed 2 Quarters of losses- USD6.5b) and told investors it would be selling its property assets and spinning off its asset management arm. The announcement followed one from Korea Development Bank that capital injection talks had ended without reaching an agreement, painting a gloomy picture that the credit crisis isn’t going away. The decline in most major markets erased all of the gains from Monday’s rally, following the announcement by the US government it would take control of mortgage giants Freddie Mac and Fannie Mae to reduce systemic risk. With all the selling, where does the funds go? Perhaps the article below could throw some light on the matter.

The Standard: Amid the global economic slowdown,fund managers withdrew US$28.5 billion (HK$222.3 billion) of funds under management during the second quarter, according to a quarterly survey by Hongkong and Shanghai Banking Corporation covering 12 fund houses around the world.It indicates the investors' concern about the inflation and economic slowdown in Asia. They continue to take a conservative position, moving away from volatile equity markets and finding a safe haven in cash and bonds," said Bruno Lee Kam-wing, HSBC's head of wealth management for personal financial services. Meanwhile, more managers have become bearish about the equity market in the third quarter. "Managers are not optimistic about the equity markets of Asia-Pacific excluding Japan in the third quarter and 22 percent of them hold an underweight view compared to zero last quarter," said Lee. Money managers with increased towards equities in North America, Japan, emerging markets and Greater China in the coming quarter, due to the blurry prospects under the global credit crunch and economy slowdown, Lee added. However, 57 percent of managers hold an overweight view on emerging market or high- yield bonds in the third quarter compared to 25 percent in the previous quarter. Equity funds recorded outflows of US$50 billion, while balanced funds and money funds reported inflows of US$15 billion and US$11 billion respectively. More than 20 percent of funds in Asia- Pacific excluding Japan had an outflow in the second quarter compared to a 6.3 percent inflow in the first quarter.

* Picture above. Shangrila Leisure farm in Taiwan.

* NZ cuts interest rate by 50 basis point yesterday leaving the bench mark interest at 7.5%. Meanwhile, Bank of Korea leaves its key interest rate unchanged at 5.25% for the month of September and may remains so if inflation falls further.

* Ah Mad racist- 3 years of suspension and still defiant!

* MT is no longer being blocked. Another flip-flop decision!

* Forbes: Malaysia's annual factory output growth slowed to an 11-month low of 1.8% in July from a revised 2.2% in July. Earlier analysts' forecast for the July readings was at a rise of 2.4%.

Talk only....

Sometimes if you have nothing to say, say nothing at all! People may buy "talk" only news for the first time of hearing it but if such similar talks continued with no positive results, such talks become just talk only. After dazzling investors with the "talk" of potential tie-up with Chicago Mercantile Exchange("still no news until now?) last year, Bursa Malaysia is said to be talking with stock exchanges in SEA, Europe and the US to form an alliance to increase the number of sites where contracts are available for trade. Big ideas, where are the action plans? My advise: Do well within yourself, people will then take notice even if they are far far away!

BT/Bloomberg: Bursa Malaysia Bhd, operator of the nation's stock exchange, said it's talking to several rivals for an alliance as slowing economic growth erodes trading income. "We're talking to a huge number of exchanges in our network," chief operating officer Omar Merican said in an interview with Bloomberg Television in Singapore yesterday. "Most exchanges have found that they're not immune from the financial conditions that are taking place right now." Talks are aimed at collaborations in Southeast Asia to increase the number of sites where contracts are available for trade, said Omar. Other discussions are with European and US exchange owners, he said, without naming any potential partners. Bursa said last December a partnership with CME Group Inc of Chicago may take months to resolve, and in April the company said it's "optimistic" about talks with CME and NYSE Euronext.

Meanwhile, slowing economic expansion and political turmoil at home is weighing on Bursa's earnings. The political tension has deterred investors and the number of shares bought and sold each day on Malaysia's benchmark index is about a third of the total at this time a year ago. Net income at Bursa dropped 56 per cent to RM28.6 million in the quarter ended June. Bursa shares have fallen 54 per cent this year, more than double the 26 per cent decline in the benchmark Malaysian index. The stock yesterday added 0.8 per cent to RM6.60 at the close.

Growth in Malaysia's US$151 billion (RM521 billion) economy will slow to 5.7 per cent this year and 5.4 per cent in 2009, the government forecasts. The economy expanded 6.3 per cent in 2007.

Computer glitches haven't helped. Derivatives trading on Kuala Lumpur's stock exchange was halted in the morning session yesterday after a technical fault. Equity trading was suspended for a day on July 3 after a systems failure.

* Will they be the laughing stock in Taiwan? Can't wait to get news and pictures of our MPs in Taiwan learning more about "agriculture" and "karaoke". Picture above -President Ma and Lee Hom singing together.

* BT: Bank Negara intevened the ringgit at 3.462 today. The ringgit went to a low of 1USD: 3.47

* Bloomberg: Oil rises after OPEC President calls for members to stop over production and match output to the group's set limits.

* BT: According to HLebroking yesterday, a total of RM125b of funds flowed out in the 1st half of the year due to domestic political uncertainties and high inflation.( 2007: RM92.3b)

* Bloomberg: Lehman in trouble after Korean Development Bank snubbed it. Any more bidders?

* Bloomberg: Inflation tamed already in China? China's August CPI was at 4.9% (July 6.3%) The PPI is however at a stubornly high reading of 10.1% (July 10%). August's trade surplus is at USD28.7b. The total surplus this 8 months to date is USD152b or down about 6% compared with the same period last year.

Chikungunya Virus

Did not really bothered with this Chikungunya Virus earlier until my brother in law and his best friend have fallen seriously ill from it. Both of them brought their families to their farmhouse in Bentong, Pahang for a weekend retreat. Latter during the day, both men decided to climb up a hill nearby to reach a waterfall where they spend half an hour there enjoying the scenery. They suspect they were bitten by mosquitoes while ascending the hill. They are now recovering slowly after fighting weakness in the arms and legs, high fever and rashes for almost a week. I was told children normally recovers faster than adults. Seems that there are no proper prescription for this virus and you just have to let your body's natural system fight through it all. Thought of sharing some general information on this Chikungunya for the benefit of all.

Email: Attention, everyone. We have just been alerted that Chikungunya Virus Outbreak in Malaysia, spread by mosquitoes, is quite serious. More than 2,000 people are infected down south. There are claims of unreported deaths. Consult a health-care provider or visit the nearest hospital for chikungunya fever if you showed symptoms such as fever, severe joint pains and rashes. Four states have been hit, i.e. Johor, Malacca, N.Sembilan and Perak. The worst hit is Tangkak, Johor. Almost all elderly people (age 45 years and> above) are infected with this virus. Many people who are infected seek treatment from Tangkak Hospital every day. There were times beds were full, and the hospital could not warded them. Therefore they were discharge after a half day treatment in the ward. This epidemic outbreak has persisted for more than three months.

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Below is the chronological of this outbreak.1. The disease is spread by the foreigner workers in the plantations. 2. Then the 'bugs' are passed down to the local planters, of which, their families are infected eventually. 3. Now people in this town (Tangkak) are infected as well as others in nearby towns and states.

Symptoms of Chikungunya: 1. High fever 2. Rashes 3. Chronic joints pain (which will last for > 3months) 4. Concurrent deaths

Recommendations:1. Increase ad hoc facilities and manpower in district hospital and clinics. 2. Bring down the population of the vector (mosquitoes) 3. Quarantine the sick people who are infected with this virus. 4. Educate the public how to prevent and contain the disease.

Dr Teo Kim Lai (among the many courageous Pahlawan Volunteers veterinarians involved in the investigation of the Nipah VirusOutbreak,1999 archived at http://www.pahlawan.com.my/voice/VECrisis1.shtml ) recommends that the sick should be quarantined as the virus is transmitted to humans by the bite of infected mosquitoes. CHIK fever epidemics are sustained by human-mosquito-human transmission. Further information can be obtained from the Health Ministry's website at http://www.moh.gov.my/ or call (603) 88810600/ 0700 during office hours.

FURTHER READING: Chikungnya Di Malaysia

http://www.moh.gov.my/opencms/opencms/moh/chikungunya_malaysia.html
Chikungunya http://en.wikipedia.org/wiki/Chikungunya

Chikungunya - Fact Sheet by European Centre for Disease Prevention and Control http://ecdc.europa.eu/en/Health_Topics/Chikungunya_Fever/facts.aspx Insect Bite Avoidance http://www.nathnac.org/pro/factsheets/iba.htm

* Bloomberg: Pakistan is set to extend an August curb on equity trading as concern grows that an end to the limit may cause the benchmark KSE 100 to plunge anew after the Karachi Stock Exchange lost a third of its value this year.

* Xinhua: China's currency has soared against the Euro and British pound since the beginning of August and analysts believe it looks set to continue its dramatic appreciation in the fourth quarter, adversely affecting some Chinese exporters. RMB has for the month of August appreciated by 10.79% and 8.39% against the Euro and pound respectively.

Technical Analysis - September 8 2008

S&P500 (1,242, last week 1,283 or -3.2% w.o.w)

The daily MACD and DMI (+ and -) succumbed to the pressure last week and are currently in a negative hook down again. The weekly charts eg MACD has also deteriorated and is also in a negative territory. The index is currently weak and may continued to worsen this week unless some massive propping up is done. The index may find support at 1,200 while resistance is at 1,280.

KLSE CI (1,071, last week 1,101 or -2.7% w.ow)

Looks like the technical rebound fizzled out during last week. Despite the heavy selling last week, the daily MACD is still in the positive cross over but is showing sign of weakness.The weekly charts are still weak. The index is expected to trade between 1,025 and 1,100.

HangSeng (19,933 , last week 21,262 or -6.3% w.o.w ).

Looks like the technical rebound fizzled out during last week. The daily/weekly indicators have all turned into a negative cross over again. The daily 200 days ema is at 19,800. At this moment, it is unlikely this level will be maintained and as such the next support levels are at 19,500 and 18,500 while resistance is at 22,500.

Nikkei 225 (12,212, last week 13,073 or -6.6% w.ow)

Just like the KLSE CI and HangSeng, the technical rebound a forthnight ago was not sustainable during last week. The daily/weekly indicators have all turned into a negative cross over again. The support is seen at 11,700 and resistance is at 12,700.

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* Badawi should have slapped racist Ahmad instead of shaking hands with him? This should get Badawi some brownie points from us.

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* AP: South Korea facing "September crisis"? It may not be happened as predicted but the economic data does not really look that great....currency falls to a 4 year low, stock market tumbles 26%, foreign investors fleeing, USD7B South Korean bonds maturing latter this month, jobless rate at 9%, high inflation, rising external debt and expected current account deficit.

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* BT: Malaysian derivatives market failed to start this morning due to computer glitch. Will it be the hard disk failure again this time? Who will go be sacrificed now?

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* DailyTimes: Top Cat on Malaysia's expected inflation rates in the coming months. "The worse is behind us. It should be lower than 8.5% in August and September" (Note Malaysia's inflation for June was 7.7% and August was 8.5%).

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* Fannie/Freddie bailed out by US Treasury with a potential amount of USD200b. Asian markets seems to delighted by such conservatorship arrangement by the US Government. Some analysts were happy the plan was thought out wilth taxpayers in mind.

Smart Investing/Trading for the week ending September 5 2008

US Markets Update and Outlook

U.S. stock indexes likely in for another wild ride

Is weekend bailout of Fannie Mae and Freddie Mac possible?

MarketWatch: U.S. stocks are likely facing another wild ride in the week ahead, with the underlying trends decidedly bearish following Friday's unemployment report that the jobless rate has spiked to 6.1%. "I think it's very hard in the very volatile environment we're in, to predict what is going to happen on any given day," said Edmund Hyland, managing director and global investment specialist at J.P. Morgan Chase Private Bank, a unit of J.P. Morgan Chase & Co. Equities investors seem to be lurching between "varying degrees of despair," said Hyland.

On Friday, U.S. stocks finished mostly higher, but posted steep weekly losses, as the market took in a big jump in the unemployment rate in August, which supported a bleak view of the economy. After falling nearly 150 points during the session, the Dow Jones Industrial Average ended up 32 points, or 0.3%, to end at 11,220, with the blue-chip index finishing the week with a loss of 2.8%, marking its fourth consecutive weekly fall. Year-to-date, the Dow industrials are down 15.41%. The S&P 500 dipped 5.4 points, or 04% to end at 1,242, while the Nasdaq Composite fell 3 points, or 0.1%, to end at 2,255. For the week, the S&P fell 3.2% and the Nasdaq shed 4.7%.

"In the third quarter, we had weak economic data pretty much across the board, so now investors are getting nervous about third-quarter earnings, and the balance sheet problems they (financial institutions) are facing," said Hyland. In a related development, the Wall Street Journal late Friday reported in its online edition that the Treasury Department is close to finalizing a plan to help shore up mortgage giants Fannie Mae and Freddie Mac, with the newspaper citing people familiar with the matter.

Crude connection

Crude-oil futures on Friday closed below $107 a barrel, with crude closing at $10.23 a barrel on the New York Mercantile Exchange. "One thing that should be helping consumers feel better, at least the ones that are still employed, is crude is down to $107 a barrel, that's significantly down from the top, but year over year, it's still up $30 or $40 a barrel," said Dave Dickens, executive vice president, asset/liability management, at U.S. Central Bank. With the stock market watching the price of crude more carefully in recent months, Tuesday's OPEC meeting should be a focus on coming days, with many market participants expecting the cartel to curb production. "The OPEC meeting is going to be crucial for the oil market. If they decide to cut production, then we could see a firming up of oil prices and we could see the Fed raising rates at the end of the first quarter," said Peter Cardillo, chief market economist at Avalon Partners.

Incoming data

The August rise in unemployment is congruent with an economy either in or close to a recession, and doesn't bode well for upcoming economic data, which in the week ahead includes housing data on Tuesday and import prices and trade deficit data on Thursday. Friday brings the producer price index and retail sales, with the recent drop in commodities expected to bring the PPI count down, although still high. "Retail sales growth should continue to weaken given the poor labor market backdrop and expensive energy, said William Knapp, investment strategist for MainStay Investments.

Darkest before the dawn?

When things are as broadly negative as they are now, it has historically been shown to be a good time invest, said Hyland. "Twelve months from now most likely equity markets will be higher than they are today, and two or three years from now we'll look back and this will have been a good time to put money to work," said Hyland. "We're most positive on U.S. large-cap stocks, and least positive on Europe, as their slowdown is just beginning," said Hyland. The global economic slowdown is among the factors clouding the equities market, as is the hotly contested U.S. presidential race, which is likely adding to the volatility currently roiling the stock market

KLSE CI Update and Outlook

ICapital: This week's I Capital updates the weekly KLSE CI. The KLCI has now retraced more than 61.8% with its weekly MACD and DMI bearish and the RSI hovering precariously close to the oversold territory. Though the KLCI reacted positively ahead of the Budget 2009 last Friday, the uncertain political climate is still dominating the fragile market. As the technical readings are not giving out any promising picture yet, continuous selling is likely to drag the KLCI to a lower support level of 1,050.

* Remember this face! Racism remarks yet again! Ahmad Ismail?? (labeled the Chinese in Malaysia as - penumpang (delete pendatang), Dr M (stroking racial tension again) ....... when can these people understand we as a nation cannot afford all these racists remarks anymore if we intend to achieve success together in this highly competitive world.