It's like we're on holiday here

Bloomberg: Pakistan stock trading fell to the lowest level in a decade after regulators introduced measures to halt a two-month slump that caused the benchmark Karachi Stock Exchange 100 Index to fall 29 percent. (note: besides Karachi, Pakistan has two other markets namely Lahore and Islamabad stock exchanges). Trading in Karachi slowed 92 percent since the Securities and Exchange Commission of Pakistan limited daily share declines to 1 percent a day on June 24. Fewer than 5.35 million shares changed hands on the Karachi Stock Exchange July 4, the lowest since May 26, 1998. Regulators are reviewing whether the curbs are needed after the exchange announced a 50 billion rupee ($702 million) fund to buy stocks after the close of trading yesterday.

Trading on the 60-year-old bourse in Pakistan's commercial capital this week ranged between 12.7 million and 52.4 million shares, down from a daily average of 225.9 million over the six months ended June 23, the day before the rules took effect, according to data compiled by the exchange. The brokers left in the largely deserted trading hall sit with their backs to their screens, chatting and sipping tea. ``It's like we're on holiday here,'' said stockbroker Haji Ghani Usman``It's become difficult for us to pass the time.''

MyTake: The statements "It's like we're on holiday here" and "It's become difficult for us to pass the time" really strike me as I am feeling the same way too. Whereas holidays are meant to be happy, time to relax after working hard and spending quality time with your loved ones, this 'holiday' is none of those mentioned but exhausting emotionally. Because of the prolonged slumping stock market, clients are sidelined and avoiding the market for the time being. Due to "lesser transactions" the take home pay for remisiers will definitely be hit. Curiously while "on holiday here", I attempted to calculate an average remisier's commission based on yesterday's volume of 290m shares (RM624m) which was the lowest since June 2006.

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The following are my assumptions-

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1) I will assume retailers participation yesterday was at 15%.(still on the high side?)

2) No of remisiers =5,000, commission rate at 0.6% (sharing by company: remisier 60:40)

(As per Bursa 2007's Annual Report, in an active 2007 , the component of total trades for the year by foreigners was 36.6%, retailers was 37% while balance was from local funds/institutions).

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Calculation of average commission per remisier on that "fateful" day is as follows-

[2(buy and sell) X RM624m(share value per day) x 0.6%(commission) x 0.4(remisier's portion) x 0.15(retailers participation) ] / 5,000 remisiers = RM90.00

In reality, if the Rule 90:10 applies( ie 10% of remisiers( or "big" remisiers) takes 90% of the available commission), then commission for 90% of remisiers on that day will be-

2 x [[624m x 0.6% x 0.4 x 0.15] x 0.1(balance for 90% of remisiers's commission portion)] /4,500 (90% of remisiers) = RM10.00

Also, using similar calculation, the other 10% of remisiers( big remisiers) will get RM808.00 on that day.
ie 2 x [[624m x 0.6% x 0,4 x 0.15] x 0.9] /500

So life is still a good for the big remisiers but the smaller ones need to tightened their belts further in order to survive this slump. I really don't think the majority of remisiers feel that they are on a holiday. With no spare money, how can we go on a holiday? Remisiers, like everyone else need to "make hay while the sun shines" and "save for the rainy days", how true.

* Citigroup(yes, it's them again) raised its recommendation on Maybank to "BUY" as the bank's shares have been trading below or near trough valuations. Incidentally, Maybanks's MCB share price closed at 300Rp today. Remember Maybank's purchase price was 470Rp for 15% stake amounting to RM2.17b. Effectively, Maybank has paid extra 36% for this Pakistani bank or an extra cool Rm0.79b before having the shares transfered into its name!

* StarBiz: For information. Latest regional economic data(country, interest rates, inflation) Indonesia 8.5%, 11.03%, Malaysia 3.5%, 3.8%, Philippines 5.25%, 11.4%, Singapore 1.19%, 7.5%, Thailand 3.25%, 8.9%, Vietnam 14%, 26.8%. Wah, no real growth at all!!! Sure die la!!!

* After US markets slips into bear territories(ie a 20% drop from their recent high) a few days ago, the London FTSE 100 is now 20 points away from its bear market territory of 5,383.

* Fannie and Freddie going into "conservatorship" soon, not receivership ah?

How deep, How long?

USNews.com: Merrill Lynch's bearish chief economist, David Rosenberg , says it doesn't matter whether we're in a recession or not. Investors already believe that we are, and the important thing now is how long the downturn lasts.

He writes:

We published our last recession piece on Monday. And we'll give you the reason. We field too many questions on when the recession began, and when we expect it to end, all for trying to time the optimal date to leap back into the equity market. It's not that easy. As we said, the GDP data are going to be subject to multiple revisions. But more to the point, with the stock market down 20% and the 10-year note yield down 100 basis points over the past year, investors already recognize that a recessionary backdrop has arrived. Here is what is important: not the peak-to-trough decline in GDP, but rather the length of time it is going to take to make the transition to the next economic expansion and bull market.

He also warns that watching GDP numbers won't tell you much about the current investing landscape. Just look at Japan back in 1993:

Japan did not incur a "technical" recession of back-to-back quarters of negative growth until the second half of 1993. But by that time, the Nikkei had sagged 55% (to just over 17,000) and the 10-year JGB yield had declined 300 basis points (to 3%)—just to put this into some sort of perspective. Indeed, by the time we saw those consecutive quarters of negative GDP prints, the [Bank of Japan] had sliced the overnight rate by 500 basis points—a sign of how ineffective monetary policy can be when confronted with a credit crunch.

Rosenberg concludes, grumpily, "We are nervous that we have ended up following in Japan's footsteps due to the inept fiscal response to the problem. A temporary tax rebate from Uncle Sam to buy iPods tackles a real estate deflation and credit crunch as effectively as the [Japanese Liberal Democratic Party's] 'solution' in the early 1990s to build bridges and pave river beds that nobody needed."

MyTake: I do agree with him that the official recession announcement in general comes a bit too late. This is because the official arbitrator of recession, National Bureau of Economic Research(NBER) does not define recession in terms of two consecutive quarters of decline in real GDP. Their interpretation of recession is based on significant decline in the economy, lasting more than a few months by refering to figures from GDP, income, employment, production and retail sales. A quick reference to an article by Seeking Alpha on time lag for recession announcements reveal the following findings which I reproduced below.

"The time-lines as shown below highlight the four recessions in the US economy since 1980 (red line). In each chart we also show the date (blue dot) when the National Bureau of Economic Research [NBER], declared that the U.S. economy was actually in a recession".

Except for 1981, did you noticed that most of NBER's recession announcements in the era 1980-2001 only came in towards end of recession or right after recession is finally over? Pretty slow huh? So is it correct to say that we should rejoice and jump straight into the stock market once NBER has announced recession in US(or rather..ending of recession ...hehe)? The answer is probably NO if history repeats itself again. If you look at the stock market's(S&P500) behaviour in the 2001-2003 period as discussed here before and attached below, the stock market did not recover upon announcement of recession by NBER. In fact it went from 1,150 (announcement date) and skidded off further to 770 before recovering in 2003. The market took almost 2 years to recover as it was stuck in a "major downtrend mode" from the 2001 recession effect. So the real question we are facing NOW is "How deep, How long is the US recession going to be this time?" A "V", "U" or "L" shape recovery? Can it be quicker this time due to the China/India/Middle East factors? What is your "calculated" guess?

* Bloomberg: S&P 500 may lose12% before bear market ends, history shows. The study was based on average retreat of 11 bear markets since 1946.

* China's June trade surplus hits USD21.4b, the 3rd straight decline as exports slows.

* China's stock markets are feeling "happy" again! Premier Wen's comments that the government is more interested in policies to boost growth than to combat inflation and over heating. Monetary loosening policy in months ahead? Bank of China's latest inflation forecast for the year is 7.2% (from 6.8% earlier)

* South Korea's central bank has decided to keep interest rate unchanged at 5% for the 11th straight months.

* Singapore will get a new commodity exchange by next year, ie Singapore Mercantile Exchange similar to the newly announced HK Mercantile Exchange. Talk about healthy rivalry. The exchange will provide a platform for futures and options trading on precious metals, based metals, energy, agricultural commodities, carbon credits and commodity indices.

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* So June 2010 is the handling over of power by Badawi to Najib? Let's see how it "blows out". Do we really have no other candidates? I dread to think the what is in store for our future.

Let's sell it to 1,000 (...and above)

No I am not refering to our KLCI but the Korean won. Our KLCI closed at 1,140 today or up 1.66% in line with the rise of the US markets and regional Asian markets due Bernanke's statement, lower oil prices and a technical rebound.

TheKoreaTimes: The South Korean currency briefly surged above 1,000 won against the U.S. dollar Wednesday as the financial authorities intensified their market intervention. The won jumped to 998.9 won against the greenback at around 1 p.m. after an unspecified amount of dollars apparently sold by the government flowed into the currency market. The local currency closed at 1,004.9 won, up 27.8 won from the previous day. This marks the first time that the won-dollar exchange rate has fallen below 1,000 won in 47 trading sessions. The authorities' intervention in the currency market was the second of its kind after the Finance Ministry and the Bank of Korea issued a joint statement Monday, pledging to work together to stem the won's excessive decline. South Korea has $258 billion worth of foreign currency reserves to support the won. The South Korean government has taken various measures to block the won's further decline after it retracted its earlier export-focused "weak won policy" amid skyrocketing oil prices and their upward pressure on inflation. A weaker won helps boost exports by making products cheaper overseas but fuels inflationary pressure by raising import prices. South Korea's consumer prices jumped 5.5 percent in June from a year earlier, the steepest gain in almost a decade. On Monday, the government intervened in the currency market by selling an estimated $2 billion, helping the won advance nearly 1 percent.

MyTake: It was reported that an aproximately USD3b was sold today besides the USD2b on Monday, to prop up the won. Before Monday's announcement, the South Korean government has drawn down up to USD10b on currency intervention. The won currency exchange rate to the USD was at its high of 898 in November 2007 while touches its low of 1,100 in March this year. Besides intervention in the local currency market to strenghtened the won, the government has also proposed to allow state-run companies to borrow in overseas currency(estimated value USD4b) and let them exchange dollar for won. I believe the moves are good in the short term to fight the stubornly high inflation. The government has probably weigh the pros and cons for intervening when the country's economic growth is slowing(in line with world economies), low confidence by locals/foreigners with the new government, the persistent selling by foreigners in the local stock market and the country's widening trade deficit of USD5.7b (1st 6 months of 2008). They know they will need plenty of money to intervene during this period, and they have it. However, if this 4th largest economy in Asia wrongly timed the intervention, the country's foreign exchange reserves even though "alot" will be reduced further while increasing short term internal debts eg issuing of government bonds. To be successful, I believe it would be better for the government after due consideration, to time the intervention at their advantage and intervene "discreetly" rather than "anticipated" to avoid speculation. They could also "talk tough" on won (just like what the US did recently) while raising the possibility of using interest rate as a tool to prop up the won. (The country's key interest rate has remained unchanged for the last 10 months at 5% pa.) With such moves, I am sure half of the battle is 'won'!

* Sir John Templeton, best contrarian investor of the 20th century, billionaire philanthropist dies at the age of 95 due to pneumonia yesterday. May god bless him.

* Will Bernanke raise interest rate this year since he commented about increasing the duration of emergency lending to investment banks? Will the USD be weakened further by then.....while we watch inflation goes up?

* Bloomberg: (1) More than 160 companies delayed or called off their IPOs worldwide this this year todate. (2) Total credit write downs todate for US banks amounted to USD178b while Europe was USD202.4b. What about Asia Pacific?

* Zeti: Malaysia's annual inflation in June is expected to exceed 6% due to a fuel price hike. Malaysia to raise interest rate in coming months?

* Indonesia's government bonds yields for 20-10 year notes is about 13.41% compared to US's 3.96% and Vietnam's 11%. It must be due to high "default" possibilities.

* SEC reported: "The major ratings firms, including Fitch, Moody's and Standard and Poor's, flouted conflict of interest guidelines and considered their own profits when rating securities, among other suspect practices". No wonder the traders now are pricing Fannie Mae and Freddie Mac's bonds of AAA to be graded as A2(ie 5 rungs lower than AAA)!

Sell, Sell, Sell?

Foreign research houses on the extremes. Last week, I posted an optimistic article here by Citigroup which is considered the most bullish foreign house in town. Their year end target for KLCI was 1,499. Today, on the other extreme end with more than 500 points difference, is what I believe todate the most pessimistic target by a foreign/local research house in town. Yes, you guess it correct, it is CLSA which has today revised its KLCI year-end target to below 1,000. This revision is the third for the year (other revisions discussed here before):-

December 07 1,560

February 08 1,320(-15%)

March 1,150(-13%)

July 980 (-15%)

Next revision to be at 833? (-15% again?)

Could the 980 be the target for the coming months instead of year end target based on the frequency(short term in nature) of CLSA's revisions? Do you need to change year end target so frequently until any new revisions become meaningless? It seems that CLSA does not really bother about valuations, economics and technical analysis etc. All it needs is a calculator and just add/subtract a certain percentage from the base to get the revised target. So easy? I really doubt so. Below is the said article.

BT: CLSA Asia-Pacific Markets has cut its year-end target for the Kuala Lumpur Composite Index (KLCI) by 15 per cent to 980 points, believed to be the lowest estimate in the market. The foreign research house also downgraded its rating on the Malaysian market to "underweight" from "neutral". It cited political uncertanities, inflationary pressures and an economic slowdown as major drags on market sentiment in the medium term. "Investors have always viewed Malaysia as a politically stable country and a defensive market. "However, the current political bickering portrays a negative perception to foreigners that will cause further de-rating," CLSA said in its report on strategy outlook yesterday. In March, it had a year-end target of 1,150 points. The KLCI closed at 1,127.26 points yesterday. Some research firms recently cut their year-end targets as well, but none had set them below 1,000 points. TA Securities cut its target by 200 points to 1,210 last month, while RHB Research slashed 257 points to 1,128 last week. CLSA said it lowered its earnings forecasts and target prices for selected stocks to reflect a higher earnings risk. Its top "sell" calls include AMMB, Bursa Malaysia and SP Setia. "Banks, construction, property and consumer-related companies are the worst hit by rising operation and material costs, weaker sales and higher default rates. "Independent power producers will be hit severely by the windfall tax," it said. It recommended buying gaming, telecommunications and plantation stocks since the former two have relatively defensive earnings. CLSA also expects high crude palm oil prices to sustain plantation companies' earnings growth. Its top "buys" are DiGi, Kuala Lumpur Kepong and Resorts World. CLSA said that while Malaysia's move to cut fuel subsidies will lead to short-term pain from higher inflation, in the long term, it will enhance productivity and energy efficiency. It expects Malaysia's economic growth to slow to 3.3 per cent in 2009 from 5.3 per cent this year.

* Badawi: "We can hit 5% (growth) target". "Political stability will soon be restored"....matter will be solved...be cool?

* TheEdge: Notable share buybacks during market downturn. Genting, Commerz, YTL, AnnJoo, CBIP, Glomac, Ahmad Zaki and Parkson.

* More financial troubles for US lenders Fannie Mae and Freddie Mac. Lehman Bros reported both companies need USD46b and USD29b respectively for capital infusion. Both companies are facing a proposed change of accounting standards which if approved, could ends the companies' source of revenue. The proposed change requires financial services firms to move bonds backed by pools of loans (ie securitization) off their balance sheets.

* Here is a quick referral of commodities prices traded on the ICE, CBOT and Nymex yesterday quoted in USD: Aluminium 3,310 per tonne, Zinc 1,830 per tonne, Lead 20,950 per tonne, tin 22,900 per tonne, copper 8,415 per tonne, crude oil 141.2 per barrel, coal 194.79 per MT, corn 6.94 1/4 a bushel, wheat 8.18 a bushel, soya bean 15.7 a bushel, cocoa 29.5 per tonne, gold 926 a troy ounce.

* TheSun(by a reader): An old saying by Margaret Fuller "Today a reader, tomorrow a leader". If one stops looking around, reading, asking and thinking, one fails as a leader. This must be a paradigm to which one aspires. Read till your last breath.

Technical Analysis - July 7 2008

S&P500 (1,263, last week 1,278 or -1.1% w.o.w)

The daily/weekly charts continue to weaken. The weekly stochastics and RSI indicate a possibility that the index may stage a rebound during the week. The index is now below the 200-day ema and 1,280 ie the minimum level required to stay within the long term major uptrend support line since 2003. Major headwind ahead. The index may find support at 1,250 and 1,220 while the resistance is at 1,280 and 1,300.

KLSE CI (1,134, last week 1,191 or – 4.8% w.ow)

The daily/weekly charts continue to weaken. The weekly stochastics and RSI indicate a possibility that the index may stage a rebound during the week. The index has failed to keep afloat above 1,190 ie the minimum level required to stay within the long term major uptrend support line since 2004. It is also below the 200-day ema. Major headwind ahead. The index is expected to trade between 1,050 and 1,190.

HangSeng (21,424, last week 22,042 or -2.8% w.o.w )

The daily/weekly charts continue to weaken. The weekly stochastics indicate a possibility that the index may stage a rebound during the week. The index is slightly below 21,500 ie the minimum level required to stay within the long term major uptrend support line since 2004. However, it is still above the 200-day ema. The index needs to work hard this week to keep above the 21,500. Immediate support is at 21,000 and 20,500 while resistance is at 23,500. Major headwind ahead.

Nikkei 225 (13,238, last week 13,544 or -2.30% w.ow)

The daily charts have weakened further. For weekly charts, MACD is still in a positive crossover but started to bend downwards further to -219(last week -195). The weekly MACD Hist is still positive. The index has dropped off from the current short term uptrend line. The weakening of daily/weekly indicators would pressure the index to trade between 12,900 to 13,800.

* BT Singapore: A Bloomberg study shows a whopping USD11.4T has been wiped out from the global equity markets so far this year-the weakest start to the year since 1970.

* Reuters: Japan foreign exchange reserves reached US1.002T at the end of June due to in part investment returns and the euro's rise against the USD that inflates the value of Euro-denominated bonds in the stockpile. Japan is the 2nd largest foreign reserves country in the world after China.

* Still on Japan- Net sell on Monday. Orders for Japaneses stocks showed there were sell orders of 26.8m shares and buy orders for 21.9m shares. As such the net sell is 4.9m shares.

Smart Investing/Trading for the week ending July 4 2008

Weekly US Market Update and Outlook

Stocks keep oil in crosshairs
Dow, Nasdaq already reach bear territory as crude marches higher

Marketwatch: Stocks are expected to come under further pressure next week, as surging crude oil prices threaten to tip the broad market more convincingly into bear-market territory. Markets are now "ridiculously correlated" with crude, said Jim Paulsen, chief investment officer at Wells Capital Management. "If we see oil going up to $150, the markets will no doubt have more pressure." Crude surged more than 3% this past week to a new high above $145 a barrel. The price of oil has now doubled in less than a year. As the market prepares for the onset of second-quarter earnings season next week, investors will watch for signs of weak demand from cash-strapped consumers as well as the impact of surging energy costs to gauge the impact on bottom lines. On Thursday, U.S. stocks got some relief, with the Dow Jones Industrial Average closing up 0.7% at 11,288. The S&P rose 1.3 points to 1,263, while the Nasdaq Composite fell 6 points to 2,245. But in terms of the holiday-shortened week, the Dow still dropped 0.5% and it's down 20% from its Oct. 9 high of 14,165, putting the blue-chip index in bear-market conditions. The Nasdaq, which fell 3% on the week, is in the same rut, now down 21.5% from its Oct. 31 high of 1,562. Offering a slightly rosier assessment, the S&P 500 Index, which most Wall Strategists consider a more accurate gauge of the broader equities scene, remains a hair shy of the general definition of a bear market. It fell 1.2% in the week and is now down 19.2% from its Oct. 10 high of 1,562.

On Friday, stocks got some help from the government's June employment report, which was more or less in line with market expectations, and it somewhat offset worries that the economy is getting worse. The Labor Department reported nonfarm payrolls dropped by 62,000 workers last month, while the jobless rate remained steady at 5.5%. But investors also contended with news from the Institute for Supply Management, which said the services sector of the U.S. economy contracted unexpectedly in June, falling to its lowest level since the start of the year.

The Labor Department next Thursday will report this week's jobless claim, which is also on investors' radar. Separately, the National Association of Realtors will report May pending home sales next Tuesday.

Weekly KLCI Update and Outlook

I Capital: The Index has now fallen for five consecutive weeks to support level of 1,150 on selling pressure, spurred by the political uncertainty and surging oil prices. Furthermore, the global equities markets also gave up grounds on renewed concerns about inflation after oil price rose to a fresh record above $144 a barrel. Its weekly RSI has gone into the oversold position with its MACD and DMI bearish. If the KLCI breaks below the influential level of support, which is also the neckline of a head and shoulder pattern the bears will likely remain in control. A move toward the next support level of 1,090 is expected then.

* On the current lousy state of political situation. Is this what the leaders(and "leaders to be") want to instill in our society? ...lies, revenge, plots.... blood for blood...an eye for an eye.....a hole for a hole..who is the devil in disguise? I am getting very confused and worried.

* Nikkei sets longest losing run over half century as it enters the 12 day share market losing run and shedded 1,200 points.

* Iceland decided to keep its policy rate unchanged at 15.5% and was not able to reduce it due to spiralling prices. Look out for recession announcement soon.

Buy, Buy, Bye?

Citigroup is by far one of the few foreign research houses left which are still very bullish on Malaysian stocks. Their year end target for the KLSE CI is 1,449. (JP Morgan 1,500). Citigroup's buy call somewhere in mid-April (as mentioned here previously) has the following excerpts which I reproduced below:

"The Malaysian stock market is highly unlikely to fall much further after the government's election upset last month".

"On top of the fear of a US-led global recession, the market had priced in the worst outcome of Malaysian politics".

"A lot of bad news is already in the price, we urged investors to start positioning".

At that time of writing, KLSE CI was at 1,256 points and the highest it went up after the advice was 1,305 points. It is interesting to note that Citigroup has made another buy call today advising its big investors to start accumulating Malaysian stocks now as it believes the market valuation is at attractive levels and the political situation is not as bad as being perceived. ...."matter will be solved...be cool" (I wonder who said this?) How now? Do you agree? Citigroup's client would probably say: Buy some more ah?, haven't even sold my earlier stocks yet! Are you trying to fool me some more?

Everyone seems to be confused these days!! We are living in exciting times! For the records, the market closed at 1,134 today while the intraday low was 1,120. Below is the said bullish report.


BT: CITIGROUP said now is the time for big investors to start accumulating Malaysian stocks, given their rock bottom prices and prospects of them rebounding once the political horizon becomes clearer." This is one of the best country to be in. The value is so cheap that we think some stocks are more attractive than others in the region. It's the sentiment that is clouding the market," Citigroup's head of Malaysia Research Choong Wai Kee said in a market outlook briefing. Citigroup recommends investor to buy shares in plantation, bank, telecommunications and property. "The market is trading at 11 times of next year's earnings after a 25 per cent fall this year. It looks very attractive. But no one looks at valuation now unless there is improvement on politics," he said. The broker has turned more bullish on Malaysia as it was convinced that recent policies, including the cut in petrol subsidy and the rise in power tariff are setting the country on the right path.The US bank also believes that there will not be a change in the federal government. He said foreign investors seem to have great misconception on Malaysia's political situation, which resulted in their negative view on local shares.

* Mr Bala, which SD is the correct one lah?

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* Philippines's inflation jumped to 11.5% in June (government's forecast was 10.4% - 11.2%). Peso fells to a 9 1/2 month low of 1USD: 45.685 peso.


* Indonesia's central bank raises its benchmark interest rate for the third month in a row to 8.75% from 8.5% to cool prices.


* Bloomberg: Vietnam's currency controls are forcing foreign investors into black market to obtain dollar. Apparently, you could change at least 7% more for dong to dollar in the black market. 1USD:16,846 dong. Traders expect dong to weaken to 20,600 to the USD by next year.


* Bursa lost approximately RM450,000 worth of opportunity cost for yesterday's "suspended trading" based on RM1b trading for the last 2 weeks.

Toxic or Tonic?

Incidently, the release of the US June Non-Farm Payroll and press conference on interest rate decision by the European Central Bank(ECB) tonight would be done almost at the same time. This may create unusual volatility on the Euro and USD, commodities and financial markets. Market watchers believe the most likely scenario would be :- ECB to raise interest rate by 0.25% and worsening of the June's non farm-payroll data. As such, the results from tonight's announcement could be Toxic to USD/World markets/Growth but Tonic to Euro/Oil/Commodities/Inflation. The question in our mind is whether the already weak market has already taken these scenarios into consideration. To add more sambal chillies to our already hot nasi lemak, the latest tense political situation, "non-opening" of our stock market couple with hugh drop in Asian markets today may leave us with some sweaty and burning sensation tomorrow. Oh get me some water and aspirin plz!!!

* Non-farm payroll. If US's June result were to show negative, it will be the 6th negative results in a row since January 2008. In the last recession 2001-2003, there were 15 consecutive months of job losses and the largest recorded monthly job losses was 325,000 jobs: Dailyfx

* Computer glitch hits Bursa due to "multi hardware failure in core trading system" -don't understand the jargon. Whatever reasons given will not get back the confidence lost by investors and market participants. Hey, did I hear many people wanting to sue Bursa on this? Yusri, how can you let such thing happened? Where is your backup? Bad..........need to cut both you and your senior management's pay on this...

* ML: GM faces bankcrupcy and needs USD15b infusion to stay afloat. Its share price fell to its lowest level since 1954 to USD9.98 yesterday.

* Gold futures will be offered from Oct 2008 in The HK Exchanges and Clearing. It will offer bullion contract in spot, 1 month and 2 months futures quoted in USD and ounces.

* China's Authorities today introduce controls on "hot money" by requiring Chinese exporters to provide details of billings on overseas revenues for their records.

And we are just beginning...

The current weak economic and stock market conditions need no further explanation. Many people have been asking whether we are at the lowest ebb and have we reached the capitulatory stage that spells the very final bottom? Well, I would like to share with you an interesting finding which may be able to answer the above questions. This finding is based solely on a technical analysis indicator, namely the Weekly MACD.

From the four stock market charts- S&P, Nikkei, KLSE and HangSeng above, we will notice that in a 10 years time frame of analysis beginning 1998, there were only twice the Weekly MACD went below the negative level. By negative level, it means the market is on a major downtrend mode even though it may have its ups and downs intervals. The down trend periods are indicated as period A(roughly from middle of 2001 - middle of 2003) and period B( beginning of 2008 till ..?) Hey, isn't the US experiencing recession then in 2001-2003? If history repeats itself all over again and again, the charts imply world markets will only recover and a major uptrend can be seen late 2009 or 2010. Soon after that, market will have a major uptrend for the next 4 years. True?

(It should be noted however, all technical indicators have their fair share of pros and cons and cannot be used in isolation but must be accompanied with a few other indicators. Further, I agree longer periods of analysis may be required to result a more consistent conclusion).

* WSJ: A German bank note printing company has agreed to stop deliveries to Zimbabwe after being pressured by the German Government. With inflation rate of well over 1 million %, Mugabe will have to stay in power without the fresh supply of paper.

* Reuters: Nikkei's longest losing streak of 9 days created 43 years ago was broken today.

* FT.com: Fears are mounting in Venezuela that regulations designed to prevent currency speculation and capitalise the banking system could trigger the collapse of several banks and hit sovereign debt prices.

* South Korea's foreign exchange reserves fell to USD258.1b in June as the Central bank sold USD5b to curb Won's steep fall. The won has dropped almost 11% this year and put pressure on inflation by making imports more expensive. Growth is expected to be 4.7%(2007: 5%) while inflation is expected to be at 4.8%.

*Forbes: A study by World Economic Forum notes that the most wired nations in the world are as follow:- Sweden, Iceland, Switzerland, Netherlands, Denmark, Hong Kong, South Korea, USA.

Stabilisation Fund to the rescue

As most of the world markets sank to their worse 1st half drop in years; a growing number of the Asian countries are contemplating to start or activate their Stabilisation Fund to prop up the markets. Some of the Asia Pacific markets and their drop for the 1H of 2008 are as follows:- Vietnam -60%, Shanghai -50%, Bombay -33%, NZ -22%, HangSeng -21%, Malaysia -18%, Australia -17%, Singapore -16%, Jakarta -15%, Korea -12%, and Taiwan/Japan -11% (S&P -13%). Such "stabilisation" move will always have its share of supporters and critics. Similar to any investments, it is important that the Stabilisation Fund needs to have a good plan and strategy with regards to the timing of entry, companies to invest in and investment horizon. The Fund must avoid at all cost buying lousy companies just to bail them out because it is a "national asset" or it belongs to a certain "well connected person".(...sounds familiar). The Fund will also need to ensure sufficient monies are available to defend in worse case scenarios, eg continuous prolong selling in the equity market or 2- prong attacks by speculators on its futures market and currency. Here is a writeup on the planned market "stabilisation" move by Taiwan, Vietnam and Pakistan.

FT.com: Several Asian countries are looking at spending billions of dollars on shares to support plunging stock markets in a move likely to be welcomed by global investors who fear emerging markets may be about to suffer further dramatic falls. The development follows a 13 per cent fall this year in the MSCI Asia Pacific index, which looks as though it will end the month on Monday with its worst first-half performance since 1992, when it sank by 23 per cent as the Japanese economic bubble deflated.

Government officials in Taipei, where the local market dropped to a five-month low on Friday, said the cabinet had called on government pension and insurance funds to buy more domestic shares and to hold their investments for a longer period. Economic and financial ministers and central bank officials met over the weekend to discuss how to boost investor confidence. They stopped short, for now, of ordering the use of a T$500bn ($16.4bn) National Stabilisation Fund designed to support markets in times of volatility caused by non-economic events. However, the board of the fund, which was last used during political turmoil after the 2004 presidential election, will meet again on Friday.

In Vietnam, state media reported that the stock exchange and securities regulator was setting up a stabilisation fund to support a market that has lost nearly two-thirds of its value this year as inflation surged.

And in Pakistan, the Karachi Stock Exchange is coming under increasing pressure to use a Rp30bn ($442m) stabilisation fund set up last week for use in “volatile circumstances”. It had one of the hottest stock markets in the world in 2007, but its loss of nearly one-third in value since April has created “systemic risk”, the KSE said.

Official intervention to support share prices has a long history in Asia. One of the most successful examples was in 1998, when the Hong Kong government bought shares in the aftermath of the Asian financial crisis to support the value of the assets backing the territory’s currency, which is pegged to the dollar. Japan started to intervene in the stock market in 1991 after prices halved after the “bubble economy” burst. Interventions continued for several years, but more than a decade later the Nikkei average is only worth a third of its value in 1989. “The success [of official support] depends on one thing only: how cheap the market is,” said Khiem Do, head of multi-asset at Baring Asset Management in Hong Kong. “The price-earnings ratio has ideally to be below 10 times, or no higher than the mid-teens, and then you have some chance of it working.” Taiwan is currently trading at about 11 times forecast profits, Pakistan at 14 and Vietnam at about 10, he said.

* Even Google is saving electricity! New electricity tariff takes effect today. Be prudent with your usage. Every kWh counts. Briefly, for electricity usage lower than 200kWh, the rate is the same as previously ie at 21.8 sen per kWh, between 201kWh and 400kWh, the rate is 34.5 sen per kWh unit. The rates will be higher as the usage increases. In general, electricity rates is poised to rise by 18% for homes and 26% for business users.

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* Some news on world economies and interest rates-

1. IMF forecasts world's economic growth to slowdown in 2008 to 3.7% from 4.9% in 2007.
2. Zeti says Malaysia's growth to slow down to 4.5-5% this year. Earlier's estimates were 5-6%.
3.China's Central Bank Governor says inflation in China likely to ease in the next couple of months but would consider raising interest rate if it remains high.
4. At least 16 countries have raised interest rates this month to curb price pressures.

* Bloomberg: Rio Tinto wins record 97% iron ore price increase from steel makers from Asia matching its agreement with the Chinese mills earlier.

* WSJ: World Trade Center rebuilding will be pushed back to at least 2015 and will cost up to USD3b more than planned. A press briefing is scheduled on Monday.

* Transparency International: Most corrupted countries in the world are Myanmar/Somalia, Iraq, Haiti, Uzbekistan, Sudan, Chad, Afghanistan, Laos and Congo. Least corrupted are New Zealand, Denmark and Finland.

* Good I take, Bad.......? Will 'poster boy" Tengku Zafrul(Karya Equity/Tunemoney-AirAsia/Avenue/ECM/Hush/"etc") wins in his RM800m bid to take over Northern Utility Resources Sdn Bhd, a debt ridden but highly potential IPP with balance of 20 years concessions(1998-2028). It supplies and bills directly to factories in Kulim Hi Tech Park?