HSBC replies

Of late, HSBC has been rumoured to require cash injection in order to keep its ship chugging along the stormy financial waters. Morgan Stanley for example, predicted the bank needs between USD20-30b of equity and halve its dividend in order to bolster its Balance Sheet. No recovery is anticipated in its results until 2011.

The news of the second financial bailout for the British banks and the staggering 70% fall of RBS yesterday compounded the already bruised European banks share prices, including HSBC. It is true as a 12 month analysis saw HSBC's share price peaking at HKD140 in May last year but has now gone down to HKD58. (refer here for share price movements). A drop of almost 60%.

HSBC has been "quick" to respond to the negative comments and says that it has ample of capital and do not need any help from anybody. It also added that, these "negative" analysts need to apologize once their predictions do not come true! Wow, we need more of such optimism(but truthful ones) in the market! Get ready your ang pow money to scoop the high dividend yield HSBC?

The Standard:Banking giant HSBC (0005) has refuted rumors that it is seeking capital support from the British government, saying it cannot "envisage circumstances" when such action would be necessary.

"HSBC has long been one of the world's most strongly capitalized banks and is committed to maintaining this position," the lender said in a statement in response to speculation that it would receive a cash injection when London announced yesterday a second bailout package for banks.
HSBC was on a list of lenders that could receive Bank of England funds in the first rescue plan unveiled in October. But HSBC rejected that offer, saying it had ample capital and needed no help from the central bank.

David Eldon, former chairman of Hongkong and Shanghai Banking Corporation, the local arm of HSBC, concurred saying the lender has no funding needs. He also said HSBC is only a victim of recent fund-raising activities by foreign banks.

Eldon cast doubt on statements by investment bank analysts that HSBC needs to raise funds, saying the London-based lender has always had a prudent policy regarding its capital base. Eldon said the analysts need to apologize once their predictions are proved wrong. Big investment banks including Morgan Stanley and Goldman Sachs have issued reports in recent weeks revising downward their forecasts on HSBC, and slashing their target prices for the lender's shares to as low as HK$52. They also predicted that the bank will cut dividends. Amid the bearish sentiment, shares of HSBC continued to nosedive in Hong Kong yesterday, losing 3 percent to close at HK$62.30, the lowest in more than 10 years. The bank's share price has shed around 15 percent since the beginning of this year.

Eldon also said he supports the Hong Kong Monetary Authority's proposal to take up all banking regulatory functions.


* Obama, the 1st Black President and the 44th President of the USA will be inaugurated today. Above. Dennis Haysbert played the accomplished President David Palmer in "24".

* YahooFinance: RBS expects full year loss up to 28B pounds due to a goodwill impairment charge related to the acquisition of ABN Ambro. The loss is probably the biggest loss ever by a British corporation.

* Forbes: South Korea's finance minister and top regulator replaced. President says reshuffle aimed at boosting economy.

* China Premier Wen says toughest year ahead since 2000.

* Jim Rogers said investors should be worried about USD, sell government bonds and buy raw materials, China stocks and the Japanese yen.

* FinancialDaily: Khazanah's December 31 portfolio down by 36.5% compared to 7 months ago. The investment now stands at RM33.7B. Also to note is Khazanah do not support LCCT in Labu plan.....??

A drop in the ocean

Here is what analysts think of Maybank after HSBC reveals that they are also paying for an arm and a leg for a stake in an Indonesian bank. Shall we say sorry to Maybank as we were "wrong" then? I don't think we need to apologize. Anyway, it is a joke to compare Maybank with HSBC! It is like comparing a Proton with Bentley on all aspects.

BT: HSBC Holdings plc's willingness to pay a high premium for an Indonesian lender this week still would not justify Malayan Banking Bhd's pricey Bank Internasional Indonesia (BII) deal, analysts said. Similar to the 4.3 times book value Maybank is ultimately forking out for a sweetened deal to BII, HSBC is paying a steep premium to control Bank Ekonomi because banking assets have become scarce in Indonesia. But still, it does not make Maybank's expensive BII deal look any easier to stomach, banking analysts in Kuala Lumpur said yesterday. The risk-reward profile between HSBC and Maybank differs vastly, they said."The purchase amount to HSBC is like a drop in the ocean. They have the capital," said one analyst.

The more than 100 banks in Indonesia have total assets of US$210.6 billion (RM745 billion), according to the central bank - or less than one tenth of HSBC's total assets of US$2.55 trillion (RM9 trillion). Europe's biggest bank by market value on Monday said it will buy 89 per cent of Bank Ekonomi for US$607.5 million (RM2 billion), giving it a foothold in Southeast Asia's largest economy and a highly sought after banking market. HSBC's offer values Indonesia's number 12 bank by market cap at slightly above four times its June 30 book value, according to media reports from Jakarta. "Maybe it will make Maybank look slightly better if you only look at valuations, in the sense that it has not really overpaid. But in absolute terms, no," OSK Research analyst Keith Wee said. Wee said the US$600-odd million for HSBC is very small relative to their asset size and earnings base. "It's a risk they can well afford to take and HSBC has the funds. But for Maybank, it has to gear up because of the high price it is paying, and it is hard for it to shore up the capital with cheap fundings in today's market," Wee said. Maybank, which has gone on a shopping spree to commit about RM11 billion for both BII and Pakistan's MCB Bank Ltd shortly before the global crisis worsened, has took on significantly higher risks than HSBC, Wee said. "The sum was huge relative to Maybank's balance sheet, market cap, earnings and shareholder's fund," Wee said. In contrast, HSBC's abandoned US$6 billion (RM21 billion) purchase of Korea Exchange Bank last month has given the banking giant more room to scoop up assets, he added. Maybank shares have lost 42 per cent this year, outpacing the 37 per cent slide in the Kuala Lumpur Composite Index."What Maybank is doing (to expand) is not wrong, just that the timing is bad. Although the BII purchase will pay off after five years or so, the market is jittery and we only take a 12-month view," Wee said. With inflation remaining high in Indonesia and a potential short-term funding problem that the country may face amid the financial crisis, he foresees more headwinds in banking operations there.

* AP: Japan's trade surplus dropped sharply in September by 94% to 95.11b yen as the rising cost of importing energy and raw materials exacerbated the impact of limp overseas demand. The central bank injected USD6.2b into the short term money market today.

There's a Hero

500 points here, 600 points there. 10% here, 15% there. Halt trading here and there. Clearly world financial markets are in panic mode; especially so for the last 5 days. The financial market participants ranging from bank account holders, businesses and lenders are mistrusting each other; bankers afraid to lend, businesses unable to borrow, account holders worried about the safety of their cash in banks. Credit crisis sinking deeper and deeper. (refer picture). Will the American stock markets hit its circuit breaker like the Indonesian or Pakistani in their trading tonight or in the near future? It does look very gloomy and it is getting gloomier especially for the last one week. Will the Federal Reserve cuts interest rate suddenly or make further unprecedented moves to counter the plunge in the financial markets? The next rate meeting is supposed to be at the end of this month. If Federal Reserve, Treasury or Warren Buffett cannot calm the markets, can International Monetary Fund helps? I sincerely doubt so..unlike IMF's bailout of Thailand and Indonesia which only requires less than USD15b...the IMF may not have any amount near the expected USD1T fresh capital required to help financial markets. How about concerted actions from G7 rich nations? Will the Middle Easterners come in instead? Where can we find help then since countries all over the world are facing their own "crisis" at home originating from the US? Forgive me if I asked too many questions.

We are stretching out our hands in the air to welcome a "hero" to calm us down and give us some breathing space to regain our confidence. Where/Who/What is this hero? Borrowing from the chorus of "There's a Hero"(Mariah Carey) gives me some comfort and sense of hope though....

"And then a hero comes along, With the strength to carry on, And you cast your fears aside and you know you can survive"....

or is the hero lies in YOU? They say Time will tell....


* TheStar: Maybank will purchase an additional 16.26% stake in BII for Rp4.33 per share amounting to RM1.26b. Maybank did not say who the shareholders were!!!!!

* Australia slashed its interest rate by 100 bps to 6% yesterday. HK slashed its base rate to 2.5% from 3.5%. China may follow suit by the end of this week. Japan keeps its interest rate unchanged at 0.5% for the 20th consecutive months.

* USD100b British bailout plan to be revealed today?

* South Korea's won at its 10 years lowest today. 1USD: 1,385

* To stop market from slipping further....freeze the market- Russian style.

Smart Investing/Trading for the week ending October 3 2008

Weekly US markets update and outlook

After bailout, stocks face economic, earnings woes
Investors to seek signs in credit markets, economic data and earnings

MarketWatch: Investors will enter next week relieved that a $700 billion financial bailout passed Congress, but still concerned about seized-up credit markets and a worsening outlook for the economy and earnings, as reporting season officially kicks off."The news over the past week is that the credit crisis continues to widen, affecting other industries and banks in Europe," said Ken Tower, senior vice president at Quantitative Analysis Service. For the market, the bailout is "positive news that could lead to a short-term rally," Tower said. "But the longer-term picture is still that of an economy struggling with the impact of this credit crisis and the market is therefore not out of the woods yet." On Friday, the Dow Jones Industrial Average ended down 157 points, or 1.5%, to 10,325, with traders selling positions following news that Congress had approved the bailout. Stocks had rallied in anticipation of the vote and traders "sold the news," a typical reaction in cautious bear markets. The S&P 500 index fell 15 points to 1,099. The Nasdaq Composite lost 29 points to end at 1,947. For the week, the blue-chip average ended down 7.4%, the S&P fell 9.4% and the Nasdaq lost 10.8%. "This is a major market disruption," Tower said. "Even though we might be due for an interim rally, this is not the end of the problems. We're telling clients not to get over-invested in any rally that develops."

Another harrowing week

On Monday, the House of Representatives turned down the bailout, sending the Dow plunging by 777 points, its worst point drop on record. On Tuesday, the rates at which banks lend money to each other surged. The overnight London interbank offered rate, or Libor, registered a record one-day increase, reaching 6.875% from 2.568% on Monday. "A lot of what's going on in markets is confidence-related. At a bare minimum, the [bailout] bill should help with confidence," said John Miller, chief investment officer for Nuveen Asset Management, which oversees more than $60 billion in fixed-income assets. While overnight lending rates eventually came back down by Wednesday, money markets have remained nearly frozen as banks remain unwilling to lend to each other amid fear that more bankruptcies might be revealed. Many home-equity loans, lines of credit, student loans, small-business loans and credit-card rates uses Libor as a benchmark, further fueling worries about the wide economic impact. "Something has to change meaningfully in credit markets to avoid the continued slide in the economic data," said Miller.

Markets and the R-word

On Friday, the latest employment report revealed the economy lost another 159,000 jobs in September. The economy has now lost 760,000 jobs this year, further evidence that the economy was in a recession even before the financial market crisis of the past few weeks. "We are in a recession and the trend is in place to go to further job losses," said William Bellamy, who manages about $1 billion as director of fixed income at Thompson Siegel & Walmsley. "The bailout is going to work on the margin, at best," Bellamy said. "It will be nothing near the silver bullet people are hoping for. It's just one more step in a series that's going to need to be put in play. It will help. Will is cure it? No." With dire reports that the economy is shedding more jobs and that manufacturing continues to contract, investors have already started massively selling the shares of companies whose earnings depends on growth in the U.S. and globally. Separately, Merrill Lynch cut its 2009 oil price forecast to $90 a barrel from $107 a barrel and warned that a "synchronous global recession" could bring oil prices to $50 a barrel.

Economic data

On Tuesday, data on consumer credit in August will be released. Minutes from the last meeting of the Federal Reserve also will be released. The market is currently expecting that the central bank will cut interest rates by 50 basis points to 1.50% when it next meets at the end of the month. Wednesday will bring data on pending home sales for August, and on Thursday will be weekly jobless claims and wholesale trade data. Friday brings data on the trade balance in August, as well as the consumer sentiment survey by the University of Michigan.

Weekly KLCI Technical update and outlook

BT: Market to continue sideways? The KLCI's weekly and monthly fast MACDs (moving average convergence divergence) continued to stay below their respective slow MACDs. Its daily fast MACD continued to stay above its daily slow MACD. The index 14-day RSI stayed at 35.37 per cent level yesterday. Its 14-week and 14-month RSI stayed at 27.51 and 35.95 per cent levels respectively. The KLCI moved sideways during week as many institutional investors were away on their festive holidays. There was not much to work on during the three-trading-day week. Next week, the KLCI's immediate overhead resistance zone is set to hover at the 1,019 to 1,053 levels while its immediate downside support zone is likely at the 979 to 1,013 levels.

* USD700b bailout plan finally completed. Here is what to expect for market watchers and US consumers.

* Maybank also finally completed the 55.6% buy of BII, but at whose expense? (please read here for analysts' negative comments).

* Bloomberg: Now SGD is being sold down. Last Friday saw Aberdeen Asset and Daiwa selling the currency on speculation the central bank will curb the currency advance as the Singaporean economy teeters on the brink of recession.

* Last week saw Warren Buffett having another bite of a Wall Street company- GE with a USD3b stake in the company. His name speaks volume and confidence....Can't help but wonders whether he coming in too early?

* Japanese retail gasoline prices dropped for the 8th week in a row as price competition intensifies and demand weakens. Hello....When is the next reduction for Malaysia is going to be? sigh!

* Thailand's inflation slowed for the 2nd month in September falling to 6% from 6.4% in August.

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?

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.

"Build Think"? Why Not "Think Build"?

There were three major corporate news on Maybank today; (1) its June 2008 results, (2) a glimpse of its 8 year vision and aspirations and (3) the RM8m acquisition of BinaFikir - a 2002 incorporated company with paid up RM650,000. Interestingly, Khazanah's current MD Azman Mokhtar was the founder and the MD for BinaFikir from 2002 till 2004. I am a bit tired commenting Maybank's recent deals which are sometimes difficult to logic and comprehend unless you think of it negatively. Anyway, this is just my opinion. Sigh!

BT: Maybank yesterday reported a lower net profit of RM2.93 billion for the year ended June 30 2008 on account of increased provision for bad loans for a non-refundable deposit made in its bid to gain control of an Indonesian bank. Maybank reported a profit of RM3.18 billion last year. During the period just ended, the bank made provision of RM483.3 million.The amount was largely provision for a non-refundable deposit it paid to buy out PT Bank Internasional Indonesia (BII). The acquisition ran into problems when Bank Negara Malaysia revoked its approval after Indonesian market regulators introduced certain changes in securities rules, which it said could put Maybank at risk.Without the provision, Maybank would have posted a 1.3 per cent increase in net profit to RM3.22 billion, according to group managing director Datuk Seri Abdul Wahid Omar. (refer here for the complete article).
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BT: MALAYAN Banking Bhd wants to become a "truly regional" financial services group and be among the top five in terms of assets and market performance in South and Southeast Asia by 2015. The country's largest bank also aspires to be "the undisputed leader in Malaysia across all high margin and profitable products and segments". The vision is in Maybank's eight-year blueprint that is due to be launched next month. The performance improvement programme will be implemented in two "horizons", group managing director Datuk Seri Abdul Wahid Omar said at a press conference in Kuala Lumpur yesterday.

The first horizon, from September till 2011 and called "Leap 30", will focus on 30 initiatives related to all of Maybank's major business sectors including consumer, enterprise, Islamic and investment banking and talent development." The initiatives will be rolled out rapidly with results consistently tracked and measured to ensure continuous innovation and change in the current practices. "Maybank, Wahid said, will strengthen its operations in seven out of 10 Asean countries while continuing to look out for opportunities in other markets.

Under the second horizon, the bank expects to expand its reach to India, the Gulf countries and certain provinces in China from 2011. Meanwhile, Maybank yesterday announced the acquisition of BinaFikir Sdn Bhd, a holder of capital market services licence, for about RM8 million. The bank also appointed BinaFikir managing director Rashdan Mohd Yusof as cheif operating officer of Aseambankers Malaysia Bhd. BinaFikir executive director Feisal Wan Zahir, 38, was appointed as Aseambankers head of investment. Both appointments are effective September 1. Rashdan, 37, is expected to be promoted soon as he has been chosen to replace Surachet Chaipatamanont as chief executive officer of Aseambankers.

* Malaysia Today ordered to blocked by MCMC? The more you hide, the more we seek!!

* The Australian: According to Japan's National Police Agency, Yakuza gangs are terrorizing the Tokyo Stock Exchange. The organised crime syndicates have mounted widespread assault on the country's financial markets that may have left hundreds of listed companies riddled with mob connections. It has under its payroll professionals in the field of auditors, accountants, brokers, bankers etc.

* The Standard: China is rumoured to consider dividend tax cut to boost shares. The tax is currently at 20%. Such move is at best short term.....

* Bloomberg: Pakistan imposes its 2nd emergency trading limits (refer here for the 1st restriction) to halt stock slides as the benchmark index went down by 42% in 5 months. From today, until 7-10 days latter, the index has been set not to be able to fall below yesterday's closing.
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* The Standard: The Chinese central government departments misused or mismanaged more than 46b yuan last year, including using disaster relief money to buid government offices and diverting funds to speculate in stocks.

Olympic cheers, Markets in tears

I have been having problems with the internet connection at home lately. Hope the connection will be restored soon especially during the weekend.

Our KLCI has not been performing well this week, and relatively, it is worse than many other markets. For the passed 4 days, the CI has lost about 30 points mainly due to political uncertainty and sell down in plantation stocks. Looking at the Dow Jones which plunged 225 points this morning, our market(and others of course) is in big trouble heading towards Olympics. The charts above especially the daily MACD shows that it is in great danger of giving up its uptrend assault if the next few days of trading remains in the negative. This will practically ends the 2 weeks uptrend cycle first created since July 23(please refer here). The support is seen at 1,100 and 1,050. Sigh...we may just have to watch the Olympics and let the markets and politics play themselves out then...Arr how many golds do you think China(or Malaysia) will get this time ah??

* Still more bad results: Axa, Toyota and Barclays earnings are all down by at least 30% in their latest earnings release.

* Reuters: Japan's July forex reserves rose slightly to USD1.007T (June USD1.001T and a year ago USD923.718B).

* Bloomberg: NZ's unemployment reaches 2 year high at 3.9% in the 2nd quarter due to jump in job seekers. Australia's latest jobless rate is at 4.3%.

* Bank of Korea unexpectedly raises interest rate to 5.25% to curb inflation, its highest rate in 7 1/2 years. Inflation stood at 5.9% in July as compared to the Central Bank's target of 2.5-3.5%.

* BT: Credit Suisse keeps their "UnderWeight" rating on the Malaysian market.

* TheStarOnline: MSWG to Maybank's directors: Get the deposit RM480m back or resign!!

Better cut losses now!

Maybank is in the news again. The stock surged the most in six months, gaining 7.3 per cent to RM8.10 at 9.08am but closed at RM7.90 today. It has lost 11 per cent since the takeover announcement of an Indonesian bank in late March 2008 (discussed here) which was perceived to be very expensive (bought at 4.6X book value) compared to industry's pricing. The other problem was the anticipated difficulty of raising capital for such hugh amount.

BT: BANK Negara Malaysia has stopped Malayan Banking Bhd's (Maybank) RM8.8 billion purchase of an Indonesian bank on the concern that Maybank may experience substantial losses after Indonesian authorities imposed a new takeover law. Malaysia's biggest lender received a letter from Bank Negara yesterday stating that approval for its purchase of PT Bank Internasional Indonesia TBK (BII) had been revoked. The central bank said Maybank may potentially incur material losses from share selldown and writedown of investment once the new takeover rule by Indonesia's Capital Market and Financial Institution Supervisory Agency (Bapepam) is implemented. Under the new takeover rule, a new controlling shareholder is obliged to divest to public shareholders a minimum of 20 per cent and at least 300 parties within two years after the tender offer is undertaken. Maybank told Bursa Malaysia yesterday that it had attempted to seek a waiver from Bapepam in having to comply with the ruling, but was rejected. "The bank is seeking legal and financial advice on this latest decision from Bank Negara and will further engage with Fullerton Financial Holdings Pte Ltd on the way forward," it said. In March, Maybank had entered into a share sale agreement with Fullerton to buy a 56 per stake in BII for RM4.8 billion, and later make a RM3.8 billion offer to buy the rest of BII from minority shareholders. Maybank was to pay RM4.8 billion to buy all of Sorak Financial Holdings Pte Ltd, which holds 56 per cent of BII. Sorak is owned by Singapore investment arm Temasek (75 per cent) and South Korea's Kookmin Bank (25 per cent). Indonesia's central bank has approved Maybank's acquisition of BII.

MyTake: Bank Negara's revocation of the approval for the proposed purchase came in just 2 days before the last day for the conclusion of the BII deal. The cancellation of deal may results in Maybank losing its deposit paid earlier to Fullerton of RM480m being 10% deposit down payment for BII's buy.(...why are we always in the "receiving" end?). This amount is to be compared with analyst's estimated losses of between RM200m - RM800m if the deal was to go through and the par down was to be carried out. (Note: BII's authorised share capital is about 49b shs, Maybank's purchase price of BII is Rp510, price before suspension Rp460 and recent low Rp360- big sell down tomorrrow in Indonesia?) The effect on Maybank's F/Y ending 30/6/09's net profit of RM3.235m if RM600m is used is almost 19%. Large indeed! What did the brokers in town say? AMMB(SELL TP RM7.55), Affin (ADD TP RM7.80), Alliance(Market Perform TP RM7.30), RHB(Market Perform TP RM7.04), OSK (Neutral TP RM7.80) and Kenanga(Buy TP RM10.10) Wow, with the closing price for Maybank RM7.90, does it mean the consensus TP's range has been reached? However, chart wise, it is pointing north with some resistance at RM8 and RM8.40. It will definitely go up further if the proposal to acquire Pakistani bank MCB -bought at 5.4X Book Value (discussed here) was to be aborted too. How about it Bank Negara?(refer here on Zeti and Khazanah) Also, are you okay with CIMB's foray into Indonesia?

* Going lower by the day. Crude oil is currently USD122 per barrel while CPO closed at RM2,988. However said, it will come up again latter.

* Reuters: Thailand's central bank sold dollars on the currency market today to prevent the baht falling below the 33.50 per dollar level. It seems that the effort for raising interest rate has so far failed to strengthened the baht due to political uncertainties in the country.(even the Thai Finance Minister slams its country's baht management policies) Oh, maybe Bank Negara knew this would happen if it raises interest rate and as such refrained from doing so. Good foresight Zeti!!

* Reuters: Between 2001 and 2007, the US trade deficit with China cost 2-3m American jobs.

* Starbucks admits defeat in Australia as it closes 61 out of 84 stores in the country. A whooping 73% stores!

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 high can you go?

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

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

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

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

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

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

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

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

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

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

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

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

Are Malaysian Banks expensive?

The Edge: While boasting strong fundamentals and earnings, Malaysian banks still offer pricey valuations in comparison to their Asean peers, making them expensive to foreign investors. “Generally, investors look at the price to book value (PBV) ratio and in Malaysia they are still high although the PE (price to earnings) ratios are decent. “The valuations range from 1.7 times to more than three times, so in that sense, Malaysian banks are pricey,” said Pong Teng Siew, head of research at MIMB Investment Bank. According to Bloomberg data, the country’s two largest banks in terms of market capitalisation — namely Public Bank Bhd and Malayan Banking Bhd (Maybank) — were trading at 4.23 and 1.99 times to book value, respectively, last Friday.

An analyst with a local research house said Malaysian banks were less attractive to foreign institutional investors due to their high valuations. Valuations of local banks are even higher than that of its peers in Singapore and Thailand, the analyst pointed out.

“Bank valuations have come down at the moment, as they are merely reflecting the conditions of the current market,” the analyst said, adding that investors would have a better indication of bank valuations in the third quarter, as banking groups’ performances would be more visible during this period.

In comparison, Singapore’s UOB Bank was trading at 1.88 times book value and Thailand’s Bangkok Bank was trading at 1.48 times. While Abu Dhabi Commercial Bank (ADCB) recently took up a 25% stake in RHB Capital Bhd from the Employees Provident Fund (EPF), MIMB’s Pong said this was an exceptional case as Abu Dhabi was keen on the resulting Islamic banking opportunities.....

An April 14 report by Macquarie Research underscored investor concerns about the Malaysian banking landscape. Based on feedback on Asean banks from Macquarie’s clients in the US, they were most receptive to Thailand banks and least keen on Malaysian banks, according to the report. “Moderating loan growth, falling margins, weaker non-interest income and risk to higher operating expenses underscore the pressure on underlying profits. "This situation is compounded by the uncertainty posed by the challenging political landscape that could potentially delay the various government initiatives (the Ninth Malaysia plan and civil servants pay hike),” said Macquarie in the report. The research house named Public Bank and AMMB Holdings Bhd as its sole outperformers. Investors were seeking political clarity following the recent elections in Malaysia, with some wondering why Maybank had paid an exorbitant sum for Bank Internasional Indonesia, said Macquarie. The research house said it preferred Thailand due to a favourable top down assessment arising from political stability and anticipation that it will likely be the sole country to see faster gross domestic product (GDP) growth this year. We believe banks are a good way to play the anticipated economic recovery, where we see a strengthening domestic demand story encapsulated by a rebound in consumer spending and spilling over to private and government spending. We expect faster loan and revenue growth (in Thailand),” Macquarie said. The research house also liked Singaporean banks due to its strong fundamentals despite pressure on margins and loan growth. It expected economic resiliency in the Philippines despite concerns over politics, inflation and remittance flow; and expected strong loan growth. Indonesian banks meanwhile, despite inflation concerns, remained attractive due to the lowest loan penetration, fastest loan growth, fattest margins and highest return on equity (ROE) in the region, Macquarie said.

MyTake: Are our banks really that expensive? Not all of them. In reality if you take Public Bank as a representive Malaysian Bank to compare with the rest of the banks, we are indeed expensive. But if you break down the local banks, you will notice that the sector's average P/BV for CY07 is 2.5X while average ex Public Bank and Maybank is 2.1X. The ROE CY07 sector's average is 12.1% while ex Public Bank and MayBank is 9.3%. (The full analysis of banks' key ratios is shown below). I believe most of the emerging markets' banks are having high P/BV mainly because of the future growth potential related to the banks and the economic conditions of countries that they are in. Take note of the following P/BV. In China, P/BV of banks range from 3.3X - 5.4X(Bloomberg survey) while in Indonesia the top 4 public listed banks are trading at 3.9X. I would consider the average Malaysian banks fairly priced based on the current market condition. Malaysian banks like many other banks in countries eg Singapore are curently facing increasing saturated market with lower interest margin, loan growth moderating, weaker interest income and probably higher operating cost but the assets quality is still good, thanks to the watchful eyes of Bank Negara . But still the growth and stability in the industry are still there. For example, the estimates for the banking industry CY08 are as follows:- loan growth(+8.5%), NPL(3%), Loan loss coverage(80%), Risk-Weighted Capital Ratio(RWCR) (13%) and fee income(+10%). In view of the "slower" projected growth, many of the Malaysian banks have ventured overseas especially in China, Indonesia, Pakistan and other emerging markets. The long term positions from venturing into emerging markets (egs Public Bank into China, Hong Kong, Vietnam and Cambodia, Hong Leong Bank into China, Maybank into Vietnam, Indonesia and Pakistan and Commerz into Indonesia and Vietnam) may pay off and value enhancing eventually.

* Wespac Banking makes takeover offer for St George Bank today valued at AUD15b. Upon takeover, Wespac will be one the largest lending and wealth management bank in Australia.

* China's April CPI was reported at 8.5% from a year earlier (estimates earlier was 8.1%) due to increased in food prices, rising commodity, energy and labour costs. The benchmark lending rate is now at a 9 year high of 7.4% after 6 increases last year. Effective May 20, the Banks' Reserve Requirement will rise to 16.5% of deposit(previous 16%) to reduce money supply and counter inflation.

* A magnitude 7.8 earthquake was recorded near Chengdu today. Estimated deaths unknown yet. For information, in 1976- an earthquate with 7.5 magnitude struck near Tongshan killing 255,000 people. This earthquake took the most lives in the last 400 years and the 2nd highest in recorded history.

Maybank: From Prudent to Imprudent?

Maybank's shares took a dive today closing at RM7.70 (down 30 sen) with heavy volume. The share was suspended for 2 days pending the announcement of a proposed bank acquisition in Pakistan. To date, with a time span of 2 months, Maybank, the usually prudent bank or now known as the "lousy negotiator", has made the following proposed acquisition in a highly risky but highly lucrative markets:

1) An Binh Bank(Vietnam) - 15% stake -USD135m

2) Bank Internasional Indonesia -100%-USD2.7b - 4.6x Book Value (details in previous posting)

3) MCB Ltd(Pakistan)-15% + 5%(1 year latter)- USD686b-5.4X Book Value-payment via part internal cash and part external financing

(note: recent Pakistan banking deals range from 4X-5.6X)

Total proposed acquisition on the above is USD3.521b(over RM11b).

A liitle bit about this MCB Ltd-

Largest in market capitalisation (USD4.1b)

4th Largest in Assets (USD6.7b)

Highly profitable with ROE more than 30%

Highest net interest margin among Pakistan banks of 8%

With such a high price investment made by Maybank, what would the brokers in town think? Below are some comments made and the target price set.

Positive Feedback

RHB (TP 10.70)- calculation based on 15 x CY08eps

CIMB (TP RM9.80)- calculation based on DDM Valuation with 20% discount with assumptions cost of equity 11.3%, dividend growth rates 7.7% - 6%

Kenanga(TP RM10.10)- 2.3X y/e08 P/BV

Negative Feedback

Alliance(TP RM7.50)-2 steps DDM with a terminal ROE of 18% and cost of equity of 12.2%. Expected improvement in eps FY09(0.4%) and FY10(0.8%).

CITI (TP RM7.60)

Merrill Lynch (TP RM7.60)

AmResearch (TP RM7.30)-3X adjusted NTA of RM2.43 (due to large goodwill arising on acquisition, NTA was reduced from RM4.51 to RM2.43)

Morgan Stanley (TP RM8.00)

I believe Maybank is paying a hefty price for these acquisitions which may be very risky and with long payback period. Although Maybank has said that in the longer term, the bank has targeted its Tier-1 Capital ratio to be about 7-8% and aims for a total capital ratio of 11-12%, the above acquisitions of USD3.5b would definitely put the ratios in jeopardy with a heavy strain on the Balance Sheet. Further, the previous target dividend payout ratio of 60% for the year end June 08 may be missed due to the acquisitions. Maybank will really need to do well to justify its purchases especially in Indonesia as the results from this controlling stake is crucial for Maybank's earnings growth while the earnings contributions from Pakistan and Vietnam could be small as it can only be equity accounted. Although Maybank's share price is closed to the pessimistic brokers' TP, except for value investors with a longer term horizon, I believe some investors may not be too eager to jump in just yet pending the bank's capital raising plan to be released by June 30. However, it should be noted that Maybank price is very cheap now (egs, P/E of 11.6X based on financial year 09 estimated earnings (below 5 years average of 15X) and P/B value of 1.9X on estimated year end 08 (below 5 years average of 2.5X). I am asking myself whether Maybank's management are seeing the acquisitions' potential in the same light with the general investing public. Is Maybank so desperate to expand overseas, especially in the politically risky markets, that it wants to buy anything that is offered on the shelf? Chartwise, Maybank has been on a down trend since beginning of this year when it hits RM10.60. The weekly stochastics/MACD are all in down trend mode and the RSI is at an oversold position of 33. The support is seen at RM7.50 and RM7.00 while resistance is RM8.50.

* Today, Public Bank Bhd has taken over from Maybank as the largest bank in terms of market capitalisation in Bursa Malaysia. Its market capitalisation is now RM40.9b while Maybank's is RM37.8b. However, Maybank is still the largest financial group in terms of assets and revenue.(Bloomberg)