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Showing posts from January, 2016

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Russia Holds Key Rate at 21% Amid Surging Inflation

The Bank of Russia unexpectedly maintained its key interest rate at a record-high  21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to  8.9%  in November, well above the central bank’s  4% target , with inflation expectations reaching  13.9%  in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s  200-basis point hike  as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...

SWISS: $4 billion may have been misappropriated from state-owned companies in Malaysia

Switzerland's top prosecutor said $4 billion may have been misappropriated from state-owned companies in Malaysia. $4 billion may have been misappropriated from state-owned companies in Malaysia “We are very concerned,” Swiss Attorney General Michael Lauber told The Wall Street Journal on Friday. “ We have found evidence of suspicious money transfers linked to 1MDB going through Swiss financial institutions, and we believe that it is very important that it is shared with the Malaysian authorities.” The investigation revealed indications that funds have been misappropriated and said it was looking into four cases of potential criminal conduct. It said some of the funds had been transferred to Swiss accounts held by former Malaysian public officials and current and former officials from the United Arab Emirates. The comments represent the most detailed allegations yet of wrongdoing around 1MDB. The fund, set up by Malaysian Prime Minister Najib Razak in 2009 to help str...

Microsoft wants everyone on board with "Windows 10" by July 2016

It is not a new story that Microsoft is giving away free "Windows 10" to everybody. The shift in strategy of the Redmond company has been gaining momentum under the leadership of Satya Nadella. Giving away the operating system for free may seems like a suicide strategy given how traditionally, the OS is one of the revenue generating products for Microsoft. The reason behind this is simple and it has been written over time and time again... WINDOWS 10 on one billion devices . 1 Billion Windows 10 Devices Getting Windows 10 onto one billion devices, (matching Apple's number on the iOS) is great but tough. Windows is a computer operating system, not a phone operating system and the era of PC's dominant has long gone. Of course, the PC market is still huge and massive, about 270 million units per year, and for Microsoft to arrive at their one billion target is still very much a possibility and to do it, and do if fast, Microsoft is giving it away for free. ...

"Experts" on where the Market is heading

2016 didn't start off brightly, especially in the global stock market, with China's slowdown seems to be worse than expected and the oil supply glut has yet to improve. The China's circuit mechanism in trying to control the volatility of the market has failed and make things worse....so, the big question now: just where the market is heading? It is common for us to have different views on the market outlook but here are the summaries that we collect from some of the "experts" in the industry. MAYBANK IB Maybank Investment Bank (IB) expects the current volatility in the stock market to continue, especially in the first quarter of 2016. Maybank IB Regional Chartist & Economics Lee Cheng Hooi was reported by Bernama as saying the factors impacting the stock market would be largely externally induced by headwinds revolving around US monetary policy normalisation, China's structural slowdown and emerging market impact. Meanwhile, for the first half...

Stock Pick: Uchi Technologies Bhd

2016 hasn't really been that great in the stock market but if you are looking for companies with strong fundamentals and balance sheet, Uchi Technologies Bhd might be the right one for you. Uchi Technologies Bhd is involved in original design manufacturing (ODM), specializing in the design of electronic control systems primarily for consumer and industrial electrical and electronic appliances industries (such as precision weighing scales and high end household appliances).  The company had a bad start to 2016, falling by 9.8% to close at RM1.57 on January 29, the last trading day in January. This is in comparison with the FBM KLCI that had dropped by 1.5%. I think the recent drop in price makes the company at a rather attractive value for a long term buy. Uchi Technologies had a rough start in 2016 The company has a strong balance sheet, cash rich and zero debt. As of the latest quarter report that was released in November last year, the company had RM153.3 million in ca...

iPhone slowdown

iPhone slowdown? Is that even possible? But that's what's in the NEWS. This has prompted APPLE Inc. to forecast a sales decline for the first time in more than a decade, adding to evidence that the market for smartphones is becoming saturated and that expansion in China is no longer enough to maintain the company’s unprecedented run of growth. APPLE's iPhone slowdown? On Tuesday, Apple said that revenue will be from $50 billion to $53 billion. This is the first quarterly drop since 2003 and it is also below the average analyst of $55.61 billion, according to Street Account. Some of the analysts look at the Q2 guidance provided by Apple seriously as they are usually quite true. Shares in the company have fallen nearly 20 percent in the last six months. Dow had a 8% decrease while Nasdaq Composite had a 10% fall for the same period. This probably reflect the worries that analysts have on how the slowdown in China could hurt Apple's expected growth in the re...

Saudi not afraid of low oil prices

Saudi Arabia is not afraid of low oil price and this will send the already gloomy oil & gas industry even further downwards. Saudi Arabian Oil Co. is maintaining investment in oil and natural gas projects and has formulated a new strategy in response to cheaper crude as it studies options to sell shares in its parent company and downstream refining and chemical operations, Chairman Khalid Al-Falih said Monday at a conference in Riyadh. The state-run producer, known as Saudi Aramco, can sustain low oil prices for “a long, long time,” he told reporters. It is a signal that the Saudi is sending across....that this is a fight they will not lose.  “Saudi Arabia is well-documented to be the clear lowest-cost producer -- we have scale, capabilities, and technology to help us maintain our low cost as we go forward,” he said.  He also mentioned how the company encourage fiscal discipline and in the company's investments capacity, oil and gas had not slowed down. LOW...

Malaysia Weekly Highlights

PETRONAS to cut spending by RM50 bil over 4 years PETRONAS out of gas? Over the week, Wall Street Journal reported that Petroliam Nasional Bhd (Petronas) plans to slash as much as 50 billion ringgit ($11.4 billion) in capital and operating expenditure over the next four years, according to an internal memo sent to staff by its chief executive officer. Petronas is the Malaysian government’s biggest source of revenue, covering as much as one third of the annual budget, even after cuts in subsidies and the introduction of new taxes to diversify sources of income.  Petronas confirmed that it had circulated the memo as part of “ongoing efforts to optimize costs to address the impact of the continuous fall in crude oil prices.”  The firm has been hit by a slump in oil prices, which have fallen over 70% over the past 18 months. BANK NEGARA RESERVES FALL TO US$95.1 billion Bank Negara Malaysia's international reserves fell by a marginal 0.21% to US$95.1 billion in the...

IRAN adds to oversupply in oil

It is difficult to see oil recovering in the near term despite the investment in Phillips66 by Warren Buffett . The oversupply doesn't seem to deter anyone from going into oil business. With the economic sanctions lifted , Iran is ready to get back into oil business and Bloomberg reported chief analyst at CMC Markets in Sydney saying by phone,  “There is ongoing negative pressure on oil prices from oversupply." "Iran is not new, but we’ve arrived now at the point where sanctions have been removed and it’s going to be a key focus for the markets over coming weeks. The question is how much supply can come online in the short-term.” The Persian Gulf nation will only be able to increase oil production by 100,000 barrels a day, or 3.7 percent, a month after sanctions are lifted and by 400,000 in six months, according to the median estimate of 12 analysts and economists surveyed by Bloomberg. Iran is the fifth biggest OPEC producer. Saudi Oil Minister Al-Naimi dec...

Iran sheds ECONOMIC SANCTIONS

Iran sheds ECONOMIC SANCTION, allowing it to move out from under the yoke of crippling economic sanctions, the United Nations’ nuclear agency announced Saturday.                                                        ECONOMIC SANCTION NO MORE The country has complied with terms of an international agreement to curb its nuclear development program. The International Atomic Energy Agency concluded that the Islamic Republic had curbed its ability to develop an atomic weapon as required under an accord with world powers. “Iran has undertaken significant steps that many people doubted would ever come to pass,” clearing the way for sanctions to end, U.S. Secretary of State John Kerry said in Vienna late Satu...

Everything goes wrong in 2016

We're just into the second week of 2016 and it already felt like a Bear Market.  Not even the pessimist on Wall Street thought things would go wrong so quickly in 2016.  BEAR MARKET in 2016? Dow Jones Industrial Average sank 391 points on Friday, China is struggling to prop up its slowing economy and calm its volatile stock market, and oil price is below $30 a barrel in 12 years.... The selling has been intense, and European stocks officially entered bear market territory on Friday when the Stoxx Europe 600 Index closed down 20 percent from its record high in April. Now global equities have lost more than $14 trillion, or 20 percent, since June. The pace of the drop has been so fast it’s unraveled about half of the rally since a low in 2011. Investors have fled into the U.S. Treasury market, and pushed the yield on the 10-year note below 2 percent for the first time in months.  

While most people turn away from oil, Warren Buffett goes in

Oil price's plunge might seem like forever especially for those living in Malaysia. It's as bad as it could go but if there's any positive that is required, one just had to look at Warren Buffet. When most people turn away from oil, Warren Buffett goes in. The stock pick king is going in on oil. Has it bottom? Warren Buffett is expanding his bet on the oil industry, slowly adding to his already large stake in oil refiner Phillips 66 even as crude oil prices have sunk to a 12-year low. From Jan. 4 to Jan. 11, Berkshire Hathaway Inc, which Buffett has run since 1965, paid about US$390 million for an additional 5.1 million shares of Phillips 66, according to filings with the U.S. Securities and Exchange Commission. The purchases boosted Berkshire's investment in Phillips 66 to 65.68 million shares, or about 12.3 percent of those outstanding, worth $5.21 billion as of Thursday's market close. Phillips 66 shares closed up $4.03, or 5.4 percent, at $79.28 on th...

China's Mountain Debt a Bigger Economic Concern

If you think that China's stock market is scary, it's time to look at its' mountain debt.  $28 trillion of credit bubble with the economy growing at its' slowest pace in 25 years, I wonder....JUST HOW BIG THE PROBLEM REALLY IS. And China's inconsistent policy and direction under President Xi Jinping and Premier Li Keqiang...question marks are everywhere...whether they are for financial sector reform and shifting their $10 trillion-plus economy from one powered by investment and exports to one more focused on consumption and services or not. We all know what happened as 2016 kick off with one of the greatest nightmare in the history of the stock market. And the yuan currency...it's crazy to talk about it. But the biggest problem perhaps is the question of how the Chinese officials will keep the economy growing to repay past obligations, without resorting to a fresh pick-up in debt to fund more stimulus. It was China’s reliance on credit-fueled growth in the...

Stock Pick: Hup Seng Industries Berhad

Hup Seng Industries Berhad increased by 3.88% to close at RM1.34.  HUP SENG's cream crackers The stock has a low beta of 0.61 and of low volatility.  The company mainly manufactures biscuit such as cream crackers, crackers, marie biscuits, cookies for domestic and export markets.  While the company is currently trading at P/E of 20.64 which is on the high side, Hup Seng has a very strong balance sheet. The company has zero borrowing and and is cash rich with RM115.3 million as of the latest quarter report.This is very good especially in turbulence time. It is also not affected by a lot of speculators given that the volume is rather stable and low. It is definitely a counter that one could consider for the long term. The company is also giving out dividend on a consistent manner, which is about 4.1% in yield. The company's latest earnings report were in November. The 3QFY2015 report shows revenue grew 10% to RM206.8 million, driven by both domestic and expor...

Malaysia's "Budget 2016" tweak to be announce on 28 Jan

Treasury secretary-general Tan Sri Mohd Irwan Siregar Abdullah said Prime Minister Datuk Seri Najib Razak is set to announce the revisions to Budget 2016 on January 28. He assured the press and the public that the government will not cut the salaries of two million civil servants in the tweaks.  "The prime minister will announce the revised budget on January 28... let’s wait for his announcement to see what the details are," he said at the launch of the World Bank's office in Kuala Lumpur today. The revision was necessary as the current economic climate had changed significantly from when the Budget 2016 was tabled. Back then, the oil was $48 per barrel but the oil price has now fallen to below US$33 per barrel.  The Ringgit has also weakened compared to back then.

Crude Oil - Below $30 a Barrel

I just posted about how the nightmare continues for the oil & gas industry in 2016 as the oil price continues to fall but I didn't expect it to drop like this. Looking at the dynamics, looking at the charts...it's just a free fall. Oil price free fall Oil dropped below $30 a barrel in New York for the first time in 12 years on concern that turmoil in China’s markets will curb fuel demand. West Texas Intermediate crude tumbled to the lowest since December 2003. Concerns that China’s economic growth may slow has soured investors on the prospects for a quick recovery, turning hedge funds the least bullish in five years. A rapid appreciation of the U.S. dollar may send Brent oil to as low as $20 a barrel, Morgan Stanley said. A SHORT HISTORY ON OIL PRICE Between 2010 and 2014, oil demand was soaring around the world, as countries recovered from the financial crisis but the supply was never able to keep up.  Many older oil fields were stagnating. Conflicts ...

2016 - Nightmare continues for Oil

It is easy to think that the nightmare for oil ended in 2015 but the market is showing us otherwise.  Crude oil's nightmare continues in 2016 as the price fell toward $30 a barrel. A supply response to lower prices continues to be slow in coming and signs of a China's slowdown is hurting the oil & gas producers.  The low oil price is hurting the oil & gas sector   HOW LOW CAN IT GO? The drop in oil prices has been accompanied by a fresh round of bearish commentary, with Morgan Stanley calling for prices to fall as low as $20 per barrel while Guggenheim sees crude reaching $25 per barrel. With the continuous drop, the latest range of investment bank forecasts has them dropping as low as $10 a barrel before finally bouncing back. So, will it be $25, $20 or even $10? How low can it go?  Primarily to blame was the 14 per cent slump on China's markets this year, which is being driven by concerns over growth that could ultimately hit oil demand....

2016: GLOBAL BEAR MARKET?

Some analysts have the view that the start to the year typically are associated with the post-holiday blues with low volume. It was reported in StraitsTime that analyst, Charles Kong said, "Markets usually edge up on low volume. People take time to recover from the holidays and traders don't usually jump in straightaway." Well, the theory has been immediately discarded when 2016 kickstart. All numbers in red and sell orders piling up. The China market was in a free fall with a survey of China's manufacturing confirmed fears that growth was slowing in the second largest economy. The yuan also fell to its lowest in five years. Investors were also getting used to the circuit breaker, with so many people rushing to sell and worries of being caught stuck once the circuit breaker triggers the close of the exchange. Source from Bloomberg Over the past week, investors lost an estimated US$2.3 trillion (S$3.3 trillion) across global markets. In Singapore alone, th...

CHAOTIC 29 MINUTES in China

China's market just made a record....and that's a CHAOTIC 29 Minutes in China . The market open at 9.30am local time and in 29 minutes, it was all over.  The share prices went into a free fall as soon as local exchange opened. One manager of $46 million in Shanghai liquidated all his holdings. Other investors, including a top-performing hedge fund, tried in vain to cash out as circuit breakers brought trading to an abrupt halt. 29 minutes, the market is close. And let's not forget...it's only the 7th January 2015...the 4th day the market opens in 2016...and it's already the second time that the circuit breakers were triggered.  It was a chaotic day for the China's market. Even after the market were close, a lot of phone calls were made. Flood of angry phone calls from clients on the market plunge and the circuit breaker. It was abrupt on Monday...it was even worse today. Imagine if you're going to watch a football game....the game was supposed to last ...

OPEC war heated up with Wall Street support for shale

The OPEC war against the shale producers are heated up as shale producers look to Wall Street for support.  Simply put: Another reason to be bearish on crude prices. Pioneer Natural Resources Co. announced on Tuesday it was tapping investors for $1.4 billion in fresh equity to help finance an increase this year in spending and production in Texas, where wells are still profitable. The share sale shows capital markets are still willing to back the shale industry as crude trades at the lowest in 11 years. The move, if followed by other top shale producers, could lead to a shallower drop in U.S. oil production than currently expected, putting further downward pressure on crude prices. On Tuesday, Brent, the global oil benchmark, fell below $35 a barrel for the first time since 2004. US Oil Production seen slowing down slightly but not enough Based on the chart from Bloomberg, the oil production in US peaked at almost 9.7 million barrels a day in April. Since then, it has ...