Flip-Flopping Fairy Tales: Malaysia Will Not Have 3.9% Growth In 2009

Today when I was reading an article and searching some new, I found a very special article that we need to share about it. This article was appear in Malaysiakini website. So I decided to make a search on the original material which is come from Future Fast Forward by Matthias Chang.

Flip-Flopping Fairy Tales - Malaysia Will Not Have 3.9% Growth In 2009 - Accepting Reality Is Not Pessimism, Giving False Hopes Is Not Optimism - By Matthias Chang (18 November 2008)

Let’s put some money in our mouths. In the past I have challenged those who disagreed with me, that if they can prove me wrong, I would gladly pay them a RM5,000 cash reward. There were no takers. None could prove me wrong!

In the past few days, the mass media have gone out of the way to interview politicians and the Governor of Bank Negara to project a rosy picture that somehow our economy will overcome the severe pain and disruption from the on-going global financial tsunami.

I am willing to take on anyone from the Badawi regime and Bank Negara that by H1 of 2009, the KLCI will drop below 700. If I am wrong in my analysis, I will pay the first five individuals from the said Badawi regime and or Bank Negara the sum of RM 5,000.

These five individuals must within a week register at my website that they are willing to take me on in this challenge.

They have to provide their full name and address in accordance with their NRIC/MyKad and their designation.

If they lose to me, they must pay me the same amount!

Fellow citizens, don’t listen to the Badawi regime’s fairy tales. Prepare for the worst and the worst is yet to come. You owe it to your family.

The best way to save our family and our country is to be prepared for all eventualities. We must tighten our belts, save for the stormy days that will surely come and not spend, spend as advocated by the Badawi regime’s ministers.

Use common sense. What do you tell your children as responsible parents when the family is going through hard times – spend, spend, spend or be thrifty, thrifty, thrifty?

Remember the flight safety rules when flying – when the oxygen mask falls from the overhead compartment, you are to wear the mask first before attending to your children. If you cannot save yourself, you are not in a position to save anyone.

This is a fundamental principle of survival for everyone when a plane is about to crash! Apply the same principle to economic woes and we will all be saved.

Here are his warnings for 2009:

By 2nd Half of next year, the automobile industry will go into a tailspin and suffer massive losses.

By 2nd Half of next year, credit card debts will soar, credit limits will be drastically reduced (worse than 1997/1998) and interest rates on outstanding will increase sharply. It is already happening!

By 2nd Half of next year, shipping rates will drop drastically and this is also happening. Our ports and shipping companies will suffer.

By 2nd Half of next year, our housing market bubble will burst notwithstanding all the stimulus and pump-priming. Arab investors will not be coming. Dubai and Abu Dhabi is already in a financial / property gridlock! Why would they come here when they have to save their own asses?

By 2nd Half of next year, our exporters will be in tears, when Letters of Credit (L/Cs) will not be honoured and inventory stacks up at ports and in factory premises. Chinese exporters are already stipulating what LCs from which global banks will only be accepted.

By 2nd Half of next year, FELDA settlers will also be in tears. Having spent their windfall early this year (because of Badawi regime’s false optimism), their savings will be down and they will bleed.

By the 3rd Quarter of next year, corporate NPLs will shoot up! Relaxing mark-to-market rules will not help.

Malaysia will have a huge immigration problem when these hardworking people are thrown out of work and have to compete with the swelling ranks of Malaysian unemployed. In the meantime capital outflows will continue.

Let’s see whether the statement that Malaysia has more than enough reserves (since according to Bank Negara, we need only have US$30 to US$40 billion reserves) will provide sufficient confidence to foreign investors to continue to invest in Malaysia.

You can call the above observations – rubbish, pessimism, gloom and doom etc. but that won’t change reality. Pause and think. In my previous warnings and alerts, I have stated that by the latest – the 1st quarter of 2009, things will get ugly and scary!

If I am not right, why did the leaders of the just concluded G-20 summit in Washington, in their so-called “Action Plan” stipulated that their policies, remedies etc. must be implemented by the end of the 1st Quarter 2009?

My articles were all written BEFORE THE SUMMIT and obviously I have no control over the leaders of G-20. So ask yourself – “Why Oh Why Must the First Action Plan Be Implemented by the First Quarter of 2009?

This is only the first tentative steps by the G-20 leaders and there is no guarantee that the measures will work. The original Bretton Woods initiatives took almost two years to be formalised and put to work. There is no magic wand to be wielded by the leaders for instant cure. It will be a long hard grind. In the meantime, more shits will hit the ceiling fan. That is a given!

I hope the Badawi Regime and Bank Negara are not accusing the G-20 leaders and Obama’s financial and economic advisers as being pessimists!

You be the judge!

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WANT TO BE RICH BY ANOTHER RM 5,000.00 ? HERE IS YOUR CHANCE ........... Jackie Lee

Russian Professor Predicts Breakup and Decline in USA

This is a very good article come out yesterday. It was send by one of my friend Mr. Jesper Lee. Worth of reading it. This is something that we usually can't find from a professor that can foreseen what would happen in U.S. Read it and you will understand.

A leading Russian political analyst has said the economic turmoil in the United States has confirmed his long-held view that the country is heading for collapse, and will divide into separate parts. Professor Igor Panarin said in an interview with the respected daily Izvestia published on Monday: "The dollar is not secured by anything.

The country's foreign debt has grown like an avalanche, even though in the early 1980s there was no debt. By 1998, when I first made my prediction, it had exceeded USD 2 trillion. Now it is more than USD 11 trillion. This is a pyramid that can only collapse."

The paper said Panarin's dire predictions for the U.S. economy, initially made at an international conference in Australia 10 years ago at a time when the economy appeared strong, have been given more credence by this year's events.

When asked when the U.S. economy would collapse, Panarin said: "It is already collapsing. Due to the financial crisis, three of the largest and oldest five banks on Wall Street have already ceased to exist, and two are barely surviving. Their losses are the biggest in history. Now what we will see is a change in the regulatory system on a global financial scale: America will no longer be the world's financial regulator."

When asked who would replace the U.S. in regulating world markets, he said: "Two countries could assume this role: China, with its vast reserves, and Russia, which could play the role of a regulator in Eurasia."

Asked why he expected the U.S. to break up into separate parts, he said: "A whole range of reasons. Firstly, the financial problems in the U.S. will get worse. Millions of citizens there have lost their savings. Prices and unemployment are on the rise. General Motors and Ford are on the verge of collapse, and this means that whole cities will be left without work. Governors are already insistently demanding money from the federal center. Dissatisfaction is growing, and at the moment it is only being held back by the elections and the hope that Obama can work miracles. But by spring, it will be clear that there are no miracles."

He also cited the "vulnerable political setup", "lack of unified national laws", and "divisions among the elite, which have become clear in these crisis conditions."

He predicted that the U.S. will break up into six parts - the Pacific coast, with its growing Chinese population; the South, with its Hispanics; Texas, where independence movements are on the rise; the Atlantic coast, with its distinct and separate mentality; five of the poorer central states with their large Native American populations; and the northern states, where the influence from Canada is strong.

He even suggested that "we could claim Alaska - it was only granted on lease, after all." On the fate of the U.S. dollar, he said: "In 2006 a secret agreement was reached between Canada, Mexico and the U.S. on a common Amero currency as a new monetary unit. This could signal preparations to replace the dollar. The one-hundred dollar bills that have flooded the world could be simply frozen. Under the pretext, let's say, that terrorists are forging them and they need to be checked."

When asked how Russia should react to his vision of the future, Panarin said: "Develop the ruble as a regional currency. Create a fully functioning oil exchange, trading in rubles... We must break the strings tying us to the financial Titanic, which in my view will soon sink." Panarin, 60, is a professor at the Diplomatic Academy of the Russian Ministry of Foreign Affairs, and has authored several books on information warfare.

KNM Berhad. Can This Counter Become A Market Leader ?

These past few days if we analyst the movement of world financial market including the DJIA; it seems that the KL Composite Index might eventually move up to a higher level. Most of the world share market are showing sign of strenght and also our share prices counters in these past few days have been staying quite stable at their level. There is some indication that the market is going to move higher and higher.

Right at the moment we can assume that most the bad news has been pour out but yet there are still many bad news being kept quite inside the vault.

What ever it is, the most important element in order for the market to move is the volume. Without the volume being built up, the chances for the market to move higher will be equivalent to zero.

Another element would be a market leader. This is one of the factors that would bring this market to move up and if we take a look at the current situation, there isn't any counters that can be a potential leader unless KNM Berhad. With the current share prices of KNM stabilize at RM 0.55 level and with a highly volume done over these few days, don't be surprise if KNM Berhad would become a market leader.

This is not a recommendation to buy or to sell. It is just for us to share our taught. As I use to mention, this is just my own points of views. It cannot be considered accurate. It was based on my charts reading method. However we must always be remember that the KL Composite Index still inside the downtrend channel.

Yesterday the Dow Jones Industrial Average finished at 8,726.61 points up +247.14 points. For the four days, the Dow is up more than 15 percent and nearly 1,200 points. The broader Standard & Poor's 500 is up 18 percent. But no one seemed ready to declare the Wall Street carnage over. Still we need to be careful because we need to face the on going financial meltdown crisis.

Bangkok In Chaos. Any Immediate Effects On Us ?

Bangkok paralyzed. The most recently newly build airports Suvarnabhumi Airport had to be shut down due to the safety. With the current political turmoil hit our country neighbour; will this political turmoil bring any effects to our country? I was wondering whether this morning the KL Composite Index went down has to do with Thailand political turmoil ?

Here are some of the articles from The Nation website.

The Airports of Thailand still kept the Suvarnabhumi Airport shut Wednesday evening, leaving some 3,000 passengers stranded. AoT decided to close the Suvarnabhumi airport Tuesday night after PAD protesters blocked an entrance, entered passenger terminals and scuffled with airport officials.

"We will gather at the airport until Prime Minister Somchai resigns," said PAD spokesman Panthep Wongpuapan, repeating the words of PAD leader Sondhi Limthongkul. Speaking to his followers Tuesday night, Sondhi apologised for the great inconvenience to travellers but said the PAD had no choice with regular bomb attacks that killed and injured many protesters but drew no reaction from the government.

It was a big political gamble by the PAD, which has seen its support declining lately because of controversial, provocative moves. Its die-hard following, however, has been galvanised by deaths and injuries of PAD members since October 7, when police fired tear gas at protesters marching to Parliament. After October 7, the PAD protesters have been targeted for some mysterious bomb attacks that increased the casualty toll.

Army chief Anupong Paochinda, who had been appointed chief of a task force to monitor the PAD and recommend measures to the government, has become a man in the most awkward position. Earlier, he had strongly criticised the government for using violent measures against PAD protesters on October 7, resulting in many deaths and injuries. And on Tuesday afternoon, he reiterated the military's stand that there will not be another coup.

But the latest PAD campaign, which will generate great repercussions on many fronts including security, economy and tourism, Anupong will be under heavy pressure to take some action.

This is a lesson for all the Malaysian. Frankly I against the use of Internal Security Act (ISA) in our country (Malaysia) but if we want to have a peaceful country we need to maintain it. What really happens in Thailand is that their country don't have a system to maintain their public order.

Crude Palm Oil Prices Might Rebound In Near Terms ?

All the while most of us have been thinking of the negative element that will strike our world financial market; will the Dow Jones Industrial Average breaks it recently low? Will the banking system in every country facing the worst scenario of collapsing? German is the latest country to announce their country has enter into a recession. Will Malaysia face the same situation next year?

How about the performance of the world share market in these few months to come; that also including the performance of the KL Composite Index? To be exact, I don't know whether I'm sitting in a comfortable chair and waiting for the KL Composite Index to tumble or to fall again from a 100 storey high rise building before it crash just like million pieces of glasses. It happens three weeks ago and I'm waiting for another one to happen. Will it happens or I'm just dreaming only?

Yesterday I went through some of the charts and I found out some of the counters are trading at their recently lows. In this case anything can happen once the share prices reaches their recently bottom.

First scenario : when the double bottom been perform, it is likely the share prices will move up.

Second scenario : breaks the recently lows and straight away create new low before they rebound. In order for this to take place, the performance of the KL Composite Index will play an important role to determine the course of way.

Let us take a look at one of the example here. Crude Palm Oil prices has shown a little bit of promising sign to move up. In this case if the Crude Palm Oil manage to breaks its resistance level of RM 1,723 per tonne then it might help the plantation stock to move higher. When the plantation stock move higher the KL Composite Index will move higher. Will it happens?

Will this be an opportunity for the next up trend to occour? Next year will not be a good year for the share market around the world and it is likely to be worst than this year but we cannot assume that it will always be bad through out the year. Any possibility of another up trend to occur anytime for now on cannot be denied. All we have to do right now is keep our eyes open and monitor the market movement.

OPPORTUNITY IN CRISIS FOR EPF ?

When I went through some article I found something interesting article about EPF. The Employees Provident Fund (EPF) is a national social security organization operating through a provident fund scheme in Malaysia. Their principal members are the private and non-pensionable public sector employees. This article below was taken from The Edge Daily online website.

The word crisis connotes danger and opportunity in mandarin. A market swarmed by sellers has given the Employees Provident Fund (EPF) the opportunity to be aggressively buying into stocks that appear to have been oversold and are fundamentally strong. The statutory fund had been raising its stake in a number of blue chips, including plantation stocks, from Oct 28 to Nov 10.

Notably, it emerged as a substantial shareholder in Kulim (M) Bhd after buying a total of 15.78 million shares between Nov 6 and 11 in the open market, giving it a 5.12% direct stake in the plantation company. The fund raised its shareholding in Tenaga Nasional Bhd to 635.14 million shares after buying a total of 14.56 million shares between Oct 28 and Nov 4, raising its stake to 14.65%.

Sime Darby Bhd, whose shares had been seeing a selling spree lately following the fall in crude palm oil price, saw EPF acquiring 10.31 million shares and lifting its stake to 935.04 million shares or 15.56%.

EPF took up a total of 9.58 million shares in IOI Corporation Bhd between Nov 3 and 10 via portfolio managers. It now has a total of 758.32 million shares or 12.86% stake in the plantation firm.

Among other counters, EPF was also a net buyer in AirAsia Bhd, Gamuda Bhd, TM International Bhd (TMI), Public Bank Bhd, YTL Corporation Bhd and YTL Power International Bhd.

From my point of views, no doubt that EPF has started to accumulate some of these stocks at a cheaper price still they are investing it for a long term run. That will be a good opportunity for EPF to make a huge return once the KL Composite Index has make a comeback. This only will happen once the share market has started to bring more confident and people are start buying it without any fear, then only the share prices will raise.

We as a player, punter or maybe an investor have a limited fund to turn around. If the share prices go up then it will be great for us but what if the share prices can't even go up and beginning to fall and fall until a stage that we have already out of fund to go in and invest some more ?

We are not like EPF where by they can continue to accumulate these shares if the share prices go down further. They can average up their share prices but we can't because most of us have limited fund only. Do you think that the KL Composite Index will touch 700 points ?????? Make your own judgement .............

KL Composite Index Still Very Weak. A Roller Coaster Move?

Overall today market performance can be consider dull. Nothing to talk about. Everything is about the same things. Last Friday movement was just a technical rebound only.

I still stick with my decision to wait and to see how the market will react in tandem with overall world market performance especially Dow Jones Industrial Average. Today the KL Composite Index went down -11.49 points to close at 855.39 points.

Share prices seem to be going down further after their recent run up. More and more counters are facing further selling pressure. MMC Corp was the next victim that facing the selling pressure today. IOI Corp also faced the same problem. Today downwards turn cannot be consider as an opportunity to buy but rather an opportunity to study how the share market movement and behavior after their recently side way movement for almost two weeks.

From my experience in monitoring the share market movement, I always found out that usually in order for the share market to make a solid U-turn (moving up); they must always tumble first for a few days before they managed to climb up. Can we consider today share market experiencing the sharp falls today ? Not yet. It is still early to assume that the market almost near the bottom. No doubt most of the share market went down today but tomorrow morning it might go up as well. It might be a roller coaster ride.

Tonight the DJIA performance will depends on how the investors will react against the announcement of a massive rescue package for Citigroup.

The U.S. federal government on Sunday announced a massive rescue package for Citigroup - the latest move to steady the banking giant, whose shares have plunged in the past week. The plan has two key features:

First, the U.S. Treasury and the Federal Deposit Insurance Corporation (FDIC) will backstop some losses against more than $300 billion in troubled assets. Second, the Treasury will make a fresh $20 billion investment in the bank. The government has already injected $25 billion into Citigroup as part of the $700 billion bailout passed by Congress in October.

Citigroup is the second largest bank in U.S. Any massive rescue package will sure lift the confident of the U.S. financial banking system. Anyway stay away from the share market will be the best option to adopt. Any risk taking right at the moment will not benefit us in the long run as our KL Composite Index still in the downtrend channel.

IGNORE THE STOCK MARKET UNTIL FEBRUARY ?

Down in the morning, up in the afternoon. Or is it the other way around? The topsy-turvy stock market is tough to read.In the last year, the Dow Jones Industrial Average has briefly been over 13,000 and below 8,000. The past month has felt like the Cyclone roller coaster on Brooklyn's Coney Island -- lots of ups and downs, the whole rickety thing feeling like it's going to crash at any minute.

Great investors are taught to listen to the market. Each tick of the tape has something to say about expectations for growth, inflation, policy changes and looming recessions. The stock market is like a giant mass of pulsing plasma doing price discovery and a game of hot potato, getting stocks into the correct hands with the right risk profile. It's way too big for any one person to manipulate, let alone touch directly. Instead, millions of us provide input with our buying and selling decisions.

When it's at its most efficient, with buyers and sellers neatly matched up at the right price, it's a pretty good predictor. The Crash of 1929 announced a recession, and the wake-up call unheeded might have caused many of the bad policies leading to the Great Depression. The Crash of 1987 ? Not so much.

You see, the market is a great manipulator. In September, the Dow dropped 700 points intraday after the House of Representatives voted down the Treasury's TARP bank-rescue bill. Spooked, the House passed the bill the next week. Or how about this? The Dow was up 300 points on Election Day applauding an Obama victory and then down 1,600 points since.

The market can also be a bold-faced liar. On Jan. 22, the Fed announced an emergency 75-basis-point rate cut in response to huge drops in European markets. A few days later, it came out that a rogue trader at Société Générale lost them $7 billion and the bank was unwinding his positions. Oops.

So which is it now: an efficient mechanism or a manipulating liar ? Should you listen to it warning of doom or anticipating renewal ? I'd say stick wax in your ears and don't listen to the market until February.

Don't get me wrong. The freezing of the credit markets is wreaking havoc on the world economy. Corporate profits are dropping. Central banks are fighting off deflation and may not turn off the spigots fast enough -- which could ignite runaway inflation. But because of the credit mess, I am convinced the stock market is at its least efficient today. Don't read too much into any move. Here are the five biggest dislocations taking place:

- Tax-loss selling: Whenever you have a loss in a stock -- and who doesn't -- it's always tax smart to sell it, take a tax loss and either buy something similar or wait 30 days and buy the original one back. December can be an ugly month of indiscriminate selling. The December effect will be huge this year.

- Mutual-fund redemptions: Mutual funds are also dumped for tax losses. When the stock market is down in the morning, it's usually because of mutual-fund redemptions. Fidelity's giant Magellan fund, down 56%, is one of many in the $6 trillion stock-fund business having an awful year.

As investors call or click to get out of these funds, Fidelity and the others have to unload shares the next morning to raise cash. This forced-selling overwhelms the system. New York Stock Exchange specialists, who are supposed to maintain an orderly market, stop buying and back away. You get huge drops, which can unnerve even more investors and cause them to redeem.

- Mutual fund cap-gain distributions: To make matters worse, in December mutual funds do capital-gains distributions. In a down year like 2008, you would think there are no taxes to pay. Think again. Legg Mason's Value Trust, run by Bill Miller, outperformed the market for 15 years by buying many "unvalue" names like Amazon. As investors redeem, he is forced to sell many of these stocks originally purchased at very low prices, triggering huge capital gains in a year his fund is down 62%. You can almost guarantee investors also will sell more of these funds to pay their unexpected tax bill.

- Hedge-fund redemptions: Instead of overnight selling like mutual funds, hedge funds typically require 45 days' notice for investors to get out of a fund. They've been furiously selling since September to raise cash to pay investors. This usually shows up as a set of stocks that just go down and down and down with no obvious explanation.

Rubbing salt in hedge-fund wounds is the fact that Lehman Brothers was a prime broker to many hedge funds, holding their shares. While Lehman's bankruptcy was not a problem in the U.S., in England the policy is to freeze accounts until the mess can be sorted out. There are billions in assets locked in this bankruptcy, and hedge funds are forced to sell positions in the U.S. and elsewhere to raise cash, exacerbating the downside here.

By the way, when hedge funds are down for the year, they work practically for free until they make up the loss. We'll see hedge funds close and stocks liquidated as -- no surprise -- hedge-fund managers like to get paid.

- Margin calls: Whenever stocks go down sharply, you quickly find who owns them with debt. We have seen spectacular margin calls, a requirement for more capital to cover share losses. Chesapeake Energy CEO Aubrey McClendon unloaded 33 million shares to cover losses.

Viacom CEO Sumner Redstone had a forced sale of $400 million in Viacom and CBS shares because of a margin call on other stocks. You can bet many not-so-public margin calls are behind many huge price drops. These usually take place in the last 30 minutes of trading.

So won't January be alright once these dislocations weighing on the market are lifted? The January effect is supposed to be positive.

Well, often money managers are fired at the end of disastrous years. A new manager comes in, looks at the existing positions and dumps them all and remakes the portfolio with new stocks that he likes, thus generating more selling. My favorite Wall Street adage suggests that the stock market trades to inflict the maximum amount of pain. Remember, you can only ignore the stock market for so long. Once everyone thinks it can only go down . . . it might go up.

Dow Jones Industrial Average In Safe Position ?

Dow Jones Industrial Average managed to climb back to close above its strong supporting level at 7,882.51 points. An indication that DJIA is entering into a safe zone while still trying to make an adjustment from recently steep falls. Yesterday world financial equity market in Asia are performing well even though the DJIA tumble -444.99 points.

Yesterday the DJIA shot up +494.13 points; well above 8,000 points to close at 8,046.42 points. The surge was supported by relatively heavy volume with nearly 10,681,747,000 shares traded hands on the New York Stock Exchange.

Those heavy losses prompted bargain hunters to bid stocks higher. Whether the push was merely rooted in short-term interest or marked a true turning point for the stock market will only be seen in time.

No doubt the DJIA breaks the new low just for one day only and climb back on the second day still we need to pay a bit of attention what would be the next course for DJIA ? If DJIA managed to stay at these level for few more days until end of the month of November than it would be great for the KL Composite Index to adjust it movement for a possibility of Chinese New Year rally in the month of December or January.

Yesterday movement of a late surge by KL Composite Index was merely a technical rebound after 4 days of decline and the movement was also in tandem with Asian share market late surge.

Dow Jones Break Its New Low. How about KL Composite Index ?

Yesterday if we take a look at some of the prices in Bursa Malaysia, indeed some of the share prices look very cheap especially MAS Berhad, Proton Berhad, Zelan Berhad and few others. That didn’t indicate that it is a time to buy or to accumulate.

The main actor for this financial meltdown still rely on how the DJIA will play its music and how our KL Composite Index will dance along with the music.

Wall Street’s still staging it biggest wars against Dow Jones Industrial Average (DJIA) and yesterday the stocks took out new bear market lows in another volatile session Thursday. The DJIA breaks its strong supporting level of 7,881.52 points and went down -444.99 points to close at 7,552.29 points.

Mounting jobless claims continue to reflect a downbeat mood among businesses. Layoffs have been on the rise as many businesses look to cut expenses and regain footing despite tenuous economic conditions. Selling pressure took the S&P 500 down to 747.78 late in the session, which marked the lowest intraday trading level since 1997.

Not only that, it also register a huge turnover during the sharp falls. The New York Stock Exchange recorded a turnover of 10,272,949,000 shares change hands. The turnover alone indicates the selling pressure was very high. With the new low, DJIA is entering to new zones with the next strongest supporting level at 7,181.47 points recorded on 10.10.2002.

No doubt the world financial market will perform badly when they open their trading today still we need to wait and examine how the KL Composite Index will react accordingly.

Whether the share markets will experience any panic selling with DJIA already breaks its new low ? I'm doubt about it. These few days will be a crucial moment for us as we have to open our eyes bigger than usual in order to monitor whether there will be an opportunity for us to grabs.

At the moment the KL Composite Index still inside a comfort zone. With the index yesterday down only -12.33 points to close at 865.32 points. Still I would rather wait, monitor the whole situation and prefer the KL Composite Index to breaks its recently low 801.27 points recorded on 28.10.2008. It would be an easier way to determine whether the share market is entering to an oversold position.

INTERNATIONAL MONETARY FUND. More Help Needed ?

The International Monetary Fund said on Tuesday that more countries were seeking its help coping with the economic crisis every day, while banking and auto industry woes reverberated around the globe. Japan's economy minister said recession in the world's second-biggest economy could last longer than feared.

In the United States and Britain measures of inflation fell sharply, paving the way for further interest rate cuts. And in an illustration of the alarm gripping America's auto industry and the impact of U.S. troubles on economies well beyond its frontiers, Ford Motor Co decided to sell its controlling interest in Japan's Mazda Motor Corp.

U.S Treasury Secretary Henry Paulson told Congress on Tuesday that the administration remains firmly opposed to dipping into the government's USD 700 billion financial bailout fund for a USD 25 billion rescue package for Detroit's Big Three automakers, no matter how badly they need the help.

In Washington, Bush administration officials defended the decision to use bailout funds to recapitalize financial institutions, instead of buying bad assets as had been originally proposed. U.S. Treasury Secretary Henry Paulson, in testimony to the House of Representatives Financial Services Committee, said the global slump had become so severe that "an asset purchase program would not be effective enough, quickly enough."

Banking, seat of a crisis inflicting the sharp international slowdown, also showed the strain. Britain's Barclays altered fund-raising plans to quell shareholder anger and profits in Japan's largest bank tumbled.

It seems that things are starting to get out of hand already. At first it look like things are getting bad but now it turn out to be worst than that.

Everyday if we search some news inside the Internet about U.S financial crisis, the news that come out everyday suggest that the U.S Financial Market still have more rooms to go down. All the news that come out everyday; only to show more negative element rather than positive news.

This morning the Wall Street tumble again. The Dow Jones Industrial Average tumble -427.47 points to close below 8,000 points for the first time. Wednesday marked an ugly session on Wall Street, with the S&P 500 and Nasdaq tumbling to their lowest levels in five years and the Dow dropping to a five-year closing low.

With DJIA moving closer near to its recently low of 7,882.51 points, today world financial share market movement will be crucial. Everyone will be anxious to wait and see what will happen next if the DJIA open its market tomorrow ? Can we assume that the opportunity has arrive ?

KL Composite Index Movement Not Genuine ? Wait for Better Leads.

It about time we talk about KL Composite Index. No doubt the KL Composite Index still manage to move side way but the shares prices for most of the counters still show a lot of weakness.

If we take a look at the movement of some of the individual stocks for yesterday movement and Monday movement, indeed some of the counters are starting to show more sign of weaknesses.

Some even try to reach the recently bottom and a few of them even break the recently low. WCT Engineering yesterday went down RM -0.16 per share to close at RM 1.52 per share. It shows that some selling activity start to emerge after the recently run up. MAS Berhad and Proton Berhad are creating new lows. The market didn't show any sign of strength to overcome the selling pressure that emerge these two days.

It seems that the KL Composite Index movement was not genuine. In this few days alone the index either try close with a little bit higher or a little bit of lower. The way the index move is not according to the world financial market momentum. So we cannot assume that the index movement will guide us anywhere whether it is a time for us to start to accumulate for short term play. I will rather wait and see.

The Dow Jones Industrial Average still struggling to maintain at 8,000 points and above. In this coming few days, any incoming major bad news will likely to bring down DJIA to break its recently new lows. This would be a great disaster if the DJIA breaks the 7,882.51 points because we don't know where the new bottom is ?

From my points of view, I would expect the KLCI market to move side way and will hold on until end of the year before Chinese New Year rally emerge. Any corrections would be considering as an opportunity to accumulate but this would depends how the KL Composite Index would react towards the world financial crisis.

It is too early to mention that our market has found its bottom. At this moment I would rather stay out from the market and wait until the end of this month (refer here -Malaysian Finance Blogspot). But in December we would have to keeps our eyes open and monitor the movement of the KL Composite Index provided that the DJIA still maintain above 7,882.51 points. Usually the movement for KL Composite Index in the month of December always shows more disappointment movement rather an excitement movement but we must always be well prepare if opportunity occurs.

IS GENERAL MOTORS WORTH SAVING ? How about Proton Berhad ?

Lately there have been news surrounding or circulate the whole issue about General Motors in U.S. In the early September, no doubt the federal government of US has already pump in USD 25 billion to help the industry (General Motors Corp, Chrysler LLC and Ford Motor Co); still they are asking more for another USD 25 billion in loan to help them to get through the whole idea to reorganize their company.

What really happens here is still in an early stage. What is really going to happens to Proton Berhad will be another issue. The whole issue now is; many countries have entered into a recession with Hong Kong and Japan were not spared from it.

How about Proton Berhad sales in Europe and other foreign countries ? Will Malaysia survive this financial meltdown ? How about Proton Berhad ? At the moment Proton Berhad share prices are entering to all time lows since its first listing in the year of 1992. The share prices now currently traded at RM 1.88 per share. Let us examine this article in order for us to be well prepare if any of these do happens in the first place.

An article from Times: For months, General Motors had been telling everyone who would listen that bankruptcy was not an option. It had a USD 30 billion cash pile and plans to restructure the company as the economy rebounded and 2007 U.S. auto sales topped 16 million units.

Then came October. Sales plummeted an astounding 45% over the same period last year, a result of a slowing economy and a dearth of financing for would-be car buyers. Total U.S. car and light-truck sales this year could come in at 13.5 million, 2.6 million fewer than last year.

"That's in nobody's business plan," says Kimberly Rodriguez, an automotive specialist with Grant Thornton. "The best planning in the world cannot survive that fluctuation." It's now clear that GM can't survive as an ongoing entity without massive federal assistance.

The company is burning through more than $2 billion each month. It has USD 16 billion left. As if they were aboard a dirigible losing altitude, GM's bosses have been frantically throwing all manner of stuff overboard — retiree health-care benefits, people, assets, new car design — to conserve USD 5 billion. That will get it through the year.

But 2009 is the year of reckoning for GM and the rest of the domestic auto industry, if not the economy as a whole. The GM crisis is raising once again the issue of how far the government should go in rescuing banks, insurance companies, mortgage holders, credit-card issuers and now carmakers.

GM has no doubts about it. "Immediate federal funding is essential in order for the U.S. automotive industry to weather this downturn," GM president Fritz Henderson admitted to investors during a conference call in which GM announced a third-quarter loss of USD 2.5 billion.

No one is more aware of that need than Barack Obama, who carried Michigan by a huge margin. The President-elect is committed to helping the Detroit Three, and House Speaker Nancy Pelosi is leading a rescue party that plans to get a bailout bill in front of President Bush before Thanksgiving.

So far, the President has offered only to speed through Congress an already approved USD 25 billion loan to help Detroit create new fuel-efficient models. But GM needs an additional USD 10 billion simply to pay its bills next year and USD 15 billion more to close plants, compensate redundant workers and dump some of its lesser-performing brands.

The issue boils down to a historic proposition: Is what's good for GM still good for the country? "If GM were to go into a free-fall bankruptcy and didn't pay its trade debts, then the entire domestic auto industry shuts down," says Rodriguez.

The system — the domestic auto plants and their interconnected group of suppliers — is far bigger than GM. It includes 54 North American manufacturing plants and at least 4,000 so-called Tier 1 suppliers — firms that feed parts and subassemblies directly to those plants.

That includes mom-and-pop outfits but also a dozen or so large companies such as Lear, Johnson Controls and GM's former captive Delphi. Beyond those are thousands of the suppliers' suppliers.

Although the Detroit Three directly employed about 240,000 people last year, according to the industry-allied Center for Automotive Research (CAR) in Ann Arbor, Mich., the multiplier effect is large, which is typical in manufacturing. Throw in the partsmakers and other suppliers, and you have an additional 974,000 jobs.

Together, says CAR, these 1.2 million workers spend enough to keep 1.7 million more people employed. That gets you to 2.9 million jobs tied to the Detroit Three, and even if you discount the figures because of CAR's allegiance, it's a big number. Shut down Detroit, and the national unemployment rate heads toward 10% in a hurry.

Even if just one of the Detroit Three — and GM is the most likely, as Ford is in better shape and Chrysler is much smaller — spiraled into a free-fall bankruptcy, the systemic effects, at least initially, would be huge. The whole industry would not be able to build cars in the U.S., because of the lack of parts.

"Unlike the airlines or steel, when you look at the automobile industry and the fact that the whole supplier base is connected — to Ford, Chrysler, Toyota — it will have a ripple effect on the entire industry," says Nicole Y. Lamb-Hale, a bankruptcy expert at the Detroit office of Foley & Lardner, a law firm that represents some GM suppliers.

THE GREAT DEPRESSION OF 1929

Many of us still don't really understand the effects of The Great Depression are. Here are some of the articles that we need to examine and make it as a reference for us to prepare if The Great Depression really happens in the first place.

The Great Depression was a worldwide economic downturn starting in most places in 1929 and ending at different times in the 1930s or early 1940s for different countries. It was the largest and most important economic depression in modern history, and is used in the 21st century as a benchmark in how far the world's economy can fall.

The Great Depression originated in the United States; historians most often use as a starting date the stock market crash on October 29, 1929, known as Black Tuesday. The end of the depression in the U.S. is associated with the onset of the war economy of World War II, beginning around 1939.

The depression had devastating effects in the developed and developing worlds. International trade was deeply affected, as were personal incomes, tax revenues, prices, and profits. Cities all around the world were hit hard, especially those dependent on heavy industry.

Construction was virtually halted in many countries. Farming and rural areas suffered as crop prices fell by 40 to 60 percent. Facing plummeting demand with few alternate sources of jobs, areas dependent on primary sector industries such as farming, mining and logging suffered the most

The Great Depression was not a sudden total collapse. The stock market turned upward in early 1930, returning to early 1929 levels by April, though still almost 30 percent below the peak of September 1929. Together, government and business actually spent more in the first half of 1930 than in the corresponding period of the previous year.

But consumers, many of whom had suffered severe losses in the stock market the previous year, cut back their expenditures by ten percent, and a severe drought ravaged the agricultural heartland of the USA beginning in the northern summer of 1930.

In early 1930, credit was ample and available at low rates, but people were reluctant to add new debt by borrowing. By May 1930, auto sales had declined to below the levels of 1928.

Prices in general began to decline, but wages held steady in 1930, then began to drop in 1931. Conditions were worst in farming areas, where commodity prices plunged, and in mining and logging areas, where unemployment was high and there were few other jobs.

The decline in the American economy was the factor that pulled down most other countries at first, and then internal weaknesses or strengths in each country made conditions worse or better.

Frantic attempts to shore up the economies of individual nations through protectionist policies, such as the 1930 U.S. Smoot-Hawley Tariff Act and retaliatory tariffs in other countries, exacerbated the collapse in global trade. By late in 1930, a steady decline set in which reached bottom by March 1933.

The Great Depression ended at different times in different countries. The majority of countries set up relief programs, and most underwent some sort of political upheaval, pushing them to the left or right.

THE BLACK SWAN - Is This The Right Timing ?

The Black Swan - How do we theory by this word ? The Black Swan theory refers to a large-impact, hard-to-predict, and rare event beyond the realm of normal expectations.

World financial meltdown or financial crisis is something beyond our expectation. It is something that we never expected it to happen. The Black Swan theory sometimes can terms as an opportunity once in a life time.

Last year if we take a look on most of the Wall Street's counter, it was impossible for us to invest in any of the counter that beyond our capability to purchase or to own any of these shares.

I still can remember when I went through some of the prices in some of shares listed in US share market last year, the prices were incredible. Most of the good counters prices at between USD 40.00 to USD 120.00 per share but today we can own it at about USD 2.00 to USD 15.00 per share.

This is something that only happens once in a blue moon. This is what we call THE BLACK SWAN. A crisis that has become an opportunity. Today I'm just trying to explain that the time will arrive but the when is the right timing to implement this kind of strategy (invest for long term) ? This would be another big question that we need to find out an answer for it.

Would it be this year or maybe next year ? Is this the right timing to accumulate some of these shares ? For my point of view it would be better to wait until next year (2009).

I'm not only referring to the US share market. I'm also referring it to the whole world share market including Malaysia, Singapore, Thailand, Hong Kong and even in European and Australia share market. As I have mention just now, timing will be the right tools to apply in this current crisis right now but when is the right timing ?

I still can remember one of the famous chartist that use to trade in 1990's. He can be consider quite a good trader, like to share his own opinion and making his own money most of the time but when 1997 Asian Financial Crisis strike, he was in deep trouble when he was hit hard by that financial crisis.

During that time, he didn't got burn at 1,000 points to 1,200 points level but he was caught at 550 points to 750 points level. He brought a lot of shares at this level.

He didn't expect the KL Composite Index was heading towards 260 points. He got burn so badly (huge losses) and at one time he can't even cover his debt and has no choice but to work as a chartist adviser in one of the broker firm in Kuala Lumpur to repay his margin debts.

After this incident he told me that Timing is the most important element to determine whether you will make it at the right time. Right at the moment either we want to play short or long will depend on the current world financial situation.

The ability of the world financial institutions to weather one of the deadliest disaster will determine the next course of the world share market movement. Basically Dow Jones Industrial Average will play an important role as the main actor towards the whole music.

There's Never A Bad Time To Seize Opportunity.

Yesterday someone by the name of John posted a comment about our Malaysia share market. Here was his comments : The Malaysian bourse is really a mini mouse market with little movement or gyration in stock prices that reflects the overall volatility of markets across the world. It's not easy to make a killing in a market that has little or no foreign fund participation !!

If one were to make a comparison with HK or the Singapore bourse we will even in a downturn clearly and unmistakably demonstrate there's a complete lack of interest from foreign investors. Even the lethargic Bangkok or Indonesian market provides more excitement than our local ones.

How to make money ???

No doubt if we want to make a comparison on our Malaysia bourse with other bourse in our region, Malaysia's share market still can be consider the lousiest and the worst performer.

I do agree with John on the terms that it's not easy to make a killing in a market that has little or no foreign fund participation. It happens because of our current government wrong policies stands and our current political situation.

Since the beginning of political tension in our country, many of us don't dare to put their money inside or to invest in the share market. I can consider this time we are lucky enough that we are not caught in a situation same as 1997 Asian Financial Crisis.

During that time many of the investors, traders, fund managers and investment house were caught by surprised in the middle of that financial turmoil.

This time we would like to say thanks to Datuk Seri Anwar Ibrahim and the Pakatan Rakyat party's. Because of their ambitions to form a new government, many investors, traders, fund manager and investment house were pulling out since the beginning of political crisis in Malaysia that started after general election on March 08, 2008.

When the financial meltdown strike in US and Europe during in the month of September, there are not many people involve in the share market compare to year of 1997-1998. One thing for sure no matter how hard to make a killing in Malaysia share market, there will be always an opportunity to make a killing.

See what has happen in the last two weeks when the share market went down so hard and make a come back strongly. During their come back, I misses the bandwagon. I did make some profit during the contra period but if I can hold for a few more days, I can make about 6 times from my contra amount.

Don't give up on our Malaysia share market at this moment because I believe there's never a bad time to seize opportunity, think big and it will change your life.

Dow Jones Industrial Average At Critical Moments

An increasingly despondent Wall Street fell for the third straight session Wednesday as investors absorbed another series of dismal corporate reports and news that the government won't buy banks' soured mortgage assets after all.

The Dow Jones Industrial Average (DJIA) dropped -411.30 points to close at 8,282.66 points, and all the major indexes lost more than 4.5 percent.

The stock market has lost about USD 1 trillion over the past three days, according to the Dow Jones Wilshire 5000 index, which reflects the value of nearly all U.S. stocks. If we take a look on charts, the DJIA is trading near the session low of 7,882.51 points created on 10.10.2008. There is a different of about 400 points only.

This is very crucial for DJIA in this few days as 7,882.51 points will stand as a strong support. If the index cannot hold on to this support level then it will turn ugly for the world financial stock market.

Currently the KL Composite Index doesn't look nice but the share prices still maintaining well with most of the counters still trade a bit low from their recently high.

If we examine these past few days, most of the counters seem to be lack of power to move up again. Just beware and be careful this coming few days. It seem like the BEARS is going to rule the market again.

At this moment, some of us might already loss the opportunity to ride on the bandwagon that was heading to the north previously but still we must not regret because opportunity will always arise when time arrive.

Now the bandwagon might be heading to south. I'm still looking at it and don't forget there might be another opportunity for us. What happen in the past two weeks will be a great lesson for us and now what we need to do is; how we are going to apply a word "PATIENT" towards ourselves. If we are impatient and jump on the wrong bandwagon, the price that we are going to pay will cost us dearly.

Ronnie Liu Arrested. What A Shame : Malaysiakini

Selangor state executive councillor Ronnie Liu was arrested Wednesday for a 2007 case where he was alleged to have obstructed Subang Jaya Municipal Council (MPSJ) workers from carrying out their duties.

Ronnie Liu, the assemblyman for Pandamaran, was arrested by several policemen outside the state secretariat building here at about 2.30pm.

State chief police officer Deputy Comm Datuk Khalid Abu Bakar said Ronnie Liu was arrested for allegedly obstructing MPSJ officers from carrying out their duty during a raid on a brothel in Puchong last year.

Ronnie Liu, the Local Government, Study and Research Committee chairman was taken to the Puchong police station and released on bail at about 3.15 pm. His brother paid the bail. Ronnie Liu is expected to be charged at the magistrate’s court here on Monday.

Please watch this small video clip about what has really happen last year during a raid. It happen last year in Nov 2007. A three star hotel located in Puchong Jaya. It was raided by the enforcement officer from Subang Jaya Municipal Council and the police. Ronnie Liu was detained by the police in Nov 2007 for obstructing a prostitution raid at a hotel in Puchong Jaya.

Malaysiakini : RONNIE LIVE VIDEO Prostitution Raid

Las Vegas Sands Corp. From USD 150 a Share, Now USD 5.34 a Share

Shares of Las Vegas Sands Corp. plummeted more than 34 % Tuesday after the hotel and casino operator said it will suspend construction activity in Macau to help preserve cash and try to raise money for projects underway in Singapore and Pennsylvania. Las Vegas Sands also said it would make a public offering of 182 million shares of stock without shareholder approval.

The company said Monday that it will freeze construction on two sites in the Cotai strip, an area between two outlying islands off the Macau peninsula where the group operates the Venetian Macao.

"Given the current conditions in the global credit environment, we have elected to significantly slow the pace of development activities on the Cotai strip," William Weidner, Las Vegas Sands president and chief operating officer, said in a statement.

Shares of the company closed down USD -2.66 to USD 5.34 per share after being halted. That is on top of a Monday decline of 8%. A little more than a year ago, the stock was trading at the USD 150 level and scraped absolute bottom at USD 4.32 late last month.

The company also said in a news release that it plans to make a public offering of nearly 182 million shares of common stock, along with nearly 92 million shares of preferred stock. The preferred stock will go for an exercise price of USD 6 with common stock going for USD 5.50 a share.

And it will not seek shareholder approval for the offering, saying that "after a careful review of the facts, the members of the audit committee of the company's board of directors have determined that any delay caused by securing shareholder approval prior to the issuance of these shares of common stock in connection with the conversion of the convertible senior notes would seriously jeopardize the ability to complete the offerings as well as the financial viability of the company."

Further, Sands said that it hopes to raise USD 2.144 billion in capital, with the participation of the family of Sheldon Adelson, the controlling shareholder, to make sure the Singapore project is completed and to keep from violating covenants on its debt. Last week, the company said it was apt to be in violation of those covenants, raising fears of bankruptcy and sending the stock into a tailspin.

Weidner said he plans to resume development in Macau when the company is able to obtain capital on terms it deems acceptable. He won't be getting it from the Macau government.

The Associated Press reported Tuesday that in his annual policy address, Macau Chief Executive Edmund Ho said, "the government has no concrete measures to help it solve its financing difficulties immediately."

Las Vegas Sands reported Monday a USD 32.2 million loss in the third quarter, narrowing from a USD 48.5 million loss in the year-earlier period. The company managed to grow revenue substantially in both Macau and Las Vegas but the latter was due entirely to an expansion.

Several key metrics including the average daily room rate, occupancy level and revenue per available room were off by double-digit percentages, more evidence of drastic slowdown in visitor spending in Sin City. Las Vegas Sands said it would halt construction on sites five and six along the Cotai strip, without releasing further details. The company currently operates three casinos in the former Portuguese enclave.

The gambling giant is currently building a USD 4 billion casino and hotel complex in Singapore, known as Marina Sands, which is due to be completed in 2010. Writing about the offering, Bill Lerner of Deutsche Bank said that "while clearly dilutive, we view this event as a 'save the company' type transaction and expect it could be received favorably."

I really don't dare to think about it when the share prices of Las Vegas Sands Corp was recorded at USD 150 per share last year (September and October 2007) and now after 1 year the share prices was at USD 5.34 per share. This is a huge blow among all the investors who had invested in that company.

Las Vegas Sands Corp Secures USD 2 Billion for Marina Bay IR

Las Vegas Sands Corp (LVS Corp) secures USD 2 billion capital funding, remains committed to Singapore project. By securing over USD 2 billion in capital funding, they are intend to stay on with their commitments to avoid violating loan agreements. President and Chief Operating Officer William Weidner said in a conference call that LVS Corp expects to close the transaction by the end of the week.

He continued to say that however, there will be some changes to LVS Corps' overseas resort developments. It will stop construction work at two sites in Macau's Cotai Strip pending project financing arrangements.

Mr Weidner said LVS Corp hopes to have an agreement with a major Chinese bank within the next three to six months. LVS Corp will also suspend the building of its St Regis Residence luxury-condominium project in Las Vegas indefinitely. The operator said it expects to save USD 1.8 billion by delaying and curbing plans for those projects.

But Las Vegas Sands Corp said it remains committed to its Marina Bay Sands project in Singapore, and expects to open the resort by late 2009 according to plan.

LVS Corp said it expects a significant return on capital from the Marina Bay Sands resort project. It assured that the current capital market conditions will not significantly impact the integrated resort development in Singapore.

It seems that Las Vegas Sands Corp is really given it words and the chariman is really commited that they are serious in finishing their jobs on time. The Marina Bay Sand Integrated Resort will remains the 'No 1' priority for Las Vegas Sands Corp even as the casino operator has to suspends its projects in its Macau headquarters and scales back on a development in Pennsylvania.

A Thumb UP For KL Composite Index And Lower Liners.

China announced a 4 trillion Yuan (USD 586 billion) fiscal stimulus plan to jump-start growth in the world’s fourth-largest economy. The funds amount to nearly a fifth of China’s 2007 Gross Domestic Product. The first 100 billion Yuan are marked for the current quarter, with the total sum to be used no later than then end of 2010.

China contributed 27% to total global economic growth last year, a share greater than any other nation. Yesterday the KL Composite Index movement was entirely based on this announcement.

This announcement also helps the world stock market to rally yesterday. No doubt the impact on Chinese economy will take a turn, will this fiscal stimulus plan work in the way of helping other region ?

I don't think so; the funds will initially go towards building low-rent housing, infrastructure in rural areas, roads, railways and airports in China. It will have a small impact in helping out the prices of the commodity and stabilize some of the construction material prices too but for sure it will have a small impact towards the crude oil prices.

KL Composite Index has been struggling to sustain above 900 points this past few trading days. No doubt the prices of some of the counter performing quite well, still any attempt to brought the share and keep it form medium to long term at these moment cannot be consider as the right timing.

What really happens to KL Composite Index now is merely a technical rebound after the recent huge sell off but still we need to monitor the performance of the world financial market reaction towards any incoming good or bad news.

Lately the way the third liners move its gear really surprised me as it catch me by surprised again when all the sudden, counters which is used to be below RM 0.20 per share were also moving up strongly - if we want to calculate in terms of percentage gains.

Nevertheless, we should give a thumb up for KL Composite Index and all the stock share prices for their ability to climb higher and higher these past few trading days. For my own record no matter how bad the KL Composite Index perform during a sharp falls, we also need to pay a bit of attention towards the lower liners as their performance during a technical rebound were tremendously in terms of percentage gains.