Special Alert: Budget 2009 Snippets [Part 3: Investment & Businesses]

On the investment and business angle, the budget had been tasteless to say the least. The incentives for domestic investment this time around was uneventful; at least last year's focused on real-estate properties. We believe those who had changed hands in property transactions last year would be smiling when they read this and for the those that could not afford physical properties investment would have also made some decent money on property stocks.

Of course, the beginning was flavourful bliss but the end..., bitter to the core. The benchmark index KL Property Index was down almost half -46%, (noop.... that is not a typo mistake, yes its the BIG -46%) from its peak of 1,216.42 in July 07 to today's 651.00 level. Anyways, thats the past and this year unfortunately is not fantastically different.

Snippets:

1. Witholding tax for REIT dividends by foreign investors was reduced from 20% to 10% and for individual resident and non-resident investors, the reduction was from 15% to 10%. [Not exciting, Malaysian REIT had always been uneventful and very people invest in them. For the benefit of those who do not know what's a REIT. REIT stands for Real Estate Investment Trust - pretty much like a unit trust fund (Public Mutual and the likes) but only focuses on propert real estates only. This type of trust is only traded on the stock market and CANNOT be bought from a unit trust consultant. The typical form of return offered by REITs are dividends, so for those who wants better return than Fixed Deposit, you might want to explore REIT as an alternative.]
2. Properties costing less than RM250k will get 50% stamp duty exemption for their loan agreements.
3. Civil servants' tenure for new housing loans raised from 25 years to 30 years.
4. Tax treatment on group relief enhanced by allowing losses for the purpose of offsetting increased from 50% to 70% (Best to consult your tax agents on what does this mean, we are not entirely sure but it has something to do with tax-offsets on loss-making subsidiaries.)
5. In the effort to promote Malaysia as an Islamic financial hub, government is granting tax exemption status for a period of 3 years for fees and profits earned by institutions
   undertaking activities relating to arranging, underwriting, distributing and trading of non-RM sukuk issued in Malaysia and distributed outside Malaysia.
   
   

This will be the last piece and will conclude our series of Budget 2009 Special Alerts. If you had missed out, click Part 1: Domestic Consumption and Part 2: Infrastructure Development

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Special Alert: Budget 2009 Snippets [Part 2: Infrastructure Development]

The Budget 2009 allocation for infrastructure development is nothing great to shout about. Amongst the biggest portion goes to human capital development followed by improvement spending in public transportation amenities.

Snippets:

1. The government had allocated RM47.7bn for human capital development (in terms of training and education) to create talented, trained and competitive workforce. Now, this amount is huge, representing 23% of total budget allocation. To us, there had been massive brain drain in the last 10-years plagued by Malaysia's poor salary scheme of working professions and the much dissatisfied governing policies. We think, instead of pouring truck loads of excessive funding into building schools and learning institution that are "half-baked", efforts should be focused on inviting brains back in to Malaysia. If you do not already know, there are a many successful Malaysian outside Malaysia doing extremely well and these talents need to be lured back.



2. This is most probably the most controversial of them lots. RM35bn will be spent for public transportation amenities over 2009 - 2014. Urban commuters sure knows what we meant by controversial. This kind of spending had repeated appeared on the national budget year in and year out, however, none of them could translate into tangible and material improvement to the public transport systems we have. To be honest, the PM should already know the congestion problem in mass transit vehicles (KTM Komuter, STAR-LRT, PUTRA-LRT) before boarding them 2 weeks prior to the budget announcement and claiming that he only found out recently that the quality was not acceptable. Sighhhh .. that's just tooo lat(m)e......






3. 
   


4. Last 2 years, we went through a whole lot of no-action no follow up big bang hoo-hahh about the 5 economic corridors. Still remember them, if not then let us remind you. The 5 economic corridors are [1] IDR - Iskandar Development Region (Johor), [2] NCER - Northern Corridor Economic Region (Perlis, Kedah, Perak & Penang), [3] ECER - East Coast Economic Region (Terengganu, Kelantan & Pahang) [4] SCORE - Sarawak Corridor of Renewable Energy [5] SDC - Sabah Development Corridor. The government is going to pump in RM6bn for these corridors.


5. Healthcare get RM13.7bn allocation.


6. Royal Malaysian Police gets RM5.4bn.


7. Only RM1.8bn allocation for the development of basic rural amenities and infrastructure. A bit too little right ???


8. Sabah and Sarawak states gets additional RM3bn and RM3.3bn respectively for development purposes. We wonder if the money has anything to do with possible politician crossing over that has been in the press all this while after the March election.

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Special Alert: Budget 2009 Snippets [Part 1: Domestic Consumption]

In general, the Budget 2009 is less likely to "touch" the mass and ease inflationary burden of average Malaysian in our opinion. Biggest beneficiary for this round are households living in hardcore poverty and very poor status. The government is now reaching out to those households earning less than RM720 in Peninsular Malaysia, RM830 in Sarawak and RM960 in Sabah a month. Hopefully these aids get to them properly and timely through properly government channels. We would not want to see "other hands" meddling with poor people's money.

We think some of these measures are "illusive" and lack the substance to relief inflationary pressure and spur growth in general. Take for example the tax cuts: top-most bracket individuals now pay tax rate of 27% (28% last year) which is still more expensive than corporate tax of 26%. In terms of luring in more foreign direct investment (FDI), Malaysia lacks the incentives and attraction. Whilst Malaysian corporate pays 26% for corporate tax, HK corporate and Singapore corporate tax stood 17% and 18% respectively. Tax rebate for individual relief was only raised by RM50 !!! (OH MY GOD - only equivalent to 11 bowls of noodles - KL standard). Free electricity if your monthly bill is lesser than RM20. Jeez, think about it, very little of us consume that little electricity.

SNIPPETS

1. For individuals paying the highest marginal tax rate bracket, government reduced the ceiling tax rate from 28% to 27%.


2. Tax rate chargable for income group earning RM35,000 to RM50,000 is now 12% compared to 13% last year. Tax rebate (for individual relief) was raised from RM350 to RM400.


3. Allowances and benefits in kind received from employers are tax-exempted. (ie. training and education, TMNet services, books & reading materials are tax free if your employers awards you, which they normally don't)


4. Reduction in import duties of consumer durable goods from 10-60% range to 5-30% range. Essential food import duties lowered to 2-20%.


5. Free electricity bill if your monthly bill is lesser than RM20.


6. Road tax for diesel vehicles reduced to the same rate as petrol vehicles.


7. Interest Income for individual is zero tax.


8. Welfare assistance eligibility criteria raised from RM400 to RM720 for Peninsular Malaysia RM830 for Sarawak and RM960 for Sabah. This is to help more poor and hard-core poor household benefit from this welfare facility.


9. Excise duties on cigarettes raised by 3sen to 18sen per stick. So, duties for a pack of 20's is now raised by 60sen. Starting 1-Sep-2008, pack of 20's Dunhill is RM9.00, pack of 14's is RM6.50. Pall Mall is RM8.20 for (25s) RM7.50 for (20s) and RM5.50 for (14s). We know that the sums do not add up; so this is the breakdown. Example Dunhill (20s): Pre-budget price RM8.20 + new tax hike for 20 sticks RM0.60 + (escalated costs: tobacco leaves, fertilizer, packaging, distribution) RM0.20.


10. Bonus for civil servants for 2008 is minimum of RM1,000 or 1 month.

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Malaysia Stock Market Review for Week Ending 22-August-2008

Hurrah…. Malaysian petrol price was lowered from RM2.70 to RM2.55 starting 23rd August 2008. We think this is indeed positive for the stock market as it opens on Monday. Cheaper petrol prices would translate into cheaper transport costs to businesses and a breath of relief to any household budget (to a smaller extent). We believe this approach is more pro-business rather than pro-people. Prices of goods and services are not likely to adjust downwards following the savings in costs of logistics. What we find more interesting in this petrol price adjustment is that it could be seen as the prelude of goodies in the up and coming Budget 2009. Just to recap, we had earlier expected the budget to be “people-friendly” (Check out our YouInvest Budget 2009 Wish-List written 28-Jul-2008).

Although government officials from the BN coalition had denied the petrol price adjustment being used as one of the tools to lure in votes in the up-coming Permatang Pauh by-election, we sense other wise. In our opinion, Mr. Anwar Ibrahim’s position is very strong in this constituent state as he and his wife had helmed this position for more than 20+ years. We guess everyone should have an idea of who’s going to win in this by-election but more importantly the quality of the victory. The government has definitely step up its ante in this event. Let’s list them down:

1. Datuk Arif Shah Omar Shah, a very fluent mandarin and hokkien speaking Malay BN candidate was chosen the go head on with Mr. Anwar Ibrahim who’s one of Malaysia’s most charismatic political speaker. If you didn’t know, Datuk Arif Shah Omar Shah gave his ceramah in mandarin and hokkien (linguistically very impressive in our opinion) to a Chinese crowd last Wednesday. Even though he may touched the hearts of some, but getting voters votes during the poll requires tangible actions where the current ruling party lacks.

2. Deputy Education Minister Dr. Wee Ka Seong had recently allocated RM1.2mn to 6 Chinese schools in Permatang Pauh on 19 Aug 2008, "coincidentally" during the run-up to the by-election.

3. The Election Day was set on 26-Aug-2008 a weekday? Why? Why not on a weekend like the
08-03-08 general election? Well, everybody knows that if the election was set on a weekday then there is high probability that the working class voters be absent from voting. So, voters from Permatang Pauh, do your responsibility choose diligently and be a responsible voter, we don’t want to see phantom votes and postal votes to sway the general opinion of politics in this country.

4. Petrol pump prices were down -15sen from RM2.70 to RM2.55 starting 23rd August 2008, 3 days before D-Day in Permatang Pauh.

Anyways, enough about politics, newsflow from corporate was still pretty dry and dull. The week continued on with companies reporting their second quarter performance results and will end until 1-Sep-2008. Performance in general was mixed, with some reported:

1. In-line with expectation results with a twist of negativity in the second half outlook amidst political instability, high commodity prices, high inflation and slower demand growth.


2. Below expectation results due to fluctuation in commodity prices, slower demand growth and rising costs.


3. Almost none of the results were above expectation this quarter. Even if we had beaten expectations, investors and analyst were still bearish and caution on the weaker second half outlook.
   

For the week, KLCI was down by -9.5pts (-1%) from 1,095.05 to 1,085.6pts.

Forecasts wise, we think the KLCI had been down a bit too much and a bit too long, so, we think there is a potential rebound in the market this week. This week, we think the market has 70% chance of going up and 20% chance of staying flat and only 10% chance of going down. As we run up to the Permatang Pauh By-election date (26-Aug-2008) and Budget 2009 (29-Aug-2008) the relief rally will continue with strength.

Stock on our watch list is MMC Corp.

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Malaysia Stock Market Review for Week Ending 15-August-2008

As expected in last week's forecast, the KLCI drifted lower this week. The benchmark index shed -25.26pts (-2.3%) led by extended selling down of banking and plantations stocks. Bumiputra Commerce (CIMB Bank) loss -95sen (-11%) after the bank reported weaker than expected profits and subsequently guided this year's net profit target downwards due to poor sentiment in the economy. Sime Darby, the world's largest plantation stock was down -35sen (-5%) on the back of declining palm oil prices. Stock market participation remain stubbornly thin despite the emergence of good value in selected stocks.

Some of our clients had asked if the stock market were to go back to 1997 or 2001 level. In our, the recurrence is most unlikely due to the stronger position that Malaysian corporates are now standing. In the yesteryears, Malaysian corporate had not exercised prudence in their capital structure, corporate debt levels were high, companies' valuation were lofty and future business prospects were pretty much in the air and not water tight. These days, it seems Malaysian corporate are more resilient and should weather through small economic shocks. Corporates in general have moderate debt levels and their capital structure are largely intact from the last round of restructuring post the 1997 Asian crisis. So we believe any slowdown in the economy will not result to sequential corporate blow-ups and corporates to belly up easily. So, we conclude the risk profile to invest in Malaysia stock market is safer than ever before.

Since newsflow continued to stay dry and scarce, we will just keep future updates short and sweet. As for stock under our watch list, MRCB is still on our list but he had dropped AirAsia this week.

Strategy: We expect the market to drift lower this week (60% chance), 30% chance to stay unchanged (+/-5pts) and only 10% chance of bouncing up. Bear in mind that all eyes are on corporate results reporting this month as they conclude their second quarter performance. Already we can see 2 out of 4 banks had guided their outlook downwards (ie. Bumiputra Commerce (CIMB Bank) and AMMB (AmBank)).

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Malaysia Stock Market Review for Week Ending 8-August-2008

888 (08-August-2008), what an auspicious number and the world's most eventful date. However, Malaysia's overall stock market last week trended lower. The KLCI lost -28.37pts (-2.5%) touching 1,120.31 on Friday's close. The fall was basically led by softening crude palm oil (CPO) prices which ultimately affected performance of plantation stocks. Poor performance of plantations stocks did not just began last week, but in fact started 3 weeks ago and was mentioned in our article dated (18-July-2008). Let's review some plantations stocks this week: IOI Corp -52sen (from RM5.50 to RM4.98); KL Kepong -110sen (RM13.20 to RM12.10); Sime Darby -80sen (from RM7.80 to RM7.00); Asiatic -45sen (RM6.40 to RM5.95); Tradewinds Plantations -38sen (from RM3.46 to RM3.08); virtually all of them were down. Like what he had previously mentioned, plantations stocks were generally facing selling pressure due to: [1] plantation stocks had performed extremely well in the last 2 years fueled by high CPO prices, so most of the investors are sitting on "deep-in-the-money" or ("un"cashed out) profit positions, hence investors sold them to unlock profit. [2] Since plantations stock are heavily owned by foreigners, a sluggish economic conditions in the domestic market and potential slowing down of global economy post Olympic 2008 would lead foreigners to unwind their investment position in Malaysia and similar emerging economies. [3] Since CPO prices had been associated with global crude oil (fossil fuel) prices (due to the bio-fuel factor) since last year, declining oil prices would also contribute to downfall of crude palm oil prices. We believe next week is going to be another down week for plantation stocks as crude oil (fossil fuel) prices dove US$4.82 (-4%) on Friday to US$115.20/barrel. Hurrahhhhh to consumers as we could expect the government to lower Malaysian petrol pump prices in the next review. Fingers crossed.

In terms of corporate news, Tan Sri Syed Moktar's proposal on related party transaction (RPT) to insert Senai Airport valued at RM1.95 billion and Aliran Ihsan Resources Bhd at RM240 million was not received well by MMC investors. MMC shares were sold down significantly by -23.4% (65sen) from RM2.78 to RM2.13 on the backdrop that the injection of these 2 businesses were not going to enhance the profitability of MMC but on the reverse putting a dent to company's profit. In fact, analysts were saying that the price tag of Senai Airport was just too high considering its loss-making situation. What more this is a related party transaction. RPT is definitely a bad word, unappealing to investors during bearish times. For the benefit of those that do not understand whats an RPT. RPT means a proposed business transaction whereby the proposing party is a buyer and a seller at the same time. For the MMC's case, Tan Sri Syed Moktar is proposing for MMC (the company where he owns 51.8% stake) to buy over Senai Airport (Syed Moktar owns 100%) and Johor's bulk water supplier Aliran Ihsan Resources (Syed Moktar is a major shareholder).

Strategy: We expect the general market again to be down this week dragged by another round of sell offs in the plantations sector. However, easing crude oil (fossil fuel) prices and commodity prices should actually be better for the general economy. This week we are downward bias, so 60% chance of market going down; 30% chance of market staying flat and only 10% of market going up.

Stocks Alert. Perhaps its time for us to give out some stock tips after several requests from our friends. Well, as opposed to calling these advise as stock tips, we shall just call it "stock we are looking at". The stocks that we list out need not necessary be a buy call, we could also highlight sell calls as well. Our picks are purely for note-taking purpose only.

"Stocks we are looking at" this week are (1) Airasia and (2) MRCB. If you would like to know why we think both stocks are on our list then you have to email us for the reasons. On that note, since its the Olympic season, Enjoy the Game, Think Green and World Peace.

YouInvest - Malaysian Investing Made Easy

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Malaysia Stock Market Review for Week Ending 01-August-2008

Contrary to general expectations of a short-lived relief rally, Malaysian stocks continued their upward climb this week. The KLCI was up +1.5% (+17.35pts) from 1,141.75 to 1,159.10. The prolonged rally was generally sustained after easing crude oil prices last week. Crude oil futures currently trade US$125.10/barrel, -14% lower than its peak US$145/barrel. We believe global oil prices could be jittery at this point after news broke out this week. [1] Israeli PM’s spoke about Iranian “nuclear breakthrough” which could spark UN interventions and also potential constraint in supplies. [2] Tropical storm Edouard is currently moving into the Mexican gulf could see supply disruption in the short term as oil production facilities shuts down.

Corporate newsflow remains dry and short with little exciting talks in the market. This week’s corporate news focused mainly on Maybank. Share price of Maybank rose +40sen this week after Bank Negara Malaysia (BNM) revoked its earlier approval to allow Maybank to buy Indonesian bank - Bank Internasional Indonesia (BII). The revocation was prompted after Indonesian regulators pass through a new rule on July 2008 which requires acquiring parties of any Indonesian bank (in this case Maybank) to sell out 20% stake in 2 years. For the benefit of those who do not follow this story, Maybank was willing to pay “exorbitant price” for BII citing reasons for regional expansion. Understandably expansion is essential for the well-being of any businesses, however, if the price of acquiring is too high, then it does not make any economic sense. Instead of improvement, the acquisition of BII was seen as risky and not justifiable by market pundits. Share price of Maybank plunged -RM2.00 (-22%) from RM8.95 ( 25th March 2008 - the day before its first announcement) to RM6.95 (7th July 2008 – 2008 year to date low). Without going too much into technical jargon and details about this acquisition, we understand that the “exorbitant pricing” was so controversial that Maybank’s CEO was asked to present this case in one of the parliament seating a few months ago. So, when this news broke out, Maybank share price recovered.

On the negative end of corporate news, the Government had scaled down UEM Builder’s Second Penang Bridge contract sum by -40% to RM1.3bn. Top glove (the world’s biggest latex glove manufacturer) issued profit warning over the weekend on the back of slower demand and high latex and energy costs.

Strategy: We predict the week ahead to be relatively quiet given jittery oil price movements and mixed sets of US economy indicators. Again, we are reiterating our bullish stance (slightly lesser this week) on equities and will be increasing our exposure if there are any significant dips. We think dips of -50pts and below will be a good opportunity to buy or average down. In terms of market direction, we think market will be 60% relatively unchanged (+/-5pts), 30% chance of moving downwards (>-5pts) and only 10% chance of moving upwards (>+5%). The market is likely to take a breather this week after rising 154pts in the last 2 weeks. PHEW ……

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Special Alert: Budget 2009 Wish List

After a spate of people and business "unfriendly" initiatives announced by the government in the first half of 2008, we think the Malaysian government is more likely to dish out some "goodies" in the up-coming Budget 2009 (next month - August08).

Let's do a count down on these less "unfriendly" news:

1. Petrol price hike from RM1.92 to RM2.70 (+41%) in June, led general consumers to dampen spending. General prices of goods and services (including food) rose significantly. Your nasi campur or mixed rice, is more expensive??? That's why.
   
2. June08 inflation touched 7.7%, meaning that everybody living in Malaysia are 7.7% poorer in real RM-value terms.
   
3. Plantations and electricity generators (Independent Power Producers) are slapped by wind-fall taxes. Hence, affecting profitability of investors, business owners and lenders of such industries.
   
4. As many as 200 Malaysian contractors have returned their letter of award to the Government due to escalating building material prices. Traditionally, such government tender jobs gives very, very lucrative margins. Well, this piece of information says a lot in our opinion. Think about it, if these contractors had already pulled away from these contract, what about the ordinary construction & development projects by the private sector?? To us, may even be loss-making. :(

Putting on our political analyst (not the most shout-about job in town) cap, we think the most appropriate thing for the government to do in order to:

1. Restore confidence in the rakyat.


2. Lessen rakyat's burden.


3. Feed the much deprived rakyat (who suffered 4.5 years of growth hunger) with some tangible goodies.


4. Position a "good" exit for the current prime minister who announced to hand over the helm in the middle of 2010 and pave a "good entrance" for his deputy.

is to (by the very least) announce some "people and business friendly" initiatives in the up-coming budget.

YouInvest Budget 2009 Wish-List.

1. Reduction in personal income taxes in the form of more relief and/or tax rate.
   
2. Reduction in EPF contribution by employees but maintain the rate of employers contribution.
   
3. EPF to allow contributors more allocation for repayment of home loans and unit trust investment.
   
4. No interest rate hike, until end of year. (We think that interest rate hike is unavoidable to control high inflation.)
   
5. Some tax relief to professionals across the board to plug the current brain-drain in the country.
   
6. Extra prudent government spending, especially on big value projects like the undersea electricity cable project (linking Bakun Dam to Peninsular Malaysia), and the 5 economic corridors. If the rakyat is going to tighten their belt and reduce unnecessary spending so should the government. We should do it all together since we are living under one roof and the government's money is the people's money. What more, the essence of a democratic government is only a mere representation of its people voices and opinions. So, in the case of misrepresentation, then the rulers are no longer relevant. In a democratic country, we do not need elite domination over the silence and the weak. Rent seeking and cronyism are definitely not welcome in any country let alone a beautiful democratic country like Malaysia.

Conclusion. Again, to sum it all up, we are turning bullish on the Malaysian stock market as we see some signs of improvement. Comparatively, the Malaysian market was extremely weak from March to July, and in our opinion, the turnaround could come in August and should be able to carry through to December 2009 when the UMNO election kicks in. So we are building our position now to take advantage for this relief rally.

YouInvest - Malaysian Investing Made Easy

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Malaysia Stock Market Review for Week Ending 25-July-2008

Well, this week we had not been too correct about predicting market direction, the KLCI moved up by +36.7pts closing 1,141.75 just now. This week we had also turn bullish on the market for the first time since we had started this blog. Although many people that we spoke to did not agree with our view but we are still sticking to our opinion for the mean time. Concurrent with our change of mode, we are putting some investment in equities unit trust to set things in motion so that we have a position in equities if and when the stock market rebounds. We've chose a slightly more aggressive fund (Public Equity Fund) which focuses on KLCI blue chips and growth stocks. From our selection, one can tell that we are not entirely ultra bullish or super conservative, we neither chose a small cap fund/sector funds nor balanced funds. Our selection of stock is purely to gain exposure on the stock market with slight biasness to growth and KLCI-following.

So what went wrong with our prediction? Mainly, the easing of global oil prices. Oil prices are now trading US$135/barrel (-10%) from the high of US$150/barrel in early July 2008. Of the reason given for the easing of oil pressures were [1] higher US$ vs other major currencies, [2] expected global slow down which could soften oil demand [3] no supply disruptions as hurricane Dolly misses the refineries in the Gulf of Mexico (YouInvest feels sorry for those hit by Dolly). [4] US law-makers are setting in more requirements for crude oil futures trading to curb over-speculation.

On the domestic front, although corporate results weren't the brightest of all, but the re-negotiation of IPP (Independent Power Producers) on their power-purchasing agreement has put in glimpse of hope in the power producing industry. Recall that previously IPPs were required to pay wind-fall taxes beginning this month, we believe some profitability will be restored within the power sector following the changes in the new power-purchasing agreement.

Most probably when you read this article, you would have already known the outcome of Malaysian interest rate. However in our opinion, there should be NO rate hike because:

1. The government need to do some "politically-correct measures" to ease burden on general public.


2. Oil prices has receeded from its high by almost 12% and potentially could go down even more if US puts additional restrictions to trading activities of oil futures.


3. Latest interest rate on mortgages have already priced in the 25-50bps increment, that is to say that the market has already priced inflation ahead of the central bank rates, hence, no point doing it.


4. Leaving the interest rate unchanged could be the prelude for potential goodies in the up-coming Budget 2009 announcement in August.
   

If you read point number 1,2,4 again, that would also give you the reason why we had turn bullish this week. Fingers crossed on Budget 2009 [we are expecting a people friendly budget this time around, fingers ] :) (check out our wish list in the next posting)

Recommendations: For first time investors, we are recommending to allocate 10% of the funds into pure equities unit trust. For those who have already invested and still making losses, we would advise to average down bit by bit.

Strategy: We will be increasing our portfolio in equities if there are any dips. Any dips of -50pts and below will be a good opportunity to buy. We are still waiting for even stronger buy signals and recoveries in the political scene to invest in equities even further than present level.

YouInvest - Malaysian Investing Made Easy

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Special Alert: Is It Time to Turn Bullish on Stock Market?

Contrary to last friday's recommendation, we are beginning to turn bullish on the market again. However, this time it could short term and for trading and positioning purposes. Unit trust investors should take opportunity to slowly accumulate or build positions in anticipation of any potential rallies. Investing all at one go (lump-sum) should be avoided as doubts on political stability and inflation scares are still not iron out yet.

Malaysian stocks rallied today as global oil price retreated from US$150/barrel to US$135/barrel (-US$15/barrel) due to the recent strenght of the US$ against other currencies and slower demand for oil globally. This week in the US also staged a series of heavy corporate performance reporting. Generally investors in the US stock market felt more bullish in the financial sectors than before as several banks like Bank of America, JP Morgan, Wells Fargo and Citigroup reported results that were better (less poor) than earlier expected by analysts.

The KLCI was up by +29.84pts, closing at 1,139.4 today. Stocks that led the KLCI to moved up were Bumiputra-Commerce (+50sen), Tanjong (+50sen), Genting (+40sen) and Resorts (+13sen). Sign of recoveries in the Malaysian stock market was defintely in sight, as volume expanded to 656mn shares traded vs average of 250-300mn level in the last 2 months. However, we understand that most of the buying is done by foreign hedge funds, so we have to be cautious not to be trapped. Hedge funds traditionally have short investment horizon and usually very gutsy with their buying and selling pattern, so markets are expected to be volatile when they buy or sell.

RECOMMENDATIONS: Since we are beginning to turn bullish, we recommend investors to take a small position at current market in order not to miss out on any potential market rallies.

Our bullishness is prompted by:
1. Increase participation in the stock market (shown by higher trading volume)
2. Lower oil prices.
3. US banks reported results better than expected.
4. Investors thinks that political risk at current market level is all in the price. So, limited downside to political risk (for the mean time).

Model Portfolio Strategy: We are releasing 10% (amounting RM10,000) of our model portfolio to Public Equity Fund to gain exposure in the Malaysian equities market.

General Strategy: Investors might want to take position at current level with some exposure in equities through your unit trust investment. The more equities exposure your unit trust fund has the higher the potential returns, however, you should always understand that if you want higher return than you need to expect higher risk.

If you need help or advise on selecting which type of unit trust to buy, please email us.

YouInvest - Malaysian Investing Made Easy

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Malaysia Stock Market Review for Week Ending 18-July-2008

As we had predicted in last Friday's market review, we expect Malaysia market to have a 70% chance of heading downwards this week and it did. KLCI this week lost -3.4% (39 pts) to 1,105.04 after heavy selling on plantation stocks. For the last 3 days, IOI Corp lost -95sen (-14.5%), KL Kepong lost -RM1.40 (-9.2%) Sime Darby lost -35sen (-4.3%), Asiatic -65sen (-9.3%) & IJM Plant lost -59sen. (-16.7%).

This week was also the first week for some companies reporting their Q2 (Apr08 - Apr08) performance results. Among the notable ones are Public Bank, British American Tobacco and Bursa Malaysia.

Public Bank was basically in-line with analyst expectations, and the results were generally good. However, stock price of Public Bank was relatively unchanged, -10sen from RM10.30 to RM10.20.

British American Tobacco - Results were also generally OK with some worries of cigarette tax hike in the upcoming budget this coming August. The government's "TAK NAK" anti-smoking campaign is also taking a toll on cigarette manufacturers. Upcoming efforts are pictorial health warning, higher taxes & restriction on smoking areas and the somewhat profileration of non-smoking zones. (If you still do not know, Ministry of Sound Euphoria the new club in Sunway Resort has a designated smoking room, you can't smoke in the club.) :( Sorry guys, but some of us in YouInvest are smokers. hehehe... The stock is down -25sen from RM41.50 to RM41.25.

Bursa Malaysia - Bursa reported a set of really, really poor set of results due to poor stock market sentiment and participation in Jan to Jun and it is still heading downwards. The stock was down -15sen from RM6.60 to RM6.45.

RECOMMENDATIONS: Unfortunately, the buy indicators had not appeared yet, so for the mean time we are still pretty much grounded on the sideline not doing much but keeping ourselves alert for any turn around news in terms of political stability in the domestic scene. For those who wants to know the market direction for the next coming week, we think there is again 70% chance of heading downwards, 25% chance for staying mutely unchanged and now even lesser chance of 5% of going up. Why? Cause we think selling of plantations stocks will persist this week by foreigners and local investors as they unwind their position for profits made from 2 years ago. Indeed plantation stocks had performed very well in the last couple of years and general long-term investors are sitting on decent profits, hence amidst difficult times, stocks that made money previously will be the ones to be sold first.

STRATEGY: For fresh and existing investment positions, we advise to buy on any market dips when the KLCI falls -50pts or more during a day. If the market does not drop as much then we will hold on to our investment with no actions taken.


YouInvest - Malaysian Investing Made Easy


For private discussion email to: youinvest.malaysia@gmail.com

Send this link to a friend if you think our blog is useful. http://youinvest-malaysia.blogspot.com/

YouInvest Malaysia Investment Portfolio Update 16-July-2008

The YouInvest model portfolio had started since 15 days ago although this is the first time we are updating our readers. Given the poor performance in the stock market, we are still adopting a "wait and see" approach in our investment.

Just a brief run down on what we had done so far:

1. Parked RM90,000 (90% of our initial capital of RM100,000) in the 1Mth-YouInvest $-Mkt which gives us interest earning of 3.53% per annum. (Note that this product is higher than any FD rates available in the market and only exclusive to YouInvest clients only; if you are interested, kindly email us).
   
2. Whilst the benchmark KLCI has gone down by -4.7% since the beginning of July 2008, our portfolio is making tiny sums of money everyday through the fixed deposit-like product. In other words, we are still beating the market performance.
   
3. Total net profit to date is: +RM108.23

Strategy:

1. Cash is still king for us at the mean time, so we will continue to keep money in our FD-like investment.
   
2. We are keeping poist for any sharp downfall in the stock market so that we can start buying on large dips or when the stock market finds its bottom, but our biggest concern is still the political stability in the country.
   

YouInvest - Malaysian Investing Made Easy

For private discussion email to: youinvest.malaysia@gmail.com

Send this link to a friend if you think our blog is useful. http://youinvest-malaysia.blogspot.com/

Malaysia Stock Market Review for Week Ending 11-July-2008

Finding market driving news to write these days had been a fairly difficult task especially when political topics tend to dominate most of the content in local daily newspaper. So bad that even the business section has dedicated 1 whole page on political bickering and how the investment community is getting tired of things. On the corporate front news flow on corporate events had been dry and boring to say the least. Malaysian corporates are now in hibernation mode with almost no sensational news. Good news are kept in the closet waiting for improved sentiments whilst bad news seems to be largely created for the purpose of selling off, we expect.

KLCI this week is pretty much disconnected with other stock markets (regional, US and Europe) . Whilst most of them were down, Malaysia's KLCI was up by +23.33 (+2.0%). Some might ask: So, is it a rebound (stock market to go up)?? In actual fact, we can't really tell .... perhaps what held us back from investing is perhaps the razor thin volume. To put things in perspective, we are most delighted the stock market closed surpassed the 1,080 pts (good sign) but we are not entirely convinced given the poor volume of market participation rate (bad sign). So the next question is: Would it come down or go up next week?????

Our best guess is that it has 70% chance of going down, with 25% chance of remaining flat and 5% chance of going up. We think it might go up on the basis that regional markets could rebound after heavy selling this week and KLCI will just take lead from regional momentum. So, overall this week is still not a window week for us to buy, in fact we are adopting a wait and see approach at the mean time.

Recommendations: It is time to look at the market now, but remain on the sideline to wait for any buy indicators, Oppotunities might come or it might not. Be careful of false start, we advise to keep your ears on the ground for good political developments.

YouInvest - Malaysian Investing Made Easy

For private discussion email to: youinvest.malaysia@gmail.com

Send this link to a friend if you think our blog is useful. http://youinvest-malaysia.blogspot.com/

Malaysia Stock Market Review for Week Ending 4-July-2008

We guess there is nothing much to write this week as we had sent out 2 special alerts [1] Dated: 30-June 2008 Special Alert: Political Risk Move Up Another Notch & [2] Dated: 3-July 2008 Special Alert: Blue Moon Shun Upon Bursa Malaysia Today. (If you would like to know more, you can always refer to these articles on the same week).

As for the review this week, KLCI dropped -52pts, erasing -2.8% settling at 1,134.14pts. Despite continuous political mudslinging, Malaysian stocks were also affected by external influences from regional stock market trends spurred by high oil prices and high inflation expected to be announced in the coming months. Regional market also showed weaknesses in terms of investor sentiments in expectation of inflation led by higher cost of basic materials (like metal, oil and food commodities).

Since we are already in the summer months (June-August), activities in the stock market will remain sluggish as investors in the West kick back and relax, enjoying, basking in the sun sipping cool magaritas and martinis. Well, seasonality like these are common, so don't alarm your friends and scare them to sell all their shares. It's an annual event. :)

Recommendations: The YouInvest team thinks in the next few months leading to August, investors should keep cool and stay on the sideline before more indicators unfolds in the economy, especially the aspects of politics and policy making. So, do like what the Western investors are doing, KICK BACK n RELAX. Go meet up with friends, catch up on old times, go for a holiday somewhere interesting to learn about things, get different view and broaden your perspectives. Anyways with all the political uncertainties surrounding the Malaysian stock market, its better to stay out than facing potential falling daggers of the stock market. With that note, YouInvest is going to yum char (have a cup of tea) with their friends catching up good times. :)

YouInvest - Malaysian Investing Made Easy

For private discussion email to: youinvest.malaysia@gmail.com

Send this link to a friend if you think our blog is useful. http://youinvest-malaysia.blogspot.com/

YouInvest Malaysia Investment Model Portfolio - Introduction

Dear investors & readers, this is our newly launched YouInvest Model Portfolio which shows you how's our performance in terms of giving investment advise and how effective it is comparing to Malaysian stock market performance. We will be switching strategies from time to time to gain the best possible return. To the YouInvest team, the portfolio serve as a test to our professionalism in investment consulting and advisory role. Lastly we want to highlight that the model portfolio may not be suitable for all investors and should only be used as a guide.

Basic Feature of the YouInvest Malaysia Investment Portfolio:

1. Initial Statup Capital: RM100,000.00

2. Type of Instruments: 5-Types (a) 1-Mth & 3Mth YouInvest FD (b) Local Bond Funds (d) Local Equities Funds (e) Foreign Equities Fund (f) Idle Cash

Note: All Funds are Public Mutual Funds and YouInvest FDs are special fixed deposit exclusively available for YouInvest clients (YouInvest FD is higher than ordinary bank FDs - if you want to know more, please email us)

3. Benchmark comparison: KLCI

4. Start Date: 01-July-2008

5. End Date: undetermined (but surely long term)

6. Frequency of reporting: Weekly (at least) or whenever there are changes in the portfolio.

If you require further help on unit trust portfolio set-ups, you can drop us an email.

YouInvest - Malaysian Investing Made Easy

For private discussion email to: youinvest.malaysia@gmail.com

Send this link to a friend if you think our blog is useful. http://youinvest-malaysia.blogspot.com/

Special Alert: Blue Moon Shun Upon Bursa Malaysia Today 3-July-2008

Today was definitely a bomber ... Bursa was not able to trade the entire day claiming fault on technical glitches on the trading system. So all brokers can't key in any trade orders. We at YouInvest think today was most probably a day when the blue moon shun upon Bursa and no other day had been more conincidental than today's trading. Let us lay it out for you guys.

1. 9.00am. Market open but Bursa's trading system had their "technical glitch" so no brokers were allowed to key in any trade orders. When we saw the official Bursa announcement it was already 9.15am, and Bursa informs that the system glitch could be ractified and possibly investors can start trading in the second half session (2.30pm to 5.00pm). Concurrently, Asian stock markets were mostly down in between (-1.0% to -2.5%) due to heavy selling triggered by weak closing on Dow Jones & S&P Index in the US the night before (The Dow was down -1.6%). Obviously, if the Bursa was open today, KLCI would most probably trended downwards in-line with the market having taken queue from US lead.

2. 11.00am. Rumour began to surface in the stock market on possible "significant" announcement by Datuk Seri Anwar Ibrahim. However, not many people knew what it was.

3. 2.30pm. Trading in Bursa Malaysia still stood still with no favourable announcements on the rectified technical glitch and opening of trade session.

4. 3.00pm. Bursa again made announcement saying if things were not rectified by 3.30pm then stock market trading will be closed for the whole day.

5. 3.30pm. News about the "significant announcement" by Anwar started to surface on the internet and finally trickled down to Malaysian investors.

How Ironic.....

We are starting our Unit Trust Model Portfolio with some explanatory notes this weekend to help you make the best out of your investment in unit trust.

YouInvest - Malaysian Investing Made Easy

For private discussion email to: youinvest.malaysia@gmail.com

Send this link to a friend if you think our blog is useful. http://youinvest-malaysia.blogspot.com/

Special Alert: Political Risk Move Up Another Notch

Concerns about Malaysia’s political instability continue to move up after news broke out in the press last weekend that Anwar Ibrahim (the de facto leader of Pakatan Rakyat) has been accused of sodomy (again). In addition, Mr. Anwar also received death threats over the weekend which resulted him to seek refuge in the Turkish Embassy. YouInvest team believes that political risk in the country has heightened sending negative sentiment sent to the stock market. In the near term, market sentiment will remain weak as news reports on political mud-slinging and power jostling between local politicians will keep stock market investors on the sideline.

Readers do not be fooled by the the closing momentum of the stock market today (30th June 2008). This is because there are some funds out there are artificially supporting key index stocks from falling drastically. Managers of these funds are supporting share price in order not to report bad (loss) numbers when they face their unitholders and fund contributors. This kind of artifical share price management support are commonly refer to as "WINDOW DRESSING" which are commonly found during the last day of the month, quarter, half-yearly or yearly (last trading day of the year).

YouInvest will continue to keep our ears on the ground for our readers and our unit trust clients for further updates of the Malaysian stock market and will advise accordingly. For now we are staying cautious and defensive on 2 counts [1] Political risk and [2] Inflation risk.

YouInvest - Malaysian Investing Made Easy

For private discussion email to: youinvest.malaysia@gmail.com

Send this link to a friend if you think our blog is useful. http://youinvest-malaysia.blogspot.com/

Malaysia Stock Market Review for Week Ending 27-June-2008

Stocks in Malaysia continue to slip even after the poor performance from last week. The KLCI, benchmark index erased –16.13pts to 1,190.54 falling below the critical level of 1,200. TM International (which holds Celcom and telecoms operations in Indonesia, Sri Lanka and India) was the biggest losser this week after it announced possible merger of Spice Telecom (its India unit) with Idea Cellular. This deal could see TM International paying RM5.9bn. Investors reacted negatively to this deal triggering them to sell their shares to avoid any potential earnings dilution in the future. The YouInvest team also agrees that TM International is overpaying and the economics of the deal does not stack up. Among other stocks that were sold down were IOI Corp and PLUS. Negative external factors also contributed to the overall bad performance of global stock markets. Amongst these negative factors are inflationary pressures, sub-prime crisis in the US and higher oil prices (touched US$140/barrel when writing).

Recommendations: We remain defensive and cautious at this juncture due to economic pressures (inflation) surrounding us.

YouInvest will be starting the [Unit Trust Investment] segment in July, remember to follow as we explore the wonders of unit trust investment and how it can help you overcome lowering value of RM (or inflation pressure) and potentially make money in the long term.

YouInvest - Malaysian Investing Made Easy

For private discussion email to: youinvest.malaysia@gmail.com

Send this link to a friend if you think our blog is useful.

http://youinvest-malaysia.blogspot.com/

Malaysia Stock market Review for Week Ending 20-June-2008

This week the stock market still performed poorly with no improvement in sight. The KLCI, benchmark index continue to drop by -31.39pts to 1,206.67. Political uncertainties continue to put pressure provoking foreigners to sell our market. Biggest market moving news this week was delivered by SAPP's party president Datuk Yong Teck Lee who expressed a motion of no confidence against PM Datuk Seri Abdullah Ahmad Badawi. To investors, it is always better to avoid uncertainties and stay out of the market (hence, the selling of stocks) than waiting for bad news to come out.

Of course, all cannot be blamed on the uncertainties of Malaysia's political scene. Global inflationary pressure is also part to be blame for the poor performance of global indicies. What the world is facing right now is "cost-push inflation". These kind of inflation are mainly caused by increasing basic material prices. Look at mineral, metal, agricultural commodities oil and fuel prices right now, they are now at "never-seen-before" prices.

Relatively speaking, if you and I didn't made as much money to cushion these price increases, don't you think you are a few Ringgit poorer. The most prevalent cost-push inflation to hit average Malaysian is the recent petrol hike from RM1.92 to RM2.70. We at YouInvest sure felt poorer. Ouch.....

YouInvest will be starting the [Unit Trust Investment] segment in July, remember to follow as we explore the wonders of unit trust investment and how it can help you overcome lowering value of RM (or inflation pressure) and potentially make money in the long term.

YouInvest - Malaysian Investment Made Easy

For private discussion email to: youinvest.malaysia@gmail.com

Send this link to a friend if you think our blog is useful
http://youinvest-malaysia.blogspot.com/