Wednesday, December 31, 2008

KLCI: 1st Half 2009 Rebound

KLCI is building momentum for further upside. So expect a chinese new year rally to 950. Do keep in mind that a break down of 850 will be start of another fierce bear trend. So hold on to your stock if the CI can hold above 900 level in coming weeks. My rebound target is set at 1100 level.

[Previous KLCI Posting]

Friday, December 19, 2008

Global Economy Seen Sinking Into 'Severe' 2009 Recession

TOKYO (AFP) - - A major banking group warned the global economy will sink into "severe" recession next year as Japan's battle to stave off a prolonged contraction was Friday hit by predictions of zero growth into 2010.
The Japanese cabinet approved the country's first zero growth forecast in real terms in seven years, which came as the central bank continued a two-day meeting to consider slashing interest rates to rock-bottom.
With the world's second largest economy battered by slumps in domestic demand and exports, the Washington-based Institute of International Finance (IIF) said the global economy would shrink 0.4 percent in 2009, after 2.0 percent growth this year.
Charles Dallara, managing director of the IIF -- which represents more than 375 of the world's major banks and financial institutions -- called it "the most severe, globally synchronised recession in modern economic history".
The global crisis requires a global coordinated response, he said at a news conference.
Dallara said the economy was mired in a negative feedback loop of weakening economic activity and intense financial market strains.
"You'll see much more bang for the buck" with a coordinated response, he said, adding: "It will be important that these measures be complemented in Europe and in Japan."
In a grim assessment, the IIF said in its monthly Global Economic Monitor report: "It should be emphasised that an overall contraction in the global economy is a truly weak outcome, and the first time this has happened in the post-1960 period."
Mature economies -- including the US, Britain the 15-nation eurozone and Japan -- that are now in recession were forecast to contract a hefty 1.4 percent amid the worst financial crisis since the Great Depression.
The US economy, the world's largest and the epicentre of the financial tsunami, would shrink 1.3 percent in 2009 after growth of 1.2 percent this year, according to the IIF projections.
The eurozone would contract by 1.5 percent from 0.9 percent growth, and Japan would shrink 1.2 percent after zero growth, the IIF said.
France, a part of the eurozone, said Friday it will sink recession next year for the first time since 1993 while it also faces a steep rise in unemployment.
Tokyo share prices were down 1.10 percent by noon Friday following the zero growth forecast, though trade remained cautious ahead of the Bank of Japan decision on interest rate cuts.
Japanese news reports said auto giant Toyota is likely to suffer its first-ever operating loss in the year to March 2009 due to a stronger yen and a global industry slump
It would be Toyota's first operating loss since it began releasing earnings figures in 1941, the Nikkei business daily said.
The dollar bounced back from fresh 13-year lows against the yen, which retreated from earlier highs as investors debated whether rates will be cut from the already low 0.3 percent, dealers said.
By late morning, the dollar was at 89.48 yen, the same level as in New York late Thursday. It had fallen to as low as 87.16 Thursday.
The euro fell to 1.4228 dollars in Tokyo trade from 1.4268 in New York and to 127.30 yen from 127.70.
World crude prices held steady above 36 dollars on Friday, at their lowest levels in more than four years, as the OPEC oil cartel's announcement of a record 2.2 million barrels per day production cut failed to rally prices.
Meanwhile the United Nations Thursday warned countries struggling with the falling value of their currencies to resist hiking interest rates to prevent devaluations.
"Rising interest rates and falling government expenditure will only reinvite speculation and worsen matters in the real economy," said the UN Conference on Trade and Development (UNCTAD) in a policy newsletter.
UNCTAD cited Brazil, Hungary, Iceland, Romania and Turkey as countries facing devaluations.

Thursday, December 18, 2008

IMF: Recovery by 2010

LONDON: The International Monetary Fund (IMF) cautiously forecast a US recovery by early 2010 and a British central banker said yesterday interest rates could hit zero, a level Japan’s are forecast to drop closer to this week.

The US is mired in recession and has dragged much of the world with it, following the meltdown of its housing market in 2007 and the crippling bank losses that resulted.

The Federal Reserve cut its key rate to near zero on Tuesday but the failure of Opec’s biggest ever supply cut to lift oil prices underscored just how gloomy markets are about the world economy.

”There is a reasonable probability ... of the US economy starting to recover at the end of 2009 or the start of 2010,” IMF managing director Dominique StraussKahn told Spanish newspaper Expansion. – Reuters

Understanding The Financial Crisis

Water Related Stocks Playing Soon?

PAAB to assume RM15b water asset loans
PUTRAJAYA: The federal government is expected to assume some RM15 billion worth of loans under its planned acquisition of state and private water assets in Peninsular Malaysia.

The amount involves some RM7.9 billion owed by state governments to the federal authorities, and another RM7 billion worth of bonds issued by private water concession holders.

“It (RM15 billion) is a rough estimate,” Pengurusan Aset Air Bhd (PAAB) chief executive officer Suhaimi Kamaralzaman told reporters in Putrajaya yesterday after a signing ceremony for the transfer of water assets in Melaka to PAAB under the National Water Services Industry Restructuring Initiative.

Melaka got the ball rolling, with the signing of the agreement to transfer RM889 million worth of water assets to the federal authorities, and in return, the state was relieved of its RM770 million worth of loans. As the value of the assets exceeds the loan, the differential sum of RM119 million will be channelled back to the state.

Deputy Prime Minister Datuk Seri Najib Razak, who witnessed the signing ceremony, said: “The involvement of the federal government has created a water services model which I believe will spur the local sector into a holistic, efficient, effective, competitive and established industry.”
The national project is seen as a win-win deal, aimed at improving the efficiency of the local sector. PAAB, a unit under the Minister of Finance Inc, will take over the water assets, and in exchange, assume the water-related debts.

The acquired assets will be leased back to the state government which will undertake the water distribution portfolio, and infrastructure maintenance, while the responsibilities of building and financing water infrastructure projects will fall on PAAB’s shoulders.

To date, PAAB has secured a RM3 billion loan facility from a local financial institution, according to Suhaimi, who also indicated the company’s intention to issue ringgit-denominated bonds to finance the company’s future undertakings.

More states are expected to climb onto the bandwagon. Talks are already in advanced stages to acquire water assets in Negri Sembilan, Johor and Pahang, In non-BN- held states, Suhaimi said the Kelantan state government had approved in principle the implementation of the national initiative in the state.

“Perak, Penang and Kedah have got a change of government. We have explained to the previous state governments and now we have to conduct a new roadshow,” he said. According to news reports, Selangor, meanwhile, had until March 31 next year to do so pending the finalisation of its water assets’ collective value.

AmResearch Sdn Bhd expects Puncak Niaga Holdings Bhd and Kumpulan Perangsang Selangor Bhd (KPS) to be winners in the water asset takeover deal. This is because both companies will be able to monetise the embeddeed value of the water concession assets, hence, boosting the valuation of the shares in both firms.

“Ideally, state-backed KPS remains the best candidate to house all four water concessionaires in Selangor under a single holistic structure. This is in line with the spirit of the new water legislation.

“But things are still in a state of flux due to intense political lobbying by various parties with vested interest along Selangor’s water supply chain. Moreover, the structure of the migration exercise remains uncertain - there could be multiple operations and maintenance licences being issued,” AmResearch analyst Mak Hoy Ken wrote in a note. Mak recommends a hold for Puncak Niaga and KPS with fair values of RM2.75 and RM1.48, respectively.

Puncak Niaga fell three sen to RM2.58, while KPS rose two sen to RM1.45 yesterday.

Monday, November 10, 2008

FREE Multimedia Entertainment System

Just purchased new multimedia entertainment system from HP, Compaq Presario PC packaged together with the Sharp 32" LCD TV. Value for money (I think it is worth! Can save RM500-RM700. I have check, if buy individually outside computer or electronic shop I need to pay more - correct me if my finding wrong :-o).
Price: RM3,800

Sharp 32" LCD TV Specification
32" HD READY AQUOS LCD TV, Resolution : 1366 x 768, 2 HDMI Terminals, Elegant Black Piano Finish Design, Dynamic Contrast Ratio 7500:'1, High Brightness 450 cd/m2, Advanced Optical Picture Control, Digital Comb Filter.

HP Compaq Presario PC Specification
AMD PhenomX4 Quad Core 9550 2.2G(good for gaming/multimedia), 2GB DDR2 800 RAM, 320GB HDD, Lynx256 D8M GeForce 9300GE 256MB Std DMI:"HDMI", SuperMulti SATA Drive with Lightscribe Technology, 15-1 Card reader, Wireless 802.11b/g LAN, Front IO - USB+Audio+1394+Video, TV-Tuner with Remote Control, Win Vista Premium, Presario Internet Keyboard & Optical Scroller Mouse.

Main Sponsor: RAMUNIA: RM3,500 & KNM: RM2,100

Looking forward for more sponsors in future. Hope I will not lost my sponsorship :-)

Wednesday, November 05, 2008

Barack Obama Victory Speech: ‘Change has come to America’

"Tonight Minnesota, after 54 hard-fought contests, our primary season has finally come to an end.

Sixteen months have passed since we first stood together on the steps of the Old State Capitol in Springfield, Illinois.

Thousands of miles have been travelled. Millions of voices have been heard.

And because of what you said - because you decided that change must come to Washington; because you believed that this year must be different than all the rest; because you chose to listen not to your doubts or your fears but to your greatest hopes and highest aspirations, tonight we mark the end of one historic journey with the beginning of another - a journey that will bring a new and better day to America.

Because of you, tonight, I can stand before you and say that I will be the Democratic nominee for president of the United States of America.

I want to thank all those in Montana and South Dakota who stood up for change today. I want to thank every American who stood with us over the course of this campaign - through the good days and the bad; from the snows of Cedar Rapids to the sunshine of Sioux Falls.

And tonight I also want to thank the men and woman who took this journey with me as fellow candidates for president.

At this defining moment for our nation, we should be proud that our party put forth one of the most talented, qualified field of individuals ever to run for office.

I have not just competed with them as rivals, I have learned from them as friends, as public servants, as patriots who love America and are willing to work tirelessly to make this country better.

They are leaders of this party, and leaders that America will turn to for years to come.

Made history
And that is particularly true for the candidate who has travelled further on this journey than anyone else.

Senator Hillary Clinton has made history in this campaign not just because she's a woman who has done what no woman has done before, but because she is a leader who inspires millions of Americans with her strength, her courage, and her commitment to the causes that brought us here tonight.

Senator Obama praised Hillary Clinton for her strength and commitment
I congratulate here on her victory in South Dakota and I congratulate her on the race she has run throughout this contest.

We've certainly had our differences over the last 16 months.

But as someone who's shared a stage with her many times, I can tell you that what gets Hillary Clinton up in the morning - even in the face of tough odds - is exactly what sent her and Bill Clinton to sign up for their first campaign in Texas all those years ago; what sent her to work at the Children's Defense Fund and made her fight for health care as First Lady; what led her to the United States Senate and fuelled her barrier-breaking campaign for the presidency - an unyielding desire to improve the lives of ordinary Americans, no matter how difficult the fight may be.

And you can rest assured that when we finally win the battle for universal health care in this country, and we will win that fight, she will be central to that victory.

When we transform our energy policy and lift our children out of poverty, it will be because she worked to help make it happen.

Our party and our country are better off because of her, and I am a better candidate for having had the honour to compete with Hillary Rodham Clinton.

Inspired a nation
There are those who say that this primary has somehow left us weaker and more divided.

Well I say that because of this primary, there are millions of Americans who have cast their ballot for the very first time.

There are Independents and Republicans who understand that this election isn't just about a change of party in Washington, it's about the need to change Washington.

There are young people, and African-Americans, and Latinos, and women of all ages who have voted in numbers that have broken records and inspired a nation.

All of you chose to support a candidate you believe in deeply.

But at the end of the day, we aren't the reason you came out and waited in lines that stretched block after block to make your voice heard.

You didn't do that because of me or Senator Clinton or anyone else.

You did it because you know in your hearts that at this moment - a moment that will define a generation - we cannot afford to keep doing what we've been doing.

We owe our children a better future. We owe our country a better future.

And for all those who dream of that future tonight, I say - let us begin the work together.

Let us unite in common effort to chart a new course for America.

Republican agenda
In just a few short months, the Republican Party will arrive in St Paul with a very different agenda.

They will come here to nominate John McCain, a man who has served this country heroically.

I honour, we honour, the service of John McCain, and I respect his many accomplishments, even if he chooses to deny mine.

My differences with him are not personal; they are with the policies he has proposed in this campaign.

Because while John McCain can legitimately tout moments of independence from his party in the past, such independence has not been the hallmark of his presidential campaign.

It's not change when John McCain decided to stand with George Bush 95% of the time, as he did in the Senate last year.

It's not change when he offers four more years of Bush economic policies that have failed to create well-paying jobs, or insure our workers, or help Americans afford the skyrocketing cost of college - policies that have lowered the real incomes of the average American family, widened the gap between Wall Street and Main Street, and left our children with a mountain of debt.

It's not change when he promises to continue a policy in Iraq that asks everything of our brave men and women in uniform and nothing of Iraqi politicians - a policy where all we look for are reasons to stay in Iraq, while we spend billions of dollars a month on a war that isn't making the American people any safer.

Foreign policy
So I'll say this - there are many words to describe John McCain's attempt to pass off his embrace of George Bush's policies as bipartisan and new.

But change is not one of them.

Because change is a foreign policy that doesn't begin and end with a war that should've never been authorized and never been waged.

I won't stand here and pretend that there are many good options left in Iraq, but what's not an option is leaving our troops in that country for the next hundred years - especially at a time when our military is overstretched, our nation is isolated, and nearly every other threat to America is being ignored.

We must be as careful getting out of Iraq as we were careless getting in - but start leaving we must.

It's time for Iraqis to take responsibility for their future.

It's time to rebuild our military and give our veterans the care they need and the benefits they deserve when they come home.

It's time to refocus our efforts on al-Qaeda's leadership and Afghanistan, and rally the world against the common threats of the 21st century - terrorism and nuclear weapons; climate change and poverty; genocide and disease.

Understanding struggles
That's what change is.

Change is realising that meeting today's threats requires not just our firepower, but the power of our diplomacy - tough, direct diplomacy where the president of the United States isn't afraid to let any petty dictator know where America stands and what we stand for.

We must once again have the courage and conviction to lead the free world.

That is the legacy of Roosevelt, and Truman, and Kennedy.

That's what the American people demand.

That's what change is.

Change is building an economy that rewards not just wealth, but the work and workers who created it.

It's understanding that the struggles facing working families can't be solved by spending billions of dollars on more tax breaks for big corporations and wealthy CEOs, but by giving a middle-class tax break to those who need it, and investing in our crumbling infrastructure, and transforming how we use energy, and improving our schools, and renewing our commitment to science and innovation.

It's understanding that fiscal responsibility and shared prosperity can go hand-in-hand, as they did when Bill Clinton was president.

John McCain has spent a lot of time talking about trips to Iraq in the last few weeks, but maybe if he spent some time taking trips to the cities and towns that have been hardest hit by this economy - cities in Michigan, and Ohio, and right here in Minnesota - he'd understand the kind of change that people are looking for.

Maybe if he went to Iowa and met the student who works the night shift after a full day of class and still can't pay the medical bills for a sister who's ill, he'd understand that she can't afford four more years of a health care plan that only takes care of the healthy and wealthy.

She needs us to pass health care right now, a plan that guarantees insurance to every American who wants it and brings down premiums for every family who needs it.

That's the change we need.

Our children
Maybe if John McCain went to Pennsylvania and met the man who lost his job but can't even afford the gas to drive around and look for a new one, he'd understand that we can't afford four more years of our addiction to oil from dictators.

That man needs us to pass an energy policy that works with automakers to raise fuel standards, and makes corporations pay for their pollution, and oil companies invest their record profits in a clean energy future - an energy policy that will create millions of new jobs that pay well and can't be outsourced.

That's the change we need.

And maybe if he spent some time in the schools of South Carolina or St Paul, Minnesota, or where he spoke tonight in New Orleans, Louisiana, he'd understand that we can't afford to leave the money behind for No Child Left Behind; that we owe it to our children to invest in early childhood education and recruit an army of new teachers and give them better pay and more support and finally decide that in this global economy, the chance to get a college education should not be a privilege for the wealthy few, but the birthright of every American.

That's the change we need in America.

That's why I'm running for president.

Americans first
The other side will come here in September and offer a very different set of policies and positions, and that is a good thing, that is a debate I look forward to.

It is a debate the American people deserve on the issues that will help determine the future of this country and the future of its children.

But what you don't deserve is another election that's governed by fear, and innuendo, and division.

What you won't hear from this campaign or this party is the kind of politics that uses religion as a wedge, and patriotism as a bludgeon - that sees our opponents not as competitors to challenge, but enemies to demonize.

Because we may call ourselves Democrats and Republicans, but we are Americans first.

We are always Americans first.

Despite what the good Senator from Arizona said tonight, I have seen people of differing views and opinions find common cause many times during my two decades in public life, and I have brought many together myself.

I've walked arm-in-arm with community leaders on the South Side of Chicago and watched tensions fade as black, white, and Latino fought together for good jobs and good schools.

I've sat across the table from law enforcement officials and civil rights advocates to reform a criminal justice system that sent 13 innocent people to death row.

I've worked with friends in the other party to provide more children with health insurance and more working families with a tax break; to curb the spread of nuclear weapons and ensure that the American people know where their tax dollars are being spent; and to reduce the influence of lobbyists who have all too often set the agenda in Washington.

In our country, I have found that this cooperation happens not because we agree on everything, but because behind all the false labels and false divisions and categories that define us; beyond all the petty bickering and point-scoring in Washington, Americans are a decent, generous, compassionate people, united by common challenges and common hopes.

And every so often, there are moments which call on that fundamental goodness to make this country great again.

Our time
So it was for that band of patriots who declared in a Philadelphia hall the formation of a more perfect union; and for all those who gave on the fields of Gettysburg and Antietam their last full measure of devotion to save that same union.

So it was for the Greatest Generation that conquered fear itself, and liberated a continent from tyranny, and made this country home to untold opportunity and prosperity.

So it was for the workers who stood out on the picket lines; the women who shattered glass ceilings; the children who braved a Selma bridge for freedom's cause.

So it has been for every generation that faced down the greatest challenges and the most improbable odds to leave their children a world that's better, and kinder, and more just.

And so it must be for us.

America, this is our moment. This is our time.

Our time to turn the page on the policies of the past. Our time to bring new energy and new ideas to the challenges we face. Our time to offer a new direction for this country that we love.

The journey will be difficult. The road will be long.

I face this challenge with profound humility, and knowledge of my own limitations.

But I also face it with limitless faith in the capacity of the American people.

Because if we are willing to work for it, and fight for it, and believe in it, then I am absolutely certain that generations from now, we will be able to look back and tell our children that this was the moment when we began to provide care for the sick and good jobs to the jobless; this was the moment when the rise of the oceans began to slow and our planet began to heal; this was the moment when we ended a war and secured our nation and restored our image as the last, best hope on Earth.

This was the moment - this was the time - when we came together to remake this great nation so that it may always reflect our very best selves, and our highest ideals.

Thank you, Minnesota, God Bless you, and may God Bless the United States of America.

Thursday, October 30, 2008

Warren Buffet: Reminds Investors How To Behave Now!

By Warren E. Buffett

The financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So ... I've been buying American stocks. This is my personal account I'm talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.


A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation's many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Let me be clear on one point: I can't predict the short-term movements of the stock market. I haven't the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor's best friend. It lets you buy a slice of America's future at a marked-down price.

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.

Today people who hold cash equivalents feel comfortable. They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts. |

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky's advice: "I skate to where the puck is going to be, not to where it has been."

I don't like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I'll follow the lead of a restaurant that opened in an empty bank building and then advertised: "Put your mouth where your money was." Today my money and my mouth both say equities.

Tuesday, October 28, 2008

Buffett’s Value Investing Style Good For Malaysia

Investors should be long-term oriented and focused on what stocks they buy

WORLD famous stock market guru, Warren Buffett, made headlines when he bought substantial stakes in technology and services giant General Electric Co (GE) and financial heavyweight Goldman Sachs Group.

Just when everyone else was pulling out their investments from Wall Street, Buffett stepped in to inject some US$8bil in these two companies via his investment company Berkshire Hathaway Inc.

Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well,” he once said.

But is Buffett’s value investing style suitable for the Malaysian equity market and investors?

"Yes, it provides great opportunities to buy now if you are buying for long-term,” said Aberdeen Asset Management Sdn Bhd managing director Gerald Ambrose, adding that the current stock pricing “is irrational” due to the heavy selldown by foreign funds.

He said investors should hold good stocks for “as long as possible” as stock investment was about investing in a company’s management and market strategy.

Jupiter Securities Sdn Bhd executive director of operations Tan Chee Siong said Buffet was very careful with his investments and rarely found stocks that met his requirements.

The five main criteria Buffett uses for stock selection are earnings versus growth, high return on equity, minimal debts, strength of management and simple business model.

Buffett’s strategy was more of a “concentration of a few solid stocks” in a few industries that he could understand, Tan noted.

However, he cautioned that the local bourse, as an emerging market, could be more volatile and that market sentiment could easily be influenced by many external factors.

“We must remember that if we talk about investment in the local equity market, the duration should be shorter and we need to take profit whenever there are signs of big changes in market trend and our economic performance,” he said.

Meanwhile, Aseambankers head of research Vincent Khoo said investors should generally hold on to three principles — “be long-term oriented, only buy what you can afford and be focused in what you buy.”

He said investors should hold on to good stocks for as long as possible.

“Blue chip stocks, for example, can ride through bad times and will recover over time,” he said.

Being among the most successful and trusted investors’, Buffett’s investment in GE and Goldman Sachs restored some investor confidence on Wall Street.

Buffett, who is also known as “The Oracle of Omaha”, is an astute long-term investor and has always investigated the underlying fundamentals of a company, rather than market sentiment.

He has always determined the intrinsic value of a business and paid a good price for it. He believes price is what you pay, value is what you get.

Being prudent, Buffett is said to never invest in any business that he could not understand, a principle that paid off when he escaped the dotcom market crash.

His investment principle is simple— always analyse a company’s annual reports to check its fundamentals and know what you are investing in.

Buffett, who is chairman of Berkshire Hathaway, the most expensive stock on Wall Street, said in a letter to shareholders last year that Berkshire was seeking to invest in companies with favourable long-term prospects and competitive advantage in a stable industry.

To him, “if a business does well, the stock eventually follows.”

One of his most successful investments was PetroChina.

Buffett bought a stake in the Chinese oil and gas firm for an initial sum of US$500mil and later sold it for US$3.5 bil.

He has also made successful investments in companies such as Coca-Cola, American Express and Gillette.

Monday, October 27, 2008

Crude Oil Price At Bottom?

Since my last update on June 08, the oil price jump to its new high of $148 per barrier on July 08. Well thats the end of the oil price rally. Every one of us should be happy now that the oil price is hitting $60. Now its time to look at how it was going to consolidate. I expect it to trading between my band of $55 - $90 level. For worst case it can go below $55 which may hit $30 - $40 (due to current financial crisis hitting around the globe if the global government failed to contain such meltdown). Anyhow low oil price is good for us, I just wondering when our Malaysia government going to reduce more on the petrol price???
Previous Crude Oil Post:

FCPO Good Time To Buy?

Those wanting to buy CPO counter can start nibble to keep for long-term. There would be also a downside risk to hit 1250 strong support level. My trading band for the CPO is around 1250 - 2000. Good Luck!

Previous CPO Post:

Tuesday, October 14, 2008

Manic Monday: Dow Roars Back From Worst Week Ever

NEW YORK, Oct 14 — Wall Street stormed back after its worst week ever and staged the biggest single-day stock rally since the Great Depression yesterday, catapulting the Dow Jones industrials to a 936-point gain and finally offering relief from eight consecutive days of stock market carnage.

While no one was saying the worst was over for the staggering financial system or troubled economy, buyers returned to the stock market with gusto, with some saying stocks had been driven down to fire-sale prices.

The surge came as executives from leading banks were summoned by the Bush administration to Washington to work out a plan to get loans, the lifeblood of the economy, moving again. And it followed signals that European governments would put nearly US$2 trillion on the line to protect their own banks.

The Dow gained more than 11 per cent, its biggest one-day rally since 1933, and by points it shattered the previous record for a one-day gain of 499, during the waning days of the technology boom in 2000.

"My screen is completely green, and I love that," said John Lynch, chief market analyst for Evergreen Investments in Charlotte, North Carolina. "But I'm not doing any backflips yet. We still have many challenges up ahead."

Stocks opened sharply higher and never looked back. The Dow was up more than 400 points in the opening minutes of trading, and by lunch hour had crossed back through the same 9,000 level it crashed below last week.

The rally intensified in the final hour of trading. In the moments before the closing bell rang, boisterous traders sounded horns on the floor of the New York Stock Exchange, and raucous applause broke out.

"I would say this is closer to the bottom. I can't say this is the bottom," said Bill Schultz, chief investment officer at McQueen, Ball & Associates. "I think it's more relief, the rally today."

For Wall Street, it came not a moment too soon. The dismal week before wiped out about US$2.4 trillion in shareholder wealth. The eight-day losing streak drained 2,400 points from the Dow, or 22 per cent — roughly equal to the 1987 crash and enough to establish a bear market all on its own.

US stock market paper gains totalled US$1.2 trillion yesterday, according to the Dow Jones Wilshire 5000 Composite Index, which represents nearly all stocks traded in America.

The massive rebound also pushed the Nasdaq composite index higher by 195 points, or nearly 12 per cent, its second-biggest gain in percentage terms. The Standard and Poor's 500, rose 104 points, its biggest point gain ever and an 11.5 per cent gain, its greatest since 1933.

About 3,030 stocks advanced on the New York Stock Exchange, while only about 160 declined — a reversal from last week, when declining stocks overwhelmed the gainers. But the trading volume of 1.82 billion shares was lighter than it had been last week, suggesting there was less conviction in the buying than during last week's selling.

At the close, the Dow stood at 9,387.61. That's still a far cry from its peak of 14,165, set a little more than a year ago — and history suggests Wall Street could have a long climb back to the top of the mountain.

After the Black Monday crash of October 1987, it took the Dow until August 1989 to set a new all-time closing high, almost two years after its previous peak. The 1987 crash took stocks down 36 per cent from their pick — comparable to the 40 per cent decline in this round of turmoil.

The Bush administration said it was moving quickly to implement its financial rescue package, including consulting with law firms about the mechanics of buying ownership shares in a broad number of banks to help get lending going again.

Neel Kashkari, the assistant Treasury secretary in charge of the programme, said yesterday officials were also developing guidelines to govern the purchase of soured mortgage-related assets. He gave few details about how the programme will actually buy bad assets and bank stock.

And Wall Street still has a lot to worry about, including a housing market that is still groping for a low point in prices and shoppers who are spooked by job losses and other ominous economic signs and are cutting back on their spending.

"I think we had enough negatives last week that if the government steps in we could have a pretty nice run," said Denis Amato, chief investment officer at Ancora Advisors. "Is it off to the races? No, I don't think so. We have a lot of stuff to work through."

It was also too soon to say for sure whether lending was finally loosening up. The sell-off on Wall Street last week was driven by fear that mistrustful banks were choking off the everyday loans that businesses use to buy supplies and pay their workers.

Yesterday was the Columbus Day holiday, and the US bond markets and banks were closed, making it difficult to gauge the reaction of the credit markets to the measures taken by world governments.

The Bank of England said it would use up to US$63 billion to help the three largest British banks strengthen their balance sheets. The Bank of England, the European Central Bank and the Swiss National Bank also jointly announced plans to work together to provide as much short-term money as necessary to help revive lending.

The heads of the five biggest US banks — Goldman Sachs, Morgan Stanley, Citigroup, JPMorgan Chase and Bank of America — were meeting at the Treasury Department with officials from Treasury and the Federal Reserve. The discussions are aimed at finalising details on the rescue package Congress passed on Oct 3.

That package started with the idea that the government would buy the bad mortgage-related debt off the books of banks. It now includes provisions for the government to buy ownership stakes in banks, among other steps.

It is coming together against the backdrop of a presidential election that has focused squarely on the economy. Sens. Barack Obama and John McCain are to meet for a final debate tomorrow night on Long Island, with the state of the nation's finances sure to be at the top of the list.

Consolidated volume on the New York Stock Exchange hit 7.1 billion shares, down from 11.2 billion during Friday's session but still very heavy. — AP

Saturday, October 11, 2008

Opportunities In Crisis

MOST in the investment fraternity agree that with the huge dip in all markets, it’s time to go shopping for stocks. Selling at this point would be a poor strategy.

Capital Dynamics Asset Management managing director Tan Teng Boo says people are ignoring that oil prices are now so much lower than what it was in July. Come 2009, inflationary pressures will have eased tremendously, and this will primp markets for another run.

“Low oil prices will definitely help emerging markets, as it will also lower interest rates, hence boost consumer spending,”

“We are getting close to the bottom. If you are 100% in cash, then it’s time to invest. Even if you’re 50% cash, it’s time to start buying. We’re not there yet, but getting very close to where we should be long-term greedy. This is a once in a lifetime investment opportunity,” he says.
Standard & Poor’s Asia Equity Research Services director Alexander Chia sees the bottom happening within the next two quarters.

“Yes, for sure I see opportunities in times of crisis. With bad news being plastered everywhere, it is hard for the investor to maintain his perspective. Don’t let emotions take over.

“I don’t think people should be buying just yet, as investors are still selling into strength, but I believe the bottom is not far off,” Chia says. Chia opines that most funds are cashed up and waiting for that point of capitulation.

“Have your assets very liquid, so that when capitulation happens, you have the bullets to buy. For the time being, I see the market trading rangebound to lower,” he adds.

A fund manager says that if one follows the Buffet style of investing, (having a 3-5 year view), present times present exceptional opportunities.

“History has proven it. So if you have the money, it is a good time to start investing,” he says.
He adds that when there are declines in the major indices, investors will normally compare sectors and look at the more defensive sectors of the economy.

Says JP Morgan Securities head of broking Clement Chew: “In the short term, its unpredictable. But if you have to buy, some of the sectors to look at would include tobacco, power, telecoms, supermarkets and number forecasting operators. Look at companies that offer deep value with some sort of yield to support it,” he says.

Chew cautions that investing in commodities is still risky, as there is still a lot of unwinding in commodity trade going on.

Chew isn’t too bullish on properties either.

“The newsflow surrounding property stocks isn’t so good, and with lending being curtailed and credit shrinkage everywhere, this wouldn’t be such a good time. Regional property companies are trading at wider discounts to their revised net asset values. I don’t think you will see property stocks going up,” says Chew.

Shock Hits Asia With Disturbing Force

OCT 11 - Can a region like Asia - with more than US$3 trillion in foreign exchange reserves, high savings rates, mostly well-capitalised banks and minimal exposure to American mortgage-backed securities - run into trouble during a global financial crisis?

The answer Friday was a resounding yes.

Stock markets plunged from Tokyo to Mumbai. Real estate prices are tumbling from Seoul to New Delhi. The economy in Singapore has tipped into recession, and there is growing evidence of a recession in Japan, where an unlisted insurer and a real estate investment trust filed for bankruptcy Friday.

From UBS to Morgan Stanley, investment banks have been warning in the past week of a global economic downturn. For Asia, that sounds uncomfortably like a forecast that economic slowdowns in the United States and Europe will cripple demand for Asia's exports and pull the region down into recession as well.

What went wrong? As the biggest beneficiary of the rise in global trade, Asia depends heavily on exports to the West. Everything from corporate earnings to real estate prices depends on a steady inflow of dollars and euros.

Growth in exports has slowed to a crawl or started declining across most of the region when calculated in local currency terms and adjusted for inflation. And that is even before Western stores have had a chance to cut back their orders in response to the sort of steep declines in sales that American retailers announced on Wednesday.

India announced Friday that industrial production in August was 1.3 per cent higher than a year earlier. That was a drastic deceleration from July, when the growth rate was 7.4 per cent.

In South Korea, exporters are suddenly struggling.

''The problem is the global recession - people don't buy consumer electronics, this means less exports and fewer dollars for us,'' said Choi Hae Pyong, an electronics parts manufacturer south of Seoul. ''It's like walking in a thick fog.''

As long as the region kept exporting and kept saving the proceeds, investors bid up real estate and share prices that now seem to have a long way to fall.

Matthew Au, a luxury real estate broker in Hong Kong, said that this past week had been even worse than the days after the Tiananmen Square killings on June 4, 1989, which briefly shattered business confidence here.

''I've been through June 4th, the 1997 financial crises and SARS, but this time around, the decline in housing prices has been the most abrupt,'' he said. ''Sellers of properties are now more willing to consider offers which come in 20 to 30 percent below their asking prices.''

As global financial markets increasingly look to each other for direction, lack of confidence in financial institutions and housing markets in the West has also proved contagious in Asia. The Asian news media, often focused on economics instead of potentially touchy political issues, have been full of reports in the past three weeks about failing banks and falling real estate prices, and that has fed through into local markets.

An outflow of Western investment has also played a role in Asia's decline now, although foreign investment has become less important in much of the region as Asia has become a formidable saver in its own right.

In Malaysia, foreign investors held nearly a third of Malaysia's national debt until they started selling this summer to raise money so as to cover losses in other markets.

In Korea, foreign investors sold US$29 billion in the first nine months of this year. This was an important reason why the country's foreign exchange reserves have slipped to a still formidable US$239.7 billion last month from US$264.2 billion in March.

Many in Asia now despair of help from the West, and are looking to Beijing.

''The United States is beyond saving - our only hope rests with China,'' said Dick Chen, a middle-aged manager in a pin striped blue shirt and carrying an ultraslim modern mobile phone who watched the markets with dismay after lunch in a trading room of Tai Fook Securities in Hong Kong.

Can China save Asia? For the past six years, the Chinese economy has been like an enormously powerful hound that has charged ahead despite every obstacle. Worried that the economy may overheat and accelerate inflation, Beijing officials have run a budget surplus, repeatedly raised interest rates and even required banks to deposit a remarkable one-sixth of their entire assets as reserves at the central bank to slow lending.

Now Beijing is trying to loosen the leash it has had on the economy by cutting interest rates and taxes and lowering reserve requirements. But the government is finding the economy already looks a little out of breath as exports slow.

Economists see annual growth slowing from 12 percent a year ago to 8 or 9 per cent this winter. That is still respectable by most countries' standards, but a shock for many Chinese, particularly workers losing their jobs in factories producing mainly for export markets.

For Asia, this is the crisis that was never supposed to happen again.

The region was deeply scarred by the Asian financial crisis of 1997 and 1998.

Dozens of banks failed after lending too much with too little capital, while profligate governments found that they had borrowed too much overseas and could not repay their debts.

That led to a rapid contraction of credit that bankrupted many industrial companies and caused a steep decline in economic output and a surge in unemployment - the same fate that may now await the United States and Europe, many economists and investors fear.

Southeast Asian economies have never entirely recovered. After a drop of nearly 10 per cent on Friday, the main index of the Thai stock market closed at 452, a quarter of its high in 1994.

Most of Asia emerged from that crisis with more cautious banks, stricter financial regulation, a tighter rein on government spending and a strong determination to accumulate. But while Asia broke its dependence on capital flows from the West, the dependence on exports remained.

Yet Asia's frugality over the past decade has given the region a lot more room to maneuver than most Western countries.

South Korea and India are often cited by economists as the two most vulnerable economies in Asia.

South Korea is drawing attention because its trade deficit, by the broadest measure possible, was US$4.7 billion in August, after mostly surpluses before that. Korean exports of manufactured goods have slumped even as the cost of its oil-dominated imports have surged - although falling oil prices now will help.

The South Korean won showed the steepest decline of any Asian currency against the dollar on Friday morning, falling more than 3 percent.

But the won soared on Friday afternoon, with a gain for the day of 6.3 per cent. The reason? Widespread rumors that the government would start spending part of the country's huge foreign exchange reserves to prop up the won.

The South Korean government only owes US$334 million in foreign debt repayments by the end of next year, or 0.14 per cent of foreign exchange reserves, according to a recent study of emerging market debt by ING. Big Korean exporters like Samsung, hobbled for lack of foreign currency reserves in 1997, have hoarded formidable reserves of dollars.

Corporate debt repayments are a little larger, and also harder to calculate. But since all of Asia only owes US$31 billion in debt repayments through the end of last year, South Korea's share is tiny relative to its foreign reserves.

India was one of the few countries in Asia to escape the financial crisis a decade ago, because it was just starting to embrace international markets then. It did not adopt the same tight bank regulatory standards and tough fiscal policies as the rest of Asia after that crisis.

That has prompted some economists, like Ajay Kapur at Mirae Asset and Takahira Ogawa at Standard and Poor's, to express particular concern about India's preparedness for the current crisis. While India has US$295.3 billion in foreign exchange reserves, it is running a large government budget deficit and a large trade deficit while its banks have lent very aggressively to a real estate sector that is now tumbling quickly.

With an election expected early next year, Indian leaders have been much more upbeat about their country's prospects than most Asian leaders.

Policy makers in India have also subscribed to the idea that their economy has ''decoupled'' from Western economies, an idea that most economists and policy makers in Asia rejected many months ago.

''India is not from any other planet,'' said a posting on an Indian web site this week. ''This common logic is ignored by our policy makers.'' - International Herald Tribune.

US Stocks High Swings, Bottom Out?

US stocks end worst week mixed after wild session

NEW YORK, Oct 11 — Wall Street capped one of its worst weeks ever with a wild session yesterday that saw the Dow Jones industrials gyrate within a 1,000 point range before closing with a relatively mild loss and the Nasdaq composite index actually ending with a modest advance. Investors were still agonising over frozen credit markets, but seven days of massive losses and the possibility of further government support for the markets tempted some investors late in the session.

The Dow lost 128 points, giving the blue chips an eight-day loss of just under 2,400, or 22.1 per cent. The average had its worst week on record in both point and percentage terms. The Standard & Poor's 500 index, the indicator most watched by market professionals, posted its worst weekly run since 1933.

The latest loss also means the Dow is down 40.3 per cent since reaching a record high close of 14,164.53 a year ago, on Oct 9, 2007. The S&P 500, which reached its high of 1,565.15 the same day, is down 42.5 per cent.

Investors suffered a paper loss for the day of about US$100 billion (RM350 billion), as measured by the Dow Jones Wilshire 5000 index. For the week, investors lost US$2.4 trillion, and over the past year, the losses have piled up to US$8.4 trillion.

But there were signs yesterday that some investors believe the market is near a bottom. On Thursday, selling accelerated in the last hour of trading. The Dow was down 221 points at 3pm but closed down 679 points an hour later. Yesterday, the Dow was down 468 points at 3 but rocketed 790 points and was up 322 points just after 3.30. It then sold off but closed down only 128.

And the Russell 2000 index, which tracks the movements of smaller company stocks, had a 4.66 per cent gain yesterday; small-cap stocks are often first on investors' shopping lists when they think a market turnaround is at hand.

"Nobody wants to miss the bottom," said Anton Schutz, president of Mendon Capital Advisors, who said of the Dow's performance, "I view it as a victory that we only finished down 100."

Some investors may have been placing bets ahead of the weekend meeting of officials from the Group of Seven nations, who gathered in Washington to discuss the economic meltdown. One of the potential remedies expected to be reviewed at the meeting is for governments to guarantee lending among banks.
"Everyone is hoping for really good news that can invigorate some buying and break this credit freeze, but your guess is as good as mine as to whether that will happen. I think people are desperate for action," said Jon Biele, head of capital markets at Cowen & Co. "It truly is remarkable to watch what's happening."

Still, yesterday's widely mixed finish was proof that Wall Street still has a long list of troubles, and trading is likely to remain volatile when the market reopens on Monday.

"This kind of volatility in the market tells you that there are huge disagreements among investors about what the fundamentals are, about what the outlook is," said Ethan Harris, managing director and chief US economist at Barclays PLC.

The hair-trigger mentality of the market — a reflection of the intense anxiety on the Street — was evident from the opening bell. The Dow fell 696 points in the first 15 minutes, recovered to gain more than 100 before that first hour was over and then turned sharply lower again. It spent much of the session with a deficit between 300 points and 500 points, regaining some ground and then falling again — until the last hour, when the average had swings spanning hundreds of points that took the Dow up as much as 322.

Investors have shuddered the past month over a credit market that remains frozen, posing a threat to the economy by making it harder and costlier for businesses and consumers to get a loan. But yesterday's gainers included financial stocks, the ones most decimated by the credit crisis.

Harris said policymakers likely will continue to do what is needed to revive the credit markets. Actions taken so far by central banks, among them the Federal Reserve, have included increased lending and interest rate cuts.

"The deeper problem is not the stock market drop but the freezing up of the credit markets and that's the root problem and they have to keep applying the antifreeze until it works," Harris said.

The major indexes' sharp swings yesterday were likely exacerbated by the computer-driven "buy" and "sell" orders that kicked in when prices fell far enough.

"Fear has been running rampant all over the Street. Fear and greed, that's what rules the Street. I think the carcass has been stripped to the bone," said Dave Henderson, a floor trader on the New York Stock Exchange for Raven Securities Corp. "The mood, it swings with the market. When we went positive, the euphoria down there was awesome. It's like at a football game."

Market index stats again told how horrific the run has been on Wall Street:

The Dow lost 1,874.19 points, or 18.2 per cent, during the week. Its dismal performance outdid the week that ended July 22, 1933, which saw a 17 per cent drop — and back then, during the Great Depression, there were six trading days in a week.

The Dow has fallen for eight straight sessions — the longest losing streak since the eight days of declines following the Sept 11, 2001, terror attacks, when the blue chips lost 1,038.12, or 10.8 per cent.

It's been the worst run for the Dow since the nearly two-year bear market that ended in December 1974 when the Dow lost 45 per cent.

Since hitting their record highs a year ago, the Dow has lost 5,713 points, or 40.3 per cent, while the S&P 500 is off 665.90 points, or 42.5 per cent.

Beyond the Dow, broader stock indicators were mixed yesterday.

The S&P 500 index fell 10.70 or 1.18 per cent, to 899.22. The 18.2 per cent drop for the week was the S&P's steepest decline since the week ending May 21, 1933; its worst loss was in 1929, when it fell 19.9 per cent. The index lost 200.01 points for the week.

The Nasdaq composite index rose 4.39, or 0.27 per cent, to 1,649.51. For the week, the Nasdaq lost 297.88, or 15.3 per cent.

The Russell 2000 rose 23.28, or 4.66 per cent, to 522.48. For the week, the Russell fell 96.92, or 15.64 per cent.

Decliners led advancers 2-to-1 on the New York Stock Exhange, where consolidated volume came to a record 11.2 billion shares, compared with 8.14 billion traded on Thursday.

Most major central banks around the world slashed interest rates this week after continuing problems in the credit market triggered concerns that banks will run out of money. Analysts have described the mood on trading floors this week as panicked at times, with investors bailing out of investments on fears there is no end in sight to the financial carnage.

A stream of selling forced exchanges in Austria, Russia and Indonesia to suspend trading, and those that remained opened were hammered. The rout in Australian markets caused traders there to call it "Black Friday."

European stocks sank yesterday, with Britain's FTSE-100 falling 8.85 per cent, German's DAX declining 7.01 per cent, and France's CAC-40 ending down 7.73 per cent. In Asia, the collapse of Japan's Yamato Life Insurance caused already nervous investors to pull even more money out of the market — the Nikkei 225 fell 9.6 per cent.

An index considered to be Wall Street's fear gauge reached record highs yesterday in another sign of massive investor anxiety. The Chicago Board Options Exchange Volatility Index, known as the VIX, rose to an all-time intraday high of 76.94. The VIX, which usually trades under 50, tracks options activity for the companies that make up the S&P 500.

Still, prospects of further government help and, perhaps, attractive prices helped parts of the financial sector show signs of life. Big national banks were among the gainers, including Bank of America Corp, which rose US$1.24, or 6.3 per cent, to US$20.87. Some smaller banks also rose, including Fifth Third Bank Corp, which advanced 67 cents, or 6.9 per cent, to US$10.40.

Not all financials enjoyed a bounce, however. Morgan Stanley Inc fell US$2.77, or 22 per cent, to US$9.68 as investors worried that even with a major investment from Japan's Mitsubishi UFJ Financial Group the company was still facing troubles. Meanwhile, Goldman Sachs Group Inc fell US$12.55, or 12 per cent, to US$88.80.

Investors appeared unfazed by final results arriving in afternoon trading from an auction yesterday that set the price of debt issued by now bankrupt Lehman Brothers Holdings Inc at 8.625 cents on the dollar, down from a preliminary estimate of 9.75 cents.

The auction was for credit default swaps, which are contracts used to insure against the default of financial instruments like bonds and corporate debt. Traded in a US$60 trillion, unregulated market, many of the instruments have fallen sharply because of their ties to bad mortgage debt. Those big losses and nervousness about who holds what CDS has made financial institutions hesitant to lend to one another. The auction could help the market determine which companies are most at risk from CDS losses. — AP

Tuesday, October 07, 2008

Wall Street Tumbles Amid Global Sell-Off

NEW YORK, Oct 6 - Wall Street tumbled again today, joining a sell-off around the world as fears grew that the financial crisis will cascade through economies globally despite bailout efforts by the US and other governments.

The Dow Jones industrials skidded nearly 500 points and fell below 10,000 for the first time in four years, while the credit markets remained under strain.

The markets have come to the sobering realization that the Bush administration's $700 billion (RM2.31 trillion) rescue plan won't work quickly to unfreeze the credit markets, and that many banks are still having difficulty gaining access to cash.

That's caused investors to exit stocks and move money into the relative safety of government debt.

Over the weekend, governments across Europe rushed to prop up failing banks. The German government and financial industry agreed on a $68 billion bailout for commercial-property lender Hypo Real Estate Holding AG, while France's BNP Paribas agreed to acquire a 75 percent stake in Fortis's Belgium bank after a government rescue failed.

The governments of Germany, Ireland and Greece also said they would guarantee bank deposits.

The Federal Reserve also took fresh steps to help ease seized-up credit markets. The central bank said Monday it will begin paying interest on commercial banks' reserves and will expand its loan program to squeezed banks.

Investors took a bleak view of the future, seeing no end to the crisis in the near term.

"This is a psychologically important moment that we passed below the 10,000 level," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. "But, the issues are worldwide. The fact is people are scared and the only thing they're doing is selling."

In midmorning trading, the Dow Jones industrial average fell 443.08, or 4.29 percent, to 9,882.30, dropping below 10,000 for the first time since Oct. 29, 2004. At one point, the Dow was down nearly 600.

Broader indexes also tumbled. The Standard & Poor's 500 index shed 53.12, or 4.83 percent, to 1,046.11; and the Nasdaq composite index fell 101.07, or 5.19 percent, to 1,846.32. The Russell 2000 index of smaller companies dropped 29.31, or 4.73 percent, to 590.09.

There were only 78 advancing stocks on the New York Stock Exchange, compared to 3,080 decliners. Volume came to 512.4 million shares.

In Asia, the Nikkei 225 closed 4.25 percent lower. Europe's stock markets also declined, with the FTSE-100 down 6.31 percent, Germany's DAX down 8.29 percent, and France's CAC-40 down 8.76 percent.

The anxiety was again obvious in the credit markets. The yield on the three-month Treasury bill slipped to 0.33 percent from 0.50 percent late Friday.

Demand for bills remains high because of their safety; investors are willing to take extremely low returns just to have their money in a secure place.

Investors also moved into longer-term Treasury bonds. The yield on the 10-year note fell to 3.45 percent from 3.60 percent late Friday.

Banks' hesitation to lend to one another and to many businesses and individuals is the result of the bad mortgage debt that the financial rescue is supposed to sweep up. But it's still unclear how quickly financial institutions will be able to hand that debt to the US government and convince the markets they are healthy again.

There has been some hope that perhaps the Fed, in concert with other central banks, might cut interest rates to help stimulate the economy.

With oil prices well off their midsummer highs and indicators pointing to a slower economy, the Fed's worries about inflation are less than they had been, making it easier to justify a rate cut.

Investors might get some indication about a potential rate cut with several policymakers slated to speak this week. Dallas Fed President Richard Fisher and Chicago Fed President Charles Evans will speak on the US economy on Monday. Federal Reserve Chairman Ben Bernanke is due to speak later today.

Frederick Dickson, chief market strategist at D.A. Davidson & Co., believes investors are eager for any signs about the well being of the economy.

"Wall Street at this point is shifting its attention from whether Congress was going to act on the emergency stabilization bill to the realization that the economy is slowing significantly faster than most analysts had expected," he said. "The downturn has shifted from first gear to about third gear in about two weeks."

Oil prices fell to an eight-month low below $90 a barrel on speculation that the spreading financial crisis will exacerbate a global economic slowdown and further cut demand for crude oil. Light, sweet crude tumbled $3.82 to $90.06 a barrel on the New York Mercantile Exchange.

In corporate news, ailing Hartford Financial Services Group Inc. received a $2.5 billion investment from European insurer Allianz. Hartford's market value was halved last week on concerns it needed more capital to survive, but shares recovered $2.97, or 11 percent, to $31.29 on Monday.

EBay Inc. fell $1.14, or 6 percent, to $17.81 after announcing it will cut about 1,000 jobs, reducing its work force by 10 percent, to streamline the company. The online auction site expects restructuring charges of about $70 million to $80 million, mostly during the fourth quarter.

Wells Fargo & Co. said late Sunday its takeover agreement with Wachovia Corp. will go forward after a state appeals court blocked a lower court ruling that favored rival bidder Citigroup Inc. Wells Fargo said it will "continue working toward the completion of its firm, binding merger agreement" with Wachovia.

Shares of Wells Fargo rose 67 cents, or 2 percent, to $33.77, while Citi fell $1.71 cents, or 9.3 percent, to $16.68. Wachovia fell 18 cents, or 2.9 percent, to $6.03.

Eli Lilly & Co. said its board approved an acquisition of ImClone Systems Inc. for more than $6 billion. The deal, which also has been approved by ImClone's board, will create one of the leading oncology franchises in the biopharmaceutical industry. Eli Lilly fell $1.90, or 4.7 percent, to $39.35, while ImClone rose $1.76, or 2.7 percent, to $66.76. - AP

Tuesday, September 30, 2008

Dow Plunges 777pts!

WASHINGTON, Sept 30 — In a vote that shook the US government, Wall Street and markets around the world, the House yesterday defeated a US$700 billion (RM2.4 trillion) emergency rescue for the nation's financial system, leaving both parties and the Bush administration struggling to pick up the pieces. The Dow Jones industrials plunged nearly 800 points, the most ever for a single day.

"We need to put something back together that works," a grim-faced Treasury Secretary Henry Paulson said after he and Federal Reserve chairman Ben Bernanke joined in an emergency strategy session at the White House. On Capitol Hill, Democratic leaders said the House would reconvene on Thursday in hopes of a quick vote on a reworked version.

All sides agreed the Bill could not be abandoned.

Yesterday, not enough lawmakers were willing to take the political risk — just five weeks before the elections — of backing a deeply unpopular measure that many voters see as an undeserved bailout for Wall Street.

The Bill went down, 228-205, even though Paulson and congressional leaders proclaimed a day earlier that they had worked out an acceptable compromise in marathon weekend talks.
Lawmakers were caught in the middle. On one side were the dire predictions from Bush, his economic team, and their own party leaders of an all-out financial meltdown if they failed to approve the rescue. On the other side: a flood of protest calls and e-mails from voters threatening to punish them at the ballot box.

The House website was overwhelmed as millions of people sought information about the measure.

The legislation the administration promoted would have allowed the government to buy bad mortgages and other sour assets held by troubled banks and other financial institutions. Getting those debts off their books should bolster those companies' balance sheets, making them more inclined to lend and easing one of the biggest choke points in a national credit crisis. If the plan worked, the thinking went, it would help lift a major weight off the national economy, which is already sputtering.

Stocks started plummeting on Wall Street even before yesterday's vote was over, as traders watched the rescue measure going down on television. Meanwhile, lawmakers were watching them back.

As a digital screen in the House chamber recorded a cascade of "no" votes against the bailout, Democratic Rep. Joe Crowley of New York shouted news of the falling Dow Jones industrials. "Six hundred points!" he yelled, jabbing his thumb downward.

The final stock carnage was 777 points, far surpassing the 684-point drop on the first trading day after the Sept 11, 2001, terror attacks.

In the House, "no" votes came from both the Democratic and Republican sides of the aisle. More than two-thirds of Republicans and 40 per cent of Democrats opposed the Bill. Several Democrats in close election fights waited until the last moment, then went against the Bill as it became clear the vast majority of Republicans were opposing it. Most vulnerable Republicans refused to back the Bill.

In all, 65 Republicans joined 140 Democrats in voting "yes," while 133 Republicans and 95 Democrats voted "no."

The overriding question was what to do next.

"The legislation may have failed; the crisis is still with us," said House Speaker Nancy Pelosi in a news conference after the defeat. "What happened today cannot stand."

Republican leader John Boehner said he and other Republicans were pained to vote for such measure, but he agreed that in light of the potential consequences for the economy and all Americans, "I think that we need to renew our efforts to find a solution that Congress can support."

Those positive comments aside, a brutal round of partisan finger-pointing followed the vote.
Republicans blamed Pelosi's scathing speech near the close of the debate — which assailed Bush's economic policies and a "right-wing ideology of anything goes, no supervision, no discipline, no regulation" of financial markets — for the defeat.

"We could have gotten there today had it not been for the partisan speech that the speaker gave on the floor of the House," Boehner said.

Rep. Roy Blunt, the whip, estimated that Pelosi's speech changed the minds of a dozen Republicans who might otherwise have supported the plan.

That amounted to an appalling accusation by Republicans against Republicans, said Rep. Barney Frank, chairman of the Financial Services Committee: "Because somebody hurt their feelings, they decide to punish the country."

More than a repudiation of Democrats, Frank said, Republicans' refusal to vote for the bailout was a rejection of their own president.

The two men campaigning to replace Bush watched the situation closely — from afar — and demanded action.

In Iowa, Republican John McCain declared: "Now is not the time to fix the blame; it's time to fix the problem."

In Colorado, Democrat Barack Obama said: "Democrats, Republicans, step up to the plate, get it done."

"We're all worried about losing our jobs," Rep. Paul Ryan, declared in an impassioned speech in support of the Bill before the vote. "Most of us say, 'I want this thing to pass, but I want you to vote for it — not me.' "

With their dire warnings of impending economic doom and their sweeping request for unprecedented sums of money and authority to bail out cash-starved financial firms, Bush and his economic chiefs had focused the attention of world markets on Congress, Ryan added.

"We're in this moment, and if we fail to do the right thing, Heaven help us," he said. — AP

Monday, September 22, 2008

KLCI Re-Visit: North Please

As what I have expected, it will have strong rebound at 95x level which I did mention at my chatroom on 18/Sep/08. And indeed the CI rally for 62pts within two days after hitting low of 963 (so close yet not far from my low target :-o) . KLCI close at 1,025 last week. My immediate outlook will be positive! (as long as it hovering above 950 level)- of course the main resistance at 1100 and 1180 should be taken out first. Enjoy the ride and good luck!

[Previous KLCI Posting]

DJI Re-Visit: Chart Preview

Dow Jones last week encounter much pressure by financial tumors which sent the index hitting 2 years low at 10,400. The sell off was a temporary and it recover quickly at the end of last week to close at 11,388. Well, what I can see is that the market will have a better sign of moving up after all this financial crisis (news) which jitter investors. Anyway a more positive view is that the DJI must be able to breakout 11,800 level, otherwise my downtrend target at 10,000 remain a question!

[Previous DJI Posting]

Tuesday, September 16, 2008

Stocks Get Pummeled

Wall Street sees worst day in 7 years, with Dow down 504 points, as financials implode.

NEW YORK ( -- Stocks tanked Monday, amid the largest financial crisis in years after Lehman Brothers filed for the biggest bankruptcy in history, Bank of America said it would buy Merrill Lynch and AIG slumped on fears that it can't raise cash.

Treasury prices rallied as investors sought the comparative safety of government debt, sending the corresponding yields lower. Oil prices tumbled, falling well below $100 a barrel on slowing global economic growth. The dollar rallied versus the euro and gold prices spiked.

The Dow Jones industrial average (INDU) lost 504 points, or 4.4%. It was the biggest one-day decline for the Dow on a point basis since Sept. 17, 2001, when the market reopened for trading after having been closed in the aftermath of 9/11 terrorist attacks. On a percentage basis, it was the biggest decline since July 19, 2002.

The Standard & Poor's 500 (SPX) index lost 4.7%, its worst day since Sept. 17, 2001, when it plunged 4.9%. The S&P 500 also closed at its lowest point since Oct. 27, 2005.

The Nasdaq composite (COMP) lost 3.6%, its worst single-session percentage decline since March 24, 2003. It left the tech-fueled average at its lowest point since March 17 of this year.

"It was an ugly day," said James King, president and chief investment officer at National Penn Investors Trust Company. "Lehman's failure to find a suitor and Merrill deciding to cash in their chips before a similar fate could befall them really stoked the fears of the public."

AIG exacerbated those fears in the afternoon. And all the bad news isn't out there yet, King said. "Investor confidence is at the lowest point we've seen in a while."

He said that after the government bailout of Fannie Mae and Freddie Mac last week and all the other financial market bad news, this was just too much for investors.

But it doesn't mean that the stock market is likely to see these kind of massive selloffs on a regular basis, King said. Nasdaq and S&P futures pointed to a higher open Tuesday, when fair value is taken into account.

After the close of trade, S&P said it is cutting its debt rating on mortgage lender Washington Mutual (WM, Fortune 500) to junk status, reflecting the ongoing credit market meltdown and WaMu's exposure to the housing market. WaMu shares fell almost 27% during the session and lost another 11% in extended-hours trading.

Also after the close, Hewlett-Packard (HPQ, Fortune 500) said it will cut 24,600 jobs, or 7.5% of the combined workforce of HP and the recently-purchased EDS. Shares were barely changed in extended-hours trading.

Stock market meltdown: Global markets tumbled as investors reeled after Lehman Brothers filed for bankruptcy, Merrill Lynch was forced to sell itself to Bank of America and investors awaited AIG's restructuring announcement.

"You have to throw out the history books because there's really nothing to compare this to," said Jim Dunigan, chief investment officer at PNC Advisors.

"Any speculation as to what inning we're in becomes difficult because each step of the way seems to bring another drop," Dunigan said.

Art Hogan, chief market strategist for Jefferies & Co., said the magnitude of the financial industry fallout is unprecedented, and could only be compared to the Great Depression of the 1930s or the railroad bankruptcies of the 1800s.

"We've never witnessed this before," said Hogan. "There's no road map for this."

Dow-component insurer AIG and mortgage lender Washington Mutual are the latest companies to spark investor fear.

AIG has been scrambling to raise enough cash to fend off ratings agency downgrades and stay afloat.

N.Y. Gov. David Paterson said in the afternoon that AIG will be allowed to use $20 billion in assets through its subsidiaries to stay afloat, basically providing itself with a bridge loan. AIG has also reportedly asked the Federal Reserve for a roughly $40 billion bridge loan over the weekend.

In addition, the federal government has asked Goldman Sachs and JP Morgan to lead a $70 billion to $75 billion lending pool for the company, the Wall Street Journal reported. (Full story)

Shares of AIG (AIG, Fortune 500) slumped 60.8%.

The developments of the day cemented for investors that the credit crisis is far from over, six months after the near-collapse and government rescue of Bear Stearns.

"The landscape has changed and a lot of the major players who were are no more, so of course people are panicked," said Stephen Leeb, president at Leeb Capital Management.

"But it's not the end of capitalism," he said. "This may usher in something worse than what we've seen in terms of the economy, but the companies left standing at the end of this will be OK."

Merrill Lynch's buyout was perhaps providing some reassurance to investors, said Dunigan, in that it shows there is still value in the market.

Losses were also tempered by the Federal Reserve's decisions to loosen up its lending restrictions. The central bank could end up cutting the fed funds rate, its key overnight bank lending rate, when it meets Tuesday, analysts said. The fed funds rate currently stands at 2.0%.

Also helping Tuesday: news that a group of 10 banks including Morgan Stanley, Goldman Sachs and Barclays had given up to $7 billion each to create a $70 billion lending pool to help smaller institutions.

Lehman bankruptcy: Lehman Brothers (LEH, Fortune 500) announced it was filing for bankruptcy, after weekend talks aimed at saving the 158-year old firm failed.

The filing came shortly after midnight Monday, after Bank of America and Barclays pulled out of negotiations to acquire Lehman, which has lost $60 billion in bad real estate bets and the credit market's collapse.

Unlike with Bear Stearns back in March, the government was reportedly not willing to help finance a takeover, bailout or restructuring of Lehman Brothers. This reportedly contributed to the reluctance of other firms to strike a deal with the troubled company. (Full story)

Speaking in the afternoon, Treasury Secretary Henry Paulson said that he hasn't ruled out additional government bailouts for the future. He also said that the banking system is sound. (Full story).

Lehman shares plunged 94%. (Full story)

Merrill Lynch buyout: After pulling out of the Lehman negotiations, Bank of America (BAC, Fortune 500) announced that it will buy Merrill Lynch (MER, Fortune 500) for $50 billion in stock. The price values the company at more than $29 a share, a more than 70% premium from Merrill's closing price on Friday of $17.05.

The company has posted losses of more than $17 billion over the last four quarters and saw its stock plunge 27% last week.

Shares had rallied more than 15% during the session Monday before ending little changed. Bank of America tumbled 21%. A variety of other financial shares plunged, including Citigroup (C, Fortune 500), Morgan Stanley (MS, Fortune 500), Goldman Sachs (GS, Fortune 500) and JP Morgan Chase (JPM, Fortune 500).

Market breadth was negative, with losers beating winners by over 18 to 1 on volume of 1.8 billion shares. On the Nasdaq, decliners topped advancers by over six to one on volume of 2.75 billion shares.

10-bank emergency fund: In a bid to calm the markets, the Federal Reserve announced plans Sunday to loosen its lending restrictions to the banking industry. A consortium of 10 leading domestic and foreign banks, including Goldman Sachs (GS, Fortune 500), Citigroup (C, Fortune 500), Barclays (BCS) and Morgan Stanley (MS, Fortune 500), agreed to create a $70 billion fund to lend to troubled financial firms.

The Federal Reserve, meeting Tuesday, could cut the fed funds rate, a key short-term interest rate, from the current level of 2%, analysts said.

Oil: Oil prices plunged as investors continued to bet on a global economic slowdown. Additionally, early reports showed Hurricane Ike didn't do as much damage to oil rigs and refineries in the Texas Gulf region as expected.

Oil prices were down $5.47 a barrel to settle at $95.71, the lowest point since Feb. 15. Oil dipped below $100 a barrel on Friday for the first time in five months.