NYSE Plunged

The NYSe plunged on 4 Feb - 5 Feb 2010.  Why Sell-off?
-Germany's failling orders
-Spain's failed bond auction
-worries that the Greek disease will spread to Spain and Portugal.
-8,000 increase in the latest US weekly initial claims.

Investors should focus on the long list of positive economic numbers. Ignore the sell-off.

Parkson ups stake in China firm

Parkson Holdings subsidiary, Serbadagang Holdings SB, has received a court action to proceed with its proposed acquisition of a 43.31% stake in Qingdao No 1 Parkson Co Ltd (Qingdao Parkson) from China Qingdao No 1 Store (China Qingdao) for 185m yuan cash (RM92.5m). The acquisition would enable the group to tap into a larger share of the earnings of the Qingdao Parkson in which the group’s shareholding would be raised from 52.6% to 95.91%. The acquisition was expected to be completed by the first quarter of 2010.

Comment: The acquisition of Qingdao stores will allow Parkson Holdings to inject the stores into Parkson Retail Group (PRG). We expect Qingdao stores to be injected into PRG after the injection of Shantou and Shenyang stores. No change in our estimates as we have factored in a 95.9% stake contribution from the Qingdao stores. Maintain BUY at a TP of RM7.06.

(OSK Research)

OldTown Kopitiam eyes Main Market listing

The home-grown OldTown restaurant chain, renowned for popularizing the nostalgia of the good old days of kopitiam in an urban setting, is going for listing. OldTown, which owns and operates the OldTown White Coffee brand and cafe outlets, plans to issue 59.5m new shares of RM1 each and offer for sale 30m shares under its proposed IPO pursuant to its listing on the Main Market of Bursa Malaysia. According to its draft prospectus on the Securities Commission website, the group is offering 10m of the new shares, representing 3.3% of its enlarged paid-up capital for application by the general public and 5m shares to directors and employees. Old Town plans to use the IPO proceeds to acquire other companies (32% of proceeds), 40% for capital expenditure, 15% for working capita, 7% for repayment of bank borrowings and the balance for listing expenses. Old Town also aims to expand its café outlets locally and in Singapore. (Financial Daily)

Weekly Review on Asia

Summary :

1) China Tightened.

2) Obama Frightened.

3) Global Markets tumbled.

3) The Global recovery has not been sychronised.

4) There's no global Overheating occuring at this moment.

5) China need not adopt aggresive tigthening.

6) Obama's banking split will not lead to another credit contraction similiar to the one created by the Lehman Panic. 

The equity markets are going through a needed correction phase. I personally see that the economies are not about to start contracting again and the "rally" will resume.

Visit to Resorts World Sentosa. Genting Singapore (GS)


arranged for a group of analysts yesterday to tour its new

integrated resort Resorts World Sentosa (RWS), which

recently had a soft opening with four hotels - Festive Hotel,

Hard Rock Hotel, Hotel Michael and by-invitation only

Crockfords Tower. According to GS, the hotels are very well

received (looking at 80% occupancy rate on weekends) and

while most guests are currently from Singapore, management

expects a dramatic shift towards overseas guests once the

casino and Universal Studio Singapore (USS) open.
 
 

Thought of the Week (Jan 26 2010)

With all the focus on politics, it's worth remembering that the Federal Reserve also faces some very difficult decisions at its FOMC meeting this week. The economic recovery remains tentative with no jobs added as yet. Concerns about a lack of credit have been exacerbated by proposed taxes on bank profits and restrictions on bank activities. At the same time, market fears of monetary or fiscal recklessness seem to be adding to inflation expectations, as can be seen in the chart. We expect the Fed to hold the federal funds rate in a 0-1% range throughout 2010, but there is a risk not only that they will tighten more aggressively but also too soon for a still fragile banking system and economic recovery.

What will impact the Stock Market (KLSE/HKex/SGX/ASX/NYSE) next week?

What will impact the KLSE next week?
1 China has begun a tightening campeign to slow the growth of M2 money supply. When they raised bank reserve requirements to 16 % on 12 January, Shanghai plunged 3 %. If history is a guide expect more tightening in the weeks ahead. In January 2007 they lifted reserve requirements to 17.5 % and the stock market collapsed. This drains huge amounts of Yuan from the Shanghai money markets and lifts bank lending rates. Yi Gang, deputy head of the PBoC, said this is necessary to dampen the rise in consumer prices.

This tightening has triggered large corrections in Asian markets. The KLSE will not be spared- especially the popular shares that have run up. Other Asian Central banks including India/ Korea/ New Zealand and Australia have begun to tighten.


2 Obama has declared war on the banks because they are reluctant to lend to small businesses/ consumers to get people back to work but rather use government bailout funds to speculate in the bond and stock markets. He threatened them that he will cap credit card rates, forbid banks to speculate in the stockmarket and operate hedge funds as well as a host of other restrictions. These restrictions will go right to the bottom line. That is why the Dow dropped over 500 points last week.

For now Keep cash and be patient for a better entry point on the KLSE/HKex/ASX/NYSE/SGX. I'm waiting for UpComing Storm.

"Kill the sheep investors(bear), Ride the Bull" - Eclectic Investor