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Decided to make adjustments on the way I blog & share due to time constraints and other commitments. In the coming weeks you should see them. Short updates but more frequent & concise.

Thursday, December 31, 2015

January Prediction of Pump Oil Price (Ron 95)

**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the compute mechanism.**


This is the seventh time I'm posting my prediction in a blog posting. Please bare that I will repeat some lines for new readers :) Also I always care to post my predictions before any official news or other analysts have given their views (typically too late after the queue starts at the stations).


Why is this sort of important? Say every month you know ahead of official price announcement and let's assume there is a price swing on average of 10 sen per month and you can fill in 35 litres. 0.10 x 35 x 12 = RM 42 savings a year. Obviously you don't feel it's a lot but every year you will always call and beg for credit card waiver of RM50 on govt service charge? Ironic isn't it? :)

Jan 2016
Global oil price took a dive to below $40. The avg price for Tapis crude oil for Dec is ~$42 as stockpiles and crude inventories continue rise. Also oversupply issue will be exacerbated by Iranian oil coming to market soon in 2016. Another potential news can be attributed to the successful climate talks in Paris in December. It is said that the breakthrough deal marks the beginning of the end of the fossil fuel age.

MYR's performance was uneventful; trading sideways for the entire month between 4.25 to 4.30. Even as the US Fed raised the benchmark rate by a quarter of a percentage point to between 0.25 percent and 0.50 percent, MYR was not really shaken as the long anticipated hike's impact has already been priced in by investors and currency traders.

Malaysia still suffers from a crisis of confidence and political uncertainty (now with UMNO's incoming annual general meeting, also Budget 2016 has not reveal any catalyst to bring MYR back to less than 4 to the Dollar. Even Moody's has the same thought: Moody's Says Budget 2016 'Tame'.

Domestically we received a "Kerja Bodoh" budget that is delivering so little with every corner being cut. I've talked about this in my previous post: Budget 2016: Ini Kerja Bodoh. Other than that I don't see anything interesting until the end of the year when global markets are usually more quiet during the festive season (Thanksgiving and Christmas).

Some asked why the price of crude oil has dropped in 2015?
- Strong US dollar; all commodities are priced in dollar and that includes oil.
- Organization of Petroleum Exporting Countries (OPEC); refuses to cut production in order to maintain market share.
- Oversupply of crude oil; thanks largely to US shale oil producers which is now the world's biggest swing producers.
- Declining demand; world's no.2 economy China is slowing.
- Iran nuclear deal; removes Western sanctions and thus allowing country to export oil once again.
- Successful Paris climate change breakthrough talks; marks the beginning of the end of the fossil fuel age.

How come our pump fuel price did not drastically drop in 2015? 
- This is primarily due to weakening MYR to the USD.




RM/L has dropped a lot from 1.77 (Nov) to 1.50 (Dec). With such a drastic drop there is no doubt that I will predict that fuel price will drop by 15 sen or 20sen. There is no need to rush to the petrol station, please wait until after the announcement tomorrow and fill your tank on 1st January (Friday).

Below is a table of my previous predictions way back to the beginning of 2015. My predictions are based on Tapis crude oil price, performance of Ringgit (added after Mar) & domestic politics (which was added after May). My total savings to date: RM 47.25 (I have already exceeded RM 42 and should hit RM50)





**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the compute mechanism.**

Sunday, November 29, 2015

December Prediction of Pump Oil Price (Ron 95)

**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the compute mechanism.**


This is the sixth time I'm posting my prediction in a blog posting. Please bare that I will repeat some lines for new readers :) Also I always care to post my predictions before any official news or other analysts have given their views (typically too late after the queue starts at the stations).


Why is this sort of important? Say every month you know ahead of official price announcement and let's assume there is a price swing on average of 10 sen per month and you can fill in 35 litres. 0.10 x 35 x 12 = RM 42 savings a year. Obviously you don't feel it's a lot but every year you will always call and beg for credit card waiver of RM50 on govt service charge? Ironic isn't it? :)

Dec 2015
Global oil price has waned slightly below $50. The avg price for Tapis crude oil for Nov is ~$49 as stockpiles remain near record highs. U.S. Energy Department said crude stockpiles ticked up by 1 million barrels last week, bringing the total tally to 488.2 million barrels, around a level not seen in the last eight decades. Also oversupply issue will be exacerbated by Iranian oil coming to market soon in 2016. 

MYR's performance was muted; trading sideways for the entire month between 4.25 to 4.30. Nevertheless MYR might take a dive in December when the US Fed anticipated interest rate rise happens. Malaysia continues to suffer from a crisis of confidence and political uncertainty (now with UMNO's incoming annual general meeting, also Budget 2016 has not reveal any catalyst to bring MYR back to less than 4 to the Dollar. Even Moody's has the same thought: Moody's Says Budget 2016 'Tame'.

Domestically we received a "Kerja Bodoh" budget that is delivering so little with every corner being cut. I've talked about this in my previous post: Budget 2016: Ini Kerja Bodoh. Other than that I don't see anything interesting until the end of the year when global markets are usually more quiet during the festive season (Thanksgiving and Christmas).

Some asked why the price of crude oil has dropped in 2015?
- Strong US dollar; all commodities are priced in dollar and that includes oil.
- Organization of Petroleum Exporting Countries (OPEC); refuses to cut production in order to maintain market share.
- Oversupply of crude oil; thanks largely to US shale oil producers which is now the world's biggest swing producers.
- Declining demand; world's no.2 economy China is slowing.
- Iran nuclear deal; removes Western sanctions and thus allowing country to export oil once again.

How come our pump fuel price did not drastically drop in 2015? 
- This is primarily due to weakening MYR to the USD.



RM/L has dropped back to 1.77 (even lower than that of September, just by 2 sen though). With such a negligible difference I would predict that fuel price will remain the same. There is no need to rush to the petrol station, it would be even better if you wait it out after the announcement tomorrow; 1st December (Tuesday) in case there is a 5 sen drop but judging from previous price adjustment this is not very likely.

Below is a table of my previous predictions way back to the beginning of 2015. My predictions are based on Tapis crude oil price, performance of Ringgit (added after Mar) & domestic politics (which was added after May). My total savings to date: RM 43.75 (I have already exceeded RM 42 and now heading towards RM50)


**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the compute mechanism.**

Thursday, November 26, 2015

Land Public Transport Commission (SPAD) Needs Your Help

Dear readers, SPAD is conducting a short online survey to seek public views on Uber, GrabCar and Malaysia's taxis. I assure you it's really short: only 13 questions. Survey is anonymous and no personal data is collected. SPAD stands for "Suruhanjaya Pengangkutana Awam Darat", a unit under the Prime Minister's Office whose central role is to improve road and rail-based public and freight transport in the country. The survey is a "reality check" to gauge public sentiment please DO the survey, it counts. Here is the link: http://bit.ly/1NPVmu7. Do share out to friends and family.


In my opinion the survey did not ask some other important questions (e.g. on a scale of 1-10, how would you rate the taxi service in Malaysia…) Anyway here's  a sample of some of the questions (with multiple choice answers) in the survey are:

- What is your preferred method to book a taxi?

- If and when you are not satisfied with the taxi services, what are your common causes of your complaint?

- Why do you prefer to use Uber or Grabcar services instead of the current taxi services available in the market?

- In your opinion, should we regulate internet based taxi network applications i.e. Uber, Grabcar and Myteksi to allow them to operate within the boundaries of Malaysia’s laws and regulations?


**The last question is very cunning.
Thank you for your time.

Monday, November 2, 2015

Weekly Market Highlights November (1)

Source: Amp Capital (here for full market update) & iCapital biz (subscription required)

It’s been a strong October with US, Eurozone and Japanese shares up 8-10%, Chinese shares up 10.8% and Australian shares up 4.3%. After the sharp share market falls in the September quarter, October has lived up to its reputation as a “bear killer”. However, November is unlikely to be as strong given that, after rising 10% from their September lows, global shares are overbought and due for a correction.

Fed on hold, but still thinking of hiking in December. The Fed’s post-meeting statement was a bit more hawkish with US consumer spending and investment seen as “solid”, less concern about global developments, and a clear statement that it will decide in December whether to raise the Fed Funds rate. December hike is arguably still less than a 50/50 proposition.


United States
US economic data was on the soft side, with falls in home sales, durable goods orders, consumer confidence and the Markit services Purchasing Managers’ Index (PMI) contradicting the Fed’s more upbeat view on the US economy. 

US September quarter earnings results were better. With 68% of S&P 500 companies having reported, 75% have beaten earnings expectations. But only 44% have beaten on sales, as the strong US dollar and oil price fall weigh.

In the US, October employment data (Friday) will be watched very closely as a guide to whether the Fed will raise rates in December. Growth in US employment costs of just 2% year-on-year (yoy) in the September quarter, and the Fed’s preferred measure of inflation stuck at just 1.3% yoy, do not support the case for a December hike and perhaps see the Fed delaying into 2016.


Meanwhile, the risk of a US debt default next month or government shutdown in December has been all but eliminated by a bi-partisan deal that will suspend the debt ceiling to March 2017 and fund the government for two years. US congressional politics remains low risk for financial markets.

Eurozone
Eurozone economic confidence improved further in October, pointing to okay growth. However, a slowing in private lending growth in August would have concerned the European Central Bank, as would inflation that remained well below target in October.

Asia
Not much to get excited about from China’s fifth plenum, beyond the shift from a one child to a two child policy. Allowing all couples to have two children is a big move for China, but it won’t impact the labour force for 15-20 years and will still see the population decline, as two per couple is still below replacement and it’s doubtful that all urban residents want to have more anyway. So it’s hard to see much economic impact. 

In terms of growth, a target to double per capita income by 2020 implies a 6.5% per annum GDP growth target for the next five years, which is in line with expectations and reflects China’s slowing population and productivity growth, as the focus shifts from investment to consumption

In terms of the recovery in Chinese shares we continue to see good medium-term return potential, particularly Chinese companies listed in Hong Kong, where the H-share market is trading on a forward price/earnings ratio of 7.6 times.

Japanese economic data was a bit more upbeat. September household spending was weak, but industrial production rose, the unemployment rate remains low and the jobs-to-applicants ratio is now at its highest since 1992. There was also good news on the inflation front with core inflation at 0.9% yoy, its highest since 1994. There is still a way to go to reach the 2% inflation target though, and so while the Bank of Japan made no change to its monetary stimulus program at its October meeting, the pressure remains for further easing.

Closer to home, Budget has been tabled and it's full of crap. Also I have yet to share out important Malaysian economic indicators, hopefully I'll get there soon. 
Oct 27: Budget 2016: Ini Kerja Bodoh (Tolong baca)
Aug 22: Alarming Figures of Malaysia's Debt Problem
Aug 16: Stuck in the Middle of Nowhere
Aug 8: Weekly Market Highlights August (1) - Special Malaysia Highlights
Aug 5: The Risk of Holding Ringgit is Skyrocketing, WTB Donations
July 26: Sunday Lite: Flip Flop In Malaysia's Property Market

I saw an interesting article from TheEdge about property (I think I was reading it on the news stand). By the end of 2016, many units that were sold under DIBS are going to have to start servicing their loans. Boleh tak? Certainly you know the market has been soft lately and looks to remain so. 

Plus the below how long more can the middle class take all these hits?

Wednesday, October 28, 2015

November Prediction of Pump Oil Price (Ron 95)

**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the compute mechanism.**


This is the fifth time I'm posting my prediction in a blog posting. Please bare that I will repeat some lines for new readers :) Also I always care to post my predictions before any official news or other analysts have given their views (typically too late after the queue starts at the stations).


Why is this sort of important? Say every month you know ahead of official price announcement and let's assume there is a price swing on average of 10 sen per month and you can fill in 35 litres. 0.10 x 35 x 12 = RM 42 savings a year. Obviously you don't feel it's a lot but every year you will always call and beg for credit card waiver of RM50 on govt service charge? Ironic isn't it? :)

Nov 2015
Global oil price has edged up slightly above $50. The avg price for Tapis crude oil for Sept was $49.68, while Oct it is hovering at $51.16 and is somewhat consistently above $50. Just moments ago crude oil gained 5.23% after EIA's (US Energy Information Administration) reports 3.4 million barrel rise in crude supplies.

MYR took a breather in October - largely due to USD being shorted after the FED decided not to raise interest rate, thus myr strengthen from a high of 4.40 to 4.15 (avg of 4.30) but has since pulled back to 4.25 levels lately. Malaysia continues to suffer from a crisis of confidence and political uncertainty, also Budget 2016 has not reveal any catalyst to bring MYR back to less than 4 to the Dollar. Even Moody's has the same thought: Moody's Says Budget 2016 'Tame'.

Domestically we received a "Kerja Bodoh" budget that is delivering so little with every corner being cut. I've talked about this in my previous post (just 2 days ago): Budget 2016: Ini Kerja Bodoh. Other than that I don't see anything interesting until the end of the year when global markets are usually more quiet during the festive season (Thanksgiving and Christmas).

Some asked why the price of crude oil has dropped in 2015?
- Strong US dollar; all commodities are priced in dollar and that includes oil.
- Organization of Petroleum Exporting Countries (OPEC); refuses to cut production in order to maintain market share.
- Oversupply of crude oil; thanks largely to US shale oil producers which is now the world's biggest swing producers.
- Declining demand; world's no.2 economy China is slowing.
- Iran nuclear deal; removes Western sanctions and thus allowing country to export oil once again.

How come our pump fuel price did not drastically drop in 2015? 
- This is primarily due to weakening MYR to the USD.


Not easy to predict next month's price. RM/L has risen from 1.78 to 1.82 which is not huge however because it should have been +15sen last round instead of +10sen I'm willing to predict that fuel price will increase by 5sen. Najib has showered you folks with his 'so called' goodies and handouts so I guess there isn't anything left. Fuel price to stay @ RM2.05 is still possible, a drop in price is out of the question so there is no harm to fill your tank before 1st November (Sunday).

Below is a table of my previous predictions way back to the beginning of 2015. My predictions are based on Tapis crude oil price, performance of Ringgit (added after Mar) & domestic politics (which was added after May). My total savings to date: RM 43.75 (I have already exceeded RM 42 and now heading towards RM50)



**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the compute mechanism.**

Tuesday, October 27, 2015

Budget 2016: Ini Kerja Bodoh

Data sources: EPF's annual reports (KWSP), Ministry of Finance (MoF), Bank Negara Malaysia (BNM) and Auditor's General Report and Economic Planning Unit (EPU).


You may refer to my compiled sources here: Malaysian National Budget via Dropbox
Spending more than we earn for a new record of 17 years in a row.
Hence we have been running fiscal deficits since the financial crisis of 1999. *I do not know how Najib came with 3.1% deficit, my calc says 3.6%.
Operating expenditure has now hit another new record high of 82% of our national budget allocation. Development expenditure is being squeezed hard. During Dr.M's time it was 30s, Pak Lah's at 20s and now Jib Goh's a pathetic 10s.
The country's national debt (domestic debt + foreign debt) is just short of its self-imposed ceiling of 55%. Although it has improved to a gap of 1%, subsidies have been cut and cost raised across the board.


While the disturbing ratio of Operational versus Development Expenditure has already raised red flags, the budget is screaming troubles from whichever angle you look at it. For the first time, multiple ministries see their budget being cut although the fuel subsidies have been cut altogether. Even tax money from GST is insufficient to pay for Najib’s mismanagement. Proof : What happened to last year's billions?)

Najib has allocated for himself (PM's Dept) a huge budget of RM20.3 Billion - 7.6% of the total budget.  Banyak cantik. Inside this RM20 billion is a special allocation of RM1.6 Billion for 'special projects'? To pay for this, that and that. Thats RM20 billion up in smoke, with nothing to show for it.

A few things I would like to highlight, things that was promised but lied through his teeth.

[1] Housing – a whopping RM1.6 billion is allocated to build 175,000 PR1MA units, of which Najib administration claims to be 20% cheaper than market price. Last year during Budget 2015, Najib boasted about building 80,000 units of such affordable housing units with RM1.3 billion allocation. A year earlier in 2013, he promised to build 123,000 PR1MA with RM1.9 billion.

So, since the mouth watering project was launched in 2011 and established under the PR1MA Act 2012, PM Najib Razak was supposed to deliver at least 203,000 PR1MA homes under allocation of RM3.2 billion. However, based on Economic Report 2014/2015 released on Oct 2014, it had only built 7,336 units. So, where’re the rest of the houses?

So, how can Najib promise to build 175,000 houses with RM1.6 billion in his latest budget 2016? when he can't even build 203,000 with RM3.2 bil! The Maths doesn’t add up.

[2] Income tax - He said about lowering everybody’s personal income tax accordingly, in exchange to taxing people via new GST tax. Well he just increased from 25% to 26% for people earning between RM600,000 and RM1 million. Punishing the rich again for working hard. If you are lazier, you pay less tax. We should have one standard income tax rate for both corporate and individual - a flat rate.

[3] Investments - How many times you want to repeat bro? The Pan-Borneo Sarawak Highway, which is set to be completed in 2021, will be toll-free.  (I say I think this is the THIRD Budget where they are repeating this Borneo Highway project. Dah start ke belum?) Also about the so called RM137 billion of investment initiatives that were announced during the 2016 Budget Day. The number is huge and the money is sexy, provided they’re new investment and genuine. Unfortunately, only 3.1% of roughly RM4.2 billion can be considered “real” initiatives, if MP Dr Ong Kian Ming’s analysis is correct.

[4] Cost of Living - Sure, there’re some candies for the financial illiterates. Some items will be zero-rated GST. The tax relief for each child below 18 years of age is increased from RM1,000 to RM2,000. The tax relief for the individual taxpayer whose spouse has no income is increased from RM3,000 to RM4,000. Free money BR1M will be continued and the list goes on. But there’re many areas which suffer various cuts this time and let me tell you I'm 101% sure cost of living will go up, if this is proven untrue please email me I will give you my own version of BR1M. 

- A RM950 million cooking oil “subsidy” cut could probably mean a higher price for cooking oil.
- The Transport Ministry will see a budget reduction of RM648 million which means transportation cost is likely set to increase.
- The second largest cut was targeted at the Higher Education Ministry which saw its budget reduced by RM2.4 billion to RM13.378 billion. To make up for the shortfall, public universities will suffer the brunt of the cut as they will see their funding reduced by RM1.442 billion. Tuition fees will go up.
- The Transport Ministry will see a budget reduction of 14.1 percent, or RM648 million, to RM3.955 billion, the fourth largest cut among the ministries. Areas that will see cuts include subsidies for KTM trains and flights from rural regions. Habis, fares will have to go up to compensate.
- The Energy, Green Technology, and Water Ministry comes in at fifth place for the largest allocation cut under Budget 2016, with a reduction of RM605 million to RM2.262 million. Consumers who will suffer the most as the single largest slash is the electricity bill subsidy of RM150 million which will be completely defunded.


And I saved the best for last.
The worst part of the Budget is the RM1000 minimum wage. Why increase the Minimum Wage from RM900 to RM1000? Because the first round of Minimum Wage sent inflation sky rocketing.  

Whatever extra salary earned was eaten up in higher prices. Now they have to raise the minimum wage even more. The prices will go up again. Why? because employers sufffer higher salary costs and they must recoup the higher salaries. Prices will go up. People will suffer again.

Then the Minimum Wages will be raised up again and again. Prices will go up again. It is never ending.

Ini Kerja Bodoh. Yet Budget 2016 can deliver so little with every corner being cut....Najib Razak is such a pathetic finance minister.

Wednesday, October 7, 2015

Pemandu Survey Needs Your Vote

Dear readers, Pemandu is conducting a short online survey to seek public views on English language. I assure you it's really short: only 7 questions. Survey is anonymous and no personal data is collected. Pemandu stands for "Performance Management and Delivery Unit", a unit under the Prime Minister's Office (it's okay if you don't like the Super Moron, nobody does) but they are many other people who wants to see Malaysia succeed so it is our duty to help as a model citizen. Therefore do VOTE, it counts. Here is the link: http://goo.gl/forms/u09WpY91mJ. Do share out to friends and family.


Datuk Seri Idris Jala, Pemandu's CEO
The seven multiple-choice questions in the survey are:

> Would you consider some subjects in school to be taught in another language besides Bahasa Malaysia?

> If Yes, which language would be your preferred choice?

> In your opinion, should some subjects in schools be taught in English to improve students’ proficiency in the language?

> Do you think teaching English in other subjects would reduce the importance of Bahasa Malaysia as our national language?

> If English is used as a language to teach other subjects, what subjects should be taught in that language?

> Based on your Question 5 answers, please explain why.

> How important do you think being proficient in English contributes to a student’s career?


Thank you for your time.

Weekly Market Highlights October (1)

Source: Amp Capital (here for full market update) & iCapital biz (subscription required)


Boom or Bust?
The past week has seen a real roller coaster ride for shares, with sharp falls early in the week. Worries about Chinese/global growth and the Federal Reserve’s (the Fed’s) interest rate decision helped initially push the US share market back down to near its August low, which in turn pushed several markets to new lows. However, shares rebounded mid-week from oversold levels, with US shares given a big push along on Friday by expectations that softer than expected jobs data for September will further delay Fed tightening.

While October is likely to remain volatile, with the risk of further weakness, it’s also likely to see share markets end higher as the cyclical bull market in shares resumes into year end before the major holiday season. Shares are cheap relative to bonds; monetary conditions are set to remain easy; this in turn should help see the global economic recovery continue; and finally investor sentiment is around the levels of pessimism that provides great buying opportunities or a possible bust?


United States
US economic data continued to point to an economy with growth averaging around 2-2.5% pa. No boom, but no bust either. On the solid side consumer confidence surprisingly rose in September (despite share market noise), vehicle sales rose to their strongest in 10 years and construction spending rose more than expected.

Soft US payrolls for September mean no chance of an October Fed rate hike and a December hike is 50/50. The failure of wages growth to pick up much, despite the fall in unemployment, suggests that the so-called NAIRU (non-accelerating inflation rate of unemployment) is lower and that deflationary pressures remain intense.

US Government shutdown averted for now. US Congress passed a bill extending US Government financing out to December 11, averting the threatened October 1 shutdown. Of course this just means that the issue will now come up again later in the year when it will get rolled into the need to raise the debt ceiling again, which now looks like being reached by November 5.

Eurozone
Eurozone economic data remained pretty good, with overall economic sentiment in September rising to its highest in more than four years and at a level consistent with a pick-up in growth. While CPI inflation went negative again in September, at -0.1% year on year, core inflation was unchanged at 0.9% and on its own this is not enough to move the ECB to step up its quantitative easing program. 

While Catalan pro-independence parties won a majority of the seats in the Catalonian regional election in Spain, they failed to receive a majority of the vote indicating that the case for independence has not been advanced.

Asia
Japanese economic data was mixed with weak industrial production and the Tankan business survey showing softer conditions for manufacturers but against this stronger housing starts, continuing solid jobs data, stronger household spending and the Tankan survey showing stronger conditions for non-manufacturing businesses.

Further stimulus from China and potential signs of growth bottoming. News early in the week that Chinese industrial profits fell nearly 9% over the year to August didn't help share markets, but thereafter the news out of China improved a bit. 

Firstly, China is continuing to announce more stimulus measures; in particular a sales tax cut on small cars and another reduction in the required deposit ratio for first home buyers.

Secondly, economic data took on a slightly better tone, with consumer confidence rising to its highest since May last year, the official manufacturing PMI rising slightly in September, the Caixin flash PMI being revised up and average home prices continuing to rise in September. While it’s hard to see a big rise in Chinese economic growth, the downside risks may be starting to recede a bit.


**Repeat "again" with tiny modifications**
Share markets are likely to see more volatility in the next month or two. We are still in a seasonally weak period of the year for shares (Sept and Oct), uncertainties regarding China and the emerging world are likely to intensify in the short term, posing risks for global growth and the uncertainty around US Fed moves. 

Closer to home, same old story. I've been talking it over many past weeks:
Aug 22: Alarming Figures of Malaysia's Debt Problem
Aug 16: Stuck in the Middle of Nowhere
Aug 8: Weekly Market Highlights August (1) - Special Malaysia Highlights
Aug 5: The Risk of Holding Ringgit is Skyrocketing, WTB Donations
July 26: Sunday Lite: Flip Flop In Malaysia's Property Market

Aug 8 post has a section on What You Can Do with your MYR. I'm inclined to say that our financial woes will continue until we get more clarity on our 2016 Budget coming October. That's still a month ahead and likely not that any good news will come out. I also heard some rumors about GST but I cannot share - later kena charge for false information :) I will end this after Budget 2016 is announced.

The MYR touched a record 4.48 to the USD for the past week. Due to this it was not difficult to forecast a oil price hike at the pumps. I missed out my post on Major Economic Indicators which I will post soon.

Monday, September 28, 2015

October Prediction of Pump Oil Price (Ron 95)

**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the compute mechanism.**


This is the fourth time I'm posting my prediction. Please bare that I will repeat some lines for new readers :) Also I always care to post my predictions before any official news or other analysts have given their views (typically too late after the queue starts at the stations).

Why is this sort of important? Say every month you know ahead of official price announcement and let's assume there is a price swing on average of 10 sen per month and you can fill in 35 litres. 0.10 x 35 x 12 = RM 42 savings a year. Obviously you don't feel it's a lot but every year you will always call and beg for credit card waiver of RM50 on govt service charge? Ironic isn't it? :)

Oct 2015
Global oil price has somewhat stabilized towards the $50 per barrel range for entire September. It declined the sharpest (~20%) in August before recovering sharply in the last days of August.

MYR to USD continues to deteriorate even without a US Fed hike in Sept largely due to negative sentiments and also Moody's recent article on junk status: Malaysia deserves junk status like Brazil, says Moody’s. The US Fed will have another round of debate among the 10 central bankers on whether there would be a 0.25% hike in Oct.

On the home front, we had a somewhat peaceful "Red Shirt" rally. Super Moron is still in charge although the country has been running on auto-pilot for quite some time. October is also the month of our tabling of 2016's Budget but that is still 3 weeks away. Overall I do not see any major political event impacting the fuel price announcement coming 30th September after dinner.

No point gathering data for 26-30 as it makes little impact on the average

It's obvious, higher global oil price + weaker MYR it all points to higher pump fuel price for the month of October. Thanks to a reader for providing me 'valuable' insights on how fuel is computed in Malaysia I have devised the table above. It 'should' provide a better estimate for the amount of fuel hike/reduction in my future postings. As such I predict fuel price to increase by 15 sen! Please go ahead and fill your tank before 1st October. I suggest doing it early Wed morning before you head to work.

Below are my previous predictions (thru emails, whatsapps, blog posts and word-of-mouth so I might have missed people out therefore decided to put it in blog is the best). **It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the compute mechanism.** My predictions are based on WTI crude oil price, performance of Ringgit (added after Mar) & politics conditions (which was added after May). My total savings to date: RM 40.25 (not very far off RM 42 and we are already 3/4 thru 2015)

Sep 2015
"Tough call" but I predict fuel prices to be kept at current pump price (RM2.05 for RON95). I also maintain a small possibility that a small 5 sen cut is possible. Refrain from pumping petrol until 1st September, either way you don't lose anything.
Ron 95 RM 2.05 (Aug) -> RM1.95 (Sep) (prediction set, saved RM 3.50)

Aug 2015
Oil is now heading to a new normal of $50 per barrel (down ~15%). No changes to my expectation of a continuation of a weaker MYR. I predict fuel prices to fall back 15/10 sen (RM2.00/RM2.05 for RON95). Worst case they will maintain it or give only a small 5 sen cut.
Ron 95 RM 2.15 (Jul) -> RM2.05 (Aug) (prediction set, saved RM 3.50)

Jul 2015
WTI crude oil future still very near $60, however the performance of the Myr has been abysmal. It continues to weaken from 3.65 to almost 3.80. I expect prices to maintain (RM2.05 for RON95). No harm to pump though, if there is a remote chance of increase it would be 5 sen. It is extremely unlikely to go down.
Ron 95 RM 2.05 (Jun) -> RM2.15 (Jul) (prediction set, saved RM 3.50)

Jun 2015
Oil per barrel still hovering near $60 and likely to be within this range. Myr has weaken again, now 3.67 and expected to weaken even more. Honeymoon is over. Like the u-turn on prepaid card GST fiasco, petrol will go up 20 sen.
Ron 95 RM 1.95 (May) -> RM2.05 (Jun) (prediction set, saved RM 3.50)

May 2015
Aboi's fuel price est for May. More likely than not likely to go up 10 sen on 1st May. Due to oil futures hovering slightly above $60 (up 10%) while Myr only strengthen by 3% against the US dollar.
Ron 95 RM1.95 (Apr) -> RM1.95 (May) (prediction off, should have factored in the two 'buy' elections)

Apr 2015
50/50 chance for price to remain or go slightly lower (5 sen/10 sen). It is highly not likely to go up.
WTI futures hovering at $50-55 instead of $60.
Offset by weaker ringgit RM3.70 instead of RM3.60.
Saudi declared war on Yemen but expected not to cause any break in oil production levels as of now.
Hence the bet best is to wait until April 1 to fill up
Unlike 28th no need to beratur...
Ron 95 RM1.95 (Mar) -> RM 1.95 (Apr) (prediction set)

Mar 2015
Time for my monthly update again. I expect fuel price to go up by 5 sen/10 sen in March.
This is because WTI oil futures is around $55-60 as compared to a month ago when it was $48.
Not likely to maintain prices unless gohmen wanna give you ang pow.
Don’t wait till 28th, later need to 'beratur'..
Ron 95 RM1.70 (Feb) -> RM1.95 (Mar) (prediction set, saved RM 5.25)

Feb 2015
I lost the original message. Continue to expect a decrease in pump oil price as per barrel dropped to $45. This is when America shale oil pumped record amount of oil and the Sheikh's continue to fight for market share at the expense of market price. If not mistaken I predicted a 10 sen drop.
Ron 95 RM1.91(Jan) -> RM 1.70 (Mar) (prediction set, saved RM 7.35)

Jan 2015
I lost the original message. Expected a decrease in pump oil price due to oil dropping below $55 per barrel. If I remembered correctly I estimated a 20 sen drop.
Ron 95 RM2.26 (Dec) -> RM1.91 (Jan) (prediction set, saved RM 12.25)

Dec 2014
Oil sinks after OPEC decides to hold onto production targets. Maybe some countries will go rogue (decide not to hold but decrease barrel production).
Oil 68.71-4.926.68%
Ron 95 @ rm 2.30 is based on $85 per barrel. So we should see it priced lower than RM 2.30 by December. Maybe rm 2.15 or rm 2.20? #tanyanajib.
Ron 95 RM2.30 (Dec) -> RM2.26 (Jan) (prediction set, saved RM 1.40)

**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the compute mechanism.**

Thursday, September 24, 2015

Weekly Market Highlights September (2)

Source: Amp Capital (here for full market update) & iCapital biz (subscription required)


It was another volatile week for global shares with strength into the Fed meeting, partly in anticipation of the Fed leaving interest rates on hold, and then European and US shares completely reversing their gains as the Fed provided a reminder about China and emerging market driven global growth worries.

At the very least share markets remain vulnerable to more volatility over the next month or so as we are still in a seasonally weak period of the year for shares and uncertainties regarding China and the emerging world remain. A failure to resolve the US budget impasse by October 1 could also add to volatility.


United States
US economic data remains mixed and suggests that growth is continuing to trend along around 2-2.5%

Uncertainty about Chinese and emerging market growth along with continued uncertainty about US inflation has clearly got in the way and the Fed has rightly opted to leave rates on hold

While the Fed is likely to be comfortable that it has seen enough improvement regarding the jobs market it still seems to lack “confidence that inflation will move back to its 2% objective over the medium term.”


Get ready for some noise out of Washington. The US budget and debt ceiling may hit the headlines again soon with Congress needed to pass budget funding for the new fiscal year that begins on October 1.

Eurozone
Eurozone industrial production and construction activity was a bit stronger than expected in July, but inflation for August fell to 0.1% yoy and core inflation fell to 0.9% yoy, both of which are well below target.

The latest Greek election has been non-event for global investment markets. The election has seen Syriza win the largest share of votes, and it looks on track to form a coalition with the same party it has governed with since the January election. 


Eurozone business conditions PMIs (Wednesday) are likely to remain solid and bank lending growth (Friday) should show further signs of gradual improvement. The focus will also be on the Catalonian regional election (Sunday Sept 27), but with the polls showing Catalonians preferring to remain in Spain it hopefully won't be an issue for markets.

Asia
Average Chinese property prices continued to rise in August with more cities now seeing gains. Chinese property related risks are continuing to recede.

In China, the focus will be on whether Caixin/Markit manufacturing conditions PMI for September has continued to deteriorate or more likely shows signs of stabilisation and bottoming as has been evident in some other recent economic data.


Japan will see the release of its manufacturing conditions PMI (Wednesday) and inflation data Friday, with the latter likely to weaken thanks to lower energy prices taking inflation further away from the BoJ's 2% target.


**Repeat "again" with tiny modifications**
Share markets are likely to see more volatility in the next month or two. We are still in a seasonally weak period of the year for shares (Sept and Oct), uncertainties regarding China and the emerging world are likely to intensify in the short term, posing risks for global growth and the uncertainty around US Fed moves. 

Closer to home, same old story. I've been talking it over many past weeks:
Aug 22: Alarming Figures of Malaysia's Debt Problem
Aug 16: Stuck in the Middle of Nowhere
Aug 8: Weekly Market Highlights August (1) - Special Malaysia Highlights
Aug 5: The Risk of Holding Ringgit is Skyrocketing, WTB Donations
July 26: Sunday Lite: Flip Flop In Malaysia's Property Market

Aug 8 post has a section on What You Can Do with your MYR. I'm inclined to say that our financial woes will continue until we get more clarity on our 2016 Budget coming October. That's still a month ahead and likely not that any good news will come out. I also heard some rumors about GST but I cannot share - later kena charge for false information :)

So much for last week's recovery. 1.00 USD = 4.37012 MYR. Next week I will educate and talk more about major Economic Indicators.



Monday, September 21, 2015

Aboi's Portfolio Review For September/October 2015

Highlights
- Volatile coming month and October: Weekly Market Highlights September (1)
- Continue to maintain all ratings, similar to June, July and Sept'2015: Archive
- No new additions in September.
- Sold all my US holdings. Cash is king now.

Portfolio target composition. Equities 65%, Bonds 25% and Supplementary 10%.
Notes
AFFIN HWANG SIF, 0.005 (MYR / UNITS), UNIT REINVESTMENT, SEP-08-2015

Comments
- Changed format for security reasons; no longer quote values. Instead it's a simply profit and loss calculation (including dividend & unit reinvestment).
- Next month I will revise Fair Value and add Margin of Safety (MoS) column. Also I will add Trade History as well my Watch List.

Supermax (Equity Malaysia)
Maintain HOLD. Uncertainty in local stock market.
- Raised fair value (RM2.11) - following BursaMKPLC consensus target price. 
- Declared interim single tier dividend of 4% to be paid on October 22, 2015. 
- Q2'15 results are out. It was a weak quarter due to lower-than-expected sales volume and margin.
- Stronger USD did help exports albeit a small extend (2.8% revenue incr q-o-q)
No new developments - stronger USD will help due to exports. See below for previous month June'2015 update.
Growth in capacity from two new plants in Meru, Klang which will double nitrile gloves production from 6.9b to 12.3b pieces p.a.
SUPERMAX CORPORATION - 27 AUG 2015


Genting (Equity Malaysia)
Maintain HOLDUncertainty in local stock market.
- Maintain fair value (RM10.69). 
Announced an equity buyback for 4% of its issued share capital after getting mandate during AGM held on June 11, 2015.
- Q2'15 results are out. 8% decline in casino revenue across
all geographical segments. Poorer luck factor and the sustained decline in CPO prices. 
However most of its current investments will only come to fruition in 2H15/2016 so there is no short term catalyst to prop up share price.
GENTING BHD - 27 AUG 2015


Freight (Equity Malaysia)
Maintain HOLDUncertainty in local stock market.
Lowered fair value (RM1.44) - following BursaMKPLC consensus target price. No new developments. See below for previous month June'2015 update.
- Stock took a beating due to cessation of a 3PL contract and temporary closure of a warehouse for renovation but expected to slowly recover.
- Growth will be supported by its core Sea Freight division and trade within Asia-Australia region.
BIMBSEC - FREIGHT MANAGEMENT - 20150827 - 4QFY15 - RESULTS REVIEWS


ICapital (Closed-End Fund Equity Malaysia)
Maintain BUY.
Huge discount from current price to NAV (-17.27%)

Affin Hwang Select Income Fund (Equity & Bond - Asia)
Maintain BUY.
- Asia Pacific's healthy credit market more or less can offset stronger USD in the coming months. See below for previous month June'2015 update.
-Strong USD will make headwinds for Asia markets as such fund pare down exposure in equities (30% -> 20%). 
- Also doubled cash levels to 7% and continue exposure on Asian credit market pending US Fed's direction in the 2H15 (possible hike in Oct / Dec).   
FUND PERFORMANCE (BID TO BID CUMULATIVE RETURNS)
Period1 wk1 mth3 mth6 mthYTD1 yr2 yr3 yr5 yr10 yr
Bid to Bid Returns (%) - RM-0.2-0.60.32.56.38.716.420.446.9115.4
Performance figures are absolute returns based on the price of the fund as at September 17, 2015 (Last updated on September 21, 2015),on NAV-to-NAV basis,with dividends being 'reinvested' on the dividend date


Kenanga Growth Fund (Equity Malaysia)
Maintain HOLDUncertainty in local stock market.
- Because fund held so much cash, impact from recent KLCI selloff activity is not too worrisome yet as year-to-date return is still in positive territory.
Lack of catalyst in the short term, fund holding high level of cash ~20-25%.
FUND PERFORMANCE (BID TO BID CUMULATIVE RETURNS)
Period1 wk1 mth3 mth6 mthYTD1 yr2 yr3 yr5 yr10 yr
Bid to Bid Returns (%) - RM2.77.00.83.213.614.536.760.7131.5379.8
Performance figures are absolute returns based on the price of the fund as at September 17, 2015 (Last updated on September 21, 2015),on NAV-to-NAV basis,with dividends being 'reinvested' on the dividend date.


AmDynamic Bond Fund (Bond Malaysia)
Maintain BUY.
- No change in my previous commentary. BNM has maintained the base lending rate in the 5th MPC.
- Mainly invested in local corporate bonds ~80%.
- BNM will likely continue its policy pause and maintain cautious stance with a "wait-and-see" approach on US Fed direction (a possible hike in Oct / Dec).
FUND PERFORMANCE (BID TO BID CUMULATIVE RETURNS)
Period1 wk1 mth3 mth6 mthYTD1 yr2 yr3 yr5 yr10 yr
Bid to Bid Returns (%) - RM-0.2-1.3-0.31.62.744.77.410.632.2110.3
Performance figures are absolute returns based on the price of the fund as at September 17, 2015 (Last updated on September 21, 2015),on NAV-to-NAV basis,with dividends being 'reinvested' on the dividend date.


Aberdeen Islamic World Equity Fund (Equity Global)
Maintain BUY.
- European markets recovered and with fund's medium exposure in Europe, fund has done well. Also it has USD exposure further strengthening its returns since the MYR has weaken considerably in July.
- Fund has no exposure to China's overheated stock market and slowing economy. Fund also has 18% exposure to the already lofty valuations in US equities so impact is minimized if a correction occurs.
- Fund continues to be very diversified globally; Healthcare (21%), Materials (16%), Energy (15%), Industrial (13%), Consumer Staples (13%).
FUND PERFORMANCE (BID TO BID CUMULATIVE RETURNS)
Period1 wk1 mth3 mth6 mthYTD1 yr2 yr3 yr5 yr10 yr
Bid to Bid Returns (%) - RM-0.6-2.61.84.78.8211.122.5---
Performance figures are absolute returns based on the price of the fund as at September 15, 2015 (Last updated on September 21, 2015),on NAV-to-NAV basis,with dividends being 'reinvested' on the dividend date.


CIMB Principal PRS Asia Pacific Ex Japan Equity Fund (Equity Asia)
Maintain BUY.
Shanghai's stock market continue to weight down to date but fund's exposure is minimal so I'm safe there is enough safety margin to absorb it. 
- Fund holding exposure to China is minimal ~10%.
- Positive on Asian Equities but growth will be more scarce moving forward as regional portfolios are fully invested hence earnings will depend highly on stock selection.
FUND PERFORMANCE (BID TO BID CUMULATIVE RETURNS)
Period1 wk1 mth3 mth6 mthYTD1 yr2 yr3 yr5 yr10 yr
Bid to Bid Returns (%) - RM-0.3-1.0-0.72.39.1415.935.9---
Performance figures are absolute returns based on the price of the fund as at September 17, 2015 (Last updated on September 21, 2015),on NAV-to-NAV basis,with dividends being 'reinvested' on the dividend date.




Disclaimer: The reports, analysis and recommendations in this blog are solely my personal views. I do not link to any investment body or company. As such, I will not be responsible of any of your investment decision. Consult your investment adviser or come to your own conclusions before making any investment decision.