Should Malaysian investors worry about the slower growth in the developed market?

Its been long time since my last post tagged as business and finance related topics. As past few days I've been informed to write an essay on the above topic in order to pass the first round assessment of my application for a unit trust research analyst position in iFast capital, I just like to give it a try despite I've been working in a bank now as I am interested to get an idea on my ability to become an analyst in investment field. Below is my essay on the topic:

Resulted from sub-prime crisis and Greece sovereign debt problem, developed countries especially Euro which leaded by US market suffering financial stagnant all the while since 2008, even though it appears sometime when there were few signals of economic recovery, but it seems can’t last long and remain stagnant still. There is no doubt that the US situation has implication on Malaysia and region stock market, however, I would like to point out that those implications may temporarily effect local investors’ psychology and sentiment in stock market, nevertheless, it will bring minimum impact towards our strong economic fundamental in the long run.

Let’s take a look at the past few months economic data and indicators, although US unemployment rate shown a significant rise in the past few months, the country’s housing data and production index also shown a dissatisfied result as well, however Malaysia’s economic indicators showed positive result, as well as stock market performed well in the same period and the FTSE KLCI index achieved 1400 points and above recently.

To strengthen the point, we may have a look at our country’s export statistics as shown in the chart below, our gap between export toward ASEAN and South countries (exclude Japan) compared to export volume to US and EU countries had became wider in recent years. This fact shows that developed countries demand are no longer a major determiner on our economic, while emerging countries have a more important role instead. In addition, there are lots of unexplored potential markets in the emerging countries (Brazil, Russia, India and China) awaiting Malaysian to explore extensive business opportunities.

Our economic health in that similar period also supported by recent profit jumping showed in most listed companies’ quarter financial reports, among those companies comprised from banking, automobile, service and else.

Another reason why Malaysian investor should take into consideration is our currency rate. As we all know, Ringgit had came to a high level against US currency at RM3.1/USD compared to previous level, and our currency had been the most impressive one among the region’s currencies, and it is optimistic to expect that Ringgit can keep strengthening against USD.

For those interested in developed market, in the short run, market may perform volatile trend due to the unstable economic environment; however, due to their strong basic fundamental, it is confident that they will rebound in the long run from the financial crisis, after all, US and EU counties had learned a lesson through the devastating financial crisis, and therefore taking action to control and tighten the financial policy.

In a nutshell, except for those who like to gain profit especially from the developed market investment in short term, otherwise Malaysian investors who invest in local market and nearby region countries should not worry about the slow growth in developed countries in the long run.

Restaurant owner Oversea Enterprise gets Bursa listing nod

KUALA LUMPUR: Oversea Enterprise Bhd, which owns and operates the Restoran Oversea chain, has received Bursa Malaysia Securities Bhd's approval to list on the ACE Market.

Oversea expects to be listed by the first quarter of 2010. OSK Investment Bank Bhd is the adviser, sponsor, underwriter and placement agent.

The group started with its pioneer Restoran Oversea outlet in Jalan Imbi, Kuala Lumpur in 1977. Since then, it has expanded to seven outlets in the Klang Valley and Ipoh. It also has a contemporary casual dining café under the "Tsim Tung" brand, and a specialty 'dim sum' outlet.

Oversea also manufactures specialty moon cakes and baked products namely egg rolls, oriental muffin and wedding biscuits, to complement its restaurant business.

Sources: http://www.theedgemalaysia.com/business-news/158762-restaurant-owner-oversea-enterprise-gets-bursa-listing-nod.html

Oversea seems to be an attractive stock, for restaurant based company, it seems that only a few listed in ACE market, nor at the main market. Another point is, it is different from other listed restaurant company such as Kentucky and etc, which Oversea offered its unique core services and side products. Additional with its famous brand name and long established experience, I believe that Oversea  can be considered a good choice to invest in it.

Restaurant Oversea Website: http://www.oversea.com.my/main.asp

EON Cap and HLB Story

The recently most interesting business news in Malaysia:

http://biz.thestar.com.my/news/story.asp?file=/2010/1/27/business/5549378&sec=business 

My observation: Usually the one which going to be takeover by other will have a share price decrease, and the one going to takeover will have share price increase, which happen to EON Cap now. Same things go to last year Media Prima takeover action on New Strait Time.

FTSE KLCI drop till 1269.70 basis point

This week FTSE KLCI unable to break the 1300 resistance line even it is so close in last week, and untill today, it had dropped till 1269.70, which had break the supporting line of 1277. And today's dropping trend is due to the share price decreased in major finance industry stocks (PPB, CIMB, and AMMB) and also planting stocks (IOI and BKAWAN).

This news will not seems interesting here as reader can get this information in any media, the interesting thing I would like to share here is, last weekend when I attending the seminar organized by RHB invest, PPB, CIMB and IOI is the few major stocks included in their recommended stocks which they said will have a chance to gain in this few weeks, haha, the message which I am going to bring out here is, don't ever believe blindly in any analysts recommendation, for market is really really unpredictable.

Anything will be a important point to determine the market trend, for example this few days downward trend is contributed by the policy of financial tightening of US and China, which scattered away lots of investors.

But if referring to Warren Buffett adverse investing strategy, is it now considered a good time to go in market? which is "greed when majority of people fear, fear when majority people greed", while we still not see the potential decrease level? lets track it~

TNB shares at 3-month low on talk of no tariffs hike

PETALING JAYA: Tenaga Nasional Bhd (TNB) shares slipped to their lowest in three months yesterday, fuelled by talk that there would be no increase in tariffs this month.

“It was that as well as a little bit of the gradual increase of natural gas and coal prices due to the cold weather factor,” said Chris Eng, head of research at OSK Investment Bank.

Natural gas and coal are the main sources for TNB’s power generation.

Shares in the national power producer shed up to 3.2% in early trade yesterday but closed 1.8% down at RM8.20.

It is understood that the subject of an increase in tariffs was not brought up at the Cabinet’s most recent meeting as widely anticipated.

A Bloomberg report yesterday quoted Energy, Green Technology and Water Minister Datuk Seri Peter Chin Fah Kui as saying that the Government had not decided whether to raise power prices.

“Investors could have been disappointed that it (a decision on a hike) is taking longer than expected and sold off,” Eng said. “But we’re still hopeful for a hike soon.”

The market has been anticipating an increase in electricity prices this month following TNB’s higher independent power producer capacity payments to its newly-commissioned Jimah plant in Port Dickson.

The expectations of a tariff hike are also premised on the Government’s move to reduce subsidies to keep its budget deficit in check.

A tariff hike may help the Government reduce subsidy expenses but it can also lead to inflationary concerns.

TNB is now paying a subsidised gas price of RM10.70 per million British thermal units (mmbtu), which is lower than the market price of about RM12 per mmbtu.

It is learnt that TNB would only adjust the electricity tariffs based on the gas price factor, and not add on any other variables.

Electricity tariffs in Peninsular Malaysia were last adjusted on March 1 last year, reduced by an average of 3.7% following the 24% hike in July 2008.

The 3.7% tariff reduction was accompanied by a 25.2% reduction in gas prices from RM14.31 per mmbtu effective July 2008 to RM10.70 per mmbtu effective March last year.

A fund manager said yesterday’s sellers included some foreign funds. A total of 17 million shares changed hands, at least double the volume traded a day earlier.

source:
http://biz.thestar.com.my/news/story.asp?file=/2010/1/8/business/5432444&sec=business

What to Look For In a Prospectus by Mr Ooi Kok Hwa

Saw Mr Ooi article on analysis IPO in The Star. Actually Mr Ooi is consider as my idol, I used to attend his 3 talks during my University degree study, possibly end of this semester will have the chance to attend his talk again. Dreaming to achieve his level one day later...how nice and useful his articles and lesson are...

Below article is found from The Star:

http://biz.thestar.com.my/news/story.asp?file=/2009/12/30/business/5381351&sec=business

OOI KOK HWA: FOLLOWING better stock market sentiment, there have been a growing number of companies wanting to get listed on Bursa Malaysia.

In every initial public offering (IPO), the vendors, who are mostly the major shareholders of the company, will distribute a prospectus to provide the required information.

However, many investors find it difficult to digest the information provided in the prospectus. In this article, we will briefly go through a few basic pointers for investors to consider before taking up any IPOs.

The most important factor to be considered is the key owners of the IPO company. Despite the lack of track records and the difficulty in determining the quality of the management, we can still get some details on the background, qualifications and experiences of the key owners and management team.

If the majority of the board of directors is comprised of family members, we can expect this family-owned business to exist for a long time.

If the key owner has some corporate finance experiences, we should expect more corporate proposals from this company on, for example, merger and acquisition activities, rights issues and share buybacks.

For operational efficiency, the chief executive officer should possess relevant and long period of working experiences in the core business activities of the company.

Besides this, the independent directors need to have adequate financial training and related working experiences to provide useful inputs to the board of directors.

There are two main types of share offerings – offer-for-sale and public issue. The key difference between these two is that the sale proceeds from offer-for-sale will go directly to the vendors whereas proceeds from public issue will go directly to the company.

The company will need to explain how it plans to use the proceeds – whether the money will be used to fund working capital, reduce bank borrowings or for future expansions.

If the majority of the offering is offer-for-sale, then we will need to be careful as this may mean that the IPO is providing an exit strategy for some key owners of the company.

We may also need to take a discount on the future prospects stated in the prospectus.

As there will be a lot of uncertainties on the company’s growth prospects, we need to check whether the expansion plans stated are realistic and reasonable, given the size and capacity of the company.

Sometimes, certain owners may be too ambitious in their outlook.

In addition, we need to understand the company’s background, production capacity, types of products, locations of its factories, key major suppliers, customers and competitors.

We need to check the company’s sustainable competitive advantages, such as possession of any intellectual properties, technology, patents, trademarks, licenses as well as strong and recognisable brands.

Other factors to look at are whether the company is dominant in any particular geographical region and niche market, or whether there is a wide distribution network, strong marketing team as well as research and development capability.

A lot of newly listed companies will also explain in detail the key risk factors associated with investing in it in the executive summary of the prospectus. Although some may appear to be standard information, we can still get a feel of the inside risk factors about the company.

Examples of special risk considerations are dependence on a few key customers and suppliers, expiration of its patents as well as special arrangements with key major shareholders, suppliers and customers.

We notice that not many investors were excited about some of the recent IPOs. One of the possible reasons was that the offer price was too expensive.

Despite higher stock market volumes, we still have a lot of listed companies selling at very cheap valuations. If the pricing of the IPO is far above the overall market average valuation, the stock may be hammered down below its IPO prices after the listing of the company.

We can use price-earnings ratio and price-to-book ratio to determine the value of companies. A good company needs to state its dividend payout policy. Even though there may be slight differences compared with the actual dividend payment, investors still need to compute the potential dividend yields from the company’s dividend payments.

Ooi Kok Hwa is an investment adviser and managing partner of MRR Consulting.

Buffettology

Among the most important laws that Buffett learned:

1) It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

2) When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.

3) Management does better by avoiding dragons, not slaying them.

4) As if governed by Newton’s first law of motion, an institution will resist any change in its current direction.

5) Just as work expands to fill available time, corporate projects or acquisitions will materialize to soak up available funds.

6) Any business craving of the leader, however foolish, will be quickly supported by detailed rate of return and strategic studies prepared by troops.

7) The behavior of peer companies, whether they are expanding, acquiring, setting compensation, or whatever, will be mindless imitated.

8) It is not a sin to miss a business opportunity outside one’s area of expertise.

9) If your actions are sensible, you are certain to get good results.

10) Do not join with managers who lack admirable qualities, no matter how attractive the prospects of their business.

11) Fearful when others are greedy, greedy when others are fearful.

12) First investment rule: do not lose money, second rule: don’t forget the first rule.

Think Deep In Finance - Part 2: Asian Rare Earth Private Ltd and Bukit Merah Village

Continue on my previous post on the inverse perception on finance. If you had read the supplement of China Press currently (started at 23th Nov 2009), you should have know that there used to be a toxic (rare earth) plant operated near Kampung Baru Bukit Merah, Lahat in Perak a few decades ago, which is also where my house located.

In 1979, Asian Rare Earth (a Japan company) came under close scrutiny after it was discovered that its operation was causing radioactive emissions in the area. It was extracting yttrium, which is used in making colour TV tubes, from monazite, and the process created the radioactive thorium hydroxide waste. The company was de-commissioned in the early 1990s after a long-drawn legal battle and countless public protests.

Even it had decommissioned, but there are lots of things at the back there, from what the protestors said, the government had arrested them under ISA that time. And I was unable to understand what the Fucking Hell of the Damn Shit “high” officer thinking that time.

Man, the solid facts that so much villagers suffering due to that damnable toxic plant, and the officer just to guarantee so easily that there is no problem on the operation of that plant? And when villagers stepped out to protest for the sake to protect their own lives and healthy population for their beloved, but the Fucking authority captures them under ISA, how could it be? Why?

I just wanna keep questioning on the officers in charged, did you Fucking ever live at that area? How do you know there will be no effect on the villagers as you are not one of them and didn’t ever visit them who are suffering once? As you just live at your luxury house and stay at your comfortable working place, but able to judge everything without seeing them by your own Ass Hole eyes?

Well, I just wondering, is that a country development and capital inflow much more important than human’s life? Why the damn authority that time (one of them included country’s top leader that time, Dr. M…), didn’t ever care for the poor villagers? What the hell stuffs running in their mind? That’s why I said before, if you think finance is a field to help developing the world, you should think twice on it, for there are lots of stories behind that beyond yours and mine knowledge.

I am glad and paid my full salute to the peoples who fight endlessly and persistently to banish that toxic plant that time. You are the great people, much greater than the Fucking Hell Ants class which only think of and chasing for power and wealth, in the past, current (presently the cases that most of us seen, almost not “news” anymore…) and forever, but never care for the citizens in sincere. God sake, maybe this is only piece of the pie only…pitiful citizens.

Why Maxis PE As High As 17 Times?

- Brand
Brand will play a significant role in push up Maxis share price up to as high as 17 times PE. But, is it worth that much? In personally, I think this kind of intangible asset shall be worth 3-4 times PE only.

- Stability (Leading position in market share)
The stability of Maxis in earning revenue, without doubt, is performing well for many financial years, and the performance result to their leading position in the industry’s market share. Thus, it is definitely a factor to mark-up their share price much higher than the EPS or Book Value.

- Fair Market
To be fair, Maxis have to fix the share price on the average level of the industry, thus, this formed the basic price level of Maxis share on 17 times PE.

- Expectation
Well, the above reasons is not the ultimate power to push the share price till so high, the most solid reason, in my personal view, must be the share buyer. Why I said like that? Think, if buyer not willing to acquire Maxis share at such price and require the price at a lower level, and insist on that, do you think Maxis still able to fix and sell their share on that price level? Second, because the buyers scramble for the shares, in consequences, this will raise the share demand, and of course, the price level too.

So, why buyers have so high demand on that? The above three reasons should be a few significant of the reasonable answers. Back to the point, do you really think that the above 3 reasons should have the Maxis share mark-up at a 17 times PE? What your say?

Think Deep In Finance

In finance field, it is the responsibility for the professionals to make sure the clients and employers they service for have the most value return to their investment or wealth. However, I always think about something else out of this box, something that worth of us to think deeply in it.

Currently, you should have heard lot of news about the destructive non-stop cloudburst in many places in the world, as a sequent from rapidity critical global warming phenomena. As a finance student, I think and ask myself, what is the relationship between Finance and these natural (or maybe man-made) disasters?

Did Finance help to avoid this, or it is one of the factors which prick up these disasters? In common, we knew that factories, cars, cigarettes, toxic wastes, and lots more things appear and increase rapidly only in modern times, is the main reason which contribute to current earth critical condition. Well, how do these modern things acquire the capital or finance resources to get being build, manufactured and produced? Even this is my field, but as a fact, yes, I have to admit that it is finance world which contribute the capital to the existing of those modern things.

We finance people always proud that we are the one which contribute to a country’s economy and development, but how if we are also the one who contribute towards earth destruction? Is it also worth for us to proud for? Well, I did not deny that we also the one to help gather the finance resources for lots of projects which trying to save the world from the brink of destruction. But, I believe that it is only a small amount if compared to the capital flow in the industries which produce modern things as they can give big return to the investment, for finance field have a rule, great investment must be compensate with great return, thus, it is common that our main investment is always towards industries creating pollution.

Finance did have ethics, but the ethics is mainly on accountability and responsibility on the money only, but rarely a point to point at which field or industry that should be invested. Well, this is what I discussed so far in this post, there will be lots more things I am going to explore and discuss in later post, hopefully my posts on these issues will let people in this field think another way deeply.

Maxis share price ended RM5.42 in 1st day trading

Thursday 19th Nov 2009, the 1st day Maxis listed again on Bursa, as what many people expected, the hot stock had a so high trading volume, as much as 3057843, and thus push the share price up to RM5.42, an increase of 8.4%. And being the top of the list of Bursa in both trading volume and gainers.

As a finance student, I wonder how the buyer of the stock value such a expensive stock, as Maxis share had a PE as high as 17 times, and today ending share price again push it near to 18 times, is it really worth that much? If there is professionals between them, what is the intrinsic value of the company that make them invest (in fact mostly is trading only) in this stock? Well, is it the reason where there is a phenomena where peoples behavior of tend to following popular stock?

I also wonder how many buyers intend to buy and hold it for a long period, with a current dividend yield of 0.04, I personally did not think that will worth enough to hold it that risky long period to cover back the cost. Thus, It is expected a vast of speculative trading will occur on this stock to gain short term capital gain only, and thus in future short term, the price will be quite volatile, barring that Maxis able to generate a enormous profit and reduce the PE and increase the dividend yield.

I am still working on reading the company prospectus to determine the future growth potential, maybe it is a joke for many people for still researching on the prospectus today as it had published long time ago. Well, despite a finance student, it is shameful to say that now I only realized that I learn very little on those practical knowledge, hence, I created a blog to train myself toward this, and try to learn as much from other experienced guru by reading their blog post, hopefully I can became like one of them soon~huh~

Summary of Malaysia Budget 2010 (3rd Strategy)

3rd Strategy: Focusing on Well-Being of Rakyat (Citizens)
1) Preventing Crime

-RM3.7bil allocated to increase efficiency of security force.

-Total RM1bil provided to improve PDRM services.

-RM1.9bil will be provided to armed forces.

-Another RM622mil will be provided for Malaysia Maritime Enforcement Agency.

2) Improving Income and Quality of Life of the Rakyat

2.1) Eradicating Hardcore Poverty

-Distribute Federal Welfare assistance on the 1st day of each month.

-Continue the “Skim Program Lonjakan Mega” with an allocation of RM141mil which will benefit 5000 families.

2.2) Assisting the Poor and Vulnerable Groups

-Continue the SPKR with an allocation of RM180mil.

-Provide skills training and entrepreneurship programs to more than 3000 women.

2.3) Establishing “Kedai Desa” (Rural shops)

-RM30mil will be allocated to UDA Holdings Bhd to build 300 units of shops in nationwide rural area.

2.4) Eradicating Urban Poverty

-RM48mil allocated to implement related programs.

2.5) Increasing Home Ownership

-More than 44000 low cost houses will be sold at a price of between RM21500-RM35000 per unit by DBKL and JPN, besides; JPN also will provide 74000 low cost houses to be rented in 2010. Priority will be given to the low and middle income groups for the above programs.

-RM200mil will be allocated under Ministry of Housing and Local Government to extending appropriate financial assistance to rehabilitate low and medium cost houses.

-The Government will launch a scheme that enables EPF contributors to utilize current and future savings in Account 2 to obtain houses.

2.6) Expanding Public Health Facilities

-RM14.8bil allocated to manage, build and upgrade hospitals and clinics. Besides, Government will also allocate RM10mil to expand 50 community clinic services in selected urban areas.

2.7) Enhancing Social Safety Net

a) RM224mil allocate to the disabled. And also RM174mil provided for the senior citizens.

b) Allocate a sum of RM15mil to assist poor patients and purchase medical equipments.

c) A total RM3.3mil provided, which increase the allowance rate from RM50-RM150 a month for every disabled children enrolled in NGO-organized special schools.

2.8) 1Malaysia Sukuk

The Government will issue 1Malaysia Sukuk (Syariah-Based Government Saving Bond) of total RM3bil, offered to all Malaysians aged 21 and above, with min investment of RM1000 and max RM50000, maturity period of 3 years with 5% annual return rate paid quarterly.

2.9) 1Malaysian Retirement Scheme

-Government will establish the above scheme which administered by EPF for those who self-employed and without fixed income.

-For every RM100 contribution, the Government will contribute 5% subject to max RM60 per annum, which is an addition to the existing dividend paid by EPF. This contribution is only for a 5 year period and contributors may withdraw the savings at age 55.

2.10) EPF contributions

-EPF contributions will be increase to 11% on voluntarily basis and effective immediately. And will revert to 11% starting from 1 Jan 2011.

-Government proposes the existing personal tax relief of RM6000 be increases up to RM7000 for EPF contribution and life insurance premiums.

2.11) Developing Wakaf Properties

RM20mil will be provided for this particular purpose.


3) Strengthening Infrastructure in Rural and Remote Areas.

-In 2010, a sum of RM2.3bil will be allocated to:

a) RM857mil for construction of both rural and village roads

b) Priority will be given to the soil stabilizer in the construction of rural roads, where appropriate.

c) RM530mil allocated to supply water and RM825mil allocated to supply electricity.

d) Provision of RM88mil to implement 5356 social amenity projects.

-Government will spend RM41mil to improve the income and quality of life of the Orang Asli Community.


4) Improving Public Transport

a) Accelerate formation and operation of SPAD as a single authority to monitor and enforce service standards as well as provide a long term plan for public transport and expected to be operational in 2010.

b) Acquire 8 new EMUs and refurbish 9 EMUs by KTMB.

c) Acquire 35 units of LRT trains by SPNB.

d) Construct covered walkways linking LRT stations to nearby activity centers.

e) Expand special lanes and increase the number of buses in KL. And 4 new hubs will be constructed in Penang.

f) Fast-Track construction of the Integrated Transport Terminal in Gombak.

g) Implement dedicated lanes for buses on underutilized expressways and modify Touch’n’Go lanes at toll booths.



Glossary

PDRM: Polis Diraja Malaysia (Royal Malaysia Police)

SPKR: Skim Pembangunan Kesejahteraan Rakyat

DBKL: Kuala Lumpur City Hall

JPN: National Housing Department

NGO: Non Government Organization.

SPAD: Public Land Transport Commission

EMUs: Electric Multiple Units

KTMB: Keretapi Tanah Melayu Bhd

SPNB: Syarikat Prasarana Negara Berhad

*Adapted from Malaysia 2010 Budget Speech by Prime Minister Najib 

Summary of Malaysia Budget 2010 (2nd Strategy)

Summary of 2nd Strategy: Ensuring Holistic and Sustainable Development

1) Enhancing Highly Skilled Human Capital
1.1) Expanding Access to Quality and Affordable Education
RM30bil will be allocated to primary and secondary school education, where:
-RM19bil for emoluments
-RM2.8bil for student assistance and scholarship program
-RM1.6bil for schools construction (where RM1.1bil for refurbish).
Besides, 4 NKRA will be focused, which are namely:
a) Strengthening pre-school education – RM48mil will be provided in 2010.
b) Increasing literacy and numeracy rate – RM32mil allocated and all 2010 year 1 school children will be involved.
c) Creating high performance school – RM20mil allocated to target 20 schools to be recognized as SBT in 2010.
d) Recognizing school principles and head teachers – Monetary or non-monetary incentives will be awarded to head teachers and principles who achieve target performance.

1.2) Safeguarding Welfare of Student
a) Award national scholarship to 30 crème de la crème students.
b) Convert PTPTN to scholarship for those who graduate with 1st class honors degree or equivalent started at 2010.
c) Provide 50% discount on KTMB long distance fares for student aged 13 and above, commence at 2010.
d) Netbook package cost RM50 per month for 2 years offered to 100000 local university students by Telekom, commence 2010.

1.3) Enhancing Skills of the Workforce
a) RM1.3bil for polytechnics and community colleges.
b) RM504mil for Industrial Training Institutes and Advanced Technology Training Centre.
c) RM438mil for Institut Kemahiran MARA, Kolej Kemahiran Tinggi MARA, Institut Kemahiran Belia Negara, and Institut Kemahiran Tinggi Belia Negara.
d) RM 110mil for state skills development centres and selected training institutions.
e) Accredit SKM level 4 and above as equivalent to the academic stream.

1.4) Expanding PERMATA program
-RM100mil allocated to implement related programs.

1.5) Strengthening Public Higher Education Institutions
-Government will consider relaxing the rules and regulations on hindering IPTA from generating their own income.

2) Strengthening Banking and Financial System
-A new motor basic insurance and takaful scheme will be offered and expected to be introduced by the mid of 2010.

-Micro insurance and takaful coverage will be expanded for small businesses, small scale businessmen will benefit from coverage ranging RM10000-RM20000, with a premium of RM20 per month.

-Government will review, improve, and enforce Anti-Money Laundering Act and Anti Terrorism Financing Act 2001.

2.1) Invigorating the Stock Market 
a) First stage of allowing brokerage sharing at a minimum rate of 40% for remisier which takes effectively, and second stage of fully liberalized commission-sharing will be effective 1 Jan 2011.
b) Allow 100% foreign equity participation in corporate finance and financial planning companies compared at least 30% local equity before.
c) All PLC required offering e-Dividend, and stockbroker will offer e-Dividend option too.

2.2) Further Developing Islamic Finance System.
Government proposes existing tax incentives be extended to 2015 in financial services especially for Islamic finance. Scope will be extended:
a) Stamp duty exemption of 20% on Islamic financing instrument.
b) Tax exemption on banking profits derived from overseas operations, and also extended to profits of insurance and takaful company which derived from overseas operations.
c) Double deduction on expenditure incurred in promoting Malaysia Islamic
Finance.
d) Deduction on expenditure incurred on the issuance of Islamic securities approved by SC and LOFSA.
e) The tax treatment accorded to SPV established under the Companies Act 1965 is extended to SPV established under Offshore Companies Act 1990 electing to be taxed under the Income Tax Act 1967.
f) Tax exemption on profits received by non-Ringgit Sukuk approved by SC extended to Sukuk approved by LOFSA.

2.3) Ar-Rahnu Micro Credit Program
Government will encourage all syariah-compliant financial and banking institutions to offer this scheme.

3) Combating Corruption
a) Formulate a Whistle Blower Act to encourage corruption disclosure and will be introduced in 2010.
b) Establish 14 Special Corruption Session Courts and 4 Special Anti-Corruption Commission Appeal High Courts.
c) Enhance Malaysia image in anti-corruption.

4)  Development of Regional Economic Corridors.
-RM3.5bil will be allocated by Government in Regional Economic Coridors.

4.1) Developing Putrajaya and Cyberjaya
Efforts will be intensified to increase business, commercial and recreational activities.

5) Improving Effectiveness and Efficiency of Government Administration

5.1) Strengthening Management of Government Finance
-If to implement GST, it will replace the current sales and service tax as well as exemption will be given to the low income group.

-Government proposes that upstream petroleum companies income tax for year of assessment 2010 based on income derived from 2009 be allowed to pay in installments within 5 years.

-Government proposes that a tax of 5% be imposed on gains from the disposal of real property from 1 Jan 2010. But the existing tax exemption will be retained for gifts between close relatives. This exemption will be given on disposal of a residential property once a lifetime.

-Government proposes RM50 service tax per year imposed on each principle credit card and charge card, included those issued free of charge, and also RM25 service tax on each supplementary card, effective 1 Jan 2010.

-Government will impose a sum of RM10000 for each AP to open AP holders, effective 1 Jan 2010.

-Government allows government agencies to rent out certain assets and retain 50% of rentals received while the 50% shall be remitted to the Government as revenues, effective 1 Jan 2010.

-Government has identified assets (lands and buildings) which can be jointly developed or sold to GLC.

5.2) Restructuring of Fuel Subsidy Scheme
-To benefit only targeted groups, Government will implement a fuel subsidy management system in early 2010 as well as other commodities.

5.3) Intensifying Government Delivery System
-Civil servants with monthly household income from RM2000-RM3000 are qualified for the RM180 monthly pre-school fee subsidy. An allocation of RM200000 will be made available for every Ministry and Government department to establish day-care centre.

5.4) Individual Income Tax
-Government proposes income tax rate reduced to 26% effective from the year of assessment 2010, as well as cooperatives and non-resident individual’s tax rate.

-Government proposes personal relief be increased from RM8000 to RM9000, effective from the year of assessment 2010.

-Government proposes income tax on employment income of Malaysians and foreign knowledge workers residing and working in Iskandar Malaysia be imposed at a rate of 15% only.

*Adapted from Malaysia Budget 2010 Speech by Prime Minister Najib.

Glossary

NKRA: National Key Result Areas

 KEMAS: Jabatan Kemajuan Masyarakat

SBT: Skim Bantuan Tuisyen

Crème de la crème: French word, which means the very best.

KTMB: Keretapi Tanah Melayu Berhad

SKM: Sijil Kemahiran Malaysia

PERMATA: Program Pendidikan dan Pengasuhan Kanak-kanak

PLC: Public Listed Company

SC: Securities Commission

LOFSA: Labuan Offshore Financial Services Authority

SPV: Special Purpose Vehicle

GST: Goods and Services Tax

AP: Approved Permit

Lottery of Life

In a BBC interview, I impressed by one of the highlight of Buffett words:

Warren Buffett:
As my friend Bill Gates says, if I've been born in some different place or some different time. I'd have been some animal's lunch. I'd have been running real fast, and the animal would have been chasing me and I'd say "I allocate capital" and the animal would say "well, those are the kind that taste the best".

 I've been in the right place at the right time, and I'm lucky, I think a fair amount of that luck should be shared with others.

Maxis IPO of RM5.20

Maxis IPO share price will be determined at NOV 10, 2009, but analyst research believe that it will locked between RM4-6, which is an average of industry PE, 18 times, and proved when news said that it will be issued at RM5.2. Maxis IPO will start traded at NOV 19, 2009.

I personally think that this should be an interesting stock to go in, as me personally also a Maxis user, and quite satisfied with their services. But the price worth only can determine after I able to seek for their financial statements.

Look forward to start my research on this stock and this will be my first step in writing a finance blog. ^^

Below are latest news articles on Maxis IPO from The Star:

Maxis to raise RM11.7bil via IPO - 29 Oct 2009

Summary of Malaysia Budget 2010 (1st Strategy)

Malaysia Budget 2010 presented by Prime Minister Najib implemented under 3 strategies, which were:

1st Strategy: Driving the Nation towards a High-Income Economy

2nd Strategy: Ensuring Holistic and Sustainable Development

3rd Strategy: Focusing on Well-Being of the Citizens

Below is the 1st Strategy Summary:

1st Strategy: Driving the Nation towards a High-Income Economy

1) Increasing Private Investment
Government will give priority to enhance domestic investment and encourage local companies abroad to remit their profits and reinvest in the country.


1.1) Providing Business Friendly Environment
-Accelerate the pace of businesses activity such as registration and commercial cases.
-MyID and MyCOID as tools in enhance effective delivery system.
-Permanent Resident (PR) status granted to high skilled and talented expatriate more smoother.
-TNB will spend RM 5 bil to improve electricity services in 2010. Sabah Electricity Sdn Bhd as well will improve services.

1.2) Implementation of Privatization Initiatives
-Government will privatize companies under Ministry of Finance and other viable government agencies.

1.3) Enhancing Implementation of Public-Private Partnership Initiatives
-High impact projects by the private sector such as Integrated Immigration, Customs and Quarantine Complex (CIQ) in Bukit Kayu Hitam, construction of 6 UiTM campuses and the development of MATRADE centre will be undertaken jointly with the government.

1.4) Intensifying FDI
-Relaxed condition and simplified procedures for foreign companies to operate in Malaysia.
-Khazanah Bhd and Permodalan Nasional Bhd enhance collaboration with foreign investors in education, tourism and infrastructure.
-1MDB will establish a CSR fund totaling RM 100 mil as a start to finance community activities.

2) Intensifying R&D and Commercialization
The government will undertake the following measures:
a) Rationalizing all research funds and grants to be more effective to achieve set targets.
b) Establishing the National Invention Centre supported by a network of innovation excellence centre under the Ministry of Science, Technology and Innovation and in collaboration with the Ministry of Higher Education.
c) Integrating R&D activities with patents, copyrights and trademarks registration to ensure R&D&C processes are implemented more effectively. The cooperation between patent and research agencies will expedite the commercialization of research findings.
d) Providing SME with tax deduction on expenses incurred in the registration of patents and trademarks in the country.

3) Leveraging Fully On Niche Areas
3.1) Boosting Tourism Industry
-Government will allocate a total of RM 899 mil in 2010 to implement:
a) Attracting participants from UK, Japan, Republic of Korea, Middle East, India and China to participate in the MM2H program.
b) Upgrading the infrastructures in tourism centres such as ecotourism development and homestay facilities.
c) Ensuring front-liners are local.
d) Utilizing internet-based advertising to promote tourism activities.
e) Providing more attractive tourism products and events.
-To further promote medical tourism industry, income tax exemption of 50% on the value of increased exports will be increased to 100%.

3.2) Strengthening ICT industry
-Government will expedite the implementation of HSBB at a total cost of RM 11.3 bil, of which RM 2.4 bil from government and remain are from Telekom Malaysia.
-To increase broadband penetration, government proposes that individual tax payers be given tax relief on broadband subscription fee up to RM 500 from 2010-2012.
-Civil servants can apply for computer loans up to max RM 5000 once in every 3 years.

3.3) Intensifying Halal Industry
a) Formulate the Halal Act
b) To corporatize the HDC as an agency under MITI.
c) Intensify Halal certification by JAKIM.
d) An amount of RM 24 bil provided to developing the Halal products anti-smuggling system.

4) Advancing Agricultural Sector
-Government will allocate RM 6 bil for the agricultural sectors, where:
a) RM 137 mil to upgrade and drainage and irrigation infrastructures in paddy fields.
b) RM 70 mil provided in 2010 to implement the Paya Peda Dam project in Terengganu.
c) RM 82 mil will allocate to modernize the aquaculture industry and implement entrepreneurship training scheme for aquaculture breeders.
d) Allocation of RM 149 mil to develop food farming industry.
e) Allocate RM 58 mil to develop basic infrastructure of livestock farms and establish related supply chain.
f) Implement the incubator program to train and guide youths and graduates to be successful agro-entrepreneurs.
-FELDA, FELCRA and RISDA cooperate in establishing a consortium to implement various high impact projects in downstream and upstream industries. Which each of the authority contributing RM 100 mil and will be implemented at the end of 2009.
-MASKargo will upgrade air cargo facilities for export of perishable agricultural products.
-Government will provide subsidies, incentives and assistance amounting to almost RM 2 bil to safeguard farmers and fisherman interest.
-In 2010, more than RM 400 mil for paddy price subsidy, almost RM 300 mil for paddy fertilizer subsidy, almost RM 220 mil for incentives to increase paddy yield, production and rice subsidy, and additional RM 170 mil allocated to provide cost of living allowances and incentives to fisherman.

5) Promoting Construction Industry
-In 2010, RM 9 bil provided to finance infrastructure projects:
a) Provision of RM 4.7 bil for road and bridge projects as well as RM 2.6 bil for water supply and sewerage services.
b) Provision of RM 899 mil for rail facilities, RM820 mil for port and sea services as well as RM 276 mil for airport projects.

6) Strengthening SME
-Government will taking steps to consolidate SME funds and grants from earlier 79 totaling RM 8.8 bil to 33 and these funds will be coordinated by SME Corp.
-A sum of RM 350 mil for SME Corp, where RM 200 mil for SME soft loans, RM 100 mil for capacity enhancement, remain balance for branding and promotion. Interest rate charge will be same as development finance institutions.
-Government will ensure financial institutions approve micro financing at an average of 6 days and disbursement at an average of 4 days.
-Government will allocate RM 538 mil for the implementation of various SME development programs:
a) RM281 mil to state economic development corporation.
b) RM 200 mil to TEKUN, where RM 20 mil for small scale Malaysian-Indian entrepreneur. Besides, loan approval and repayment processes will be restructured to improve effectiveness.
c) RM 57 mil for the purchase of business premises, provision of infrastructure outside industrial areas and Skim Kilang Bimbingan through the SME Bank.

7) Developing Green Technology
-RM 20 mil provided to intensify green awareness activities.
-A fund amounting to RM 1.5 bil to provide soft loans to green companies, maximum financing is RM 50 mil for suppliers and RM 10 mil for consumer companies. Government will bear 2% interest rate.

7.1) Promoting Construction of Green Buildings
a) Building owners that obtaining GBI Certificates from 24 Oct 09 until 31 Dec 14 will be given income tax exemption.
b) Buyers purchasing buildings with GBI Certificates from developers will be exempt from stamp duty charges on instruments of transfer of ownership.

8) Promoting Creative Industry
a) Formulate a comprehensive Creative Industry Policy.
b) Establish RM 200 mil creative industry fund to finance related activities and will managed by BSN.
c) Launching grant of RM 3 mil to establish Tabung Kebajikan Penggiat Seni to ensure the welfare of artistes.

Glossary
NKRA: National Key Results Areas
MATRADE: Malaysia External Trade Development Corporation
FDI: Foreign Direct Investment
1MDB: 1 Malaysia Development Bhd
CSR: Corporate Social Responsibilities
SME: Small and Medium Enterprise
MM2H: Malaysia My Second Home
HSBB: High Speed Broad Band
HDC: Halal Industry Development Corporation
MITI: Ministry of International Trade and Industry
JAKIM: Department of Islamic Development Malaysia
FELDA: Federal Land Development Authority
FELCRA: Federal Land Consolidation and Rehabilitation Authority
RISDA: Rubber Industry Small Holder Development Authority
TEKUN: Tabung Kumpulan Usaha Niaga
GBI: Green Building Index

*Adapted from 2010 Malaysia Budget Speech by Prime Minister Najib