Monday, April 25, 2011

The Chinese are coming

The Chinese are coming because America does not want them.

Listings via RTO / merger have recently been suspended in the U.S. stock exchanges. This is due to lack of interest in such listings.

Many Chinese companies listed in the U.S. are now being sued by investors for fraud, inflated reporting and misleading statements. In the light of the present scenario, Bursa is likely to experience an influx of Chinese companies applying for listing in Bursa. A few Chinese stocks are already listed here. They are not well received and some are still below their IPO price.

Before a stock is allowed to get listed, a due diligence must be carried out. This means visiting its factories, testing and checking its products, talking to its CEO and workers and its customers as well. Bursa should have its own team of auditors to do this instead of depending too much on other auditors to ensure propriety. Does Bursa have the workforce to do this? If not, it should upgrade itself first.

Integrity, transparency and reliability must be implemented without compromise. Unless people feel safe to invest, they would rather leave their money in the banks.

Therefore if Bursa wants more activities in the stock market, it must do everything to ensure that it is a safe place to invest.

Most of our ACE counters are rubbish shares. Over the years, they show no growth, no dividend and no appreciation in their prices. They should be classified under a category called, "Useless". I wonder why anyone wants to invest in such counters.

Monday, April 18, 2011

Time for harsher penalties

There are many ways to destabilise or mismanage a company, and in Kenmark case, its top executive and directors from Taiwan went AWOL

There are many ways to destabilise or mismanage a company, and along the way, upset and annoy its minority shareholders.

In the case of Kenmark Industrial (M) Co Bhd, its top executive and directors from Taiwan went AWOL. The furniture maker's shares were sold down, losing some RM140 million of market value in a matter of days. The stock did bounce back, but not before a big damage was done and a new, "friendly" major shareholder was installed.

The latest file marked "How to upset your minority shareholders" involves Linear Corp Bhd. Initial company probe showed that one of its directors had used his autocratic rule to hand out RM36 million to a project owner/developer. The amount was an advance for a RM1.66 billion contract Perak Linear had secured from the developer, but appeared not viable.

Kenmark and Linear are among a list of listed companies that have run foul of corporate rules. Kimble Corp Bhd and Tat Sang Bhd are counted in the list, too.

Kimble, another Taiwan-owned furniture maker, breached a listing requirement in 2008 for failing to disclose in its fourth quarter 2007 results that it had made provision for doubtful debts of RM33.7 million.

Its managing director Datuk Yao Bor Bin and former executive director Yao Po Chen were fined by Bursa Malaysia a total of RM75,000 "for being ambiguous and inaccurate in the announcement". The company was delisted in April 2009.

Tat Sang, another furniture maker, shocked investors with its accounting irregularities and the disappearance of key management personnel back in 2002.

Its former managing director Lim Chai Hock was sentenced to five years' jail by the Sessions Court for making false statements to Bursa Malaysia. The sentence was revised by the High Court to a five months' jail and a fine of RM200,000 in default of two months' imprisonment.

Tat Sang was plagued with financial woes just a year after its listing in 2000. It was eventually delisted in 2003.

The point here is that once a corporate manipulator is caught and goes to court, make sure he (interestingly, women is almost or non-existent in the issue) is punished accordingly.

While our local stock market watchdogs, the Securities Commission particularly, may have been swift in their action, the punitive measures appear lenient on corporate manipulators.

Some have said in jest (or are they not kidding?) that our corporate punishments are the laughing stock among foreigners. Swindle loads of money from your company and leave the country, you can then come back and face the low-decibel music.

We may have read that a man was sentenced to 25 weeks in jail for stealing 80 pairs of women's panties. For mismanaging or embezzling millions of ringgit or causing hurt and grievance to many investors, you just get a fine or a brief spell in prison. Some balance in blue and white collar crimes, right? Is there a very fine line in steal, cheat or lie between a corporate man and an ordinary Joe?

In February 2006, it was reported that Fountain View Development Bhd former director Datuk Chin Chan Leong and ex-remisier were found guilty of share manipulation.

Chin was fined RM1.3 million or in default of 13 months' jail as well as sentenced to serve one day in prison for manipulating its share price seven years before.

Hiew Yoke Lan, a former Avenue Securities Sdn Bhd remisier, was fined RM1 million or 10 months default jail sentence for abetting Chin in the offence.

The offence was committed between November 18 2003 and January 20 2004. During this period, Fountain View stock had a low of RM1.99 and a high of RM6.15.

Back in November 2003, at a low of RM1.99, Fountain View carried a market capitalisation of RM885 million. At the peak of the share manipulation of around RM6.15, Fountain View carried a market capitalisation of RM2.73 billion!

If Datuk Seri Idris Jala can overhaul the various subsidies enjoyed by us, how hard can it be to review and slap the harshest possible punishment on corporate manipulators?

The above article is written by Zuraimi Abdullah of Business Times

Thursday, April 14, 2011

Gaming for Gambling, the only winner is the House

The only winner in the casino or lottery game is the house or the banker. When odds are not in your favor, over time, you are bound to lose. Unfortunately many people do not realize this. It’s okay if you bet what you can comfortably lose and get some excitement out of it once in awhile. But to bet the farm, you must be out of your mind.
Don’t ever think you can beat the house, whether it gaming or gambling. Read more here.

Saturday, April 09, 2011

Chinese Products How Scary

Tainted milk, fake eggs, contaminated red wine, bleached mushrooms, fake tofu, recycled edible oil & clenbuterol-added pork products. All these items come from China. Be careful; read more here.

Saturday, April 02, 2011

Short Attack in America

In the U.S. shorting in the stock market is legal. Shorting means selling stocks you do not own. The idea is to short, smear and cover. Many Chinese U.S.-listed stocks are the subjects being utilized this way. The latest is a company known as Advanced Battery Technologies (ABAT).

Many bullish articles have been written about ABAT before a negative one brought it down 42.7% in one trading session. This means that if you have $100,000 invested in the stock, you lose $42,700 overnight. Whether anyone of those bullish articles has anything to do with the negative one is anybody's guess. But one thing is certain. I will never read any article without skepticism, even though it is written by a reputable analyst.

ABAT was doing pretty well. Its price was hovering at around $3.75. As soon as the smear-campaign article was published at :, on 30th March 2011, the price commenced to slide rapidly. At the end of the day, it closed at $2.01 for a lost of 42.7%! This is indeed frightening.

The next day, it plummeted again hitting a low of $1.51! At the time of this post, the stock managed to hold at $2.07.

At Bursa we have what we called "Circuit Break". This means whenever we have a drastic drop of 30% in price, the underlining stock will be immediately suspended pending investigation.

In the U.S., they don't have such a system in place.
Well, such is the scenario there. If you can't stand the heat, please get out of the kitchen.

Talking about short attacks, some stocks quickly come to mind. They are: CEU, CCME and
Yongye. All these companies are small-cap Chinese stocks listed in the U.S.

My advice: Don't invest in Chinese stocks listed in the U.S. unless you have money you want to lose or the skill to match the shorts. Swimming in shark-infested water is dangerous.

Friday, April 01, 2011

20% Rule For Big Profits

Investor's Corner: Use 20% Rule For Big Profits

You'll never know for sure if a stock is going to be a huge winner if you sell it too soon. So if the stock you just bought makes a big jump right away, resist the urge to take the money and run.

Watching a stock go up after you sell it can be truly frustrating. That's where the eight-week rule comes in. The rule states that if a stock breaks out from a proper base and gains 20% or more in three weeks or less, you should hold it for at least eight weeks.

It's normal for a stock to pull back after breaking out, so don't panic unless the stock starts to give back the bulk of its gains. Only then should you sell. You never should turn a good profit into a loss.

Stocks that gain 20% or more soon after the breakout are showing you unusual power. These have the potential of doubling, tripling or more.

The eight-week rule is designed to help you avoid the heartache of missing out on what could be a monster winner. Stocks that surge hundreds of percentage points will seldom do so in a short period of time. Big gains need time to brew.

In "How To Make Money In Stocks," IBD founder and Chairman William O'Neil wrote, "Your objective is not just to be right but to make big money when you are right."

If you bought a stock with great earnings and sales growth, healthy margins and institutional sponsorship as it just cleared a base, you have to give it time to do its thing. In investing, patience is a virtue.

Avoid thinking too much once you're in the stock. You don't have to watch every tick. Doing so can cause you to get shaken out. But be aware of signs of weak action and act if they appear.