Wednesday, August 31, 2011

Good money for good governance

By Adeline Paul Raj
Published: 2011/08/31
Kuala Lumpur: Institutional investors are keen on companies with good corporate governance (CG) and are willing to pay top dollar to invest in them but sadly, few fit the criterion in Malaysia, says Aberdeen Asset Management, one of the country's top investment firms.

"We care about things like GCG because a company with sound governance policies will outperform over the longer term. We don't mind paying a premium for CG because we know there'll be a board that will always be watching our backs," said Abdul Jalil Rasheed, its head of equities, who helps manage US$2.5 billion (RM7.5 billion) of assets at the firm.

He said CG is a key criterion for Aberdeen when analysing companies to invest in.

"If it fails our CG test, we won't invest in the company," he remarked.

Jalil, who has been with Aberdeen for eight years, said the firm visits at least 100 companies a year in each key country in its quest to find undervalued stocks with good fundamentals to invest in.

"It's not as easy as you'd think," he shared. "We're long-term, fundamental, bottom-up investors ... so investing in the right company is key."

In Malaysia, Aberdeen's major investments include AEON Co (M) Bhd (15 per cent stake), Public Bank Bhd (5 per cent), CIMB Group Holdings Bhd (5 per cent), British American Tobacco Malaysia Bhd (5 per cent), Guinness Anchor Bhd (about 7 per cent) and Pos Malaysia Bhd (6 per cent).

Aberdeen has some RM11 billion invested in 29 companies here, Jalil said.

At a recent accounting-related conference held here, he shared his views on what institutional investors like Aberdeeen want to see in companies, especially on the matter of CG.

"We ask if a company will still be in the same business in 20 years' time. And if it's got a good track record, is it run fairly for all shareholders, and are they transparent? How independent are the board of directors?

"What we want are directors that are knowledgeable of the industry. We want experienced and really independent people. There are some companies out there where the independent directors are former employees of the company - it's not wrong, but it's not right in the spirit of corporate governance," he remarked.

Jalil noted that boards play a key role in setting the CG tone for the company, and so directors shouldn't be sitting on boards for too long as investors would then find it difficult to see them as being truly independent.

"Changing board members is a good thing ... it brings a rejuvenation of the board. Younger board members would bring in new perspective," he voiced.

Another problem commonly seen by investors is companies providing sparse information in their quarterly financial reports.

"They should at least have a performance commentary on how the company has done in the past quarter. We see similar words being used in almost every quarter," he lamented.

Jalil said institutional inves-tors like Aberdeen would also like to see a more transparent voting process at shareholder meetings, like a poll voting system.

He noted that Singapore has made it mandatory to vote by poll and have the results audited by an independent auditor. "I hope this is something we can move to," he said.

Jalil said it would also be good for independent directors to be given a few minutes to explain the operations of the company to shareholders at annual general meetings. "We have seen this in Thailand, and to a certain extent in Singapore.

"In Malaysia, they are rather quiet ... it would be nice if they were given a bit of airtime," he suggested.

Jalil opined that in Malaysia, companies do the bare minimum when it comes to CG. "It's more about form than substance, a mere box-ticking exercise, and I think that's wrong. If you want to adopt CG, you've got to do it in the right spirit," he said.

Friday, August 26, 2011

TM commits to returning excess cash, sees jump in UniFi take-up

Tags: First half results | Telekom Malaysia Bhd | Zamzamzairani Mohd Isa
Written by Cindy Yeap   
Thursday, 25 August 2011 13:55

KUALA LUMPUR: Telekom Malaysia Bhd (TM) announced an average interim dividend with its 1HFY11 earnings release yesterday, but group CEO Datuk Zamzamzairani Mohd Isa promised the company will return any excess cash it has after assessing its needs.

“It’s expensive to keep extra cash. We’ve always said we would return any extra,” Zamzamzairani told The Edge Financial Daily on the sidelines of its earnings briefing. “Active capital management will continue,” he told reporters earlier.

Expectations TM would make a special payout rose after the company fattened its coffers by some RM468.3 million (about 13 sen per share) last month with proceeds from the sale of its remaining stake in Axiata Group Bhd.

TM’s cash pile stood at RM2.7 billion as at June 30, 2011, down from RM3.5 billion at end-2010, having just made a RM1.04 billion (29 sen per share) capital distribution in May. 

That was on top of the 26.1 sen per share dividend (13 sen interim and 13.1 sen final) paid for FY10. In FY09, TM made a 98 sen per share capital repayment, on top of 23 sen in regular dividends (10 sen interim and 13 sen final)

Analysts are forecasting dividend per share to be between 20 sen and 49 sen for FY11, averaging at 26.5 sen per share. TM has a policy of distributing at least RM700 million cash back to shareholders a year, or up to 90% of its normalised profits, whichever is higher.

TM announced an interim dividend of 9.8 sen per share yesterday, which represents a RM350.6 million payout. This was after saying earnings for 1HFY11 ended June 30 fell 18.5% to RM311.7 million from RM382.4 million in 1HFY10, even as revenue rose 2.5% to RM4.38 billion over the same period, shored up by higher revenue from Internet, multimedia and data services.

Take-up of the UniFi service has exceeded TM's expectations.
The reduced bottom line is primarily due to higher operating costs and lower foreign exchange gains on translation of foreign currency borrowings, which fell to only RM49.5 million in the current period against RM180.5 million in the same period last year. 

Net profit of RM137 million in 2QFY11 was smaller than the RM174.7 million booked in 1QFY11, but 4.2% above the RM131.5 million booked in 2QFY10.
Excluding non-operational items like translation gains, 2Q earnings would have increased by 20.8% year-on-year and be up by 10.4% quarter-on-quarter, TM said.

“Overall, we’re very pleased with the performance, which shows continued operational improvement,” Zamzamzairani said, adding that strong demand for its UniFi high-speed broadband (HSBB) service “has exceeded expectations and the momentum we saw at the beginning of the year”.

UniFi’s subscriber base jumped from 63,541 in 1Q11 to 109,019 in 2Q11 on the back of 904,000 premises passed. As at Aug 18, TM has installed UniFi to more than 142,000 customers on the back of more than 973,000 premises passed covering 76 exchange areas with 46 IPTV channels. “This shows a ramping up of the take-up rate from 12% as at June 30 to 14% to date, exceeding our initial expectations of 8% to 10% take-up for the first two years, Zamzamzairani said.

TM is on-track with its plan to cover 1.1 million premises by end-2011 and 1.3 million premises by end-2012, it said.  

While capital expenditure to revenue ratio improved from 18.8% to 17.1% in 1HFY11, with total capex falling from RM804 million in 1HFY10 to RM749 million in 1HFY11, group CFO Datuk Bazlan Osman said capex on HSBB is likely to be higher in 2HFY11. “Overall capex was about RM1.6 billion last year. This year’s capex will be about the same, if not slightly higher,” he said.

Foreseeing a challenging outlook ahead, Zamzamzairani said TM will continue to spend where necessary while keeping a tight watch on costs. “We hope the momentum of revenue growth we are seeing will continue,” he said.

Based on its headline KPI guidance for FY11, TM is expecting 2.5% revenue growth this year against 2.1% in FY10, with momentum picking up further to 3.5% to 4.5% in FY13. Guidance on earnings before interest, tax, depreciation and amortisation (Ebitda) margins, however, is at 32% for FY11 against 33.1% in FY10, before rising to the “mid-30s” in FY13. 

TM rose eight sen or 1.95% to RM4.18 yesterday, after trading between RM4.11 and RM4.18.

At press time, it had nine brokers calling it a “buy” against 13 “holds” and seven “sells”. Target prices range between KAF Seagroatt & Campbell’s RM3.23 and CIMB Research’s RM4.92.

This article appeared in The Edge Financial Daily, August 25, 2011.

Thursday, August 25, 2011

EPIC Offered 3.10 a share Not a fair price

Shares of EPIC belonging to Ahmad Zaki Resources were sold to the Trengganu Government at RM3.10 a share on Nov 4, 2010. At that time, EPIC was traded at around RM2.10 per share.

EPIC was last traded at RM2.93. Thus the offered price should be higher than RM3.10. In my opinion RM3.30 per share would be a fairer price.

Wednesday, August 24, 2011

The Hidden Dangers in Safe Havens

by Paul Sullivan
Monday, August 22, 2011

As Europe's debt troubles intensified earlier this month and United States debt was downgraded, many people rushed into gold and Treasury securities as a safe haven. It was the latest sign that in uncertain times, investors act in ways that can hurt them in the long run.
"They fled the perceived risk of falling stock prices right into the assured risk of overvalued assets," said G. Scott Clemons, chief investment strategist for the wealth management division at Brown Brothers Harriman.
What drove those decisions was not logic but fear — fear of a repeat of September 2008. And that fear may only have intensified when markets dropped again late this week, sending yields on 10-year Treasury notes to record lows and the price of gold above $1,800 an ounce.
Even if the fear is understandable, however, acting on it may not be the best long-term strategy.
"If you were right about the timing decision to get out, you're going to have to be right again about when to get back in," said Joseph W. Spada, managing director at Summit Financial Resources in Parsippany, N.J. "Even professionals have trouble doing it. If that's not going to be your strategy, then don't do it once."
But now that people have done it once, what are the risks of holding on to large positions in gold and Treasuries?
TREASURIES While the economy may seem bad to many people, it would not take much improvement for investors to lose money quickly on their investment in Treasury bonds.
A week and a half ago, the 10-year Treasury note was yielding only 2.10 percent, after Standard & Poor's downgraded the United States' credit rating. Since the yield of a bond moves in the opposite direction of its price, this meant demand for 10-year Treasuries was high.
If over the next six months, the yield were to move up another half of a percentage point to 2.60 percent, however, investors owning those bonds would have a negative 6.25 percent return, said Barbara Reinhard, chief investment strategist at Credit Suisse Private Banking in New York. If the yield curve were to move up a full percentage point during that time, the loss would be 14 percent.
She said such a quick increase could easily happen, as it did from October 2010 to January 2011 when the Federal Reserve began its second round of large-scale purchases of government debt, the program known as quantitative easing.
Now, plenty of people buy bonds with the intention of holding them until maturity. In doing that, it would seem that they would earn a return of 2.10 percent. But they would actually lose 1.5 percent, when the most recent inflation rate of 3.6 percent is factored in.
"That's assuming inflation doesn't rise," Ms. Reinhard said. "Right now, you're betting inflation will fall below 2.10 percent. You're betting against history because inflation has been around 3 to 4 percent historically."
This is not the brightest picture for people who added to their allocation of Treasury bonds. But many felt it was the only safe place.
J. D. Montgomery, a managing director at Canterbury Consulting, an investment consulting firm in Newport Beach, Calif., said he had a client who wrestled with where to put $5 million that he needed to keep safe. The client chose a three-month Treasury note, even though the interest was only $1,000.
There was at least some logic behind this. Most people who bought Treasuries were abandoning their investment strategy, and wealth advisers say that is more troubling than paltry returns.
"The risk of changing your strategy when it's being tested as opposed to changing it when it's not being tested is you risk derailing your long-term investment plan," said Gregg Fisher, president and chief investment officer of Gerstein Fisher, a wealth management firm in New York.
So what should nervous investors have done? Selling Treasury bonds when everyone else was buying them would have been a start. But that might have taken too much discipline. Moving to cash was the top option because at least investors would have money ready when they felt comfortable returning to the markets.
GOLD Investors in gold are a different breed. They often have a passion for the metal that goes beyond returns. And they are not going to be swayed by arguments that gold, hovering around $1,800 an ounce, is overvalued.
"When you buy gold you're saying nothing is going to work and everything is going to stay ridiculous," said Mackin Pulsifer, vice chairman and chief investment officer of Fiduciary Trust International in New York. "There is a fair cohort who believes this in a theological sense, but I believe it's unreasonable given the history of the United States."
As for the nonbelievers who piled into gold, they need to think practically now. Only about 11 percent of gold has an industrial use. While gold can get lost or buried, it does not get used up like oil or natural gas. And its actual cost is between a third and half of where it is trading. Dan Denbow, co-manager of the USAA Precious Metals and Minerals Fund in San Antonio, said it cost about $600 to produce an ounce of gold, but that rises to about $1,000 when all the costs of mining are factored in.
Yet a bigger risk may come from exchange-traded funds for gold. While they let small investors buy gold easily — the price of one share of the GLD exchange traded fund is roughly one-tenth the price of an ounce of gold — that same ease of buying means investors can just as quickly sell their shares in a panic.
No one I spoke to would venture a guess as to how high gold would rise before it hit its peak. But most stressed that people forgot that gold's value was driven by sentiment.
"Gold doesn't have any intrinsic value," said Larry M. Elkin, president of the Palisades Hudson Financial Group in Scarsdale, N.Y. "It's this era's wampum. At one point you could buy Manhattan for beads."
(Mr. Elkin said what bothered him the most about investing in gold was how irrational it was, unlike buying a blue-chip stock whose value rises and falls based on what the company produces.)
That said, having gold in a portfolio is still a good buffer against swings in other markets. Mr. Fisher calculated that over a 43-year period ending in June 2011, the average annual increase for gold, accounting for inflation, was 3.82 percent compared with 4.92 percent for the Standard & Poor's 500-stock index. Gold, however, was 28 percent more volatile.
"The smoother the ride, the more likely the investor is going to stay in his strategy," Mr. Fisher said. "That produces a better result."
He said that from the perspectives of both return and volatility, a better strategy would have been to put 10 percent in gold and split the rest 60-40 between stocks and five-year Treasury bonds. Rebalancing the portfolio to maintain those ratios would have meant an average annual return of 4.66 percent, with more than half of the volatility of gold alone.
For those who fled to gold and Treasuries, the hardest part will be deciding when to get back into other securities. The best way in uncertain markets may be to go slowly in small chunks — a practice known as dollar-cost averaging.
"There are real and psychological benefits to it, because getting someone to take that first step is the hardest," said Christopher Wolfe, chief investment officer for the private bank and investment group at Bank of America. "With a five-year time horizon, it makes a big difference. You might get one of those wicked big down days you could benefit from. But if you have a 30-year time horizon it doesn't matter."
Of course, if people had thought on such a long time horizon they might not have rushed to buy gold and Treasuries in the first place.

Tuesday, August 16, 2011

Is the generosity of Genting at the expense of the minority shareholders? You be the judge

Genting gives big payout to directors published: 2011/08/16

KUALA LUMPUR: Genting Bhd topped the list with a big payout of RM111.48 million to its board, up 21 per cent from RM92.11 million previously.

The company also has the highest remuneration band of RM106.65 million to RM106.70 million for a single director, says the Malaysian Business in a statement today.

The company, however, did not name who the director was. The top executive listed is its executive chairman and chief executive Tan Sri Lim Kok Thay.

According to the business magazine's annual survey of the "Highest-Paid Directors", listed companies paid out substantially higher remuneration to their directors last year compared to 2009 on the back of an improved economic climate.

Some companies, however, lowered their boardroom remuneration last year, including CIMB Group Holdings Bhd.

The second largest bank paid RM18.51 million or 13 per cent less to its board members and lower remuneration to its group managing director and group chief executive officer Datuk Seri Mohd Nazir Razak.

He received RM12 million last year as opposed to RM14.5 million in 2009.

IOI Corporation Bhd came in second with a total payout amounting to RM56.29 million, 71 per cent more from a year ago, said the Malaysian Business.

Meanwhile, with three companies -- YTL Corp, YTL Power International and YTL Cement -- Tan Sri Yeoh Tiong Lay received a combined remuneration of RM13.10 million.

Interestingly, out of 630 companies, 95 companies with huge losses are still rewarding their directors with huge payouts.

The survey lists a total of 630 companies with a remuneration band of RM300,000 and above as stated in the company's annual report.

Of these, only a handful of the companies were transparent in stating the exact remuneration of their top executives. -Bernama

Read more: Genting gives big payout to directors

Sunday, August 14, 2011

Malacca becomes Malaysia´s first smoking-free city

KUALA LUMPUR: The Malaysian world heritage city of Malacca will be smoke-free from June 15, a first for the country, the health minister said Monday.

The move was to bring in more tourists and help stamp out smoking in a country where the habit is widespread, Liow Tiong Lai told AFP, insisting it would also help preserve the city.

"The idea is to create fresh air and a clean environment for tourists and Malaysians alike to enjoy the historic city," he said.

"It will also aid in preserving the old monuments and buildings as the ban will reduce pollution in the area and promote a healthy lifestyle."

The no-smoking area covers the entire 4.2 square kilometres (1.6 square miles) of the city and four other areas in the southern state of Malacca.

"These areas will be free from cigarette smoke and make Malacca city the first smoking-free city in the country," said the minister.

"Those caught will be hit with a fine of 300 ringgit (100 dollars) although the maximum penalty is 5,000 ringgit."

Malacca chief minister Mohamad Ali Rustam told the Star daily that the state was also serious about declaring more tourist destinations in the state smoke-free zones.

With more than 500 years of trading and cultural exchanges between East and West, Malacca's multi-cultural heritage is seen its ornately designed government buildings, churches and forts.

It is where the Malay sultanate originated in the 15th century, before being invaded by the Portuguese and Dutch in the early 16th century.

In 2008, UNESCO included Malacca and Georgetown, on the resort island of Penang, in its world heritage list but there have been recent concerns that the southern port city could be de-listed because of redevelopment in its historic quarter.

Malaysia is hoping the heritage listing will boost tourism, which is a key foreign exchange earner.

Friday, August 12, 2011

Warren Buffett buying in down market

NEW YORK - Warren Buffett has been buying amid this week's sharp declines in the market, and has not yet seen anything that suggests another downturn is emerging, the legendary investor told Fortune magazine.

In an interview published on Thursday, Buffett also told the magazine he understood why Standard & Poor's lowered its outlook on the credit rating of his conglomerate Berkshire Hathaway, but said he disagreed with the underlying premise - the downgrade of the United States' credit rating.

The 80-year-old "Oracle of Omaha" is known for his love of a good deal, which is why his company made an unsolicited offer below book value for reinsurance company Transatlantic Holdings last weekend, and why Berkshire sold $2 billion of senior unsecured notes this week at historically low rates.

In that vein, Buffett told Fortune Managing Editor Andy Serwer the market declines have not fazed him.

"The lower things go, the more I buy. We are in the business of buying," he said, adding that he had "never been better."

Buffett also told the magazine that he was not seeing fresh indications of the economy turning bad again, though things could change if market conditions do not improve.

"Up until right now, all of our businesses have been coming back - even Europe isn't doing that badly - except for businesses relating to home construction which is on its rear end," Buffett said.

Thursday, August 11, 2011

TDM Doing Well

TDM, considered one of the cheapest plantation stocks in Malaysia, closed up nearly 3 per cent to RM2.92 yesterday. Its net profit more than doubled to RM32 million for the quarter ended June 30 2011.

The improved stock performance of the Terengganu state government outfit was in line with other plantation stocks on the market, which collectively increased by 121.54 per cent yesterday.

Plantation stocks are in the limelight this results season as companies like TDM post stellar profits on higher crude palm oil (CPO) prices.

TDM posted a net profit of RM32 million on revenue of RM126.9 million for its second quarter due to higher crude palm oil production, which increased 26 per cent.

Hong Leong Investment Bank said TDM is one of the laggard plays within the plantation sector and was worth a second look due to a clearer business strategy, improving financial performance and standing, as well as continued dividend payouts.

"We are projecting TDM's net profit to rise from RM92 million in 2010 to RM129.1 million, RM105.2 million and RM100.2 million in 2011, 2012 and 2013 respectively, mainly on the back of higher CPO price assumptions of RM3,200 a tonne in 2011 and RM3,000 a tonne in 2012-2013," it said in a research report.

The above article is an excerpt from Business Times

Wednesday, August 10, 2011

Sweet Victory for Malaysia

By Rupa Damodaran

KUALA LUMPUR: Palm oil industry players, in lauding the move by the Australian Senate committee to reject a mandatory palm oil labelling bill, say the battle is far from over for the commodity to gain wider market access in international markets.

The decision from Canberra spelt a sweet and significant victory for Malaysia's important commodity against the unjust and misleading anti-palm oil campaigns by environmental non-government organisations (NGOs), they added.

Malaysian Palm Oil Council (MPOC) CEO Tan Sri Yusof Basiron said while the report is seen as a significant repudiation of environmental NGOs' anti-palm oil campaigns, the industry must continue to fight against global efforts to require mandatory labelling.

Efforts must continue to ensure producers retain market access across the globe and consumers, such as those in Australia, continue to benefit from the use of a low-cost vegetable oil.

"We appreciate the committee's professionalism, especially taking into consideration a rigorous scientific evaluation instead of relying on the NGOs (in drafting a bill), which if allowed, can lead to zero trade," he said yesterday.

Yusof led a team when presenting Malaysia's case to the Senate hearing in Canberra on the mandatory labelling of palm oil proposed under the Truth in Labelling - Palm Oil Bill in April.

In Malaysia's case, Yusof pointed out, the palm oil industry has been a pillar of economic growth and societal advancement as smallholders account for 39 per cent of palm oil production, while producers enjoy incomes four times above the national poverty level.

The industry is also committed to conservation efforts through initiatives like the Malaysian Palm Oil Wildlife Conservation Fund.

Meanwhile, United Plantations executive director of corporate affairs Datuk Carl Bek-Nielsen welcomed the news, saying it was a decision made based on facts and figures and not "emotional exaggeration".

"It's a positive development for Malaysia in terms of how palm oil is viewed abroad - which not everything thrown by the NGOs are swallowed hook, line and sinker.

"We consider it a fair and just decision, not only to the industry, but to smallholders. Had it (the Bill) gone through, it would have put in more wind to the detractors out there to tarnish palm oil," he commented.

Bek-Nielsen, who was also present at the Senate hearing, said some of the comments from the organisations on the planting of oil palm were based on wild exaggeration.

He said palm oil producers in Malaysia and Indonesia should not be afraid to take on battles (against the crop) as long as there is injustice taking place and counter them.

Sunday, August 07, 2011

Understanding S&P's downgrade of the United States

NEW YORK - The United States lost its top-tier AAA credit rating from Standard & Poor's on Friday, a move that will affect the country's borrowing costs and investor opinion of U.S. assets. Here is a Q+A on what the downgrade means for investors, consumers and to the country.


Standard & Poor's, one of the three major credit rating agencies that assign scores to debt issued by institutions, municipalities, and governments, said there is a heightened degree of risk in holding debt issued by the United States. So it lowered its rating from the AAA, the highest possible level, by one notch to AA+. It also said the outlook is negative.


The credit rating agency believes the outstanding debt of $14.3 trillion and projected deficits for coming years in the United States no longer warrant the top-tier rating that it had assigned to the United States since 1941. It also said that the political environment does not build confidence that the United States can agree on how to lower the deficit in a meaningful way any time soon.


No. At AA+, the U.S. is still considered to have a "strong" ability to meet its obligations. In fact, only a handful of countries now have the AAA rating - among them Canada, Germany, France and the United Kingdom. In addition, Treasuries have rallied this week, driving the yield on the benchmark 10-year note to 2.34 percent, its lowest level in about 10 months. This suggests people still view the U.S. as a safe place to invest.


Yes, but the savings from this are projected at $2.1 trillion. S&P has said that a larger level of savings is needed - at least $4 trillion either through spending reductions or tax increases - are needed in order to start lowering U.S. deficits in coming years.


Over time, a lower rating will cause investors who buy U.S. government debt to demand a higher interest rate to hold that debt to reward them for the risk. If that is the case, benchmark long-term interest rates will rise. Most major rates, including the debt of corporations, mortgages purchased by investors, and other types of loans, are priced in relation to the U.S. Treasury benchmark. That means borrowing costs across a number of spectrums over time will rise, making loans and bonds more expensive. The more an individual or company is devoting to interest payments, the less they have for other activities.


The downgrade could add up to 0.7 of a percentage point to U.S. Treasuries' yields, increasing funding costs for public debt by some $100 billion, according to SIFMA, a U.S. securities industry trade group.


Other than the U.S. Federal Reserve, the most recent data from the U.S. Treasury shows that China, with $1.16 trillion in U.S. Treasury securities, is the biggest holder of our debt. China has repeatedly warned of the unsustainable trend of U.S. deficits and has talked of diversifying its holdings to other economies. But because China maintains the value of its currency through buying of U.S. dollars, it is likely to continue to be a major holder of Treasury securities for some years ahead.


Not likely. The credit rating change affects long-term debt - the short-term credit rating of the U.S. is A-1+, the highest short-term rating. Money market funds with short-term debt are unlikely to be affected.


This is possible. Some large investors, such as William Gross of PIMCO, have said other markets such as Canada offer more value. But the U.S. market retains significant appeal because its bond market was more than $35 trillion at the end of March 2011, according to SIFMA. No other bond market is close to that size.


No. To begin with Standard & Poor's has assigned a "negative" outlook to the US long-term credit rating. That means another downgrade was possible in the next 12 to 18 months if it does not see an improvement in debt reduction.

The other ratings agencies, Moody's and Fitch, currently still have a AAA rating on U.S. debt, which they just affirmed. But both of those agencies have suggested the U.S. could also be downgraded if projected government deficits are not reined in. Moody's currently has U.S. debt on review for possible downgrade.


S&P has maintained a AAA rating on the U.S. since 1941. Moody's has had an Aaa rating on the U.S. since 1917; Fitch's top-tier AAA rating dates to 1994.

Breast-touching Festival is on in China

The Daily Chilli
Friday, Aug 05, 2011
The Chinese have entered the seventh month of the Lunar calendar, known as the Hungry Ghost month, which began July 31.

This period is considered unlucky for many Chinese as they believe that the ghosts are allowed to return to the human realm as the Hell Gate opens throughout the month.

While the Buddhists and Taoists prepare offerings for the homeless ghosts, a minority tribe in China have their own interesting celebration.

The Yi people in Ejia town of Yunnan province, who are still singles, will head to the streets for Breast-Touching Festival (Monai Jie) on the 14th, 15th and 16th days of the month.

On these days, the men are welcome to touch the women's breasts.

Legend has it that the festival began around the Sui Dynasty (AD 581 - 619) when most of the teenagers of the Yi tribe were forced into the army and died in wars.

The people then carried out prayers to commemorate the dead, and it happened that the ceremony was held in the seventh month.

According to the wizards, the dead were unrest because they had not touched a woman before.

And so, they wanted 10 "pure and untouched" ladies to accompany them in the afterworld.

In a move to prevent them from being chosen, the single women - aged 15 and above - then asked the men to touch their breasts, and the custom is past down for generations.

Thursday, August 04, 2011

M'sia, S'pore and HK picked as top spots for investments

SINGAPORE: Pacific Star Group, one of Asia's leading real estate investment houses, says commercial properties in Asia will continue to do well in the second half of 2011.
Within the commercial sector, its top pick is retail real estate, while the top three destinations in the region for retail property investment are Hong Kong, Singapore and Kuala Lumpur.
The group's senior vice-president and head of research and strategic planning Leslie Chua said Hong Kong was supported by tourist spending especially from outbound mainland Chinese visitors.
“Singapore likewise is enjoying a surge in visitors attracted especially to its integrated resorts.
“Over in Malaysia, domestic factors are at play. Strong wage growth and positive retail sentiment have boosted retail spending and real estate fundamentals in Kuala Lumpur,” he said, commenting on the group's biannual Asia Property Outlook and Strategy report here yesterday.
According to the report which highlights its key investment themes in regional real estate markets, the shine of Asian real estate environment continues despite greater global uncertainty, as it is supported by favourable economic fundamentals and positive consumer sentiment in most markets.
It says capital values have risen on the back of solid rental growth as regional economies continue their strong expansion, and the economic recovery in the region is moderating to a more sustainable rate which should provide steady support for Asian real estate.
The key factors supporting retail properties are tightening employment conditions, which are driving buoyant retail spending, and rising tourism inflows to Asia, which are becoming an important source of revenues for some cities.
After retail, the group favours office properties, as the region's rapid economic growth is fueling a steady upturn in the office sector.
Demand for office space in Asia has been driven mainly by corporate expansions, upgrading as well as relocations with financial, insurance, real estate and information technology tenants leading the way.
Pacific Star's top destination for office property investment is Singapore. Singapore continues to exhibit strong fundamentals in several key drivers including services outlook, political stability, and ease of doing business.
Although fundamentals for Asian residential real estate remain intact, the group is less sanguine on the residential sector citing a disproportionate amount of policy risk and rising interest rates as the key threats.
Taking into consideration loan structures, incomes and home prices, the group expects home buyers in Seoul and Ho Chi Minh to be the hardest hit in the region.
It says Kuala Lumpur will be least affected because policy risk is relatively low and economic conditions are generally healthy.
The biannual Pacific Star Asia Property Outlook and Strategy report surveys Bangkok, Beijing, Ho Chi Minh, Hong Kong, Kuala Lumpur, Seoul, Shanghai, Singapore and Tokyo. Bernama