Oops, I Shrink The Kids!

Reminds me of the good old science-fiction movie "Oops, I Shrink the Kid" where kids were accidentally shrunk to miniature sizes and someone lived to regret it! That could happen when a person accidentally did the wrong thing or pressed the wrong button, leading to a catastrophic scenario. A "catastrophic" event happen today at the Singapore Stock Exchange, where stocks index fell by 400 points, representing a whopping 11% plunge from the opening bell! If you are a trader or investor, I don't think you could bare to watch this bizarre plunge! Fortunately, this was due to a technical error as a local remisier accidentally sold 187,000 units of DBS (largest bank in Singapore) shares for SGD0.27 when in fact the shares were trading at above SGD23!! What a costly error! The error was quickly rectified in no time but this poor fellow remisier must be a pretty worried man! Worst of all, he may have incurred a huge trading loss as a result of this blunder!

Fickle-minded Investors Mind!

It's funny, Wall Street initially rose almost 100 points in reaction to the announcement of an apparently very encouraging economic data in the form of new home sales and durable goods orders. Just as optimism starts to sink in, suddenly things took a U-turn as "someone" must have come up with this thought that perhaps it was not so good news afterall as strengthening economic conditions mean interest rates cut is unlikely.. Hang on, at the very first place isn't this (stronger US economy) what the whole world all want to hear? Afterall, stronger economy means US will likely not go into recession or economic hard landing, thereby the rest of the world can still rely on US to continue importing goods and services from them, keeping the money flow!

Strangely, it wasn't to be. Perhaps other people have a different agenda to how the world's largest economy should be.

More Warnings For China Stocks!

First it was Hong Kong's tycoon Li Ka Shing who issued the warning about a potential unsustainable China stock market bubble. Next was former US Federal Reserve Chief, Alan Greenspan, who also issued a similar warning, causing any further global stock market optimism to put on hold.

A check on the statistics revealed the following startling facts:
- prices on China's bourses have jumped about 55% since January and more than tripled since the start of 2006
- Number of brokerage accounts set up to buy mainland shares and mutual funds amounted to 327,019 on 16 May 2007;
- Investors opened a record 385,121 new accounts on May 8.

The frenzy buying was a result of investors riding on China's booming economy which has grown a minimum of 10% for the last four years and improving corporate earnings. As in any over heating stock market, it is often unsustainable. (Reminds me of the buying frenzy during the 1993 Super Bull Run of KLCI which thereafter came tumbling down!) Nervous authorities have struggled to clamp down on irregularities and to cool the investor frenzy. China's central bank raised interest rates and bank reserve requirements as well as widened the currency's trading band last Friday but investors ignored the moves, sparking 3 consecutive days of record gains this week.

Could this be a signal of an upcoming major and healthy correction? Time will tell. A slump in China's stocks may be felt beyond its borders. Bear in mind that a record 9.2% plunge on Feb. 27 triggered a five-day rout that wiped more than $3.3 trillion from the market value of equities worldwide. Perhaps it may be wiser to stay defensive or hold cash at this present moment.

Power Of Success

Over the last 2 days, I had been invited to attend a world class seminar featuring absolutely powerful and world class speakers such as T. Harv Eker (author of best-selling books "Secrets of the Millionaire Minds), Mark Victor Hansen (author of best-selling book "Chicken Soup For The Soul"), John Childers (world class trainer of "Million Dollar Speaker") and Jay Abraham (businessman and trainer of "Master of the Universe Passive Income Training"). All of them may possess different uncanny approaches to wealth creation but one thing is common for sure, i.e, they are all highly successful and multi-millionaires!

During the 2-day event, I have indeed learned many aspects of life and wealth creation, including latest ideas on achieving financial freedom and I have to say, all the information have truly opened up my minds over the many possibilities of wealth creation! Nevertheless, an equally important element in achieving success is about having a positive mindset, which I can't agree more. Here are some of the salient comparisons (between winners and victims):

1. Winners play to win; Victims play not to lose;
2. Winners admire and model after successful people; Victims resent;
3. Winners create and be responsible of their lives; Victims blame, complain and justify all the time;
4. Winners thrive on challenges; Victims fear of challenges and prefer to stay in comfort zone;

This event is held annually and I highly recommend it to anyone seeking a different perspective of life and wealth creation. Watch out for the National Achievers Congress next year!

The Next Shenzhen in the Making?

China has in the 80s and 90s successfully created and transformed several special economic zones. The booming of cities such as Zhuhai, Shenzhen, Shantao and Xiamen were the results of that transformation and the Government's dedication and commitment. Citing the economic and tourism boom in Singapore over the next few years, the Government of Malaysia recently launched a new development region, called Iskandar Development Region (IDR), which is located south of Peninsular Malaysia and is situated just next to Singapore. An ambitious project, indeed, and as always, the plan attracted plenty of sceptics and to be fair, this is not surprising, given the perceived "failure" of past mega projects such as Cyberjaya and Putrajaya. The big question remains, will this be another mega project flop or is it going to raise the bar for Malaysia as a foreign investment destination?

Based on early indications, Malaysian Government appears to be fully committed to the success of this project. A slew of incentives were declared, including:
- 100% foreign ownership
- freedom to source for capital overseas
- freedom to source for 100% foreign human capital
- tax incentives and exemption
- removal of property gains tax

The above were further supported by the Government's effort to improve efficiency of public service delivery.

In recognition of Singapore's involvement being one of the key success factor, the Prime Minister of Malaysia even resembles the position of Singapore vis a vis the IDR like that of Hong Kong to Shenzhen, and pledged to make it a win-win proposition for both countries. Yesterday, for the first time, the Prime Minister of Singapore has also pledged to support IDR as he sees the success of IDR being fundamentally important to Singapore's growth. In pledging the support, both countries agree that they will each deploy a minister to be part of the IDR special committee to discuss areas of co-orperation.

While the sceptics are still sharpening their knives, I am one who believes that the Malaysian Government is fully committed to its success, and is making the right steps forward in making its business more liberalised and forging a closer collaboration with its close neighbours (which has not been as such previously) in ensuring nothing other than success is achieved.

This is just to say there are more opportunities to be tapped for the like-hearted investors of the world!

Caught In the Act of Insider Trading

The recent USD5billion takeover attempt by News Corp (owned by Australia's media tycoon Rubert Murdoch) over US Financial News giant, Dow Jones, had taken the world by storm. The news had sent Dow Jones stock soaring by almost 60%! As the event unfolded, there was another storm brewing...the regulators. A Hong Kong couple were charged by US Securities Commission for insider trading, whereby both of them had apparently profited a whopping USD8million by allegedly buying into Dow Jones shares before the takeover news were announced. The Hong Kong couple were believed to be connected to David Li, Hong Kong's most powerful financier, who is also the chairman and chief executive of Bank of East Asia, Hong Kong's largest local bank, who also sits on Dow Jones' board of directors. Li has since denied the allegation. The couple's bank accounts have since been frozen pending investigation.

So what is insider trading? Let's take a closer look. First, we need to distinguish the legality of insider trading. Illegal insider trading is the buying or selling of a security by insiders who possess material that is still not public. The act puts insiders in breach of their fiduciary duty. A common misconception is that only directors and upper management can be convicted of insider trading. In fact, anybody who has material and non-public information can commit such an act. This means that nearly anybody, including brokers, family, friends and employees - can be considered an insider. eg., The CEO of a company sells a stock after discovering that the company will be losing a large contract next month that will have major impact on bottom line earnings. The above scenario could extend to CEO's family, friends, relatives and employees! If this is the case, does it mean insiders cannot buy or sell shares? That's not the case either. The Securities Commission would require insiders to disclose their buy or sell transactions within the stipulated time frame and as long as this requirement is adhered to, it is considered legal (provided there is no intention to trade unfairly, mislead or to undermine investors confidence and the integrity of financial markets)

However, persons caught in insider trading are never easily prosecuted as it is difficult to obtain evidence. That's not to say that it is impossible as there were cases insiders got convicted!

So the next time you are "gifted" with a piece of valuable tip from your close friend who happens to be the CEO of the company, evaluate your position carefully before jumping into it! There again, the regulators normally only go against significant transactions....to the amount of millions of trade! Small investors may not need to worry too much.

Resilient Global Markets

Global stockmarkets have stayed resilient over the last one week with Wall Street staying above the psychological 13,000 mark given promising corporate results. Kuala Lumpur Stock Exchange (KLSE) have also performed well last week, with the index overtaking the historical high once more. Back home in Malaysia, the index had been further reinforced by one of the largest telecommunication player, Maxis, plan to be taken private, via a whopping RM40billion (USD11.5b) privatization deal, thus making it one of the three largest deals in Asia (ex Japan) in recent times! This is indeed a generous offer by the management of leading telco in Malaysia...At RM15.60 a share, it is a whopping 258% gain for shareholders who have first subscribed to the IPO price at only RM4.36 less than 5 years ago in July 2002!

This shows again if you invest long term in a fundamentally sound company with solid track record and management, it can be a truly rewarding journey!

Not Quite the Dream Vacation

Yep, glad to be back! We had been looking forward to this supposedly splendid crystal clear coral reef vacation but unfortunately we had a mixed fortune. Not that the vacation destination was a bad one but the truth was 3 members of our family (me included) were hit with food poisoning in the middle of it all! We spent nearly a day having to rest at the resort room, with very little intake of food and barely had the energy to walk! After our return yesterday, most of us were still feeling the after effects and adjourning on the recovery mode....

It's time to get back to the thick of the action!

Taking A Break!

Hi all my blog readers,

Would like to inform you that I'll be taking this week off from any blogging activity as I am due to undertake a family vacation at a beautiful island off the east coast of Peninsula Malaysia.

Do leave me a message if you wish and hope to catch up with you soon!