In line with other metal based commodity, tin prices have skyrocketed from a mere USD5k per metric tonne about 15 years ago to more than USD24k this year! That's almost a whopping 400% increase!!
First and foremost some background on tin....this is a metal that bonds readily to iron, and has been used for coating lead or zinc and steel to prevent corrosion. Tin-plated steel containers are widely used for food preservation, and this forms a large part of the market for metallic tin.
In the mid 19th and early 20th century, there has been a huge influx of Chinese immigrants to the then Malaya (Today is known as Malaysia) for the then booming tin mining industry. A number of rich towns (such as Ipoh and Kuala Lumpur) were borned as a result of this booming industry. My dad, also a Chinese immigrant (from the Hakka Province in Kwang Tung), had settled in this piece of foreign land due to the lure of tin mining and potential of riches. From mining to trader of tin, it was my dad's predominant business until the end 80s. Then, tin prices hit rock bottom to the point of many traders or miners were running their businesses at a loss! The consequences were many tin traders were forced to shut down their businesses. The same happened to my dad's business...
I remember vividly that my dad used to tell me that tin trading was a sunset industry. So he never believed in imparting any knowledge to me about the trade!
How times have changed!
New Demand in 90s
The shift in environmental legislation regarding the banning of lead in solder has come to the rescue of the tin market as tin had had a torrid time since the mid-1980's when prices rose to levels that caused manufacturers to switch to other raw materials. However, with a consumer economy emerging in China and gathering pace in other parts of Asia, demand for electronics and hence solder lead to strong tin demand. In addition as China's rural population moves into the cities, more food will need to be packaged and this benefits tin demand.
Ironically China is now one of the major tin producing country in the world!
Today some of my distant family members are still running the trade, albeit at a smaller scale, as Malaysia's production is smallish compared to the rest of the world. However, as prices are so good, the profit margins are exorbitant!
How I wish I could be the one inherited the knowhow and business from my dad and continued with the legacy!
Today tin is commonly traded in many countries, including Malaysia, of course.
Friday, April 25, 2008
A Reflection on Tin Commodity: Sunset To Sunshine Industry?
Tuesday, April 22, 2008
Malaysia Real Estate Take Five...
Below is some of the latest statistics compiled by Kuwait Finance House Research. For those who wish to invest in Malaysia's real estate properties but taken aback by the recent political uncertainties, this information could possibly help.
Malaysia’s population is expected to increase from 27.17 million in 2007 to 28.96 million in 2010. The median age of Malaysians is 27.4 years. In 2007, a total of 63.4% of the total population consist of those in the working age group of between 15 and 64. The Government expects that 63.8% of the population would be living in urban areas, resulting in a higher demand for more houses, schools and employment.
In recent years, the proportion of total potential buyers grew from 36.9% in 2002 to 39.1% in 2007, underpinned by an increase in the age groups of between 40-49 and 50-59 at a 5-year CAGR (Compound Annual Growth Rate) of 2.7% and 5.4%, respectively, in 2007. The 40-59 age group is likely to be more affluent than the younger age groups and also more likely to buy higher-end property and own more than one property for investment purpose or for their children.
The average lending rates continue to fall to as low as 6.27% in January 2008 as compared to 6.57% in January 2007, suggesting that banks are still competing for quality mortgage home loans. However, if the impact of the world economy worsens, the non-performing loans (NPL) for residential property may edge upwards, in particular for properties held for investments. purposes.
According to the research, real estate property prices are expected to widen between mass market and high-end residences given the spillover effects of petrodollar inflows on property demand in Malaysia as prices are relatively cheap compared to regional properties.
However, given the physical supply coming onstream in 2008 and 2009, the growth in rentals and capital value is expected to ease by the end of 2008.
Monday, April 21, 2008
Winds of Optimisms Gradually Returned?
On Friday, Dow Jones went up by 1.81% with supporting better than expected financial results from Google Inc, the internet giant, and Caterpillar. However, this came about despite the worse than expected results posted by one of the world's largest banking group, the Citigroup. In the normal circumstances, any unexpected surprises, especially in the financial sector, would normally trigger off a knee-jerk reaction but not this time.... So, what's the telling story this time? Well, apparently some smart investors and/or analysts in the street decided that they had enough bad news coming from the financial sector and perhaps it's time to blow some trumpets instead of being kept too long in sorrows.....Citigroup posted a $5.11 billion quarterly loss and said it will cut jobs to drive down expenses....Investors welcomed its efforts and therefore decided to restore some luster to a stock that has fallen by about half over the last one year!
Sounds convincing? I am not sure about that! However, what does seem encouraging is that corporate (other than financials) performance have not been adversely hit so far, with only a handful like Oracle Corporation and GE not meeting expectations and cutting forecasts. This could well be a confirmation that for the globalized multi-national US Corporations, the effect of a slowdown in the US economy and the softening US Dollar have been offset by strong overseas operations and the conversion of overseas profits into greenbacks.
From a technical perspective, it also appears to me that 11,634 appears to be the bottom of the Dow's down swing. Perhaps it is a positive sign that the worst is over! However, it does not mean that the US credit and financial crisis have run out of bad news. The main difference this time is that there is better anticipation and preparation for the worst.
Tuesday, April 8, 2008
Automate Trading Strategy and Trade Stocks For Free, Anyone?
Anyone interested to automate his or her trading strategy and trade stocks for FREE? It may sound too good to be true but this is REAL!
Whilst online trading is nothing new in Malaysia, the momentum for online trading has picked up tremendously over the past couple of years, as investors are better informed of its advantages and the increasing penetration of internet usage across the country. First of all, the brokerage commission for online trading is lower compared to the conventional trading method of having to contact one's remisier over the telephone. It provides ease and convenience to traders and investors from the comfort of their homes or anywhere (with an internet access) for that matter. Couple with the common availability of wireless internet access in public areas particularly cafes, there is no question that this brings to an increase of trading velocity in the local stock market.
However, this poses a problem. There seems to be a major disconnect between traders and stock brokers. Personally, this is how i feel as I seldom have to contact my remisier, other than seeking some specific technical advice. Besides, my investment decisions are based purely on my own research findings and judgement, as I do not rely on hot TIPS from my broker! So, it appears that having a broker is quite redundant for many! Well, not quite i would say. This is because by virtue of having an online account, investors also have access to all the research materials and resources from the broker. These information are valuable for savvy investors to conduct their own research and keeping up-to-date with the latest information on both companies and economic development.
However, while the above is deem valuable, all the stock brokers are providing roughly the same services....or in another words, short of INNOVATION! I would say the only differentiator is probably the quality of the research materials vis-vis the other.
A positive change has happened recently...One of Malaysia's leading stock broker, RHB Investment Bank, has revolutionized the way investors trade their stocks. Besides offering the usual services mentioned above, they have offered an additional platform for their customers to base their investment decisions using a guided technical trading strategy, called RHB Analyzer. Instead of just giving you a bunch of technical charts, this system is able to screen through thousands of stocks and enable one to trade particular stocks based on a particular chosen trading strategy. In essence, the system automates trading strategy! This could save investors/traders a lot of time having to conduct extensive technical analysis on their own. Besides, it is extremely useful for investors / traders who have little or no knowledge of technical analysis!
How to trade stocks for FREE? Well, for those who sign up for this system before 30th April 2008, you are entitled to 3 FREE trades, absolutely COMMISSION FREE!
Personally i find this trading strategy effective and is very easy to use. For complete information, please visit RHB Investment Bank.
I should also qualify that I am not an agent to RHB or anyway related to them. So you should always exercise your discretion in choosing to use this system.
Is It Time To Buy Into Battered Vietnam Stocks?
For many, Vietnam has long been touted as the next China in the making... With a USD$70 billion economy, 85 million diligent working-class population and 8.5% GDP growth, it's not unrealistic to make such predictions. Many foreign companies have flocked into Vietnam, setting up mainly low-cost manufacturing plants and ventured into the property market to serve the supposedly "hungry" market. However, being a relative new emerging market, risks are abundance. Nevertheless, it is difficult to ignore Vietnam as it has all the potential to be the next major source of growth, after China and India.
So, today, i would like to take this opportunity to share with you an article on Vietnam from an investment perspective.
Today Vietnam has an inflation problem, but it’s a great market to pick up value, says a chief investment officer, adding that price/earnings ratios for many firms have fallen to below 10 times — cheaper than the Thai and Philippines markets.
The hype about Vietnam’s WTO entry and its “mini-China” potential has been washed away by double-digit inflation but, ironically, now could be the time for funds to pour money into the country’s ravaged stock market.
Investment managers who talked up Vietnam in the past two years say that amid the slump in shares, bargains are emerging in the US$70 billion economy, which is still expected to grow as much as 7.5 per cent this year despite a global slowdown.
Government estimates show foreign direct investment disbursements would jump 25 per cent to US$10 billion in 2008 from last year, when it joined the World Trade Organisation.
After two years of what some have described as gambling in the fledgling stock markets of the Communist Party-run Southeast Asian country, investors are urged to take a long-term view.
However, Lalonde said companies had not borrowed heavily and still needed capital to take advantage of an emerging middle class and a fast growing economy that has drawn manufacturers such as Samsung Electronics Co Ltd, Intel Corp, Compal and Foxconn.
Some companies, including listing candidates who have already had initial public offerings pushed back, would look to foreign investors to raise equity through private placements.
“Yes, they’ve got an inflation problem, but it’s a great market to pick up value,” said Lalonde.
Investment strategist Spencer White, who helped stoke Vietnam fever in 2006 with a report calling it a “10-year buy" while he was at Merrill Lynch, said market bubbles were popping.
“One bubble has burst — equities. The other bubble currently bursting is the property market,” said White, who is an adviser to Thien Viet Securities in Ho Chi Minh City.
Property prices have fallen about 10-15 per cent this year, after quadrupling in cities last year.
“That means opportunity,” White said at a sparsely attended Hong Kong conference session on Vietnam. “I’ve seen more private equity teams in the last six weeks than in the previous six months.”
While the global credit crunch has done little to encourage investment in risky emerging markets, Vietnam’s headaches are rooted in soaring food, fuel and house prices, reflected in a 19.4 per cent jump in the consumer price index in March.
To battle inflation, authorities have sought to restrict bank lending, which grew 50 per cent last year. The government also has raised bank reserve requirements and interest rates, and imposed stricter rules on lending.
The Ho Chi Minh Stock Exchange is the worst performer in Asia this year, losing 43 per cent, after being one of the top performers a year ago. The share slump prompted government intervention in March to buy back shares and restrict the intra-day trading band to 1 per cent.
The market rose sharply on Monday after regulators doubled the intra-day share trading band to 2 per cent to increase liquidity.
“The panic that was around suggested that the Vietnam story was over, but that’s clearly not the case,” said Kevin Snowball of PXP Asset Management in Ho Chi Minh City. “The government intervention achieved its aim to slow down the fall and the panic and now people can stop and think long term.”
Sacombank Securities, whose research tries to educate with a “word of the day” explaining terms such as net asset value, says catfish exporter Navico is trading at 8.8 times earnings, while Petrovietnam Fertilizer and Chemicals Co, information technology firm FPT and Industrial group Hoa Phat are at around 13 times.
Still, Vietnam remains an opaque market, lacking research to aid investors. The stock market is still illiquid and the government interventions have highlighted the risk that new rules can be sprung on investors.
“It’s possible to make a quick killing but you could be the one to get killed!” investment manager Lalonde said.
For the complete article, please visit Reuters.
In Malaysia, one can invest in Vietnam via the Vietnam Unit Trust fund offered by Hong Leong Bank. However, as this is a wholesale fund, only high net worth individuals (those with net worth more than RM3 million or roughly USD$960k) are eligible!
Thursday, April 3, 2008
Who Twisted Bernanke's Arms?
For a very long time, US Federal Reserve's chief, Ben Bernanke, had never admitted the likelihood of US heading into a recession since the sub-prime crisis exploded, despite average American households already feeling the recession heat with crashing home prices, job losses and downward spiralling consumer confidence. Bernanke had always uphold his somewhat "miraculous' belief that the worst was an economic soft landing (that means still minor growth) . Technically speaking, a recession would only become official upon two consecutive quarterly GDP growth occur. With the US general election forth coming, it's perhaps not difficult to understand why Federal Reserve would take such a stand, and refused to come to a reality standpoint....
Recent Federal Reserve's aggressive actions in bailing out US financial institutions and covering the credit shortfall would further otherwise that the situation has become alarming and needs immediate remedies to salvage the potential wreckage.
Yesterday, Bernanke had finally acknowledged that a US recession is possible because homebuilding, employment and consumer spending will deteriorate. Was he arm twisted (to say so in order to set the right expectation) or perhaps finally coming to a realization from his dream?
As quoted by Bernanke (on Bloomberg), it now appears likely that real GDP will not grow much, if at all, over 1H08 and could even contract slightly. However, he added that Fed's interest rate cuts and liquidity provisions should spur economic growth "over time" and he expects improvement in 2H08, but the outlook is highly uncertain and attended by downside risks. In addition, inflation is still a source of concern as he pointed to February's 3.4% year-on-year increase in the price index for personal consumption expenditures.
Finally, Bernanke also emphasized the unusual nature of rescue efforts for Bear Stearns, saying the central bank's financing of the sale to avoid bankruptcy was a "one-time event." Bernanke said the Fed did not intend to offer a safety net for every firm that runs into trouble.
Oops...for those who chased up the stocks on Wall Street with optimisms on Tuesday (the Dow rose more than 3% in one day), best to review your policies again!
Personally, I would prefer to see the worst possible events to unfold in a quicker mode, compared to the current "slow-death" syndrome. When that happens, we can then at least look forward to a brighter future and a better Christmas in 2008!
