Category Archives: News

Went for Star Walk 2016

2 Sundays ago, on 11th September 2016, I went for Star Walk with my spouse. It was a 7-km non-competitive walk with prizes and lucky draws at the end of the walk, should you finish within the 2-hour limit. After that, for the tired ones who could not complete the walk, a sweeper bus will pick up the stranded walkers and take them to the finishing point. There’s African dance performance, Line dancing for those who still have an iota of energy left, plenty of jazzy music, etc. There were some credit card promotions and Julie’s biscuits sale going on too. Participants will get free rounds of 100 plus drinks and chocolate malt with strawberry-flavoured or corn-flavoured buns and free The Star newspapers. You will also get a certificate of participation as you queue for it at the finishing line. The slight rain did not dampen our spirits as we came armed with an umbrella.

McDonald’s plans to sell Malaysia, Singapore franchises

McDonald’s Corp is planning a sale of 20-year franchise rights in Malaysia and Singapore that could collectively fetch at least US$400mil, people with knowledge of the matter said.

Suitors for the fast-food operations in the two Southeast Asian markets have begun sounding out banks for financing, said the people, who asked not to be identified because the information is private. A potential bidder is in talks with lenders for as much as US$300mil in funding, they said.

McDonald’s is seeking local franchise partners to run its restaurants in Malaysia and Singapore as it pursues an international turnaround plan put in place after CEO Steve Easterbrook took over last year.

The Big Mac maker, which has a US$112bil market value, is revamping its ownership models throughout Asia, including plans to sell operations in China, Hong Kong and South Korea.

McDonald’s has adopted a “development licensee model” for the two markets, a Singapore-based spokeswoman for the company said in an e-mailed response to Bloomberg queries. It is negotiating with candidates “who are committed to helping accelerate growth and innovation in Malaysia and Singapore,” she said.

Unlike in its other major markets — including the U.S. — most McDonald’s outlets in Asia are company-owned. The chain aims eventually to have 95% of its restaurants in the region under local ownership, it said in March.

McDonald’s currently has more than 120 restaurants with around 9,000 employees in Singapore, according to its local website. In Malaysia, the chain runs more than 250 restaurants, its website shows.

Tycoon land sales raise questions

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A few tycoons are selling large swathes of their land in Malaysia, either directly or through companies they control. Could this be a sign of the times, in the sense that these businessmen are looking to cash out of an asset class that is set for a prolonged downturn?

“You get the feeling like these tycoons are reading the market and acting on it,” says one fund manager.

Just last month, Guocoland (M) Bhd, a company controlled by Tan Sri Quek Leng Chan said its associate company announced it was selling a large piece of land in Sepang to Petronas-owned Putrajaya Holdings Bhd.

Around RM116mil of the sales proceeds will be attributable to Guocoland, in which Quek has around 65% interest.

At around the same time, Tan Sri Lee Shin Cheng decided to sell 400 acres of his privately-owned land to IOI Properties Group Bhd for a whopping RM1.58bil.

Lee will be paid mostly in shares, nudging his stake up to 58.56% from 51.47% but will also be getting cash of around RM158mil from the sale.

Lee has since explained that the deal shows his belief in the long-term prospects of IOI Properties and that the land will enhance the prospects of the latter.

He also said that he would use the cash proceeds from the sale to buy more shares in IOI Properties. But some observers say his move, of putting his privately owned land into his listed company, can be read as a decision to not want to take the risk of holding this land in these troubling times, but rather move it into his listed company.

Another notable vendor of land in recent times is Tan Sri Danny Tan. Through his listed Tropicana Corp Bhd, he has sold more than RM1.5bil worth of land this year alone.

Tan also sought to sell a large piece of land in Gelang Patah Johor to Singapore-listed Albedo Ltd for which he would have assumed control via a reverse takeover.

That deal has since been aborted and it isn’t clear if Tan has sold that piece of land, which was valued at almost RM2bil at the time of the proposed deal.

Last year, Tan Sri Desmond Lim’s Global Oriental Bhd sold 15 acres of land in Seri Kembangan to Singapore incorporated Qingdao Investment Pte Ltd for RM142mil while in 2013, DRB Hicom Bhd, controlled by Tan Sri Syed Mokhtar divested close to 250 acres of land in Johor to Eco World Development Group Bhd for more than half a billion ringgit.

Public Bank launches e-fixed deposit account

Public Bank Bhd recently launched the PB e-fixed deposit account (PB eFD) which is for customers opting for e-banking.

PB eFD is a “Go Green” paperless fixed deposit account which allows the customers to create the accounts, make placements and also withdraw online via PBe Online Banking (PBe).

With PB eFD, customers will benefit from the fixed deposit (FD) interest rate just by applying for a PB eFD account and make FD transactions anywhere via PBe throughout the whole week.

The PB eFD placements are carried out in real time with minimum placement from as low as RM1,000.

PB eFD is open to individual customers aged 18 years and above as well as sole proprietors, who have existing conventional personal current accounts or savings acounts and who have registered for PBe.

The bank said the facility would enable customers enjoy their interest earned before the maturity as PB eFD offers the option of monthly automatic crediting of interest into customers’ current account or savings account.

PB eFD also offers automatic renewal for the same tenure at the prevailing board rates for the convenience of customers.

In conjunction with the launch of PB eFD, Public Bank is running a “PB eFD Campaign” from Jan 12 to March 31 offering higher promotional interest rates of up to 3.60% per annum for three months and above.

With “PB eFD Campaign”, customers can watch their money grow and earn competitive interest rates.

Customers just have to open a PB eFD account via PBe and make a minimum PB eFD placement of RM1,000 during the campaign period in order to enjoy the higher promotional interest rates.

Leaking gas tank causes shutdown along NSE

A leaking LPG tank on a trailer near the 310th kilometre between Tapah and Gopeng led to a temporary shutdown of both sides of the North-South Expressway (NSE), causing a 5km traffic jam.

The Tapah fire department said an LPG tank being hauled by a ­trailer along the NSE was dis­covered to be leaking the dangerously flammable gas.

According to the trailer driver, there were two safety valves on the tank which were leaking.

Fire department personnel, with the help of the police, closed both sides of the highway to allow the LPG tank to vent, as the safety valves could not be repaired.

A Hazmat team from Pasir Puteh together with fire brigades from Tapah, Gopeng, Kampar and Ipoh were involved in the clean-up operation, said Fire & Rescue Department of Malaysia assistant superintendent Muhammad Shaznil Abd Thoher.

During the operation, water was sprayed to cool the gas so that it could be released into the air and to prevent it from seeping below.

As at 5pm, the emptying of the gas tank was completed and the highway was reopened soon after.

For safety reasons, drivers were directed to exit the highway at either Gopeng or Tapah to continue on their journey.

PLUS Corporate Communications deputy senior manager Iskandar Dzulkifli has also advised the public to avoid the Tapah and Gopeng inter­change to bypass the massive jam.

For the latest traffic updates, go to PLUSTrafik Twitter or call the PLUSLine at 1800-88-0000.

Chua: No penalties yet, but file GST returns

No penalties have been imposed on companies which failed to file their GST returns, Deputy Finance Minister Datuk Chua Tee Yong said.

He said despite the Aug 24 submission deadline, the authorities had decided not to take punitive action yet.

“Businesses which have yet to submit the GST returns should do so without delay.

“The Customs Department has been very accommodating but please don’t take advantage of this.

“The time will come when penalties will be imposed and Customs officers will look for these defaulters,” he said after a dialogue with Chinese guilds and non-governmental organisations in Wisma MCA here yesterday.

Also present were MCA vice-president Datuk Lee Chee Leong and MCA Economic Consultative Committee member Datuk Seri Dr Lim Chin Fui.

Chua said the penalties, once imposed, would be auto-generated but businesses could still submit an appeal.

He said all GST-registered companies should make an effort to comply and that it was not fair to those who had filed the returns on time.

“The Customs Department has made it clear that it is not its intention to take immediate punitive action.

“They will not penalise companies over a mistake in the returns,” he said, adding that businesses should not take for granted that it was not a necessity to file the returns.

Records showed the first quarterly GST filing from April to June stood at 87%.

On GST refunds, Chua said several measures had been implemented to improve the process.

Don’t just invest your money, optimise it

IN this money-driven world, the need to invest is absolutely undeniable.

The unstable economy combined with rising inflation and the implementation of the goods and services tax is affecting our cost of living in unpredictable ways. At this rate, if we do not invest, we run the risk of having to work our entire lives.

Investing allows us an opportunity to grow our wealth at compounded rates, thus multiplying our money within a shorter period of time. Take a look at the multi-billionaires of today – they did not exactly make their wealth by earning monthly paycheques.

Nevertheless, when we invest, we also inadvertently expose ourselves to the risk of making investment losses. These cases are not unheard of. We’ve all come by stories of investments that are deemed to be “perfectly good” by analysts and salespersons, only to drop like rocks, costing investors their capital or worse, their entire life savings.

Take for example, the unexpected collapse of financial juggernaut Lehman Brothers which eventually pulled the entire global economy into a tailspin; or the notorious Madoff ponzi scheme that left investors wary of even the most reputable and well-regulated institutions; or the 2007-2008 financial crisis which caused unit trust funds to lose 30%-40% of their value.

More recently, the investors of oil and gas stocks were hit badly by the recent crude oil downturn, causing them to lose up to 50% of their capital. The list goes on and on.

Alas, investment misfortunes are not limited to just stocks and unit trusts.

In the case of gold investment company, Geneva Malaysia Sdn Bhd, some 1,065 gold investors are presently embroiled in a lawsuit with the company for breach of contract involving RM146mil in gold products and monies owed to them.

You may have also heard of stories of property investors aiming to make a quick buck by flipping properties, only to be caught off-guard by not being able to rent or sell the properties for profit as planned.

Even the most experienced investors are not completely “bullet proof” from committing investment blunders.

By his own admission, Warren Buffett, the greatest investor of our time, shared in an open letter to his investors, two of his biggest business and investment mistakes, one of which he claims cost him and his investors US$100bil when he bought ailing Berkshire Hathaway. He called the actions that led up to his purchase of Berkshire a “monumentally stupid decision.”

In order to learn from these investment mistakes, we must first understand the risks and rewards of investing well.

The simple science of investing dictates that you are essentially aiming for maximisation of your return of investment (ROI). As such, in a best case scenario, investing will increase your net worth significantly and substantially. This is perfect, if you have done all the right things and had picked a winner.

However, what if the reverse happens? Depending on the size of the capital invested, you could suffer a major loss to your net worth and be further away from achieving financial freedom. Chart 1 illustrates the best and worst-case scenario when you invest money.

Archidex Exhibition 2015

I attended the Archidex exhibition recently from 12 – 15 August 2015 at KL Convention Centre and if I am not mistaken, there were 9 halls with various booths of different home and construction products. What I particularly like was a new type of laminated wood infused with negative ions particles via nano technology. The cut apple will remain fresh and not get oxidised and turn brown when place on the wood. You can even check the negative ions counter and when you place your handphone over it, the counter immedately register near zero instead of negative in the thousands since electrical gadgets emit positive ions that make us lethargic and tired. I collected many colourful canvas bags, pens, note book and a diary. Some people even got themselves long golf umbrellas and big teddy bears.

Pressure on ringgit remains unabated

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At RM3.85 to the US dollar, the selling pressure on the ringgit remains unabated on the back of two probable developments – first, the widely speculated put option that traders had gone into a few months ago offering RM4 for every US dollar.

The second is the arbitrage difference between the non-deliverable forward (NDF) ringgit offshore contract versus the onshore ringgit forward contract.

As of yesterday, the one-month NDF offshore had an implied yield of 8.2% versus the onshore forward yield of 3.2%.

“That’s a very decent arbitrage yield of some 5%. This is clearly another channel of pressure for the ringgit,” said Dr Suresh Ramanathan, an independent interest rate and foreign exchange strategist.

An NDF contract is a short-term forward contract where the profit or loss is calculated based on the difference between the forward rate and spot rate. It is settled in US dollars and the tenure can be one month or up to one year.

Since the ringgit is not available in large amounts in the offshore market, the NDF is the common benchmark used to speculate the currency.

Yesterday, the ringgit hit a fresh 17-year low of 3.8517 against the greenback. Year-to-date, the ringgit has lost about 8.4% against the US dollar, making it the worst-performing currency in Asia.

Suresh is, however, not overly pessimistic about the ringgit’s depreciation, as he is of the opinion that beyond the RM3.70 level, a lot of the selling pressure was purely due to arbitrage opportunities and the currency will eventually revert once the arbitrage window in both the forward and options market closes.

Last week, it was reported that Bank Negara was attempting to stem the decline of the ringgit by persuading traders to not enter into forward contracts to sell the ringgit.

“The message was to go long on the ringgit and short the US dollar,” said a trader.

This comes as dealers get offers to enter into a “put” option for the ringgit at RM4 to the US dollar over a period of between three and six months.

This means that the counter party has taken the view that the ringgit will go to RM4 against the US dollar in three months and is prepared to take delivery from the dealer at that price when the time comes.

Nonetheless, over the near term, there is still risk for the ringgit, for instance, the high bond holdings by foreigners.

Should the ringgit continue to weaken, this could be a third channel of pressure, as foreigners may start selling off their ringgit-denominated bonds.

The foreign shareholding on the ringgit bond market, via the Malaysian Government Securities (MGS), remains high. With the value of the ringgit depreciating by the day, the 3% to 4% yield that foreigners are getting from the MGS is significantly being eroded.

As at end-June, foreign ownership of MGS stood at 47%, or US$43bil (RM165.55bil) of the total outstanding of US$92bil (RM354.2bil).

“The signal this sends is that the foreigners holding the bonds are still comfortable with the ringgit risk,” said a dealer.

It will be interesting to see Malaysia’s current account position when Bank Negara announces Malaysia’s second-quarter gross domestic product (GDP) later this month.

Economists are forecasting the current account surplus to narrow mainly because Malaysia’s main exports will be hit both by the weak ringgit and lower oil and commodity prices. Oil-related products make up more than 20% of Malaysia’s exports.

On the other hand, Malaysia’s import bills will increase due to the strengthening US dollar. Furthermore, Petroliam Nasional Bhd, which contributed some 22% to national coffers last year, has built its 2015 budget based on oil prices of US$55. As of yesterday, Brent was trading at US$51.03.

Malaysia’s revised Federal Government budget is also based on Brent crude oil at US$55 per barrel

In the first quarter, Malaysia’s overall current account advanced to RM10bil (or 3.6% of GDP). That compares with RM5.7bil (or 2% of GDP) in the fourth quarter of 2014.

Down South

I am now in KL for business and will stay for 4 days until Monday. I reached here on Friday yesterday afternoon and went to see a client before calling it a day and drove back home in Rhythm Avenue. There are a few restaurants here which have operated for a long time already and are quite established with repeat patrons. I think it is a better place than Main Place which is too pricey for me. Both Rhythm Avenue and Main Place were abandoned projects under the Barisan government in Selangor and then revived to completion under the Pakatan leadership. I am pleased that Pakatan is doing well and really cares for the citizens and their financial problems. Lim Kit Siang personally took it upon himself to visit widows and widowers who have lost their spouse and network of financial support. He does not mind travelling from Penang to Johor just to comfort a person in distress.

This is his caring trademark that is now followed by his son, Lim Guan Eng. I just hope Pakatan will continue to rule more states and offer more benefits for the common people with their individual problems just to put food on the table and the struggles just to survive and get by day by day for all races, regardless of religion or creed.

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